211 Conn.App. 724
Conn. App. Ct.2022Background
- Electrical Contractors, Inc. (subcontractor) contracted with Greython Construction, LLC (general contractor) to perform electrical work on a 50 Morgan Hospitality Group, LLC (owner) renovation project.
- Article 6 of the subcontract stated: payment by the owner to Greython is a “condition precedent” to Greython’s obligation to make partial or final payments to the subcontractor.
- Subcontractor claimed Greython failed to pay $350,616.65 for work performed and sued for breach of contract and breach of the implied covenant of good faith and fair dealing, among other counts.
- Greython moved for summary judgment, arguing the contract’s unambiguous condition-precedent language relieved it of any payment obligation until Greython was paid by the owner.
- The trial court granted summary judgment for Greython on breach of contract and implied covenant claims; the court found the clause clear and that the subcontractor produced no evidence of Greython’s bad faith in collecting from the owner.
- On appeal, the Connecticut Appellate Court affirmed, holding the contract language unambiguous (a pay‑if‑paid condition precedent) and that the record contained no evidence of dishonesty or bad faith by Greython.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the subcontract’s payment clause is a condition precedent (i.e., pay‑if‑paid) or only postpones payment for a reasonable time (pay‑when‑paid) | The clause is ambiguous and should be read as pay‑when‑paid; Connecticut disfavors clauses that transfer owner nonpayment risk to subcontractors | Clause expressly labels owner payment a “condition precedent,” so it unambiguously makes Greython’s duty to pay contingent on owner payment | Clauses are enforced as written here; article 6 unambiguously creates a condition precedent (pay‑if‑paid), so Greython had no contractual duty to pay until it was paid by the owner |
| Whether there was a genuine factual dispute that Greython acted in bad faith (breach of implied covenant) | Greython failed to demonstrate it made substantive collection efforts and may have caused or contributed to the owner’s nonpayment; omission shows bad faith | Subcontractor produced no evidence of dishonest purpose or that Greython acted from a sinister motive; Greython submitted requisitions and communications supporting collection efforts | No genuine issue of material fact as to bad faith; subcontractor offered no clear‑and‑convincing evidence of dishonest purpose, so summary judgment for Greython was proper |
Key Cases Cited
- Murtha v. Hartford, 303 Conn. 1 (Conn. 2011) (principles of contract interpretation; clear, unambiguous language governs intent)
- DeCarlo & Doll, Inc. v. Dilozir, 45 Conn. App. 633 (Conn. App. 1997) (distinguishes pay‑when‑paid language; clause at issue there was not a condition precedent)
- Wells Fargo Bank, N.A. v. Lorson, 341 Conn. 430 (Conn. 2021) (definition and effect of a condition precedent)
- Geysen v. Securitas Security Services USA, Inc., 322 Conn. 385 (Conn. 2016) (freedom of contract and definition of bad faith requiring dishonest purpose)
- Renaissance Management Co. v. Connecticut Housing Finance Authority, 281 Conn. 227 (Conn. 2007) (implied covenant of good faith and fair dealing applies to contractual discretion)
- Buehler v. Newtown, 206 Conn. App. 472 (Conn. App. 2021) (summary judgment standard and appellate review)