204 Conn.App. 614
Conn. App. Ct.2021Background
- O&G Industries supplied concrete to subcontractor Concrete Superstructures, Inc. (CSS) on an 18‑story Stamford project; CSS then failed to pay $484,919.30 owed for deliveries between Sept.–Dec. 2016.
- O&G had previously billed the general contractor (Morganti) under a joint check arrangement and was paid for earlier deliveries; later O&G opened a credit account for CSS (for another project) and billed CSS directly for the disputed deliveries.
- O&G filed a timely mechanic’s lien; the surety (American Home Assurance Co.) issued a substitute bond under Conn. Gen. Stat. §49‑37, which O&G accepted; O&G also submitted a claim under the project payment bond issued by the surety for Morganti.
- The surety denied the claims and pled nine special defenses (including reckless/bad‑faith conduct by O&G, failure to satisfy a payment‑bond condition precedent by not producing a written contract/purchase order, mitigation/estoppel, and statutory writing requirements).
- The trial court entered judgment for O&G on both the substitute bond and payment bond claims, finding the surety failed to prove its equitable defenses and that O&G satisfied the payment‑bond claim requirements; the surety appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether O&G’s conduct (giving CSS an account, not immediately suing) breached a duty of "diligence and utmost good faith" (recklessness/bad faith) | O&G acted reasonably: it took protective steps (sought joint‑check agreement, returned redacted lien waiver), was not the party that brought CSS onto project, and CSS appeared judgment‑proof later. | Surety: O&G acted recklessly/unfairly by extending an account and failing to mitigate, so surety discharged from liability. | Trial court’s factual findings that O&G did not act with common‑law recklessness or bad faith were supported by the record; affirmed. |
| Whether O&G satisfied the payment bond condition requiring a copy of the claimant’s written contract or purchase order with the subcontractor | Invoices, signed delivery tickets, a credit agreement, and price quotations collectively evidenced the agreement and satisfied item 3 of §16.1 of the payment bond. | Surety: O&G failed to provide the required written agreement/purchase order; invoices/delivery tickets are insufficient and many were unsigned. | Court reasonably construed the bond and found the submitted invoices/delivery tickets and related documents satisfied the condition precedent; affirmed. |
| Whether O&G could recover damages exceeding the penal sum of the substitute bond (including prejudgment and offer‑of‑compromise interest) | O&G sought full recovery of the unpaid balance plus statutory interest and offer‑of‑compromise interest; it filed an offer of compromise that defendant did not accept. | Surety argued the award exceeded the substitute bond’s penal sum and challenged interest calculations. | Appellate court declined to reach merits: defendant waived this claim by failing to object at trial to the court’s interest/calculation determinations. |
| Whether the trial court abused its discretion by allowing O&G rebuttal evidence after the surety rested without calling witnesses | O&G limited rebuttal to evidence presented during the surety’s cross‑examination and documents admitted by the surety; the court had previously barred such evidence in O&G’s case‑in‑chief. | Surety: No case was presented to rebut because it called no direct witnesses; rebuttal was improper. | Trial court did not abuse discretion. Rebuttal was properly limited to refuting evidence the surety elicited/admitted during cross‑examination. |
Key Cases Cited
- Aetna Bank v. Hollister, 55 Conn. 188 (1886) (historic statement that a claimant must observe diligence and "utmost good faith" when claiming against a surety)
- Wolthausen v. Trimpert, 93 Conn. 260 (1919) (early treatment of "utmost good faith" and negligence benchmark)
- Pacelli Bros. Transportation, Inc. v. Pacelli, 189 Conn. 401 (1983) (equating "utmost good faith" with fair dealing in contract contexts)
- Capstone Building Corp. v. American Motorists Ins. Co., 308 Conn. 760 (2013) (principles for breach of the implied covenant of good faith and fair dealing)
- Boone v. Boehringer Ingelheim Pharm., Inc., 335 Conn. 547 (2020) (trial court discretion on admission of rebuttal evidence)
- State v. Lisella, 187 Conn. 335 (1982) (permitting rebuttal evidence where defendant’s cross‑examination effectively raised evidence to be refuted)
- Williams v. Housing Authority, 327 Conn. 338 (2017) (definition and standard for common‑law recklessness)