316 Conn. 202
Conn.2015Background
- Town contracted with Old Colony (Low bid $912,500) to replace a pump station; contract effective April 22, 2004, with substantial completion due January 17, 2005; liquidated damages of $400/day provided.
- Contract contained procedures for time extensions and price adjustments: written notice to project engineer within 30 days of event and supporting data within 60 days; change orders could adjust time/price if mutually agreed.
- Project experienced numerous delays (contractor late submittals, unforeseen utility locations, removal of caisson); the town extended completion to June 14, 2005 but warned liquidated damages would apply thereafter.
- Town ultimately terminated the contract for convenience on August 14, 2007; Old Colony sought payment under the termination-for-convenience provision and later claimed equitable adjustment for delay-related costs.
- Trial court awarded Old Colony $164,440.64 under termination-for-convenience, found Old Colony had not complied with contractual notice requirements for time/cost adjustments, awarded town $315,000 in liquidated damages, and set off amounts to render a net judgment for the town. Judgment affirmed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether termination for convenience bars owner from recovering default-based remedies (liquidated damages) | Termination-for-convenience precludes default remedies; allowing both would nullify distinction between convenience and for-cause termination | Contract preserves "any other right or remedy" in the termination-for-convenience clause, so town may still recover liquidated damages | Court: Contract language is clear; town may recover liquidated damages despite terminating for convenience |
| Whether liquidated damages clause is unenforceable where delays were partially caused by town (Alden rule) | Alden requires abrogation of liquidated damages when both parties contribute to delay | Contract provides mechanisms (change orders/time-extension procedures) to adjust the liquidated-damages date; Old Colony failed to follow those procedures | Court: Alden inapplicable because contract preserved a Mosler Safe exception; liquidated damages enforceable absent contractor compliance with extension procedures |
| Whether town must prove actual damages to recover liquidated damages | Plaintiff: must show actual loss; liquidated sum cannot be enforced if owner suffered no damage | Defendant: liquidated damages recoverable because contract validly set a reasonable pre-estimate of loss and no finding shows zero damages | Court: No proof-of-actual-damage requirement here; liquidated damages recoverable under contract absent factual finding of no damage |
| Whether change orders waived strict notice requirements or modified contract to allow equitable adjustment | Old Colony: change orders acknowledging schedule impact modified the contract and excused strict notice compliance | Town: change orders did not quantify time extensions nor comply with formal notice/claim procedures; no mutual assent to modify notice regime | Court: Trial court not clearly erroneous in finding no contract modification or waiver; Old Colony’s equitable-adjustment claim fails for lack of strict contractual compliance |
Key Cases Cited
- Hartford Electric Applicators of Thermalux, Inc. v. Alden, 169 Conn. 177 (discusses abrogation of liquidated-damages clause when delays attributable to both parties)
- Mosler Safe Co. v. Maiden Lane Safe Deposit Co., 199 N.Y. 479 (parties may preserve liquidated damages by contractually empowering an architect/engineer to extend completion date)
- Norwalk Door Closer Co. v. Eagle Lock & Screw Co., 153 Conn. 681 (liquidated damages not enforced where it is apparent plaintiff suffered no damage)
- Litton Industries Credit Corp. v. Catanuto, 175 Conn. 69 (interpretation of contractual limitation of remedies and alternative remedies language)
- Armour & Co. v. Nard, 463 F.2d 8 (federal case giving effect to reservation of rights after termination for convenience)