195 Conn.App. 695
Conn. App. Ct.2020Background
- Semac contracted with Skanska to perform all electrical work on a Stamford Hospital expansion; the subcontract price was initially ~$14.8M and, after 38 change orders, the revised contract price used at trial was $19,114,535.
- On October 19, 2015 Semac sent a "Notice of Cardinal Change," demanding extra money and stating it would stop work if not paid; Skanska declared Semac in default on October 21 and terminated the subcontract on October 22 without giving the 48‑hour cure period set out in the subcontract.
- Semac sued for wrongful termination and related claims; Skanska counterclaimed for breach, overbilling, and sought setoffs; Skanska also impleaded Semac’s CFO (Pope) and president (Scanlon) for alleged fraud in sworn invoices.
- The trial court found no cardinal change, concluded Semac materially breached by abandoning the job, but also found Skanska breached by failing to provide the contractual 48‑hour cure period, converting a for‑cause termination into a termination for convenience.
- The court calculated Semac had completed 65% of the work, computed a termination payment, then offset amounts Semac had been overpaid and amounts improperly billed to obtain a judgment for Skanska of $3,857,130.77 (plus prejudgment interest to a total of $4,262,390.56). The court rejected Skanska’s fraud claim against Pope and Scanlon.
Issues
| Issue | Plaintiff's Argument (Semac) | Defendant's Argument (Skanska) | Held |
|---|---|---|---|
| Was there a cardinal change excusing Semac's performance? | Delays and resequencing materially altered the character and cost of the electrical work, constituting a cardinal change. | The work remained the same in character; delays and coordination problems were contemplated and addressed by contract/change orders. | No cardinal change; contract language and change orders show alterations were addressable under the contract; Semac breached by abandoning the job. |
| Did Skanska materially breach by terminating without a 48‑hour cure period? | (Responding) Skanska was required to give the contractual cure period; failure to do so breached the contract. | Skanska asserted Semac had repudiated/abandoned the contract and that common‑law doctrines made the cure period inapplicable or futile. | Skanska breached: it failed to comply with the unqualified §12.1 cure requirement; common‑law doctrines cannot be used to evade express contract terms. |
| Were the damages awarded to Skanska proper? (calculation and remedies) | Semac argued it was entitled to a termination payment and that the court erred in crediting Skanska for amounts billed/paid. | Skanska argued Semac’s breach excused Skanska and entitled it to expectation damages; alternatively, setoff for overpayments and costs to complete were proper. | Award upheld: because both breached and Skanska failed to follow the contract, termination became for convenience; the court reasonably calculated Semac’s entitlement by percentage complete and applied offsets for overbilling and unpaid subcontractor amounts. |
| Did Pope and Scanlon commit fraud by swearing to inaccurate invoices? | Semac (and the third‑party defendants) argued their sworn invoices were not fraudulent but improperly managed/accounted. | Skanska argued the sworn misrepresentations were false, knowingly made, and induced payment. | No fraud: trial court found insufficient clear and convincing evidence of intent or recklessness; credibility findings deferred to the trial judge. |
Key Cases Cited
- Randolph Constr. Co. v. Kings East Corp., 165 Conn. 269 (Conn. 1973) (establishes test for substantial/cardinal change: whether alterations unreasonably alter character of work or unduly increase cost)
- Air‑A‑Plane Corp. v. United States, 408 F.2d 1030 (Ct. Cl. 1969) (framework for determining whether ordered deviations change the nature of the work contracted for)
- Pellerin Constr., Inc. v. Witco Corp., 169 F. Supp. 2d 568 (E.D. La. 2001) (cardinal change defined as a drastic modification beyond contract scope, not redressable under contract)
- Coppola Constr. Co. v. Hoffman Enters. Ltd. P’ship, 157 Conn. App. 139 (Conn. App. 2015) (failure to give contractually required termination notice constitutes material breach)
- Collins v. Sears, Roebuck & Co., 164 Conn. 369 (Conn. 1973) (court may not rewrite or create new contract terms)
- Trumbull v. Palmer, 123 Conn. App. 244 (Conn. App. 2010) (fraud elements and heightened clear‑and‑convincing proof standard)
- McLeod v. A Better Way Wholesale Autos, Inc., 177 Conn. App. 423 (Conn. App. 2017) (appellate deference to trial court credibility and factual findings)