JAMES E. BURNS, JR. v. DAVID Y. ADLER ET AL.
SC 19560, SC 19561
Supreme Court of Connecticut
May 16, 2017
325 Conn. 750
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BURNS v. ADLER-DISSENT
ROBINSON, J., with whom ESPINOSA, J., joins, dissenting.
I
I begin by noting my agreement with the background facts and procedural history set forth in the majority opinion. I also agree in limited part with the majority‘s statement of the standard of review. Specifically, I agree that the issue of whether the plaintiff can invoke the bad faith exception in this case presents a question of law over which our review is plenary, albeit only to the extent that the defendant‘s claims on appeal require this court to define the contours of that doctrine. See, e.g., Thompson v. Orcutt, 257 Conn. 301, 308-309, 777 A.2d 670 (2001) (application of equitable doctrine of unclean hands is committed to trial court discretion, but interpretation of that doctrine is question of law subject to plenary review); see also Walpole Woodwork-ers, Inc. v. Manning, 307 Conn. 582, 588, 57 A.3d 730 (2012) (“[t]he determination of whether an equitable doctrine applies in a particular case is a question of law subject to plenary review“). With respect, however, to the application of the bad faith exception, I disagree with the majority‘s statement of the standard of review to the extent it conflicts with the well established principle that “[w]hether a party has acted in bad faith is a question of fact, subject to review only for clear error.” Renaissance Management Co. v. Connecticut Housing Finance Authority, 281 Conn. 227, 240, 915 A.2d 290 (2007); see MacMillan v. Higgins, 76 Conn. App. 261, 271-73, 822 A.2d 246, cert. denied, 264 Conn. 907, 826 A.2d 177 (2003); see also Habetz v. Condon, supra, 224 Conn. 237 n.11. This reflects the fact that a finding of bad faith turns on subordinate considerations such as the relevant actor‘s motives and intent, which often may only be inferred from circumstantial evidence.6 See, e.g., Wadia Enterprises, Inc. v. Hirschfeld, 224 Conn. 240, 250, 618 A.2d 506 (1992).
A
I begin with the majority‘s analysis of the defendant‘s claims on appeal, which, notwithstanding footnote 16 of the majority opinion, may be misconstrued as embracing an unduly narrow approach to the bad faith exception. In particular, I wish to emphasize my disagreement with the defendant‘s position, founded largely on this court‘s decision in Wadia Enterprises, Inc. v. Hirschfeld, supra, 224 Conn. 240, that the bad faith exception is applicable only to cases wherein the homeowner entered into an agreement or accepted services from a contractor knowing that the act gave the homeowner an “escape hatch” from payment because the contract was defective under
At the outset, I briefly discuss the statutory scheme governing home improvement contract disputes and the history of the bad faith exception in Habetz.7 “Section 20-429 (a) provides that no home improvement contract shall be valid or enforceable against a homeowner unless it contains certain enumerated criteria. The aim of the [act] is to promote understanding on the part of consumers with respect to the terms of home improvement contracts and their right to cancel such contracts so as to allow them to make informed decisions when purchasing home improvement services. . . .”
“In Barrett Builders v. Miller, 215 Conn. 316, 328, 576 A.2d 455 (1990), this court held that a contractor who did not comply with the written contract requirement of the act could not recover in restitution. This result was subsequently modified by one common-law and one statutory exception. First, in Habetz v. Condon, supra, 224 Conn. 240, this court held that contractors may recover in restitution despite noncompliance with
In formally adopting the bad faith exception, this court emphasized in Habetz that its “central element . . . is the recognition that to allow the homeowner who acted in bad faith to repudiate the contract and hide behind the act would be to allow him to benefit from his own wrong, and indeed encourage him to act thusly. Proof of bad faith therefore serves to preclude the homeowner from hiding behind the protection of the act. . . . [W]e need look no further than the maxim that no person may take advantage of his own wrong. . . . This deeply rooted principle has been applied in many diverse classes of cases by both law and equity courts and has frequently been employed to bar what would
Applying the bad faith exception in Habetz, this court upheld the judgment of the trial court with respect to a contractor‘s counterclaim for unpaid sums, despite the fact that the contract violated
Rather than confine the bad faith exception to a limited array of homeowner conduct involving the knowing acceptance of services under a noncompliant agreement, I believe that case law from this court and the Appellate Court suggests that, consistent with its equitable and fact dependent nature, the bad faith exception is applicable
I disagree with the defendant‘s position that Wadia Enterprises, Inc. v. Hirschfeld, supra, 224 Conn. 240, a companion case to Habetz, stands for the proposition that the bad faith exception is only applicable when the homeowner accepts services with knowledge of an “escape hatch” under the act. Consistent with the fact sensitive nature of the bad faith inquiry, I would confine Wadia Enterprises, Inc., to the facts and claims before the court in that case, which held that a contractor‘s claim of bad faith could not survive summary judgment, despite the fact that the underlying defective contract was prepared by the homeowners’ New York based attorney and architect, and the homeowners: (1) had certified payments while retaining 5 percent and refused to make the final payment in reliance on the terms of the contract that they sought to repudiate; (2) forced the contractor to “extend credit for change orders under provisions of the contract they [sought] to repudiate“; and (3) acted to “[enforce] the delay damages clause and alleged breach of specific parts of the very contract they [sought] to repudiate.” Id., 248. This court held that “[n]one of these facts . . . indicates a dishonest purpose” sufficient to justify invocation of the bad faith exception, observing that the “fact that the [homeowners] had their architect and New York attorneys draft the contract does not in and of itself indicate bad faith on the part of the defendants. There is no allegation or proof that the attorneys intentionally omitted this requirement in order to have an escape hatch. At most, the New York attorneys were negligent in failing to consult Connecticut law and to include the required clause in the contract. An honest mistake does not rise to the level of bad faith.” Id., 248-49. The court held that summary judgment was appropriate because these facts were not sufficient to
Our Appellate Court has followed Wadia Enterprises, Inc., in rejecting claims of bad faith in cases wherein—at least in my view—the homeowners or their agents engaged in conduct that should place them beyond the protections of the act—at least by estoppel—such as actively participating in the drafting of the defective contract. See Lucien v. McCormick Construction, LLC, 122 Conn. App. 295, 302-303, 998 A.2d 250 (2010) (reversing finding of bad faith, despite “eleventh hour” invocation of act to avoid contract, which homeowner did not sign prior to work starting, because there was no evidence that homeowner knew of violations or that her attorney “purposely drafted the contract in violation of the act in order to later avoid her obligation to pay“); id., 302 n.5 (noting that homeowner‘s attorney was based out of New York and would be charged with knowledge of act if admitted in Connecticut); MacMillan v. Higgins, supra, 76 Conn. App. 272 (“the fact that the [homeowners], through their agent, [a Connecticut attorney], drafted the contract does not mandate a finding of bad faith“); see also Dinnis v. Roberts, 35 Conn. App. 253, 256, 259, 644 A.2d 971 (recognizing footnote in Habetz, but declining to extend bad faith exception in upholding summary judgment for homeowners, despite contractor‘s claim that they acted in bad faith by terminating relationship when work was 85 percent complete, hiring engineer to inspect work without providing notice or expressing dissatisfaction, and using harassing litigation tactics), cert. denied, 231 Conn. 924, 648 A.2d 162 (1994).
I believe that Wadia Enterprises, Inc., was wrongly decided, even beyond its apparent suggestion that the homeowner or their representative must harbor intent to draft a defective contract as an escape hatch in order for the bad faith exception to apply. Wadia Enterprises, Inc., is inconsistent with both the bad faith exception and the purpose of the act, which is to protect consumers from unscrupulous contractors employing high pressure sales tactics and performing substandard work. Habetz v. Condon, supra, 224 Conn. 239. Thus, I hardly see how it is “responsive to demands of justice and good conscience“; id., 238; to allow a homeowner to repudiate a contract drafted by the homeowner, or especially the homeowner‘s professional representative such as an attorney or architect, based on technical defects in the contract. Allowing act based repudiation in such a case strikes me as just the kind of “inequitable reliance on statutes” contemplated by the bad faith exception. Id. Given the “strong” estoppel basis of the bad faith doctrine; id., 240; allowing a repudiation of a defective contract drafted by a homeowner‘s attorney or architect does nothing to further the legislative judgment to “impose the burden of compliance with the statute on the professional, the contractor, rather than on the nonprofessional, the consumer.” Barrett Builders v. Miller, supra, 215 Conn. 326; see also Wright Bros. Builders, Inc. v. Dowling, 247 Conn. 218, 231, 720 A.2d 235 (1998) (“The [act] is a remedial statute that was enacted for the purpose of providing the public with a form of consumer protection against unscrupulous home improvement contractors. . . . The aim of the statute is to promote understanding on the part of consumers with respect to the terms of home improvement contracts and their right to cancel such contracts so as to allow them to make informed decisions when purchasing home improvement services.” [Citation omitted.]).
The Appellate Court‘s decision in Kronberg Bros., Inc. v. Steele, 72 Conn. App. 53, 804 A.2d 239, cert. denied, 262 Conn. 912, 810 A.2d 277 (2002), similarly suggests that the bad faith inquiry is not limited to events surrounding the formation of the contract. Although the Appellate Court disagreed with the contractor‘s claim that the trial court had “improperly rejected its claim of bad faith by the [homeowners] on the basis of its finding that none of the acts alleged was committed prior to the execution of the contract“; id., 62; the court emphasized that, even with no evidence that the homeowners had contributed to the defect in the contract, the trial court had “clearly considered the [homeowners‘] acts before and after the execution of the contract when it rejected the [contractor‘s] bad faith claim,” in concluding that the homeowners’ actions alleged to constitute bad faith “arose out of the deteriorating relationship between the parties and can hardly be held to be actions in bad faith when the [homeowners] were confronted with what must have been an exasperating ordeal. The [contractor] overlooks the evidence in this trial, which hardly depicts a neat, orderly and efficient project proceeding on time and without delay.” (Emphasis added; internal quotation marks omitted.) Id., 63.
Accordingly, I conclude that the Appellate Court properly determined that the bad faith exception is not limited to claims
B
Relying heavily on evidence of the plaintiff‘s disorganized bookkeeping practices as part and parcel of his failure to comply with the act‘s documentation requirements, the majority further concludes that the defendant‘s conduct after he made a final payment on August 4, 2008, was not in bad faith because the trial court “made no finding, and the plaintiff has cited no evidence that would support a finding, that the defendant knew or should have known that the plaintiff‘s calculations of the amounts owed to him were correct, or even close to correct.” The majority posits that “it is implicit in the trial court‘s factual findings that the plaintiff‘s noncompliance with the act gave rise to a genuine, good faith disagreement between the parties as to whether the defendant owed the plaintiff the amounts that the plaintiff claimed. Moreover, even if there were no genuine dispute about the value of the goods and services that the plaintiff actually provided, the plaintiff‘s failure to comply with the act deprived the defendant of the opportunity to make an informed decision as to whether he should continue to accept goods and services from the plaintiff during the course of the renovation project . . . .”12 The majority further emphasizes that the trial court “made no factual findings as to what items of work the plaintiff performed after [August 4, 2008], nor did it make any findings as to when the plaintiff billed the defendant for those items of work, and the plaintiff has cited no evidence that could provide the basis for such findings. Thus, there is simply no way of knowing whether the defendant believed in good faith that he already had paid the plaintiff for the small amount of work that the plaintiff performed after August 4, 2008, and it clearly would not be in bad faith for the defendant to allow the plaintiff to finish work for which the defendant believed that he had already paid.” (Footnote omitted.) I respectfully disagree with these conclusions because I believe that the majority‘s reliance on certain “implicit” findings represents an intrusion into the trial court‘s explicit factual findings.
I begin by noting that the majority‘s recitation of the governing principles is generally consistent with this court‘s statement of the law in Wadia Enterprises, Inc. v. Hirschfeld, supra, 224 Conn. 240—with which I agree in the abstract—that the homeowners’ act of “initially enforcing the contract and subsequently asserting the contract‘s invalidity as a defense to a suit by the contractor . . . does not, by itself, present a claim of bad faith. There is nothing dishonest or sinister about homeowners proceeding on the assumption that there is a valid contract, enforcing its provisions, and later, in defense to a suit by the contractor, upon learning that the contract is invalid, then exercising their right to repudiate it.” Indeed, I wholly agree with the majority‘s statement that the bad faith exception does not apply when the homeowner “repudiates the contract because the contractor‘s noncompliance with the act gave rise to a genuine, good faith dispute about the scope of the work or the contract price.” See Taylor v. King, 121 Conn. App. 105, 125-27, 994 A.2d 330 (2010) (upholding trial court‘s rejection of contractor‘s bad faith claim because there was no evidence that contractor repeatedly and unsuccessfully asked homeowner to sign contract, there were multiple violations of
This statement of the law does not, however, alter the fundamentally factual nature of the bad faith inquiry; Renaissance Management Co. v. Connecticut Housing Finance Authority, supra, 281 Conn. 240; and the deference that the appellate courts owe the finder of fact under the applicable clearly erroneous standard of review, even when we disagree with the finding. See MacMillan v. Higgins, supra, 76 Conn. App. 271-72 (deferring to attorney trial referee‘s finding that homeowners had not acted in bad faith, despite fact that they presented contractor with new contract one month after work had started, and that contract had been drafted by homeowner‘s attorney who was familiar with act, because referee could have credited attorney‘s testimony that original defective contract was merely draft). The “question before this court is not whether, if faced with the same set of facts, we would reach the same finding as did the [fact finder], but whether [his] finding of an absence of bad faith was clearly erroneous.” Id., 271.
Turning to the facts in the present case, I agree with the Appellate Court‘s appropriately deferential treatment of the inferences drawn by the trial court in its rejection of the defendant‘s claim that “the alleged bad faith in this case involved nothing more than a homeowner‘s refusal to pay disputed charges arising from a contract dispute . . . .” Burns v. Adler, supra, 158 Conn. App. 803. In particular, the trial court “found, and the record confirms, that the renovation project on the defendant‘s home was largely completed by the time the defendant decided that he had paid the plaintiff enough for the work done on his home and refused to pay the plaintiff any more. The [trial] court found that the defendant‘s refusal to pay the plaintiff was motivated by the fact that the defendant had already received the bulk of the benefits he expected from his relationship with the plaintiff, and thus that there was little risk to him if he refused to pay. The [trial] court found
II
I next address the plaintiff‘s certified appeal from the judgment of the Appellate Court affirming the trial court‘s denial of his motion for attorney‘s fees upon the foreclosure of a mechanic‘s lien pursuant to
On appeal, the plaintiff contends that the Appellate Court improperly concluded that the “hearing” requisite to the award of attorney‘s fees had not occurred because the terms of the foreclosure were determined by stipulation and in-chambers conferences, rather than in a hearing. The plaintiff argues that this approach is unworkable because it elevates “form over substance” by requiring the court to convene on the record for a very brief hearing. To this end, the plaintiff relies on A. Secondino & Son, Inc. v. LoRicco, 19 Conn. App. 8, 15-16, 561 A.2d 142 (1989), for the proposition that attorney‘s fees are allowed under
In response, the defendant emphasizes that the proceedings in this case were bifurcated between the foreclosure and underlying unjust enrichment and breach of contract counts, and that the parties’ subsequent stipulation resolving the plaintiff‘s motion for a supplemental judgment obviated the need for a hearing on the foreclosure remedy. Thus, the defendant contends that the plaintiff‘s “form over substance” arguments ask this court to rewrite the plain and unambiguous language of
Whether
I am mindful that, “[i]n determining whether . . . a statute abrogates or modifies a common law rule the construction must be strict, and the operation of a statute in derogation of the common law is to be limited to matters clearly brought within its scope. . . . Thus, [n]o statute is to be construed as altering the common law, farther than its words import [and a statute] is not to be construed as making any innovation upon the common law which it does not fairly express. . . . We recognize only those alterations of the common law that are clearly expressed in the language of the statute because the traditional principles of justice upon which the common law is founded should be perpetuated.” (Citations omitted; internal quotation marks omitted.) Ames v. Commissioner of Motor Vehicles, 267 Conn. 524, 532, 839 A.2d 1250 (2004). It is well settled that this rule of strict construction applies to statutes such as
I disagree with the plaintiff‘s argument that this interpretation of
Because I would affirm the judgment of the Appellate Court, I respectfully dissent.
ROBINSON, J.
Notes
“(f) Nothing in this section shall preclude a contractor who has complied with subdivisions (1), (2), (6), (7) and (8) of subsection (a) of this section from the recovery of payment for work performed based on the reasonable value of services which were requested by the owner, provided the court determines that it would be inequitable to deny such recovery.”
I note that § 20-429 was amended subsequent to the events underlying the present case. See, e.g., Public Acts 2009, No. 09-18, § 2; see also footnote 2 of the majority opinion. All references to § 20-429 in this opinion are to the 2007 revision of the statute.
With respect to the attorney‘s fees issue relative to the foreclosure count, the parties “agreed, subject to the court‘s approval, to submit . . . simultaneous briefs on this issue . . . .” The parties then stipulated that “the plaintiff has incurred reasonable attorney‘s fees in the total amount of $98,325 for all legal work in the [above captioned] case,” as supported by attached time entries, which “may be considered by the court in considering the issue to be decided by the court pertinent to the attorney‘s fees, if any, that should be awarded on the [foreclosure count]. Although the parties agree that the plaintiff has incurred these fees, they do not agree as to whether he is entitled to recover fees in that amount, or any amount, as part of the judgment on the [foreclosure count]. Both parties reserve the right to submit briefs to the court regarding that issue, and to present oral argument if the court requests argument . . . .” The parties also stipulated that they would be available for oral argument, if desired by the court, on the attorney‘s fees issue.
The remainder of the stipulation concerned appellate issues, including the plaintiff‘s agreement not to seek to terminate the automatic appellate stay, collect the judgment, or foreclose the mechanic‘s lien while an appeal is pending. The parties also stipulated to an annual postjudgment interest rate of 4.5 percent.
