Lead Opinion
Opinion
The principal issue in this appeal is whether a violation of the Home Improvement Act (act), General Statutes § 20-418 et seq., and specifically, General Statutes § 20-429 (a),
The record reveals the following relevant facts and procedural history. The parties entered into a written home improvement contract on June 1, 2002, the terms of which provided that the defendant would provide various home improvement services and materials for $349,500. The original terms of the contract were changed periodically through the execution of thirty different change orders, which increased the price for the project by $42,354, to a total of $391,854. The terms of the contract required the plaintiffs to make monthly requisition payments for work already completed, the first nine of which the plaintiffs made in a timely fashion. The plaintiffs failed, however, to make the tenth requisition payment within thirty days, as required by the contract. By letter dated May 19,2003, the defendant advised the plaintiffs that it intended to terminate the contract, in accordance with its terms, if payment was not received within one week. Thereafter, the plaintiffs did not pay the defendant, which then terminated the contract on May 29, 2003. At the time of termination, the defendant had completed and billed the plaintiffs for $346,378 worth of work,
The plaintiffs thereafter brought this action, alleging that the defendant had breached the contract by failing to complete all of the work, and by performing some of that work in a defective manner. The complaint did not contain any reference to the act, nor did it assert a claim under the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq. The defendant filed three counterclaims, seeking money damages for breach of contract, quantum meruit and foreclosure of its mechanic’s lien.
The court referred the case to the referee, who, after conducting a hearing, filed a report finding in favor of the plaintiffs with regard to both the breach of contract claim
On appeal, the defendant contends that the plaintiffs’ damages award should have been reduced by an amount equal to the unpaid balance remaining on the contract, because, under traditional contract damages law, the appropriate measure of damages in a construction contract case is the plaintiffs’ reasonable cost to complete or repair the work, less the unpaid balance on the contract. The defendant further contends that the trial court improperly accepted the referee’s conclusion that a violation of § 20-429 (a) serves to alter this well established principle of contract damages law. We agree with the defendant in both respects, and conclude, therefore, that the referee improperly failed to reduce the plaintiffs’ damages by the unpaid balance remaining on the contract.
We begin by determining the appropriate standard of review. “While the reports of [attorney trial referees] . . . are essentially of an advisory nature, it has not been the practice to disturb their findings when they are properly based upon evidence, in the absence of errors of law, and the parties have no right to demand that the court shall redetermine the fact[s] thus found. ...
“A reviewing authority may not substitute its findings for those of the trier of the facts. This principle applies no matter whether the reviewing authority is the Supreme Court . . . the Appellate Court ... or the Superior Court reviewing the findings of . . . attorney trial referees. . . . This court has articulated that attorney trial referees and factfinders share the same function . . . whose determination of the facts is reviewable in accordance with well established procedures prior to the rendition of judgment by the court.
“Although it is true that when the trial court reviews the attorney trial referee’s report the trial court may not retry the case and pass on the credibility of the witnesses, the trial court must review the referee’s entire report to determine whether the recommendations contained in it are supported by findings of fact in the report. . . .
“Finally, we note that, because the attorney trial referee does not have the powers of a court and is simply a fact finder, [a]ny legal conclusions reached by
I
We begin our analysis by briefly addressing the defendant’s first claim, namely, that the trial court improperly accepted the referee’s report because the referee failed to use an appropriate method to calculate the plaintiffs’ damages. “It is axiomatic that the sum of damages awarded as compensation in a breach of contract action should place the injured party in the same position as he would have been in had the contract been performed. . . . The injured party, however, is entitled to retain nothing in excess of that sum which compensates him for the loss of his bargain. . . . Guarding against excessive compensation, the law of contract damages limits the injured party to damages based on his actual loss caused by the breach. . . . The concept of actual loss accounts for the possibility that the breach itself may result in a saving of some cost that the injured party would have incurred if he had had to perform. ... In such circumstances, the amount of the cost saved will be credited in favor of the wrongdoer . . . that is, subtracted from the loss . . . caused by the breach in calculating [the injured party’s] damages. . . . It is on this ground that . . . when an owner receives a defective or incomplete building, any part of the price that is as yet unpaid is deducted from the cost of completion that is awarded to him .... Otherwise, the owner would be placed in a better position than full performance would have put him, thereby doubly compensating him for the injury occasioned by the breach.” (Citations omitted; internal quotation marks omitted.) Argentinis v. Gould,
Thus, we agree with the defendant that the referee used an improper method to calculate the plaintiffs’ damages. The parties do not dispute the fact that, at the time of the breach, there remained an unpaid balance on the contract of $16,472. They also do not dispute the fact that, as a result of the breach, the plaintiffs incurred expenses to complete and repair the work in the amount of $16,085.17. Accordingly, in the absence of some legal justification for not doing so, the referee should have subtracted any unpaid amount remaining on the contract from the extra costs incurred by the plaintiffs, so as to avoid placing the plaintiffs in a better position than they would have been in had the contract been fully performed. See id. Had the referee done so, it becomes apparent that the plaintiffs in this case have, if anything, actually saved $386.83 as a result of the defendant’s breach.
II
We turn, then, to the principal issue in this appeal, namely, whether the trial court improperly accepted the referee’s legal conclusion that the defendant’s violation of § 20-429 (a) precluded a reduction in the plaintiffs’ damages by an amount equal to the unpaid balance on the contract. The defendant claims that there is nothing in the language of § 20-429 (a), or our cases interpreting it, that mandates an abandonment of the traditional approach to contract damages by allowing a homeowner to recover damages against a contractor when they have not, in fact, suffered any actual loss or injury. To hold otherwise, the defendant contends, would give the plaintiffs a windfall double recovery that the legislature did not intend when it passed the act. In response, the plaintiffs claim that § 20-429 (a) prohibits a contractor who has violated the act from using its own damages under the contract to offset the homeowner’s damages, since the contractor’s damages are, standing alone, unenforceable and uncollectible. We agree with the defendant, and conclude that, in a breach of contract case brought by a homeowner against a contractor, § 20-429 (a) does not preclude a trial court from reducing the homeowner’s damages by the amount left unpaid under the contract.
Whether § 20-429 (a) precludes the defendant from reducing the plaintiffs’ damages in the present case “raises a question of statutory construction, which is a [question] of law, over which we exercise plenary review. . . . The process of statutory interpretation involves the determination of the meaning of the statutory language as applied to the facts of the case, including the question of whether the language does so apply. . . .
“When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature. ... In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply. ... In seeking to determine that meaning, General Statutes § l-2z directs us first to consider the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered. . . . The test to determine ambiguity is whether the statute, when read in context, is susceptible to more than one reasonable interpretation.” (Internal quotation marks omitted.) Slate v. Marsh & McLennan Cos.,
We begin our statutory analysis, then, with the language of § 20-429 (a). Section 20-429 (a) provides in relevant part: “No home improvement contract shall be valid or enforceable against an owner unless it: (1) Is in writing, (2) is signed by the owner and the contractor, (3) contains the entire
Accordingly, we now turn to an analysis of the relevant extratextual sources in order to determine the scope of § 20-429 (a). Although the legislative history of § 20-429 (a) is silent on this specific question, the history of the act, more broadly, indicates that § 20-429 (a) was intended to protect homeowners, rather than, to serve as a tool for them to enhance their own interests at the expense of contractors. Representative William P. Candelori, for example, remarked that “ [t]he purpose of the bill is to provide minimal, and I stress minimal, safeguards for the consumer who contracts for home improvement work to be done on or in the home.” 22 H.R.
Moreover, the only cases disclosed by our research in which § 20-429 (a) has been used offensively by a homeowner arise in the context of CUTPA claims, wherein that statute provides the basis for recovery, not § 20-429 (a) itself.
Furthermore, were we to agree with the plaintiffs’ position in this case, we would, in effect, award them an unwarranted windfall that the legislature could not have intended. The plaintiffs essentially claim that, not only does § 20-429 (a) relieve them of their obligation to pay the defendant for work already completed, but it also serves to punish the defendant by obligating it to reimburse the plaintiffs for any costs incurred to complete the contract, regardless of whether such costs are over and above the original contract price. Thus, according to the plaintiffs, if a contractor discovers that the contract violates § 20-429 (a) the day after it is entered into, and then immediately terminates the contract rather than risk doing work on a contract that it cannot enforce,
We conclude that, in an action brought by a homeowner against a home improvement contractor for breach of contract, § 20-429 (a) does not preclude the damages award from being reduced by an amount equal to the unpaid balance remaining on the contract. Accordingly, the trial court’s acceptance of the referee’s report, which failed to reduce the damages award by that amount, was improper. Because application of this conclusion means that the plaintiffs’ damages are completely offset by the amount they owed the defendant under the contract, judgment should have been rendered in favor of the defendant.
The judgment is reversed and the case is remanded with direction to render judgment in favor of the defendant.
In this opinion ROGERS, C. J., and PALMER and ZARELLA, Js., concurred.
Notes
General Statutes § 20-429 (a) provides in relevant part: “No home improvement contract shall be valid or enforceable against an owner unless it: (1) Is in writing, (2) is signed by the owner and the contractor, (3) contains the entire agreement between the owner and the contractor, (4) contains the date of the transaction, (5) contains the name and address of the contractor and the contractor’s registration number, (6) contains a notice of the owner’s cancellation rights in accordance with the provisions of chapter 740, (7) contains a starting date and completion date, and (8) is entered into by a registered salesman or registered contractor. . .
The defendant appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to General Statutes § 51-199 (c) and Practice Book § 65-1.
In addition to accepting the referee’s finding in favor of the plaintiffs on their breach of contract claim, the trial court also accepted the referee’s recommendation against awarding the defendant any recovery on its three counterclaims. The defendant does not appeal from this portion of the trial court’s judgment, but, rather, focuses its appeal exclusively on the referee’s calculation of the plaintiffs’ damages.
In calculating the total of $346,378 for work completed and billed, the referee included costs contained in the eleventh requisition payment, which the defendant had submitted to the plaintiffs by letter dated May 15, 2003, as well as $4650 for work completed after the submission of the eleventh requisition payment up to the date of termination.
Subsequent to its termination of the contract, the defendant filed a mechanic’s lien against the plaintiffs’ property to secure the unpaid balance.
Finding in favor of the plaintiffs on their breach of contract claim, the referee concluded that the “[p]laintiffs were ready, willing and able to pay requisition [ten] to [the] defendant conditioned, only on the completion of the customary type of discussions,” and that “[t]he failure to complete the discussion in reference to requisition [ten] was caused by the failure or refusal of the defendant and not by the adions of the plaintiffs.”
The referee did not elaborate on his conclusion that § 20-429 (a) precluded the defendant from reducing the plaintiffs’ damages, simply stating that “[b]ecause of [the] defendant’s CUTPA violations [the] defendant is not entitled to any of its claim for damages nor is it entitled to offset any of its damage claims against [the] plaintiffs’ damages.” We note that the referee’s reference to CUTPA is somewhat confusing. In his report, for example, the referee correctly recognized that a violation of the act is a per se violation of CUTPA. The referee then went on, however, to note that the plaintiffs did not assert any claim under CUTPA, and had properly based their defense of the defendant’s counterclaims on the defendant’s violation of the act, not on CUTPA. Thus, it appears that, in concluding that CUTPA precluded the defendant from recovering any damages under the contract or offsetting the plaintiffs’ damages with its own, the referee improperly conflated CUTPA with the act. Although it is true that the defendant’s violation of the act constituted a violation of CUTPA; see, e.g., Woronecki v. Trappe,
Indeed, it appears that the plaintiffs have, as a result of the defendant’s breach and the inability of the defendant to prevail on its counterclaims; see part II of this opinion; incurred a savings of far more than $386.83. The unpaid balance remaining on the contract pertains only to the amount unpaid for work already performed. Had there been no breach at all, therefore, the plaintiffs likely would have been liable for both the $16,472 owed to the defendant for work already performed, as well as the amount that the defendant would have billed them for the uncompleted work, which was subsequently completed by another contractor.
It appeal's that the plaintiffs and the referee both miss this important distinction in the purpose for which the defendant attempts to use the contract. The referee, for example, found that “[b]ecause of [the] defendant’s CUTPA violations [the] defendant is not entitled to any of its claim for damages nor is it entitled to offset any of its damage claims against [the] plaintiffs’ damages.” Similarly, the plaintiffs repeatedly assert that the defendant may not offset its own damages against those of the plaintiffs. The defendant does not claim, however, that it is entitled to recover the unpaid balance, with the result being that the two damages awards offset or cancel each other out. On the contrary, the defendant fully admits, as evidenced by its decision not to appeal from the adverse judgment on its counterclaims, that § 20-429 (a) prohibits it from affirmatively pursuing its claim for damages against the plaintiffs, and then using any award it may obtain to offset the damages awarded to the plaintiffs. Rather, the defendant simply asserts, and we agree, that, by accepting that the defendant is legally precluded by § 20-429 (a) from affirmatively asserting its own claims against the plaintiffs, it does not necessarily follow that the defendant is thereby precluded from asserting any of its traditional defenses to reduce the damages award in an action brought against it by the plaintiffs.
Indeed, § 20-429 (a) cases arise almost exclusively within one of just two different contexts: (1) those in which the homeowner asserts an affirmative CUTPA claim against the contractor; see, e.g., MJM Landscaping, Inc. v. Lorant,
General Statutes § 20-427 (c) provides in relevant part: “A violation of any of the provisions of this chapter shall be deemed an unfair or deceptive trade practice under subsection (a) of section 42-110b.”
General Statutes § 42-110b (a) provides: “No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”
Although it is not controlling, Argentinis v. Gould, supra,
The plaintiffs claim that the defendant’s reading of § 20-429 (a) will eliminate any incentive on the part of contractors ever to continue doing work on a contract once it is discovered that the contract violates § 20-429 (a), because a contractor will not risk doing more work on a contract that it cannot enforce. According to the plaintiffs, this will result in added costs and delays to homeowners that were unintended by the act. The plaintiffs’ argument is without merit, however, because the contractor remains liable for any damages that may result from the breach under traditional principles of contract damages.
Indeed, the legislature’s enactment of § 20-429 (f), which provides that “[n]othing 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,” indicates that, although it was intended to protect homeowners, § 20-429 (a) was not even intended to result in inequitable windfalls in all cases brought by the contractor, let alone those cases brought by the homeowner. See Economos v. Liljedahl Bros., Inc.,
Concurrence Opinion
concurring. I agree that the plaintiff homeowners, Gerald Hees and Beatrice Hees, are not entitled to recover damages for their costs to complete and repair the work performed by the defendant, Burke Construction, Inc. I disagree, however, with the decision to reverse the judgment on the basis of an interpretation of the Home Improvement Act (act), General Statutes § 20-418 et seq. I would reach the same result by a more direct route that does not involve any statutory interpretation of General Statutes § 20-429 (a), which provides
Central to my approach is a precise recognition of the parties’ claims and the application of § 20-429 (a) by the attorney trial referee, David Albert (referee). As the majority opinion indicates, the plaintiffs brought a breach of contract action, thereby treating the contract as valid and enforceable against the defendant. In recommending judgment for the plaintiffs on their breach of contract claim, the referee, whose report was accepted by the trial court, recognized the viability of the contract for this purpose, and repeatedly cited the contract in his various findings. In short, the contract was valid and enforceable with respect to the plaintiffs’ breach of contract claim.
The defendant, in addition to contesting the plaintiffs’ breach of contract claim, also filed various counterclaims. In response, the plaintiffs filed a motion for summary judgment, claiming that § 20-429 (a) barred the defendant’s counterclaims. The referee agreed that § 20-429 (a) barred the counterclaims and recommended summary judgment in favor of the plaintiffs.
The plaintiffs, in other words, simultaneously claimed that the contract was enforceable to support their breach of contract claim but unenforceable, pursuant to § 20-429 (a), with respect to the contractor’s counterclaims. This is a valid dual argument. See New England Custom Concrete, LLC v. Carbone,
The problem in this case arose when, in calculating the plaintiffs’ damages, the referee conflated the application of § 20-429 (a) to the defendant’s counterclaims with the application of § 20-429 (a) to the plaintiffs’ burden of proof as to damages on the breach of contract claim. In short, the referee took the concept that the contractor could not prevail on his counterclaims and applied it to the calculation of the plaintiffs’ damages. The referee stated: “Because of [the] defendant’s . . . [statutory] violations
I agree with the majority that “§ 20-429 (a) does not preclude the damages award from being reduced by an amount equal to the unpaid balance remaining on the contract.” I reach that conclusion, however, on the ground that § 20-429 is inapplicable to the present case, rather than by relying on an analysis of the statute’s legislative history.
Simply put, the road to calculating the plaintiffs’ damages never detours with a
Under the facts of the present case, the appropriate calculation of compensatory damages, with reference to the contract, would be as follows: The contract price of $349,500, after various change orders, totaled $391,854. The defendant charged the plaintiffs $347,003
In short, this case presents nothing more than an ordinary breach of contract claim that requires the plaintiffs to prove damages.
The majority opinion, at the outset, seems to agree with the proposition that § 20-429 (a) does not apply in calculating the plaintiffs’ damages. In analyzing various cases that were based on violations of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., the majority concludes that “if § 20-429 (a) does not affect the damages calculation in actions brought under CUTPA, we do not see why it should alter such a calculation in an action for breach of contract.”
Moreover, § 20-429 (a) would be relevant to calculating damages only if our case law took account of a defendant’s legal entitlement to collect an unpaid balance. As the majority observes, however, a court, in calculating a plaintiff’s damages, need not consider whether a defendant legally would be entitled to recover an unpaid balance in a cause of action brought by the defendant.
The majority’s analysis with respect to the CUTPA cases, and the insignificance of a defendant’s legal authority to collect an unpaid sum, makes the majority’s foray into statutory inteipretation all the more unnecessary. In my view, the majority’s analysis goes astray when it asks whether “the legislature intended § 20-429 (a) to prohibit a contractor from in any way using the contract against the interests of the homeowner, even in the procedural context of an action brought by the homeowner against the contractor.” It is no wonder, given the potential breadth of that query, that the majority concludes that the statute is ambiguous.
The question actually presented by the facts of this case is far narrower. The more appropriate question to be asked is whether § 20-429 (a) abrogates the usual method of calculating damages when a homeowner has brought a successful breach of contract claim. I conclude that it does not. The effect of § 20-429 (a) is to render a contract invalid and unenforceable. The plaintiffs, however, prevailed on their breach of contract claim, a claim based on a valid and enforceable contract.
Accordingly, because I conclude that the referee properly considered the contract to be valid for purposes of the plaintiffs’ complaint, I see no obstacle to relying on the contract to assess damages, as the case law requires. Doing so does not run afoul of the act in any respect. This approach would avoid interpreting the act in a way that, to my mind, relies on concepts, such as affirmative uses of the statute as opposed, presumably, to nonaffirmative uses of the statute, that do not appear in the statute and are likely to prove troublesome in the future. It is also unnecessary to engage in any discussion of whether the plaintiffs would benefit from a windfall.
For the foregoing reasons, I respectfully concur in the judgment reached by the majority.
The referee stated “CUTPA violations”; see Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq.; but it is clear that the referee was referring to § 20-429 (a) and not to CUTPA violations, because, as the maj ority opinion notes, the plaintiffs did not raise any CUTPA claims. See footnote 7 of the majority opinion.
The referee did not make any findings with respect to the value of the home in its unfinished and finished state. Accordingly, the proper calculation of damages consists of the reasonable cost of completion in accordance with the contract.
The $347,003 owed by the plaintiffs consisted of $346,378 that had been billed by the defendant and $625 that had not been billed.
To illustrate this point, it is clear that if the defendant had never raised any of his counterclaims, and thus had never given the plaintiffs cause to invoke § 20-429 (a), the calculation of damages on the plaintiffs’ breach of contract claim would have proceeded in the same fashion as I have outlined today. That is, if the defendant had been silent during the trial and had left the plaintiffs to their proof, the plaintiffs still would not have been entitled to damages under our case law. In that posture, it could not reasonably be said that the contract was being used “against” the plaintiffs because the plaintiffs would need to rely on the contract to attempt to prove their damages.
The plaintiffs have not cited any authority that suggests that a court should take into account a defendant’s legal ability to collect an unpaid balance when the court calculates a plaintiffs damages.
Again, it is a fine line to walk, but the contract was invalid and unenforceable with respect to the defendant’s counterclaims only; it was valid and enforceable with respect to the plaintiffs’ breach of contract claim. As noted previously in this concurring opinion, this is a permissible dual view of the contract. New England Custom Concrete, LLC v. Carbone, supra,
Although we consider the failure to comply with the act, which includes § 20-429 (a), to be a per se violation of CUTPA; Woronecki v. Trappe,