Date: 09-14-2015

Case Style: State Of Connecticut v. Bacon Construction Co.

Case Number: AC36829

Judge: Honorable Michael R. Sheldon

Court: Connecticut Appellate Court

Plaintiff's Attorney: Charles D. Ray Benjamin F.Elliott, Thomas J. Finn, John J. Robinson

Defendant's Attorney: Jared Cohane, Timothy T. Corey, Peter J. Martin

Description: .Thenameddefendant,BaconConstructionCompany,Inc.,1appealsfromthetrialcourt’sdenial of its motion for summary judgment, in which it argued thattheclaimshereinassertedbytheplaintiff,thestate of Connecticut, are all barred by the doctrines of res judicata and collateral estoppel2 because such claims wereorcouldhavebeenmadeanddecidedinanearlier arbitrationproceedinginitiatedbythedefendantpursuant to General Statutes § 4-61.3 We affirm the judgment of the trial court. Thisactionarisesoutofacontractbetweentheplaintiff and the defendant for the construction of the York Correctional Institution in Niantic. After completion of its work under the contract, the defendant filed a demand for arbitration, in which it sought money damages against the plaintiff for alleged breach of contract. The arbitrator ruled in favor of the defendant, and thus awarded itdamages asrequested. That awardwas later confirmed by the Superior Court and upheld by our Supreme Court on the plaintiff’s appeal from the Superior Court’sjudgment confirmingthe award.See Bacon Construction Co. v. Dept. of Public Works, 294 Conn. 695, 987 A.2d 348 (2010). The plaintiff thereafter brought the present action in the Superior Court. This action arises out of the same contractthatwasthesubjectofthepreviousarbitration proceeding, and is based on allegations that the defendant was negligent and breached its contract with the plaintiffinperformingitsworkattheYorkCorrectional Institution.Attheoutsetofthisaction,theplaintifffiled an application for a prejudgment remedy against the defendant, seeking various forms of relief. In its objection to that application, the defendant asserted, inter alia, that, in light of the arbitrator’s determination that thedefendanthadperformedallofitsobligationsunder the contract, the plaintiff’s claims were all barred by the doctrines of res judicata and collateral estoppel. In a memorandum of decision dated December 16, 2008, which we will discuss more fully in this opinion, the trialcourtrejectedthedefendant’sclaimsofresjudicata and collateral estoppel, and thus overruled the defendant’s objection.4 The defendant thereafter filed a motion for summary judgment, wherein it once again alleged, inter alia, that the plaintiff’s claims were all barred by the doctrines of res judicata and collateral estoppel, and thus that thedefendantwasentitledto judgmentonthoseclaims asamatteroflaw.OnJanuary21,2014,thecourtdenied the defendant’s motion for summary judgment. The court explained, in so ruling, that it had ‘‘reviewed the records from the arbitration proceeding and all of the exhibits upon which the parties rel[ied] in their respective submissions,’’ and found that the issues raised in
the motion for summary judgment ‘‘were correctly decided’’ by the court when, on December 16, 2008, it overruled the defendant’s objection to the plaintiff’s application for a prejudgment remedy.5 The court concluded:‘‘Nousefulpurposewouldbeservedbyareiteration ofthe lawand analysisset forth in[the December 16, 2008] memorandum of decision. [The defendant’s] argument that [the court’s earlier determination of the preclusionclaims]runscontrarytofundamentalbreach of contract law is not persuasive and is rebutted by the principles and concepts relied upon . . . in [that] . . . decision. The doctrines of res judicata and collateral estoppel do not bar the [plaintiff’s] claims against [the defendant]. The motion for summary judgment is denied.’’6 Thefollowingrelevantfactualandproceduralhistory was set forth in the trial court’s December 16, 2008 memorandum of decision on the defendant’s objection to the plaintiff’s application for a prejudgment remedy. ‘‘[The defendant] is one of ten defendants whom the [plaintiff]allegesareresponsibleforsubstantialdefects in the design and construction of the correctional facility for women (York) at Niantic. . . . ‘‘Theallegationsofthecomplaintfiled[inthisaction], very briefly stated, are as follows. [The defendant], a Rhode Island corporation, performed masonry and related services on a project which involved the design andconstructionoftwenty-twobuildingsatYork(project). The project began in 1990 with design activities; construction commenced in 1991 and was completed in 1996. Over time the state experienced problems with water intrusion into the buildings, cracks in the masonry facade and efflorescence and organic growth on the masonry facade, which problems continued and worsened. Engineers retained by the state identified numerousdefectsinthedesign,constructionandinstallation of the masonry work. ‘‘In its first two counts the complaint alleges that these defects were proximately caused by [the defendant]’s breach of its contract with the [plaintiff] and its negligenceinperformingunderthecontract.Inthethird and fourth counts the [plaintiff] claims that, in order toreceivepartialpaymentsforitswork,[thedefendant] either intentionally or negligently made misrepresentations when it filed periodic certifications that it had performeditsworkincompliancewiththeplans,specificationsandcontractdocuments.Asaresult,the[plaintiff]claimstohaveincurredcoststocorrectthedefects andtorepairorreplacedamagedfurnishingsandequipment, suffered a diminution in the value and service life of York, lost the beneficial use of York or portions of it and experienced increased operating costs and inefficiencies in its operation of York. . . . ‘‘[The defendant]’s demand for arbitration was filed with the American Arbitration Association (AAA) on
August 1, 2005, and it sought to resolve a ‘dispute over paymentofcontractbalanceandpaymentforadditional work.’ . . . It was stated in two counts, one for breach of contract; the other, unjust enrichment. . . . Paragraph 8 of both counts alleged that ‘[the defendant] undertook the performance of its obligations under the contract in strict and full accordance with the plans, specifications, and general and special conditions of the contract and amendments thereto, and did completely and fully satisfy the obligations of the contract.’ . . . ‘‘In its ‘answering statement’ of October 12, 2006, the [plaintiff] stipulated to that allegation . . . and in an amended answering statement of November 1, 2006, the [plaintiff] made clear that it so stipulated ‘for the limited purposes of this arbitration only.’ . . . ‘‘In between these two pleadings [the defendant] attempted to file an amended demand for arbitration which added a third count alleging that its work under the contract was ‘performed in accordance with the plans and specifications and free from defect.’ . . . In its prayer for relief on this proposed amendment, it sought, in effect, a declaratory judgment that it had performed its work in accordance with the plans and specifications and free from defects. . . . The [plaintiff] objected to this attempt on the ground that the requested declaratory relief was not permitted under § 4-61.Itmadeitclearthatitmight,indeed,haveclaims against [the defendant] and others involved in the construction of York for allegedly defective construction, which it intended to bring ‘in a different jurisdiction.’ . . . After the [plaintiff] filed a notice of its election not to file counterclaims against [the defendant] in the arbitration, reserving its rights to assert such claims in ‘another forum and/or action’ . . . the arbitrator ruled that he lacked jurisdiction to consider the claim for declaratory relief because it was not a claim ‘under the contract,’ as required by § 4-61. . . . He ‘denied’ [the defendant]’s amended complaint, and ordered that the arbitration proceed under its original demand. . . . ‘‘The arbitrator rendered his decision on January 25, 2008. . . . He summarized [the defendant]’s claims as follows: ‘[The defendant] alleges that it is entitled to damages on account of unpaid contract balance, additional work and costs incurred as a consequence of delays and disruptions attributable to [the state] and/ or its project construction manager. . . .’ The major portion of the [arbitrator’s] decision analyzed [the defendant]’s claims for damages due to alleged delays anddisruptionsofthe constructionschedulecausedby the [plaintiff] and/or its construction manager. . . . Its allegation, admitted by the [plaintiff] for purposes of the arbitration, that it had performed in accordance with its contract with the [plaintiff] played no role in the arbitrator’s determination of those claims.
‘‘Thearbitratordidfindthat[thedefendant]wasentitledtopaymentofanoutstandingbalanceof$82,812.81, known as the ‘retainage’ on the contract. . . . He made no findings as to whether [the defendant] had proved its allegation that it had performed ‘in strict and full accordance with the plans, specifications and general andspecialconditionsofthecontractandamendments thereto,’notingsimplythatthestate‘hasnotchallenged’ that assertion. . . . [The arbitrator concluded:] ‘In light of that admission . . . I see no legal basis why [the defendant] would not be entitled to its retainage. . . .’ ’’ (Citations omitted; emphasis in original.) The court further found: ‘‘A review of the arbitrator’s decision demonstrates that most of [the defendant]’s claims had to do with delays and disruptions in the construction schedule, who was responsible for them and what were their consequences for [the defendant]. . . . These were not the kinds of claims which required the arbitrator to determine whether [the defendant] performed its work negligently and, therefore, not the kind of claims to which the state would be expected to assert its claim for allegedly defective construction. [The defendant]’s claim forthe retainage on the ground that it had performed in conformity with the construction contract would have permitted the state to claim in response that it had performed negligently, but it did not require the state to do so. . . . The [plaintiff] did raiseasspecialdefensesa jurisdictionalclaimofsovereign immunity due to alleged untimely notice and one of accord and satisfaction . . . both of which the arbitrator rejected. . . . Certain performance related claims which the state attempted to raise in its posthearingbrief;viz.,that[thedefendant]hadfailedtopay prevailing wages on the project, to provide a ten year warranty against moisture intrusion and to deliver asbuilt drawings . . . did not go to the quality of [the defendant]’s work on the project and were not considered by the arbitrator.’’ (Citations omitted; emphasis in original.) The trial court concluded: ‘‘The conduct of the arbitrationanditsresolutionbythearbitratordemonstrates thatthe[plaintiff]neverassertedinarbitrationtheclaim of defective construction it makes in the complaint here. Furthermore, when [the defendant] attempted to force the issue by its proposed amendment of the arbitration complaint, the arbitrator refused to entertain the amendment because he lacked jurisdiction to do so. Finally, whether or not [the defendant]’s performance was in conformity with its contract with the statewasneverlitigatedinthearbitration,thearbitrator ordering payment of the retainage based on the state’s admission of that allegation for purposes of the arbitration.’’ As previously noted, the trial court relied expressly upontheDecember16,2008decisiononthedefendant’s
objectiontotheplaintiff’sapplicationforaprejudgment remedyindenyingthedefendant’smotionforsummary judgmentbaseduponitsspecialdefensesofresjudicata and collateral estoppel to the plaintiff’s instant claims of negligence and breach of contract. ‘‘Practice Book [§ 17-49] provides that summary judgment shall be renderedforthwithifthepleadings,affidavitsandanyother proof submitted show that there is no genuine issue as toanymaterialfactandthatthemovingpartyisentitled to judgment as a matter of law. . . . In deciding a motionforsummaryjudgment,thetrialcourtmustview the evidence in the light most favorable to the nonmoving party. . . . The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law . . . and the party opposing such a motionmust provideanevidentiaryfoundation todemonstrate the existence of a genuine issue of material fact. . . . [T]he scope of our review of the trial court’s decisionto grantthe[defendant’s]motion forsummary judgment is plenary.’’ (Internal quotation marks omitted.) Doran v. First Connecticut Capital, LLC, 143 Conn. App. 318, 320–21, 70 A.3d 1081, cert. denied, 310 Conn. 917, 76 A.3d 632 (2013). The applicability of the doctrines of res judicata and collateral estoppel presents a question of law over which our review also is plenary. See Marques v. Allstate Ins. Co., 140 Conn. App. 335, 339, 58 A.3d 393 (2013); Nipmuc Properties, LLC v. Meriden, 130 Conn. App. 806, 812, 25 A.3d 714, cert. denied, 302 Conn. 939, 28 A.3d 989 (2011), cert. denied, U.S. , 132 S. Ct. 1718, 182 L. Ed. 2d 253 (2012). We begin with a brief overview of the doctrines of res judicata and collateral estoppel in general before addressing the defendant’s specific claims on appeal as to the applicability of those doctrines to this case. ‘‘Claim preclusion (res judicata) and issue preclusion (collateral estoppel) have been described as related ideas on a continuum. . . . [W]e have observed that whether to apply either doctrine in any particular case should be made based upon a consideration of the doctrine’s underlying policies, namely, the interests of the defendant and of the courts in bringing litigation to a close . . . and the competing interest of the plaintiff in the vindication of a just claim. . . . The judicial doctrines of res judicata and collateral estoppel are based on the public policy that a party should not be able to relitigate a matter which it already has had an opportunity to litigate. . . . ‘‘The doctrine of res judicata holds that an existing final judgment rendered upon the merits without fraud or collusion, by a court of competent jurisdiction, is conclusive of causes of action and of facts or issues thereby litigated as to the parties and their privies in all other actions in the same or any other judicial tribu
nal of concurrent jurisdiction. . . . If the same cause of action is again sued on, the judgment is a bar with respect to any claims relating to the cause of action which were actually made or which might have been made. . . . Res judicata bars not only subsequent relitigation of a claim previously asserted, but subsequent relitigation of any claims relating to the same cause of action . . . which might have been made. . . . ‘‘Collateral estoppel, or issue preclusion, is that aspect of res judicata which prohibits the relitigation of an issue when that issue was actually litigated and necessarily determined in a prior action between the same parties upon a different claim. . . . Collateral estoppel means simply that when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit. . . . Issue preclusion arises when an issue is actually litigated and determinedbyavalidandfinaljudgment,andthatdetermination is essential to the judgment.’’ (Citations omitted; internal quotation marks omitted.) Massey v. Branford, 119 Conn. App. 453, 464–65, 988 A.2d 370, cert. denied, 295 Conn. 921, 991 A.2d 565 (2010). Here, the defendant argues that the claims set forth in the plaintiff’s complaint in this case are barred by both doctrines. If the plaintiff’s claims are barred by either doctrine, the defendant is entitled to judgment as a matter of law and analysis of the other doctrine would be unnecessary. Because we conclude that the plaintiff’s claims are not barred by either doctrine, we address each in turn. I RES JUDICATA The defendant first claims that the plaintiff’s claims in this action are barred by the doctrine of res judicata. Specifically, the defendant claims that the plaintiff could have filed a counterclaim in the arbitration proceeding, and thus could have had its present claims decided therein. The defendant also claims that the arbitrator’s award would be nullified by a judgment in favor of the plaintiff on its claims in this case. We are not persuaded. Section 22 of the Restatement (Second) of Judgments, which we follow, provides:7 ‘‘(1) Where the defendant may interpose a claim as a counterclaim but he fails to do so, he is not thereby precluded from subsequently maintaining an action on that claim, except as stated in Subsection (2). ‘‘(2) A defendant who may interpose a claim as a counterclaiminanactionbutfailstodosoisprecluded, after the rendition of judgment in that action, from maintaining an action on the claim if: ‘‘(a)Thecounterclaimisrequiredtobeinterposedby
a compulsory counterclaim statute or rule of court, or ‘‘(b) The relationship between the counterclaim and the plaintiff’s claim is such that successful prosecution of the second action would nullify the initial judgment or would impair rights established in the initial action.’’ 1 Restatement (Second), Judgments § 22 (1982). Thus, the defendant’s argument regarding the plaintiff’s failure to assert a counterclaim in the arbitration proceeding would be valid in a compulsory counterclaim jurisdiction. Connecticut, however, is a permissive counterclaim jurisdiction. See Practice Book § 1010;8 Gattoni v. Zaccaro, 52 Conn. App. 274, 280, 727 A.2d 706 (1999); Hansted v. Safeco Ins. Co. of America, 19 Conn. App. 515, 520 n.4, 562 A.2d 1148, cert. denied, 212 Conn. 819, 565 A.2d 540 (1989). In Connecticut, the fact that a defendant in a prior action did not assert a related cause of action in that prior action does not foreclose the defendant from asserting those claims in a new action filed in the future.9 As explained in the commentary to the Restatement: ‘‘The justification for the existence of such an option is that the defendant should not be required to assert his claim in the forum or the proceeding chosen by the plaintiff but should be allowed to bring suit at a time and place of his own selection.’’ 1 Restatement (Second), supra, § 22, comment (a), pp. 186–87. Thus, the plaintiff is not barred from asserting its claims in this action by virtue of its failure to interpose those claims in the arbitration proceeding. The defendant also claims that the successful prosecution of theplaintiff’s claims in thiscase would nullify the arbitrator’s determination that the defendant had fully performed its contractual obligations. Although thearbitratorconcluded,albeitonthebasisofastipulation by the plaintiff for purposes of the arbitration, that the defendant had fulfilled its contractual obligations, he made no determination as to the quality of the work performedbythedefendantunderthecontract.Inother words, a determination by this court that the work performed by the defendant was deficient would not be contrary to the arbitrator’s determination that the defendant had completed such work. The arbitration awardwasbasedonentirelydifferentclaimsthanthose asserted by the plaintiff in this action. A judgment in favoroftheplaintiffhereinwouldnotnullifythearbitration award. We therefore conclude that the court properlydeterminedthattheplaintiff’sclaimsarenotbarred by the doctrine of res judicata. II COLLATERAL ESTOPPEL The defendant also claims that the plaintiff’s claims in this action are barred by the doctrine of collateral estoppel because the arbitrator previously ruled that it had ‘‘under[taken] the performance of its obligations
under the contract in strict and full accordance with theplans,specifications,andgeneralandspecialconditions of the contract and amendments thereto . . . .’’ Thedefendantclaims,asitdidattrial,thattheplaintiff’s claimsinthisactionwereactuallylitigatedornecessarily determined in the arbitration proceeding. We disagree. As previously noted, ‘‘[f]or an issue to be subject to collateral estoppel, it must have been fully and fairly litigated in the first action. It also must have been actuallydecidedandthedecisionmusthavebeennecessary to the judgment. . . . ‘‘An issue is actually litigated if it is properly raised in the pleadings or otherwise, submitted for determination, and in fact determined. . . . An issue is necessarily determined if, in the absence of a determination of the issue, the judgment could not have been validly rendered. . . . If an issue has been determined, but the judgmentisnotdependent[on]thedeterminationofthe issue,thepartiesmayrelitigatetheissueinasubsequent action.Findingsonnonessentialissuesusuallyhavethe characteristics of dicta.’’ (Citations omitted; emphasis omitted; internal quotation marks omitted.) Lyon v. Jones, 291 Conn. 384, 406, 968 A.2d 416 (2009). In rejecting the defendant’s claim of collateral estoppel,thetrialcourtfirstobservedasfollows:‘‘[Thedefendant]’s protestations that the issue of its contractual performance was ‘actually litigated’ in the arbitration . . . are stated in conclusory fashion, unsupported by any references to the arbitration record and contradictedbythearbitrator’sdecision.Intheonlyreference to that issue in his decision, the arbitrator makes it clear that he is relying solely on the state’s stipulation to [the defendant]’s performance of the contract and not on any evidence introduced before him. . . . ‘‘Moreover, three decisions made by the arbitrator demonstrate that the issue of [the defendant]’s performance was not litigated in the arbitration. First is his denial of [the defendant]’s request to amend its complaint to seek a declaration that it had performed in accordance with the contract and ‘free from defect.’ . . . Second, he denied a request by [the defendant] to inspect York to show that ‘[the plaintiff’s] allegations of defective and incomplete work have no merit’ . . . because he did not believe that ‘the evidence that is proposed to be developed by way of the inspection would be material or relevant to the issues that I must decide,’ in view of the [plaintiff]’s stipulation for purposes of the arbitration that [the defendant] had performed in accordance with the contract. . . . Third, he specifically declined to consider certain performance related claims which the [plaintiff] attempted to raise in its posthearing brief; viz., that [the defendant] had failedtopayprevailingwagesontheproject,toprovide a ten year warranty and to deliver as-built docu
ments. . . . ‘‘Much of [the defendant]’s argument that principles of collateral estoppel should bar this action by the [plaintiff] rests on allegations that the [plaintiff] could have or should have raised the issue of defective construction as a defense in the arbitration. As the Restatement puts it, however, ‘[a]n issue is not actually litigated if the defendant might have interposed it as an affirmative defense but failed to do so; nor is it actuallylitigatedifitisraisedbyamaterialallegationof a party’s pleading but is admitted . . . in a responsive pleading; nor is it actually litigated if it is raised in an allegation by one party and is admitted by the other before evidence on the issue is adduced at trial . . . .’ 1 Restatement (Second), supra, § 27, comment (e), pp. 256–57.’’ (Citations omitted.) Onthebasisoftheforegoingobservationsandanalysis, the court concluded that the plaintiff’s allegations of defective construction by the defendant were not fully and fairly litigated in the arbitration proceeding. We agree with the trial court’s conclusion, and we further conclude that a determination that the defendant’s work under contract at the York Correctional Institution was free from defects was not necessary to the arbitrator’s decision that it was entitled to payment of the retainage allegedly due and owing to it under the contract. The court thus properly determined that the plaintiff’sclaimsarenotbarredbythedoctrineofcollateral estoppel.

Outcome: The judgment is affirmed.

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