Opinion
No. CV 02-0080135 S
November 3, 2004
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT ( #124) AND OPPOSITION TO MOTION FOR SUMMARY JUDGMENT ( #142)
Introduction
In this action the Plaintiff Naek Construction Co., Inc., claims in Count I of the Second Amended Complaint that it and PAG Charles Street Limited Partnership and PAG's general partner, PAG New Haven, Inc. ("PAG"), entered into a contract for the construction, remodeling and rehabilitation of the Florence Virtue Homes in New Haven. The contract was for a sum of $9,263,957. Naek began construction and substantially completed the work in 2001. The Plaintiff claims that during the course of the work PAG deviated from the plans and specifications for the project and required Naek to perform extra work in an amount in excess of $1,000,000. Naek claims that this extra work constituted a cardinal change and/or an abandonment of the contract for which it should be compensated. The Plaintiff claims that despite demand the Defendants have failed to pay for the work.
In Count II of the Second Amended Complaint, the Plaintiff claims that PAG entered into an agreement with Naek concerning the change orders and that PAG represented that it would apply for further funding to pay for the change order work by way of application to the Connecticut Housing Finance Authority ("CHFA") for additional tax credits by which it would generate additional funds. Naek claims that PAG made no effort to secure any additional funding and that due to the Defendants' deliberate misleading behavior and misrepresentations, Naek has suffered damages, as it would not have performed the extra work.
In Count III the Plaintiff claims that the advisements by PAG and its general partner induced Naek to believe in the existence of certain facts and to act upon that belief, actually changing its position to act to its injury, which Naek otherwise would not have done.
In Count IV the Plaintiff claims that the Defendants' action constituted bad faith and a breach of the covenant of good faith and fair dealing.
In Count V the Plaintiff claims the actions/conduct of the Defendants violated the Connecticut Unfair Trade Practices Act.
PAG has moved for summary judgment as to these counts of the Second Amended Complaint because under the plain and unambiguous terms of the parties' contract Naek agreed to assume sole responsibility for the cost of all change orders on the project. In addition, PAG did submit an application to CHFA for additional allocation of tax credits but that application was denied.
Discussion
The standards for granting summary judgment are well settled. "Pursuant to Practice Book § 17-49, summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Such questions of law are subject to plenary appellate review." (Citation omitted; internal quotation marks omitted.) Faigel v. Fairfield University, 75 Conn.App. 37, 39-40 (2003). "In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party . . . The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the party is, therefore entitled to judgment as a matter of law . . . The test is whether a party would be entitled to a directed verdict on the same facts." (Citations omitted; internal quotation marks omitted.) Vaillancourt v. Latifi, 81 Conn.App. 541, 545 (2004). "A material fact is a fact that will make a difference in the result of the case . . . The facts at issue are those alleged in the pleadings." (Emphasis in original.) Id.
"In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent . . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue. . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § 380 [now § 17-45]." (Citations omitted; internal quotation marks omitted.) Allstate Ins. Co. v. Barron, 269 Conn. 394, 405-06 (2004).
The undisputed facts reveal that the contract entered into by the parties provided that: "The Owner [PAG] shall pay the Contractor [Naek] in current funds for the Contractor's performance of the Contract the Contract Sum of Nine Million Two Hundred Sixty-three Thousand Nine Hundred Fifty-seven-Dollars ($9,263,957.00); subject to additions and deductions provided in the Contract documents. The contract sum shall be a fixed, lump sum, guaranteed maximum amount . . ." (Standard Form of Agreement Between Owner and Contractor, Article 4.1). The contract further provided: "Contractor understands and acknowledges that it is solely responsible for any excess over the Contract Sum, except as may be specifically provided in writing by the Owner and CHFA, as well as, at the option of the Owner, the City of New Haven and/or the Project Investors. Contractor and Owner acknowledge that no additional funds shall be provided to the Contractor for added costs during the construction period. Accordingly, all Change Orders, whether necessitated by circumstances such as (including, but not limited to), unforseen conditions, changes in building code requirements or any government official's interpretation of such code requirements or other modifications to the specifications, plans or drawings, shall be `no additional cost' Change Orders. Such Change Orders shall be prepared and executed solely for the expressed purpose of providing documentation for changes made in the scope of work and for the preparation of `as-built' plans, drawings and surveys. All Change Orders must be approved in writing in advance of any change in the scope of work by the Owner and CHFA and, at the option of the Owner, by the City of New Haven and/or Project Investors. Any additional cost caused by any approved Change Order shall be the sole responsibility of the Contractor." (Standard Form of Agreement Between Owner and Contractor, Article 4.2).
The contract also provided that: "Changes in the Work may be accomplished after execution of the Contract and without invalidating the Contract by Change Order, Construction Change Directive or order for a minor change in Work, subject to the limitations stated in this Article 7 and elsewhere in the Contract Documents." (General Conditions of Contract for Construction, Article 7.1).
Rashid Hamid, a principal stockholder of Naek, also guaranteed "the payment of all direct costs of completing the Project [Florence Virtue Apartments], including any and all cost overruns and the costs of any change orders incurred to contractors and/or subcontractors and for any and all materials, permits, license, and the like, which exceed the amounts provided in the budget for the Project . . ." (Unconditional Guaranty).
In December 2000, PAG and Naek entered into a letter agreement which stated: "The purpose of this letter is to confirm our understanding and agreement regarding past and future change orders relative to the Florence Virtue project in New Haven, Connecticut. As you are aware, the construction contract for Florence Virtue between PAG Charles Street Limited Partnership (`PAG') and Naek Construction Company, Inc. (`Naek') is a fixed price contract which does not entitle Naek to any additional payment for work performed pursuant to any change orders. We anticipate that at various times in the future we may be executing change orders which may be required; those change orders will be submitted to Connecticut Housing Finance Authority for approval (all such change orders which are specifically approved by CHFA are referred to in this letter as `Change Orders,' it being the agreement of Naek and PAG that the term `Change Orders' does not include change orders which have not been signed by PAG and Naek and approved by CHFA). Although PAG has no obligation to pay Naek for any of the Change Orders, PAG had indicated that it will attempt to obtain from Connecticut Housing Finance Authority additional (i.e., new) tax credits for the Florence Virtue project and to find investors who will purchase those credits. In the event that PAG is successful in obtaining those credits and finding those investors, to the extent that Net Equity, as defined below, is actually generated, that Net Equity will be paid by PAG to Naek up to and not exceeding the amount of the Change Orders . . . Naek agrees that PAG is under no obligation whatsoever to obtain those tax credits or to find investors. Further, Naek agrees that under no condition will it make any claim or demand against PAG or any of the partners of PAG i) for payment for any of the work covered by any of the change Orders or ii) relating in any way to the failure of PAG to obtain those credits or find such investors. This letter agreement nullifies any and all change orders signed previously by Naek and PAG except so-called change order number one. Nothing in this letter agreement modifies, amends, rescinds, supersedes or otherwise effects the construction contract between Naek and PAG dated December 15, 1998; that contract remains in full force and effect." (Letter dated December 19, 2000 signed by representatives of Naek and PAG).
By letter dated January 26, 2001, PAG requested that CHFA approve an additional tax credit allocation for the project for costs incurred above and beyond the original development budget in the amount of $923,242.79. CHFA denied that request.
A review of the information supplied by both parties in support and in opposition to the motion for summary judgment reveals that PAG never itself agreed to pay for any extra work but at most agreed to seek additional funding from CHFA to pay for such work.
As to Count I of the Second Amended Complaint, the Defendants claim that they are entitled to summary judgment because the change orders do not constitute a cardinal change or abandonment of the contract because Naek performed the change orders in accordance with the plain and unambiguous terms of the contract and the letter agreement. The Plaintiff claims that the Defendants are not entitled to summary judgment on this count because material issues of fact exist as to whether the changes at issue constitute a cardinal change of the contract. It also claims that if it establishes that it did perform cardinal changes on the Project the changes clause in Paragraph 4.2 of the contract becomes moot and does not apply to bar payment. As to the letter of December 19, 2000, Naek claims that issues of fact exist as to whether it was signed by reason of a fraud perpetrated upon it by PAG. Lastly, Naek claims that the guarantee signed by Hamid is irrelevant to this action because it is an individual guarantee and not one executed by Naek.
As to Counts II, III, IV and V PAG claims that it is entitled to summary judgment because the common factual predicate to each of these counts is that PAG did not apply for an additional allocation of tax credits from CHFA and the undisputed facts indicate that it did so apply but its application was rejected. Naek claims that genuine issues of material fact exist as to whether and to what extent PAG made full efforts to apply for supplemental funding and whether PAG made misrepresentations to Naek concerning how, when, and what efforts PAG would make to secure additional funding.
Count I
As to Count I, the Defendants argue that the court should follow the four corners' doctrine and find that the change orders did not void the contract because they are provided for in the contract, along with the Letter Agreement, dated December 19, 2000. Although PAG also argues that the Unconditional Guaranty supports its position, the court agrees with the Plaintiff that it is not relevant here because the guaranty is a personal guaranty by one not a party to this action.
"If a contract is unambiguous within its four corners, the intent of the parties is a question of law, requiring plenary review. Issler v. Issler, supra, 250 Conn. 235. If, however, a contract is ambiguous, the clearly erroneous standard of review is used because the intent of the parties is a question of fact. Amodio v. Amodio, 56 Conn.App. 459, 470, 743 A.2d 1135, cert. granted on other grounds, 253 Conn. 910, 754 A.2d 160 (2000) (appeal withdrawn September 27, 2000). A word is ambiguous when it is `capable of being interpreted by reasonably well-informed persons in either of two or more senses.' (Internal quotation marks omitted.) Aetna Ljfe Casualty Co. v. Braccidiferro, 34 Conn.App. 833, 840, 643 A.2d 1305 (1994), cert. granted on other grounds, 232 Conn. 901, 651 A.2d 743 (1995) (appeals withdrawn September 1, 1995). Ambiguous also means `unclear or uncertain . . . [or] that which is susceptible of more than one interpretation' or `understood in more ways than one.' (Citation omitted; internal quotation marks omitted.) Lopinto v. Haines, 185 Conn. 527, 538, 441 A.2d 151 (1981)." (Footnote omitted) Kremenitzer v. Kremenitzzer, 81 Conn.App. 135, 140-1 (2004).
"`A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction . . . [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract . . . Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms . . . Lawson v. Whitey's Frame Shop, 241 Conn. 678, 686, 697 A.2d 1137 (1997). Although ordinarily the question of contract interpretation, being a question of the parties' intent, is a question of fact . . . [w]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law . . . Levine v. Massey, 232 Conn. 272, 277, 654 A.2d 737 (1995); see Mulligan v. Rioux, 229 Conn. 716, 740, 643 A.2d 1226 (1994), on appeal after remand, 38 Conn.App. 546, 662 A.2d 153 (1995); Bank of Boston Connecticut v. Schlesinger, 220 Conn. 152, 158, 595 A.2d 872 (1991); Thompson Peck, Inc. v. Harbor Marine Contracting Corp., 203 Conn. 123, 131, 523 A.2d 1266 (1987); Bead Chain Mfg. Co. v. Saxton Products, Inc., 183 Conn. 266, 274-75, 439 A.2d 314 (1981).' (Internal quotation marks omitted.) Pesino v. Atlantic Bank of New York, 244 Conn. 85, 91-92, 709 A.2d 540 (1998)." Issler v. Issler, CT Page 16442 250 Conn. 226, 235-6 (1999).
Here the language of the agreement of the parties, as stated in the contract, is clear and unambiguous. The contract provided that Naek would be "solely responsible for any excess over the Contract Sum," that all Change Orders "shall be `no additional cost' Change Orders," and that "[a]ny additional cost caused by any approved Change Order shall be the sole responsibility of the Contractor." The December 2000 letter agreement also reiterated that the contract was "a fixed price contract which does not entitle Naek to any additional payment for work performed pursuant to any change orders." Although the Plaintiff claims that the December 2000 letter was perpetuated by fraud, by its own terms it does not purport to alter the terms of the original contract between the parties.
"`It is established well beyond the need for citation that parties are free to contract for whatever terms on which they may agree. This freedom includes the right to contract for the assumption of known or unknown hazards and risks that may arise as a consequence of the execution of the contract. Accordingly, in private disputes, a court must enforce the contract as drafted by the parties and may not relieve a contracting party from anticipated or actual difficulties undertaken pursuant to the contract, unless the contract is voidable on grounds such as mistake, fraud or unconscionability. See 1 Restatement (Second), Contracts §§ 154, 159, and vol. 2, § 208 (1981); cf. Warner v. Pandolfo, 143 Conn. 728, 122 A.2d 738 (1956).' Holly Hill Holdings v. Lowman, 226 Conn. 748, 755-56, 628 A.2d 1298 (1993)." Gibson v. Capano, 241 Conn. 725, 730-1 (1997).
Pursuant to the plain and unambiguous language of the contract between the parties, Naek cannot recover from PAG for the costs of the change orders.
Naek argues however that PAG is not entitled to summary judgment as to Count I for the reason that material issues of fact exist as to whether the changes at issue constitute a cardinal change of the contract.
"A cardinal change is a drastic modification beyond the scope of the contract that altered the nature of the thing to be constructed." (Internal quotation marks omitted.) Pellerin Construction, Inc. v. Witco Corp., 169 F.Sup.2d 568, 587 (E.D.La. 2001), citing Air-A-Plane Corp. v. United States, 408 F.2d 1030 (United States Court of Claims 1969). A cardinal change constitutes a breach of contract. Id. "By definition, a cardinal change is so profound that it is not redressable under the contract." (Internal quotation marks omitted.) Id. The standard courts look to in deciding whether a cardinal change is present is "whether the modified job was essentially the same work as the parties bargained for when the contract was awarded." (Internal quotation marks omitted.) Air-A-Plane Corp. v. United States, 408 F.2d 1030, 1033 (United States Court of Claims 1969). "[T]here is a cardinal change if the ordered deviations altered the nature of the thing to be constructed." (Internal quotation marks omitted.) Id. "[T]he problem is a matter of degree varying from one contract to another and can be resolved only by considering the totality of the change and this requires recourse to its magnitude as well as its quality." (Internal quotation marks omitted.) Id. "There is no exact formula . . . Each case must be analyzed on its own facts and in light of its own circumstances, giving just consideration to' the magnitude and quality of the changes ordered and their cumulative effect upon the project as a whole." (Internal quotation marks omitted.) Id.
Although the parties have not cited any Connecticut case specifically referring to the cardinal change doctrine, Connecticut does recognize the doctrines of abandonment of contract and substantial alteration which are analogous.
"The issue of substantiality, a determination of whether the enumerated differences in the final plans were substantial, is a question of fact which depends on a consideration of the circumstances." Randolph Construction Co. v. King East Corp. 165 Conn. 269, 274 (1973). "The factual issue includes in this case the total undertaking covered by the writing, the amount of work affected by the alterations and the net change in the cost of performance. In dealing with contract provisions allowing alterations or modifications, an appropriate standard for substantiality is whether such changes unreasonably alter the character of the work or unduly increase its costs, or effect such a material change as to constitute a radical departure from the original contract." Id.
"[A]bandonment of contracts . . . depends upon the intent of the parties and . . . the relevant intent is to be inferred from the attendant circumstances and conduct of the parties." (Internal quotation marks omitted.) Rowe v. Cormier, 189 Conn. 371, 372-73 (1983). "Whether the parties have manifested an intention to modify or abandon their agreement is ordinarily a question of fact." Id., 373.
Although Naek argues that whether there was a cardinal change or substantial alteration to the contract is a fact-intensive issue not suitable for disposition on summary judgment, the Plaintiff has submitted no evidence from which the court could find that issues of fact exist as to whether the contract was subject to a cardinal change, abandoned or substantially altered. The Plaintiff cites a number of cases where the court found a cardinal change yet each of those cited facts which supported such a determination. Without evidence of such facts here, the court cannot apply or analogize the principles stated in those cases to the situation here. The Plaintiff has simply submitted a list of the dollar amount of each change order but no information as to how this work differed from that required to be performed under the contract. But change in cost alone does not evidence a cardinal change. The contract itself was for the "complete interior and exterior rehabilitation and modernization of existing residential strictures (20) containing 129 apartment units . . ." (Standard Form of Agreement Between Owner and Contractor, Article 2). From a review of the change orders submitted to CHFA, the changes related to such things as landscaping, electrical fixtures and lighting, flooring, and replacement of interior doors.
"[A] cardinal change is a breach. It occurs when the government effects an alteration in the work so drastic that it effectively requires the contractor to perform duties material different from those originally bargained for. By definition, then a cardinal change is so profound that it is not redressable under the contract, and thus renders the government in breach." (Citations omitted.) Allied Materials Equipment Co., Inc. v. United States, 569 F.2d 562, 563-64 (United States Court Claims 1978). "The touchstone of the doctrine is that Government actions subsequent to the contract so alter the contractor's duties and rights that wholesale reformation of the contract occurs." Paragon Energy Corp. v. United States, 229 Ct.Cl. 524 (1981).
"`Although the party seeking summary judgment has the burden of showing the nonexistence of any material fact . . . a party opposing summary judgment must substantiate its adverse claim by showing that there is a genuine issue of material fact together with the evidence disclosing the existence of such an issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court [in support of a motion for summary judgment].' (Citation omitted; internal quotation marks omitted.) Home Ins. Co. v. Aetna Life Casualty Co., 235 Conn. 185, 202, 663 A.2d 1001 (1995); see also Practice Book § 17-49." Morris v. Congdon, 85 Conn.App. 555, 558 (2004). Consequently the Plaintiff's assertion that issues of fact exist as to whether there was a cardinal change in the contract, standing alone, is not sufficient to defeat the motion for summary judgment.
In light of the undisputed fact that the contract was a fixed price contract and that the Plaintiff was to absorb the costs of any change orders, and in the absence of any evidence which raises an issue of fact as to whether there was a cardinal change of the contract, the motion for summary judgment as to Count I is granted.
Count II
Count II alleges that on or about December 19, 2000 PAG entered into an agreement with Naek concerning the change orders and that PAG represented that it would apply for further funding to pay for the change order work by way of an application to CHFA for additional tax credits. Subsequent to that agreement, Naek alleges that PAG representatives advised Naek that they were in the process of applying for the additional tax credits from CHFA. The Plaintiff alleges that the Defendants made no effort to secure any additional funding and that due to the Defendants' deliberate misleading behavior and misrepresentation, Naek suffered damages as it would not have performed the extra work.
The undisputed facts are that on or about January 26, 2001, the Defendants did apply for additional funding from CHFA but, on June 7, 2001, it was denied. The Plaintiff claims that genuine issues of material fact exist as to whether and to what extent PAG made full efforts to apply for supplemental funding and/or whether PAG made misrepresentations to Naek concerning such efforts.
The June 2001 denial letter from CHFA indicated that the Defendants could apply again in a subsequent round. PAG did not do so. The affidavit by the President of Naek indicates that even after this date PAG indicated it would be applying to CHFA for additional funding and continued to mislead Naek into believing that Naek would be paid for the change orders. "`In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party. Town Bank Trust Co. v. Benson, 176 Conn. 304, 309, 407 A.2d 971 (1978).' Strada v. Connecticut Newspapers, Inc., 193 Conn. 313, 317, 477 A.2d 1005 (1984)." Connecticut Bank Trust Co. v. Carriage Lane Assoc., 219 Conn. 772, 781 (1991). Viewing the evidence presented against this standard, issues of fact exist as to the allegations of Count II and summary judgment is denied as to that Count.
Count III
In Count III, the Plaintiff alleges that it changed its position as a direct result of the Defendants' misrepresentation, which it would not have otherwise done. "Section 90 of the Restatement [(Second) of Contracts] states that under the doctrine of promissory estoppel [a] promise which the promiser should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. [1 Restatement (Second), Contracts § 90, p. 242 (1981).] A fundamental element of promissory estoppel, therefore, is the existence of a clear and definite promise which a promisor could reasonably have expected to induce reliance. Thus, a promisor is not liable to a promisee who has relied on a promise if, judged by an objective standard, he had no reason to expect any reliance at all. (Citations omitted; internal quotation marks omitted.) D'Ulisse-Cupo v. Board of Directors of Notre Dame High School, 202 Conn. 206, 213, 520 A.2d 217 (1987). Although the promise must be clear and definite, it need not be the equivalent of an offer to enter into a contract because `[t]he prerequisite for . . . application [of the doctrine of promissory estoppel] is a promise and not a bargain and not an offer.' (Emphasis added.) 3 A. Corbin, Contracts (Rev. Ed. 1996) § 8.9, p. 29; cf. Suffield Development Associates Ltd Partnership v. Society for Savings, 243 Conn. 832, 845-46, 708 A.2d 1361 (1998) (concluding that contract did not exist because agreement was not sufficiently definite and remanding case for new trial to permit consideration by fact finder of promissory estoppel claim predicated on same facts). This, of course, is consistent with the principle that, although `[a]n offer is nearly always a promise'; 1 E. Farnsworth, Contracts (2d Ed. 1998) § 3.3, p. 188; all promises are not offers. See 1 Restatement (Second), supra, § 24, comment (b), p. 72 (`[w]hether or not a proposal is a promise, it is not an offer unless it specifies a promise or performance by the offeree as the price or consideration to be given by him'). Additionally, the promise must reflect a present intent to commit as distinguished from a mere statement of intent to contract in the future. See D'Ulisse-Cupo v. Board of Directors of Notre Dame High School, supra, 202 Conn. 214-15. `[A] mere expression of intention, hope, desire, or opinion, which shows no real commitment, cannot be expected to induce reliance'; 3 A. Corbin, Contracts, supra, § 8.9, pp. 29-30; and, therefore, is not sufficiently promissory. The requirements of clarity and definiteness are the determinative factors in deciding whether the statements are indeed expressions of commitment as opposed to expressions of intention, hope, desire or opinion. See D'Ulisse-Cupo v. Board of Directors of Notre Dame High School, supra, 214-15. Finally, whether a representation rises to the level of a promise is generally a question of fact, to be determined in light of the circumstances under which the representation was made. Torosyan v. Boehringer Ingelheim Pharmaceuticals, Inc., 234 Conn. 1, 17 n. 6, 662 A.2d 89 (1995)." Stewart v. Cendant Mobility Ser. Corp., 267 Conn. 96, 104-6 (2003).
The affidavit submitted by Naek's President indicates that even after CHFA had denied PAG's application PAG continued to advise Naek that it would apply for additional funding so as to mislead Naek into believing that Naek would be paid for the change orders it performed and that if it had known that PAG would not exhaust all efforts in applying for additional funding, Naek would not have performed all the change order work which it did. This evidence is sufficient to defeat the Defendants' Motion for Summary Judgment as to Count III.
Count IV
Count IV of the complaint alleges that the Defendants had a common-law duty to act fairly and reasonably in satisfying its obligations. The Plaintiff claims that the Defendants ordered extra work and advised the Plaintiff that they were in the process of applying for additional tax credits with reckless disregard of the Plaintiff's rights, or otherwise with a dishonest purpose to deal unfairly with Plaintiff and Defendants' actions were not prompted by any honest mistake.
The Connecticut Supreme Court has held that "[e]very contract carries an implied covenant of good faith and fair dealing requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement." Home Insurance Co. v. Aetna Life Casualty Co., 235 Conn. 185, 200 (1995). "Though the weight of authority seems to be on the side of recognizing a duty of good faith, there is no consensus about what that duty requires." (Internal quotation marks omitted.) PSE Consulting, Inc. v. Frank Mercede Sons, Inc., 267 Conn. 279, 302 (2004). "The majority of courts agree that the principal must establish something more than mere negligence to prove bad faith." Id., 302-03. "Unfortunately, many of these jurisdictions do not go past this label to define the term `bad faith.' In those jurisdictions that do further define the term, one common characterization used frequently, is that bad faith, in essence, means that . . . [someone] acted with an `improper motive' or `dishonest purpose.'" (Internal quotation marks omitted.) Id., 303-04. "Unreasonable conduct can be evidence of improper motive and is a proper consideration where parties are bound by a contract that gives unmitigated discretion to one party." Id., 305. "[W]hat constitutes good faith or lack thereof depends on the facts of each case." Id., 318. "Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive." (Internal quotation marks omitted.) Habetz v. Condon, 224 Conn. 231, 237 (1992). "It is the burden of the party asserting the lack of good faith to establish its existence and whether that burden has been satisfied in a particular case is a question of fact." Id., 237 n. 11.
Whether the Defendants breached the covenant of good faith and fair dealing is a question of fact. The evidence submitted by the Plaintiff, in the form of the Naek's President's affidavit, raises an issue of fact as to this claim. Therefore, the motion for summary judgment with respect to Count IV is denied.
Count V
Count V of the complaint alleges that the Defendants violated the Connecticut Unfair Trade Practices Act ("CUTPA"), General Statutes § 42-110a et seq., in that the Defendants' actions were unfair, deceptive, intentional and/or malicious and have caused economic harm to the Plaintiff. "CUTPA provides in relevant part that `[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.' General Statutes § 42-110b(a)." Miller v. Guimaraes, 78 Conn.App. 760, 775 (2003). "The purpose of CUTPA is to protect the public from unfair practices in the conduct of any trade or commerce, and whether a practice is unfair depends upon the finding of a violation of an identifiable public policy." (Internal quotation marks omitted.) Willow Springs Condominium Assn, Inc. v. Seventh BRT Development Corp., 245 Conn. 1, 42 (1998).
"It is well settled that in determining whether a practice violates CUTPA . . . [Connecticut has] adopted the criteria set out in the `cigarette rule' by the federal trade commission for determining when a practice is unfair: (1) [`W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise — in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers, [competitors or other businesspersons] . . . All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all thee." (Internal quotation marks omitted.) Id., 43.
"[A] violation of CUTPA may be established by showing either an actual deceptive practice . . . or a practice amounting to a violation of public policy . . . Furthermore, a party need not prove an intent to deceive to prevail under CUTPA." (Internal quotation marks omitted.) Id. "An act or practice is deceptive if three conditions are met. First, there must be a representation, omission, or other practice likely to mislead consumers. Second, the consumers must interpret the message reasonably under the circumstances. Third, the misleading representation, omission, or practice must be material — that is, likely to affect consumer decisions or conduct." (Internal quotation marks omitted.) Miller v. Guimaraes, supra, 78 Conn.App. 775. "Whether a practice is unfair and thus violates CUTPA is an issue of fact." Willow Springs Condominium Asssn, Inc. v. Seventh BRT Development Corp., supra, 245 Conn. 43.
The evidence submitted by the Plaintiff, as discussed above, is sufficient to establish that there are issues of fact as to whether the Defendants violated CUTPA.
Conclusion
Summary judgment is granted as to Count I and denied as to Counts II, III, IV and V.
Jane S. Scholl, J.