Opinion
No. CV 02 0192282
December 1, 2003
MEMORANDUM OF DECISION
The plaintiffs, Andrew O'Connell, Jr. and Blanche O'Connell, have applied for a discharge of the mechanic's lien placed on their real estate located at 15 Anderson Road, Greenwich, by the defendant, A. Miranda Contracting Corp., a building contractor. The lien is for $67,940 and was recorded in the Greenwich land records on October 24, 2002 in book 4002 at page 176. The original contract price was for $298,000, plus extras of approximately $118,000, less payments by the plaintiffs totaling about $349,000. The construction consisted primarily of renovating the second floor, plus some work on other rooms and the roof.
On November 27, 2002, Judge Adams of this court wrote a memorandum of decision determining that the contract between the plaintiffs and the defendant, which was in the form of a letter from the defendant to the plaintiffs dated August 22, 2001, did not comply with General Statutes § 20-418 et seq., the Home Improvement Act (HIA). Judge Adams also wrote that the defendant "concedes that the written contract does not comply with the provisions of [HIA]."
Connecticut General Statute § 20-429(a) provides, in pertinent part, as follows: "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, (6) contains a notice of the owner's cancellation rights in accordance with the provisions of chapter 740 [General Statutes § 42-135a], (7) contains a starting date and completion date, and (8) is entered into by a registered salesman or registered contractor . . ." General Statutes § 42-135a requires a notice of cancellation "in boldface type of a minimum size often points" to the effect that the buyer may cancel the transaction within three business days.
Our Supreme Court, in interpreting the act, has established the general rule that a contractor who fails to comply with the act is prohibited from recovery under either a breach of contract claim or quasi-contractual methods of recovery, such as unjust enrichment or quantum meruit. Liljedahl Bros., Inc. v. Grigsby, 215 Conn. 345, 350, 576 A.2d 149 (1990); A. Secondino Son, Inc. v. LoRicco 215 Conn. 336, 340, 576 A.2d 464 (1990); Barrett Builders v. Miller, 215 Conn. 316, 322-23, 576 A.2d 455 (1990). The court, however, in Habetz v. Condon, 224 Conn. 231, 237, 618 A.2d 501 (1992), held that "proof of bad faith . . . serves to preclude the homeowner from hiding behind the protection of the act." The court also stated that the existence of bad faith is a question of fact. Id., 237 n. 11.
"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 . . . Bad faith means more than mere negligence; it involves a dishonest purpose." (Citations omitted; internal quotation marks omitted.) MacMillan v. Higgins, 76 Conn. App. 261, 270, 822 A.2d 246, cert. denied, 264 Conn. 907, 826 A.2d 177 (2003). Moreover, this case does not involve the holding in Wright Brothers Builders v. Dowling, 247 Conn. 218, 231, 720 A.2d 235 (1998), that compliance with the HIA does not need to be "letter perfect" and that minor deviations from the act will not prevent a recovery by a building contractor. The parties in this case agreed that their contract did not comply with the HIA in a substantive manner.
An application for discharge or reduction of a mechanic's lien is authorized by General Statutes § 49-35a(a). At the hearing, "the lienor shall first be required to establish that there is probable cause to sustain the validity of his lien." General Statutes § 49-35b(a). In order for the lien to be valid, there has to be compliance with the HIA, which was concededly not the case, but the defendant contractor was given the opportunity to demonstrate that the plaintiffs acted in bad faith and therefore strict compliance with the statute is not required.
The evidence at the hearing on January 21, 2003 does not establish bad faith on the part of the plaintiffs. "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. The plaintiff presented the court no evidence on the issue of bad faith; instead, he relies on the allegations the defendant waited until the job was completed before raising the alleged defects in the contract . . . The plaintiff has the burden of proof on this issue." Chaves v. Arthur, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 02-0390889 (February 20, 2003, Sheedy, J.)
In Dinnis v. Roberts, 35 Conn. App. 253, 259, 644 A.2d 971 (1994), the court limited bad faith to "the formation of, or inducement to, enter into the home improvement contract." In the case before this court there is no evidence of that kind of bad faith. The contract was in the form of a letter from the defendant contractor. The evidence is that the plaintiffs knew nothing about the HIA at the time that the contract was entered into with the defendant, so the plaintiffs did not induce the defendant to enter into the contract in bad faith.
The concept of bad faith was expanded by the Appellate Court last year to include "acts before and after the execution of the contract." Kronberg Bros., Inc. v. Steele, 72 Conn. App. 53, 63, 804 A.2d 239, cert. denied, 262 Conn. 912, 810 A.2d 277 (2002). After the building project was underway, disputes between the parties began to surface. The homeowners complained about over-billing and defective workmanship. The defendant complained that it was owned money by the plaintiffs for the work already performed. The plaintiffs told the defendant that they were not going to pay any more money until the job was completed. The defendant said it would not do any more work until and unless the plaintiffs paid what was allegedly owned.
The positions of the parties in this regard was illustrated succinctly first in the testimony of Mrs. O'Connell: Question: "And its your position then that had Mr. Miranda completed the contract satisfactorily in accordance with what he had contracted to do, you would have paid him?" Answer: "Absolutely." On the other hand, Mr. Miranda, the principal of the defendant corporation, testified: "And I believe I spoke to Mrs. O'Connell about getting paid and she said she wanted the job finished a hundred percent, and I didn't want to finish it because it was too much of an outstanding bill, you know, for punchlist items, that really I considered punch — you know, small."
The more plausible evidence is that the plaintiffs in this case stopped paying on the contract because the defendant was not completing the work or had been doing some of it in an unworkmanlike manner. In Wadia Enterprises, Inc. v. Hirschfeld, 224 Conn. 240, 618 A.2d 506 (1992), our Supreme Court found none of the acts alleged, which included the plaintiffs' withholding of final payment, indicated a "dishonest purpose." Id., 248. "There is nothing dishonest or sinister about homeowners proceeding on the assumption that there is a valid contract, enforcing its provisions, and later, in a defense to the suit by the contractor, upon learning that the contract is invalid, then exercising their right to repudiate it." (Citation omitted.) Id., 249.
The court concludes that the contract is unenforceable because it violates the HIA, and the defendant has failed to prove its special defense of the plaintiffs' bad faith. As a consequence, the defendant did not establish probable cause to sustain the validity of its mechanic's lien and judgment may therefore enter vacating and discharging the lien filed by the defendant on 15 Anderson Road, Greenwich.
So Ordered.
WILLIAM B. LEWIS, JUDGE.