Opinion
No. X-08-CV03-4001935S
April 10, 2008
Memorandum of Decision on Motions to Dismiss Procedural and Factual Background
This action arises out of a public works construction project to close the City of Danbury Municipal Landfill in 1998 (the "Project"). On April 1, 1997 the general contractor Metcalf Eddy, Inc., as "Principal," and defendant United States Fidelity Guaranty Company ("USFG") (a member of the St. Paul Fire Marine Insurance Company group of insurance companies), as "Surety," issued a Labor and Material Payment Bond No. 53-01823-97-5 (the "Bond") in the amount of $8.9 million to the City of Danbury for the benefit of Project "claimants" defined in the Bond as ". . . one having a direct contract with the Principal, or with a sub-contractor of the Principal for labor, material, or both, used or reasonably required for use in the performance of the contract . . ." The plaintiff Paradigm Contract Management Company alleges that it provided labor and materials for the Project pursuant to a sub-subcontract with Poole Kent New England, Inc. which was a subcontractor of the general contractor Metcalf Eddy, Inc. Plaintiff claims that it is unpaid for such labor and materials in the amount of $3,616,250. Plaintiff alleges that it has given proper and timely notices to the City of Danbury, the general contractor, and USFG pursuant to the provisions of the Bond and has not been paid within the time for payment specified in the Bond and therefore seeks to be indemnified in the amount of $3,616,250 by the Bond Surety, USFG.
This case was first brought in 1999 as Docket No. CV99-0336073S in the Judicial District of Danbury. That case was reached for trial in April 2002. The parties agreed that it was in their mutual best interest not to try the case at that time, but to postpone the litigation, preserving their respective rights. Accordingly, the parties entered into a written Tolling Agreement effective April 19, 2002 pursuant to which the case was withdrawn by Paradigm and USFG waived any and all statute of limitations defenses which did not exist prior to that date, and agreed that its waiver would remain in effect for a period of one year from April 19, 2002. The case was recommenced in Danbury returnable March 18, 2003 (within the one-year period of the Tolling Agreement) as Docket No.CV03-0348428S. It was granted complex litigation status in 2004, transferred to this Judicial District under the present docket number, and consolidated on the complex litigation docket with other litigation arising out of the Danbury Landfill Project. The other litigation has now been resolved without trial, and this case standing alone has been reached for trial. A jury has been selected and evidence is scheduled to commence pending the resolution of these motions to dismiss.
Specifically the Tolling Agreement, which is attached as Exhibit 1 to plaintiff's Memorandum in Opposition to Defendant's Second Motion to Dismiss says, in relevant part: "(1) St. Paul [a term which by definition in the agreement includes USFG] hereby waives, and is estopped from asserting, any and all defenses or bars based upon any statute of limitations, or based on any theory premised on laches or delay or lapse of time, with respect to any such defense or bar which has not already accrued prior to the Effective Date [defined as April 19, 2002]. (2) The parties agree that the above waiver and the applicable statute of limitations will extend for a period of one year following the effective date (the "Termination Date") and that St. Paul can maintain a defense or bar of laches or statute of limitations for any passage of time after the Termination Date. (3) In consideration of, conditioned upon and in reliance upon the foregoing, Paradigm agrees to withdraw its current Action without prejudice . . . (6) If any portion, provision or part of this Agreement is held, determined or adjudicated to be invalid, unenforceable, void or voidable for any reason whatsoever, each such portion, provision or part shall be severed from and shall not affect the validity or enforceability of the remaining portions."
Now before the court are the plaintiff's March 17, 2008 Motion to Dismiss Defendant's Counterclaim (No. 177), and defendant `s March 28, 2008 Motion to Dismiss for Lack of Subject Matter Jurisdiction (No. 185). Since both motions to dismiss implicate the court's subject matter jurisdiction, they can be made at any time (Practice Book §§ 10-31, 10-32 and 10-33). Stroinev v. Crescent Lake Tax District, 205 Conn. 290, 294 (1987). And once the court's subject matter jurisdiction is called into question ". . . [it] must be disposed of no matter in what form it is presented . . . and the court must fully resolve it before proceeding with the case." (Internal quotation marks omitted.) Community Collaborative of Bridgeport, Inc. v. Ganim, 241 Conn. 546, 552 (1997).
Discussion A. Defendant's Motion to Dismiss This Action
USFG claims in its motion to dismiss and supporting memorandum that this action arising out of a public works project of the City of Danbury is a suit brought pursuant to Conn. Gen. Stat. § 49-42, part of the statutory scheme known as the Connecticut "Little Miller Act," and that the court does not have subject matter jurisdiction over this suit against a Little Miller Act labor and material payment bond because (1) plaintiff filed its suit (the present action commenced in March of 2003) after the expiration of the one-year period provided for in § 49-42(b), which has been held to be a jurisdictional requirement establishing a condition precedent to a cause of action under the statute; and (2) there is no other cause of action, at common law or otherwise, against a statutory labor and materials payment bond over which this court has subject matter jurisdiction. A defense of statute of limitations must be specially pleaded and normally cannot be raised on a motion to dismiss. But in situations such as this where the statute of limitations is claimed to be a substantive and jurisdictional prerequisite of a statutory cause of action, it implicates the court's subject matter jurisdiction and may be raised by a motion to dismiss. Ambriose v. William Raveis Real Estate, Inc., 226 Conn. 757, 766-67 (1993).
Section 49-42(a) sets forth in detail the procedure for a protected subcontractor or materialman on a public works project to make and process a claim against the surety on a required labor and material payment bond, and concludes by providing that "Any person having direct contractual relationship with a subcontractor but no contractual relationship express or implied with the contractor furnishing the payment bond shall have a right of action on the payment bond upon giving written notice of claim as provided in this section."
Named and patterned after the federal statutory scheme known as the "Miller Act" codified at 40 U.S.C. §§ 3131 et seq.
Section 49-42(b) provides that "Every suit instituted under this section shall be brought in the name of the person suing, in the superior court for the judicial district where the contract was to be performed . . . but no such suit may be commenced after the expiration of one year after the last date that materials were supplied or any work was performed by the claimant . . ."
The plaintiff does not factually contest the claim that it commenced this second action more than one year after it completed work on the Project. The complaint (¶ 7) alleges that Paradigm completed the work under its subcontract as of September 23, 1998, more than four years prior to the March 18, 2003 return date of this action. The plaintiff does contest however, that this is an action under the Little Miller Act, governed by the one-year limit of § 49-42(b). The plaintiff's present claim is that this case is premised on a common-law cause of action against USFG to enforce the provisions of the bond — a cause of action not limited by the one-year limitation of § 49-42(b) and not otherwise barred by the Little Miller Act.
The plaintiff's intent when this suit was first brought in 2003 was obviously to state a statutory cause of action under § 49-42 which is expressly cited in ¶ 8 of the complaint (alleging that Paradigm had given USFG and others ". . . due and timely notice of it's [sic.] claim for payment of the Debt, pursuant to Connecticut General Statutes Section 49-42") and in ¶ 4 of the claims for relief (claiming "[r]easonable Attorneys fees pursuant to Connecticut General Statutes Section 49-42"). The plaintiff now disavows any intent to sue under the statute or to seek an award of counsel fees and asks the court to disregard those statutory references in its complaint.
As a threshold matter the court takes note of the fact that a prior motion to dismiss this action for lack of subject matter jurisdiction was filed by USFG in 2006 and denied by Judge Adams. Paradigm Contract Management Company v. United States Fidelity and Guaranty Company, Docket No. X08CV03-4001935S, Superior Court, Judicial District of Stamford-Norwalk, Complex Litigation Docket at Stamford (July 10, 2006, Adams, J.), 2006 Ct.Sup. 12748, 41 Conn. L. Rptr. 596. The issue before the court in 2006 was essentially the same issue raised by the instant motion to dismiss, and Judge Adams ruled that the Tolling Agreement permissibly provided a benefit to Paradigm greater than required by the Little Miller Act, and that the bond itself contained a one-year limitation on suit which can be waived like any other statute of limitations and was in fact waived by the parties in the Tolling Agreement. The issue of subject matter jurisdiction has been brought back into focus, however, by the plaintiff itself which moved on March 17, 2008 shortly before the start of jury selection to dismiss USFG's counterclaim for counsel fees under Conn. Gen. Stat. § 49-42(a). In that motion (No. 177) the plaintiff itself invoked the protection of the Little Miller Act by claiming that the defendant's counterclaim (first filed on December 9, 2005) is barred by the one-year statute of limitations of § 49-42(b) and that "[t]his time limitation is a jurisdictional bar that cannot be waived." Pointing out the seeming inconsistency between the plaintiff claiming on the one hand that its own case was not governed or barred by the statute of limitations of § 49-42(b) and on the other hand that the counterclaim was jurisdictionally barred by that very provision, USFG renewed, at first verbally and then in writing (No. 185), its motion to dismiss the plaintiff's own case based on the admittedly missed and admittedly non-waiveable one-year time limitation of § 49-42(b). The plaintiff responds by disclaiming any notion that the one-year limitation of § 49-42(b) has been waived and concedes that the statutory one-year limitation is a non-waiveable jurisdictional requirement establishing a condition precedent to a cause of action under the Little Miller Act as held by the Supreme Court in American Masons' Supply Co. v. F.W. Brown Co., 174 Conn. 219 (1978). The plaintiff argues, however, that its claim to valid subject matter jurisdiction rests entirely on its present position that it is not suing USFG under the Little Miller Act, but is rather relying entirely on a common-law right of action to sue USFG "on the Bond" as an authorized "claimant" under the terms of the Bond, which cause of action is not limited by the one-year limit of the statute but rather is limited by the statute of limitation provision of the Bond itself which is waiveable and has been waived and extended by the Tolling Agreement. The issue of subject matter jurisdiction having been raised, it must be acted upon by the court. Moreover, whenever a court discovers that it has no jurisdiction, it is bound to dismiss the case ". . . without regard to previous rulings." In re Judicial Inquiry No. 85-01, 221 Conn. 625, 629 (1992). In this regard it is also established that "[a] judge is not bound to follow the decisions of another judge made at an earlier stage of the proceedings, and if the same point is again raised he has the same right to reconsider the question as if he had himself made the original decision." Breen v. Phelps, 186 Conn. 86, 98 (1982). In summary the defendant's motion to dismiss has been timely raised and is not foreclosed by the denial of its earlier motion to dismiss, which brings this court to a consideration of the merits of defendant's claim that the court is without subject matter jurisdiction over this case.
Section 49-42(a) provides in part that "The court judgment may award reasonable attorneys fees to either party if upon reviewing the entire record, it appears that either the original claim, the surety's denial of liability, or the defense interposed to the claim is without substantial basis in fact or law."
The Bond provides in ¶ (3) that: "No suit or action shall be commenced hereunder by any claimant . . . (b) after the expiration of one (1) year following the date on which Principal ceased work on said Contract, it being understood however, that if any limitation embodied in this bond is prohibited by any law controlling the construction hereof such limitation shall be deemed to be amended so as to be equal to the minimum period of limitation permitted by such law." Although the gross period of one year coincides with the one-year period of § 49-42(b) the limitation language of the Bond otherwise varies from the limitation provisions of the statute, quoted at fn.3.
The burden to prove this claim of subject matter jurisdiction rests with the plaintiff. Fink v. Golenbock, 238 Conn. 183, 199 n. 13 (1996). The plaintiff's claim of jurisdiction is stated in its memorandum of law:
Connecticut's Little Miller Act merely creates a statutory obligation that requires the general contractor purchase a bond . . . and is simply a floor beneath which the protections afforded claimants on the bond cannot sink . . . Once a bond is procured pursuant to General Statutes § 49-41, the parties to that bond have the authority to expand coverage under the bond beyond that allowed by statute . . . Here, the parties clearly agreed to expand coverage under the bond beyond that allowed by the statute by executing the attached Tolling Agreement, which states that St. Paul "waives and is estopped from asserting, any and all defenses or bars based upon any statute of limitations, or based on any theory premised on laches or delay or lapse of time with respect to any such defense or bar which had not already accrued prior to the Effective Date" of the Tolling Agreement which is April 19, 2002 . . . The Payment Bond in this case contains a one-year limitation period. While there may be case law that indicates a suit brought under the Little Miller Act must be brought within one year, and that this one year limitation is a jurisdictional prerequisite, this action is brought upon the Bond and, by necessary implication, the Tolling Agreement . . . which . . . is clearly an agreement by the parties to expand the coverage afforded to the Plaintiff under the bond . . . [I]n this situation, the parties have adopted a less restrictive limitation period pursuant to the terms of the bond and the Tolling Agreement between them.
In essence, defendant is asserting that the plaintiff's exclusive cause of action is one under the Little Miller Act. However, the defendant has not provided any Connecticut authority to support the conclusion that the plaintiff does not have an action on the Bond. In fact, the Superior Court decisions in Wolverine Fire Protection Co. v. Tougher Industries . . . and Blakeslee Arpaia Chapman, Inc. v. United States Fidelity Guaranty Company . . . both hold that there is no exclusivity provision written into the Little Miller Act.
. . .
If the defendant intended to incorporate the statutory limitations contained within the Little Miller Act, it could have done so explicitly by referring to the statute in the bond or by specifically incorporating the one-year jurisdictional limitation contained within Connecticut's Little Miller Act. Cf. Commissioner of Labor v. CJM Securities, Inc., 73 Conn.App. 39, 58 (2002) (Noting that "The bond, a copy of which was attached to the complaint, specifically stated that it was `executed pursuant to the provisions of the [Little Miller Act]' . . . and the rights and liabilities hereunder shall be determined and limited by said sections . . .") There does not appear to be any express reference to General Statutes § 49-42 or any other section of Connecticut's Little Miller Act in the language of the Bond. Accordingly, the absence of any terms expressly incorporating Connecticut's Little Miller Act limitation period into the Bond also militates against finding that the bond in fact intended to incorporate the jurisdictional bar contained within Connecticut's Little Miller Act.
(Superior Court case citations omitted.) Plaintiff's Memorandum in Opposition to Defendant's Second Motion to Dismiss, April 2, 2008, 2-5.
The plaintiff's multi-faceted argument can be broken down into three components all of which, on close analysis, are flawed.
(1) The claim that the Bond was not executed pursuant to the Little Miller Act and does not incorporate the provisions of the Little Miller Act.
This claim is totally inconsistent with the plaintiff's stipulation in paragraph "B" of the introduction to the Tolling Agreement which provides: "WHEREAS, St. Paul, formerly USFG, issued a payment bond pursuant to Connecticut General Statutes § 49-41, et seq., (the "Bond") to the general contractor for the Danbury Landfill, Metcalf Eddy, Inc." (Emphasis added.) The court finds, based on that statement in the Tolling Agreement and the background of the Project as alleged in the complaint, that the Bond at issue herein is a Little Miller Act Bond required by and issued pursuant to Conn. Gen. Stat. § 49-41. An express reference to the statute in the bond is not required. See New Britain Lumber Co v. American Surety Co., 113 Conn. 1, 7 (1931) (No statutory references in the bond, yet ". . . liability of the surety under the bond is coterminous with the statute."). As a bond required by § 49-41 for a public works project "the bond and the statute, therefore, are to be construed together." American Masons' Supply Co., supra, 174 Conn. at 225 (citing New Britain Lumber Co. v. American Surety Co., supra, 113 Conn. at 5-6, where the court said: "Where a statutory bond is given, the provisions of the statute will be read into the bond . . . If the law has made the instrument necessary, the parties are deemed to have had the law in contemplation when the contract was executed.") (Citations and internal quotation marks omitted.) "We have consistently recognized that the provisions of § 49-41 are to be incorporated into a payment bond that is executed pursuant to the statute." Herbert S. Newman Partners v. CFC Construction, LP, 236 Conn. 750, 756 (1996). The bond in this case therefore includes and incorporates the Connecticut Little Miller Act including the one-year statute of limitations of Conn. Gen. Stat. § 49-42(b) quoted at fn. 4 of this memorandum.
(2) The claim that the Tolling Agreement is a permissible expansion of coverage afforded the plaintiff under the Little Miller Act bond.
Connecticut's Little Miller Act (Conn. Gen. Stat. §§ 49-41 through 49-43) is a statutory scheme ". . . enacted to protect workers and materials suppliers on public works projects who cannot avail themselves of otherwise available remedies such as mechanic's liens." (Citation and internal quotations marks omitted.) Blakeslee Arapia Chapman, Inc. v. EI Constructors, Inc., 239 Conn. 708, 714 (1997). Section 49-41 requires that the general contractor provide a payment bond with surety to the state or municipality, which guarantees payment to those who supply labor and materials on a public works project. Section 49-41a specifies that the protection of such bond extends to subcontactors and materials suppliers of the general contractor and subcontractors and materials suppliers of any subcontractor (in other words, down to the "third tier" of contracting). Section 49-42 provides that any person who has performed work or supplied materials on a public works project, but who has not received full payment for such materials or work may enforce his right to payment under the payment bond.
The plaintiff is correct that the "statutory requirements [of the Little Miller Act] establish only. floor of protection beneath which the coverage of a payment bond cannot fall, rather than an upper limit upon the scope of a bond's coverage . . . In other words, the provisions of the payment bond may create more extensive liability for the surety than that required by the act." (Citation and internal quotation marks omitted.) Blakeslee Arpaia Chapman, Inc., supra, 239 Conn. at 716-17. See Herbert S. Newman Partners v. CFC Construction, LP, supra (expansion of bond coverage by agreement to include architectural services in connection with public works project); and Northeast Waste Systems, Inc. v. Connecticut Abatement Technologies, Inc., Docket No.CV98-0419724S, Superior Court, Judicial District of New Haven at New Haven (June 2, 2000, Alander, J.), 27 Conn. L. Rptr. 263 (bond language may extend coverage by agreement down to fourth-tier subcontractor). This freedom to agree on bond protection greater than required by the Act is in keeping with the remedial nature of the Little Miller Act. As the United States Supreme Court has stated, the federal Miller Act (upon which our statute is patterned) is "highly remedial in nature . . . [and] entitled to a liberal construction and application to effectuate the [legislative] intent to protect those whose labor and materials go into public projects." Clifford F. McEvoy Co. v. United States ex rel. Calvin Tompin's Co., 322 U.S. 102, 107 (1944), quoted in Blakeslee Arapia Chapman, Inc., supra, 239 Conn. at 716. See also Okee Industries, Inc. v. National Grange Mutual Insurance Co., 225 Conn. 367, 373 (1993) ("The statute's provisions are to be liberally construed to effect its remedial purpose").
Urging such a liberal construction of the Little Miller Act in its favor the plaintiff contends that the Tolling Agreement is a permitted agreement by the parties to expand the coverage afforded to the plaintiff under the bond "by adopting a less restrictive limitation period pursuant to the terms of the bond and the Tolling Agreement between them." In the court's opinion this argument takes the concept of liberal construction and freedom to agree to expanded bond coverage a step too far, because it tries to carry those concepts from the area of bond protections into the realm of enforcement mechanism. As the court said in Blakeslee Arapia Chapman, Inc., supra, 239 Conn. at 716: "The federal precedents, like our own, counsel liberal construction of statutory requirements other than those relating to specific time constraints." (Emphasis added.) The specific time constraint here at issue, the one-year statute of limitations of Conn. Gen. Stat. § 49-42b, is no ordinary statute of limitations. It is a jurisdictional requirement establishing a condition precedent to maintaining an action under the Little Miller Act — a cause of action which did not exist at common law. American Masons' Supply Co. v. F.W. Brown Co., supra, 174 Conn. at 224.
The statute having created the cause of action and prescribed the procedure, the mode of proceeding is mandatory and must be strictly complied with. Pittsburgh Plate Glass Company v. Dahm, 159 Conn. 563, 565 (1970). Both the Bond and the Tolling Agreement itself recognize the priority of the Act's statute of limitations. ". . . [I]f any limitation embodied in this bond is prohibited by any law controlling the construction hereof, such limitation shall be deemed to be amended so as to be equal to the minimum period of limitation permitted by such law." (Bond, ¶ 3(b).) "If any portion, provision, or part of this Agreement is held . . . to be invalid, unenforceable, void or voidable, [it] shall be severed from . . . the remaining portions." (Tolling Agreement, ¶ 6.) The parties therefore cannot modify or extend by agreement the one-year limitation period of § 49-42(b). To hold otherwise would be to contravene the established doctrine that the parties cannot by agreement confer subject matter jurisdiction upon this court. Jolly v. Zoning Board of Appeals, 237 Conn. 184, 192 (1996); Oliphant v. Commissioner of Correction, 83 Conn.App. 10, 16 (2004).
The plaintiff has conceded this point in oral argument and in its motion to dismiss USFG's counterclaim where it has referred to the § 49-42(b) statute of limitations as a "jurisdictional bar that cannot be waived." What plaintiff now claims, however, is that the Bond modification it attributes to the Tolling Agreement does more than just extend the one-year limitation period, but also removes the cause of action entirely from the statutory scheme and transforms the claim into a common-law cause of action not governed by § 49-42(b). This argument — also to be discussed in the following section — goes beyond the precedent which allows the parties to agree to extended bond protection under the Little Miller Act. In those cases (see Herbert S. Newman Partners and Northeast Waste Systems, Inc., supra) the allowable enhanced bond protection was enforced within the structure of a statutory cause of action under § 49-42. For instance, in Northeast Waste Systems, Inc. Judge Alexander denied summary judgment on the fifth and sixth counts of the complaint "which seek payment pursuant to a labor and material bond established in accordance with General Statutes § 49-41," holding that the protection of the statute had been extended by the bond language to a fourth-tier subcontractor. Summary judgment denied, the case proceeded on those counts as Little Miller Act claims, not as separate claims under the common law.
(3) The claim that plaintiff has sued the defendant "on the bond" as a common-law cause of action which exists separate and apart from a cause of action under the Little Miller Act.This argument depends on a claimed distinction between a cause of action "on the bond" and a cause of action under § 49-42 of the Little Miller Act. In order to avoid the mandatory nonwaivable or modifiable one-year statute of limitations of the Little Miller Act, plaintiff claims to be suing under the common law "on the bond" subject only to the contractual one-year statute of limitations of ¶ 3 of the Bond as extended by the Tolling Agreement. But labeling a claim as a cause of action "on the bond" does nothing to distinguish the claim from a statutory action under the Little Miller Act which is itself a cause of action "on the bond": "If the surety denies liability on the claim, or any portion thereof, the claimant may bring action upon the bond in the Superior Court . . ." (Emphasis added.) § 49-42(a).
There is no Connecticut authority at any level holding expressly that an action under the Little Miller Act is the exclusive remedy for a party in plaintiff's position to make a claim on the general contractor's payment bond, but the plaintiff's admission in ¶ B of the Tolling Agreement that this Bond was issued pursuant to the terms of the Little Miller Act compels that result. The Bond admittedly exists because it is required by the statute. The Bond affords claimant status to a sub-subcontractor such as the plaintiff because the statute requires it. The terms of the statute are incorporated into the Bond. The Supreme Court has held in American Masons Supply Co., supra, that a cause of action by a subcontractor against the surety on the prime contractor's payment bond did not exist at common law. Under these circumstances the only available action "on the bond" is an action under the Little Miller Act.
The plaintiff has misconstrued the statements in several Superior Court decisions that an action under the Little Miller Act "is not the exclusive remedy" of an unpaid subcontractor or materials supplier to a public works project. In each of those cases the court permitted a plaintiff in the position of Paradigm to maintain one or more tort or tort-related counts against the bond surety in addition to — not in lieu of — a claim on the Bond under the Little Miller Act. See Wolverine Fire Protection Co. v. Tougher Industries, Docket No. CV01-0805554S, Superior Court, Judicial District of Hartford at Hartford (June 20, 2001, Hale, J.) [ 29 Conn. L. Rptr. 731] (counts sounding in breach of covenant of good faith and fair dealing and CUTPA violation allowed in addition to count on the bond under the Little Miller Act), and Blakeslee Arapia Chapman, Inc v. United States Fidelity and Guaranty Company, Docket No. 520348, Superior Court, Judicial District of New London at New London (March 4, 1994, Hurley, J.), 11 Conn. L. Rptr. 169 (CUIPA and CUTPA counts allowed in addition to count one, being a Little Miller Act claim on the bond). Other cases cited by Judge Hale in Wolverine Fire Protection Co. follow the same pattern — tort related claims allowed in same complaint as a Little Miller Act claim on the bond. No case has been cited by the plaintiff, nor has the court's research disclosed any case, holding that the non-exclusivity of the remedy under the Little Miller Act permits a separate common-law action on the bond. In fact one case cited by the plaintiff implies strongly that such a common-law action would not be permitted. In Ten Hoeve Brothers, Inc. v. Hartford, Docket No. CV93-0704020S, Superior Court, Judicial district of Hartford at Hartford (May 13, 1996, Corradino, J.) [ 17 Conn. L. Rptr. 173], the court said:
See Premier Roofing Company v. Insurance Company of North America, Docket No. 312438, Superior Court, Judicial District of Danbury (March 3, 1995, Leheny, J.), 13 Conn. L. Rptr. 544, 547, and Production Equipment Company v. Blakeslee Arapia Chapman, Inc., Docket No. 247485, Superior Court, Judicial District of New Haven at Meriden (January 3, 1996, Silbert, J.), 15 Conn. L. Rptr. 558.
The plaintiff here does not base its claim on § 49-41 and it would be an odd interpretation of an ameliorative statute to say that because a company in the class of entities sought to be protected by ameliorative legislation doesn't take advantage of the protection afforded by a particular statute then that party cannot resort to common law or equitable remedies that pre-existed the legislation. (Emphasis added.)
An action on the payment bond of the general contractor did not exist at common law prior to the enactment of the Little Miller Act. American Masons' Supply Co., supra, 174 Conn. at 224. The clear inference, then, is that plaintiff Paradigm may not decline to take advantage of its right to sue USFG on the Bond under the Little Miller Act and proceed instead by suing on the bond under the common law.
Although there is no direct Connecticut precedent that there in no common-law action "on the bond" available to a party in plaintiff's position, common-law actions on the bond have been barred under the laws of other states having Little Miller Act statutes. Midasco, Inc. v. Hunter Associates, No. 2:05CV, 2006 U.S. Dist. LEXIS 9363 at *7-20 (E.D.Va. Feb 22, 2006), involved claim on a payment bond for a large public works project in Virginia. The bond surety claimed that the action was not brought within the one-year period of the Virginia Little Miller Act and the plaintiff subcontractor took the position that the Virginia statute did not apply to the payment bond in issue because the bond was signed in either Georgia or Massachusetts and that the substantive laws of those states indicate that a common-law right of action exists outside of the statutory framework. The District Court examined the issue under the laws of Georgia, Massachusetts, and Virginia (all of which have Little Miller Act statutes) and concluded that there is no common-law right to sue outside the statute under which the bond is issued, and that a cause of action under a valid statutory bond must be filed within the one-year statutory limitations period. In Joseph Hughes Co., Inc., 211 Va. 4, 175 S.E.2d 413 (1970), the Virginia Little Miller Act required that the action be commenced "within one year after substantial completion of the contract." The bond provided that no action is to be commenced "after the expiration of one (1) year following the date on which Principal ceased work," but went on to say in an "amendment provision" that "if any limitation embodied in this bond is prohibited by any law controlling the construction hereof, such limitation shall be deemed to be amended so as to be equal to the minimum period of limitation permitted by such law." The trial court had found that the action was not commenced within the statutory period but was commenced within the limitation period of the bond, and that the bond provision was controlling. The claimant argued before the Supreme court of Virginia that the trial court was correct, and that ". . . because the bond gives materialmen a right, independent of the statute, and that is the right relied upon, the statutory prohibition goes only to the remedy and the parties are not prohibited thereby from contracting for a different period." 211 Va. at 6. The Supreme Court reversed, holding that the statute was "prohibitory of any other limitation" and took precedence over the bond's limitation clause, and, with respect to the claim of a right independent of the statute, the court said:
Va. Code. Ann. § 11-23.
This "amendment provision" language is identical to the language of the bond at issue in this case, quoted at p. 11 of the text.
But to adhere to that theory would be to obviate the amendment provision of the bond completely; the parties would always be free to contract for any period of limitation and the amendment provision would be meaningless . . . We cannot presume that the parties to the bond intended to include therein a provision of no effect . . . The statute and the bond are to be read together, for together they constituted the measure of Broyhill's [contractor] undertaking and the extent of his and the surety's liability.
(Citations and internal quotation marks omitted.) Id. 211 Va. at 6-7.
Other authorities holding that there is no common-law right to sue on a Little Miller Act bond include Philip Carey Manufacturing Co. v. Peerless Casualty Company, 330 Mass. 319, 113 N.E.2d 226 (Mass. 1953), Martin Fireproofing Corporation v. Aetna Insurance Co., 364 Mass. 498, 194 N.E.2d 101 (Mass. 1963), and U.S. Fidelity Guaranty Co v. Tafel Electric Co., 262 Ky. 792, 798 (Ky. 1935) ("Agreements to abridge or lengthen the period of limitations prescribed by statutes are void as against public policy.").
Cases suggesting the existence of a common-law right to sue on the bond when the bond creates rights greater than statutory rights include CT Page 6179 Petition of Lean Keyser, Inc., 97 N.H. 404, 89 A.2d 917 (1952), and National Surety Corp. v. Fisher Steel Corp., 213 Tenn. 396, 374 S.W.2d 372 (1964). For all of the reasons stated herein, however, this court holds to the contrary.
The court recognizes the unfairness of ruling that a jurisdictional statute of limitations has run before this action was commenced, when the party urging that position has expressly agreed in the Tolling Agreement to waive and extend that statute of limitations. Matters of subject matter jurisdiction, however, are not controlled by equitable considerations nor by agreements of the parties. This court has an obligation to dismiss the case when it concludes that it lacks subject matter jurisdiction. After a thorough evaluation of the positions taken by the parties, and the authorities they have cited, the court has concluded that it does lack subject matter jurisdiction under American Masons' Supply Co. v. F.W. Brown Co., supra, and accordingly the defendant's motion to dismiss must be granted.
B. Plaintiff's Motion to Dismiss the Counterclaim
The defendant's counterclaim asks for an award of counsel fees under The Little Miller Act, § 49-42(a) (relevant provision quoted at fn. 6). The plaintiff's motion to dismiss the counterclaim suggests lack of subject matter jurisdiction because the counterclaim was not filed within the one-year time restriction for bringing claims under the Little Miller Act, a "jurisdictional bar that cannot be waived."
The statute of limitations upon which the motion is based is contained within § 49-42(b) and provides that ". . . no such suit [a suit under `this section'] may be commenced after the expiration of one year after the last date that materials were supplied or any work was performed by the claimant . . ." If this statute applies to defendant's counterclaim there is no doubt that it has not been satisfied. The last day of work by the "claimant" in this "suit" [plaintiff Paradigm] was September 23, 1998 (Complaint, ¶ 7). The defendant's counterclaim was first filed on December 9, 2005 in the second action — more than seven years after plaintiff last worked on the Project.
The court holds, however, that the time limitation of § 49-42(b) does not apply to a defendant's counterclaim for counsel fees under § 49-42(a). The limitation provision applies to any "such suit" which refers back to the first clause of that sentence which commences with the words "[e]very suit instituted under this section . . ." which in turn refers to the provision of § 49-42(a) that "[i]f the surety denies liabililty on the claim, or any portion thereof, the claimant may bring action upon the payment bond in the Superior Court . . ." The court construes this reference to a "suit" without a similar reference to a counterclaim as a clear indication that the limitation period applied to a bond claimant's initial lawsuit but does not apply to a counterclaim. This view is confirmed by the measuring time for the period of limitations beginning to run, which is one year from last date that the claimant supplied materials or performed work on the project. To hold otherwise would lead to irrational and unintended results. For instance, if a plaintiff instituted suit as a tactical move on the last possible day within the limitations period, the defendant would be forced to seek attorneys fees on the same day the suit was served, even before the case is returned to court. Or, in a case such as this, where the suit (the second suit) has been commenced more than one year after the last day of work on the Project, the defendant would be totally foreclosed from counterclaiming for counsel fees.
There is no other provision of the Little Miller Act which imposes a time limit on a defendant's seeking an award of counsel fees. The defendant suggests that there is no time limit. In the court's opinion it may not be necessary that an award of counsel fees under § 49-42(a) be pleaded by counterclaim at all. Either party may be able to seek such counsel fees by a post-trial motion.
It is not necessary, however, for the court to decide what time limitation, if any, applies to a clam for counsel fees under § 49-42(a) because, in the present context of this case, the court finds, sua sponte that it has no subject matter jurisdiction over that claim. The award of counsel fees is authorized by § 49-42(a) ". . . if, upon reviewing the entire record, it appears that either the original claim, the surety's denial of liability, or the defense interposed to the claim is without substantial basis in fact or law." Because the court has granted the defendant's motion to dismiss the plaintiff's case prior to the start of evidence, it will be impossible for the court to consider "the entire record." At oral argument there were claims made of substantive issues of fact and law relating to the adequacy of plaintiff's notice of claim under the bond, plaintiff's failure to respond to certain correspondence from the defendant, and the consequences of USFG's failure at any time to have issued a denial of plaintiff's claim. Without hearing evidence or considering substantive arguments of law on those points, because the case has been dismissed on a timeliness issue, the court would be unable to consider the substantial basis or lack thereof for the plaintiff's claim or the defendant's defense to that claim. The counterclaim is thus in a state of procedural mootness. Mootness implicates a court's subject matter jurisdiction. Stamford Hospital v. Vega, 236 Conn. 646, 656 (1996).
Lack of subject matter jurisdiction may be raised at any time, even by the court sua sponte. Ambriose v. William Raveis Real Estate, Inc., supra, 226 Conn. at 767.
The defendant may agree with this analysis: "Accordingly, any right to attorneys fees may accrue for example, only after the surety has interposed a defense to the claim, or even after a review of the entire record, such as at trial." Defendant's Memorandum of Law in Opposition to Plaintiff's Motion to Dismiss Defendant's Counterclaim, p. 5.
Order
For the foregoing reasons the Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction (No. 185) is granted; and Plaintiff's Motion to Dismiss Defendant's Counterclaim (No. 177) is denied, but the court, sua sponte, herby dismisses defendant's counterclaim for lack of subject matter jurisdiction.
Alfred J. Jennings, Jr., Judge