Old Colony Construction, LLC v. Southington

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OLD COLONY CONSTRUCTION, LLC v. TOWN
OF SOUTHINGTON
(SC 19346)
Palmer, Eveleigh, McDonald, Robinson and Prescott, Js.
Argued December 10, 2014—officially released April 21, 2015
Jared Cohane, with whom were Peter J. Martin and
Luke R. Conrad, and, on the brief, Timothy T. Corey,
for the appellant (plaintiff).
Linda L. Morkan, with whom were Dennis C. Cavan-
augh, and, on the brief, Ryan M. Burns, for the appel-
lee (defendant).
Wendy Kennedy Venoit and Peter J. Zarella filed
a brief for the Connecticut Associated Builders and
Contractors, Inc., as amicus curiae.
Opinion
McDONALD, J. This appeal principally concerns a
municipality’s ability to recover liquidated damages for
a contractor’s failure to timely complete a public works
contract if the municipality has elected to terminate
the contract for convenience1 or has contributed to
some portion of the delay. The plaintiff, Old Colony
Construction, LLC (Old Colony), appeals from the judg-
ment of the trial court awarding the defendant, the
town of Southington (town), liquidated damages on its
counterclaim and permitting the set off of those dam-
ages against the damages awarded to Old Colony for
the town’s failure to pay sums due under the contract’s
termination for convenience provision. Old Colony con-
tends that the town is barred from collecting liquidated
damages because: (1) termination for convenience pre-
cludes any default based remedies available for termina-
tion for cause, including liquidated damages; and (2) the
town’s contribution to the delay rendered the liquidated
damages provision unenforceable under Hartford Elec-
tric Applicators of Thermalux, Inc. v. Alden, 169 Conn.
177, 184, 363 A.2d 135 (1975). Old Colony further con-
tends that, in light of change orders approved by the
town acknowledging Old Colony’s entitlement to addi-
tional time for certain delays, it is entitled to an equita-
ble adjustment in the contract. The trial court rejected
these claims in light of a reservation of the town’s rights
and remedies in the termination for convenience provi-
sion and contractual mechanisms for obtaining exten-
sions of time for delays beyond Old Colony’s control,
with which Old Colony had failed to strictly comply.
We affirm the trial court’s judgment.
The record reveals the following summary of the
underlying facts, as found by the trial court or as
reflected in the express terms of the parties’ contract.
In early 2004, the town sought bids on a construction
project known as the Pond View Drive Pump Station
Replacement. The project required the demolition of
an existing sewer pump station and the construction
of a wet well, a pumping station, and an above grade
garage. The town received eleven bids on the project,
ranging from $912,500 to $1,665,000. By letter dated
February 24, 2004, the town awarded the contract to
Old Colony for $912,500. Included in the contract docu-
ments was a document entitled ‘‘Standard General Con-
ditions of the Construction Contract’’ (general
conditions), which included, inter alia, provisions con-
cerning the contractor’s responsibilities, execution of
change orders, and suspension of work and termination.
In executing the contract, Old Colony attested that it
had examined the work site to ascertain any conditions
that could affect performance and had undertaken any
supplemental examination or testing necessary to meet
the contract’s terms and conditions.
Under the express terms of the contract, time was
of the essence. The effective date of the contract was
April 22, 2004. Substantial completion of the contract
was due by January 17, 2005. The contract authorized
liquidated damages in the amount of $400 for each day
that substantial completion exceeded that date. The
contract also provided mechanisms for Old Colony to
seek extensions of time and increases in the contract
price for delays beyond its control. Such extensions of
time could be made only by way of change orders or
amendments to the contract, but, unless the parties had
agreed to the adjustment, Old Colony was required to
file written notice of a claim to the project engineer—
the town engineering department—within a specific
period and with supporting documentation to obtain
the adjustment.
From the outset, the project was plagued with delays.
Part of the delay stemmed from Old Colony’s misunder-
standing as to when the contract time commenced. Old
Colony’s first written submittals were more than three
months late. Over the course of the project, the project
engineer repeatedly brought to Old Colony’s attention
the provisions pertaining to contract times, liquidated
damages, and the extension of the construction period
under specific conditions. In a letter dated November
16, 2004, in response to Old Colony’s complaint that
the town had delayed responding to certain submittals
and providing certain materials, the town agreed as a
compromise to extend the substantial completion date
to June 14, 2005. The letter advised: ‘‘[A]ny delay beyond
June 14, 2005 will be assessed liquidated damages at
$400 per day.’’ Following a May 16, 2005 meeting, the
project engineer reiterated this position, advising by
letter that ‘‘[o]nly the [t]own [c]ouncil can waive or
reduce liquidated damages and only at [the] completion
of the project.’’
After the substantial completion date was extended
to June 14, 2005, several other problems arose that
impacted the schedule. For example, Old Colony dis-
covered that contract construction documents did not
correctly reflect the location of underground electrical
lines and the elevation of the force main for the sewer
lines. Old Colony also discovered a caisson for the old
pump station in the excavation site that had to be
removed, which the town agreed was an unforeseen
condition. In each of these instances, the project engi-
neer signed off on change orders drafted by Old Colony
to address certain costs arising from these circum-
stances, which, in describing the change, noted that the
impact to the schedule had not been determined and
that additional time would be incorporated into the
schedule. When the town, however, rejected as unnec-
essary Old Colony’s new proposal for a temporary
bypass system in lieu of a previously accepted proposal,
it advised Old Colony by letter that it was not agreeing
to any substantial change in the original contract as to
time or costs. The letter also reiterated the applicability
of the liquidated damages clause and the town’s reserva-
tion of right to assess such damages.
On more than one occasion during this process, the
town initiated steps to terminate the contract for cause,
but on each occasion agreed to continue the project
after meeting with Old Colony. Ultimately, however,
after disagreements and further delays relating to the
dewatering process, the town notified Old Colony by
way of a letter dated August 14, 2007, of the town’s
election to terminate the contract on the basis of conve-
nience under paragraph 15.03 of the general conditions
of the contract. Shortly thereafter, Old Colony submit-
ted payment application 15 in the amount of $86,765.64.
Old Colony previously had been paid a total of
$650,220.74 pursuant to payment applications 1 through
14. In further communications in September and Octo-
ber, 2007, the town acknowledged receipt of payment
application 15 and its obligation to pay Old Colony for
expenses, claims, and completed work on the project
but requested a complete accounting of costs to set-
tle payment.
On January 16, 2009, Old Colony submitted payment
application 15R seeking $1,352,405.89 in unpaid costs,
or, in the alternative, a request for an equitable adjust-
ment in the contract price in the amount of $951,245.43,
based primarily on delay related costs. After the town
rejected the payment requests, Old Colony submitted
a claim to the project engineer, as required under the
contract. That claim effectively was denied after the
project engineer failed to issue a written decision on
the merits within thirty days after the claim submission.
In July, 2009, Old Colony commenced the present
breach of contract action.2 The town asserted a special
defense claiming that Old Colony had not satisfied the
conditions precedent to recovery, including proper,
timely notice of its claims. The town also requested a
setoff for a counterclaim seeking liquidated damages
for breach of contract.3 In response, Old Colony filed
a motion for summary judgment, contending that the
counterclaim was barred as a matter of law by virtue
of the town’s election to terminate the contract for
convenience, not for cause.
The trial court, Young, J., denied Old Colony’s motion
for summary judgment. The court framed the issue as
‘‘whether the town’s election to terminate the contract
pursuant to [paragraph] 15.03 of the general conditions
of the contract absolved Old Colony of any further
obligation for prior alleged default or liquidated dam-
ages, which could have been asserted if the contract
was terminated for cause.’’ In answering that question
in the negative, the court cited language in paragraph
15.03 reserving to the town other rights and remedies.
Following a bench trial, the trial court, Hon. Lois
Tanzer, judge trial referee, rendered judgment in favor
of Old Colony on its breach of contract claim and in
favor of the town on its liquidated damages counter-
claim. With respect to Old Colony’s claim, there was
no real dispute as to whether Old Colony had a right
to recover for sums due under the termination for con-
venience provision, but rather as to the amount due
thereunder. That provision distinguishes between pay-
ment for completed work, payment for expenses for
uncompleted work, and payment for expenses sus-
tained in connection with termination. The court con-
cluded that Old Colony was due a total of $164,440.64:
$86,765.64 for completed work set forth in payment
application 15; $45,000 in expenses for incomplete work
related to the dewatering plan; and $32,675 in expenses
directly attributable to termination for materials that
the town had required Old Colony to leave on the site
posttermination.
Having resolved the issue of damages due under the
termination for convenience provision, the court con-
sidered Old Colony’s claim for an equitable adjustment
in the contract price due to project delays. The court
agreed with the town that no such adjustment could
be afforded in light of Old Colony’s failure to comply
with the strict contractual notice preconditions for
obtaining adjustments for delays. The court rejected
Old Colony’s position that the notice requirements had
been satisfied by letters accompanying some of its appli-
cations for payment indicating that the requests therein
were not inclusive of all costs or work completed to
date, that the project had been impacted by circum-
stances beyond Old Colony’s control, and that, as a
result, additional time and efforts would be required to
complete the project. The court also disagreed with Old
Colony’s position that the town’s approval of the change
orders was persuasive evidence that the parties had
agreed to modify the contract to dispense with contrac-
tual requirements for changes in time, cost, or notice
of the details of delay claims. The court concluded: ‘‘In
sum, [Old Colony] is not entitled to recover payment for
its claimed delay expenses because [paragraph] 15.03
[Termination for Convenience] of the [c]ontract does
not authorize such payment, because [Old Colony] did
not comply with the notice provisions of the contract
for delay claims and changes in [c]ontract price and
time, and because there is no equitable basis such as bad
faith or contract modification to invoke such a claim.’’
The court next turned to the town’s counterclaim for
liquidated damages and a setoff. The town sought $400
per day for 789 days of delay between June 14, 2005,
the revised substantial completion date, and August 14,
2007, the termination for convenience date. As there
was express contractual language providing for such
damages, the court considered in turn, but ultimately
rejected, each of Old Colony’s special defenses as to
why such relief was legally unavailable. The court first
concluded that the argument that this relief was pre-
cluded by the town’s election to terminate for conve-
nience had been rejected in the prior decision by Judge
Young denying Old Colony’s motion for summary judg-
ment, noting that Old Colony had not provided the court
with any basis to rule contrary to that decision. The
court next rejected Old Colony’s reliance on Hartford
Electric Applicators of Thermalux, Inc. v. Alden, supra,169 Conn. 184, for the proposition that the liquidated
damages provision had been abrogated because the
town had caused or contributed to some of the delays.
The court reasoned that the New York case on which
Alden had relied for this general rule acknowledged that
abrogation would not apply if the contract contained
a mechanism to reset the date from which liquidated
damages would run if the delay was not caused by the
contractor. See Mosler Safe Co. v. Maiden Lane Safe
Deposit Co., 199 N.Y. 479, 486–87, 93 N.E. 81 (1910).
The liquidated damages provision in the present case
provided such mechanisms, but Old Colony had not
followed the procedures required by the contract, and
the town had not granted extensions beyond June 14,
2005. As such, the court concluded that Old Colony
should not be permitted to avoid liquidated damages
without strict compliance with the delay provisions.
Finally, the court rejected Old Colony’s defenses that
the town had waived, or was estopped from asserting,
a claim for liquidated damages by virtue of the change
orders acknowledging that additional time would be
warranted. The court concluded that the town’s con-
duct may have been an acknowledgment of Old Colo-
ny’s right to seek additional compensation but did not
express the town’s intention to waive the town’s right
to liquidated damages for delay or dispense with Old
Colony’s obligations to comply with procedures for
delay claims.
Ultimately, the court concluded that the town was
entitled to $315,000 in liquidated damages on its coun-
terclaim. The court granted the town’s request to set
off the $164,440.64 in damages it owed Old Colony for
terminating the contract for convenience, and rendered
judgment in favor of the town in the amount of
$150,559.36. This appeal followed.4
I
We begin with Old Colony’s claims in support of its
contention that the town is not entitled to liquidated
damages.
A
Old Colony first claims that default based remedies,
including liquidated damages, are not available if a prop-
erty owner elects to terminate a construction contract
for convenience, or ‘‘without cause.’’ Old Colony con-
tends that, because a property owner terminating a
contract for convenience avoids liability for the other
party’s expectation damages as well as the risks atten-
dant to proving a proper termination for cause, the
consideration supporting that unilateral right is the loss
of default based remedies available for termination for
cause. We conclude that, irrespective of the merits of
Old Colony’s position as an abstract proposition, the
present case is governed by the express terms of the
parties’ contract, under which the town may recover
liquidated damages.
It is well settled that, ‘‘[w]hen construing a contract,
we seek to determine the intent of the parties 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. . . . When the language of a
contract is ambiguous, the determination of the parties’
intent is a question of fact. . . . When the language is
clear and unambiguous, however, the contract must be
given effect according to its terms, and the determina-
tion of the parties’ intent is a question of law.’’ (Citations
omitted; emphasis omitted; internal quotation marks
omitted.) Isham v. Isham, 292 Conn. 170, 180–81, 972
A.2d 228 (2009). Old Colony concedes that this issue
is a question of law to be resolved by resort to the
contract terms.
Article 3 of the parties’ contract addresses ‘‘Contract
Times.’’ Paragraph 3.1 sets forth the period by which
substantial completion of the project is due. Paragraph
3.2, entitled ‘‘Liquidated Damages,’’ provides in relevant
part: ‘‘[The town] and [Old Colony] recognize that time
is of the essence of this [a]greement and that [the town]
will suffer financial loss if the [w]ork is not completed
within the times specified in paragraph 3.1 . . . plus
any extensions [of time] thereof allowed in accordance
with [a]rticle 12 of the [g]eneral [c]onditions. They also
recognize the delays, expense, and difficulties involved
in proving the actual loss suffered by [the town] if the
[w]ork is not completed on time. Accordingly, instead
of requiring any such proof, [the town] and [Old Colony]
agree that as liquidated damages for delay (but not as
a penalty) [Old Colony] shall pay [the town $400] for
each day that expires after the time specified in para-
graph 3.1 for [s]ubstantial [c]ompletion until the [w]ork
is substantially complete. . . .’’
Article 15 of the general conditions of the contract
addresses ‘‘Suspension of Work and Termination.’’
Paragraph 15.02 provides for termination for cause, set-
ting forth the events that constitute such cause and the
town’s right to recover from Old Colony should the
town’s damages and costs for completing the project
exceed the unpaid balance of the contract price. Para-
graph 15.03 provides for termination for convenience,
providing in relevant part: ‘‘Upon seven days written
notice to [Old Colony] and [the project engineer], [the
town] may, without cause and without prejudice to
any other right or remedy of [the town], elect to termi-
nate the [c]ontract. . . .’’ (Emphasis added.) This para-
graph then prescribes Old Colony’s right to be paid for:
(1) completed, acceptable work, including reasonable
sums for overhead and profit on such work; (2)
expenses sustained prior to the effective date of termi-
nation in connection with uncompleted work, including
reasonable sums for overhead and profit on such
expenses; (3) losses incurred in settlement of termi-
nated contracts with subcontractors, suppliers, and oth-
ers; and (4) reasonable expenses directly attributable
to termination.
We begin with the observation that the reservation
of ‘‘any other right or remedy’’ appears exceedingly
broad. (Emphasis added.) Had the parties intended to
limit the town to nondefault remedies, as Old Colony
suggests,5 one would expect some sort of limiting lan-
guage rather than such expansive terms. Cf. Litton
Industries Credit Corp. v. Catanuto, 175 Conn. 69, 70–
71, 394 A.2d 191 (1978) (agreement providing that, in
event of default, lessor shall have right to exercise ‘‘ ‘any
one or more of the following remedies’ ’’ but then pro-
viding that ‘‘ ‘[t]he remedies provided under [B] and [C]
may be exercised only in the alternative’ ’’). When a
contract expressly preserves remedies following termi-
nation, such a reservation must be given full effect
absent evidence of a more limited intent. See Armour &
Co. v. Nard, 463 F.2d 8, 10 (8th Cir. 1972) (rejecting
contractor’s argument that owner was barred from
seeking damages for delay after exercising right to ter-
minate ‘‘without cause’’ in light of contractual provision
stating that ‘‘ ‘failure by [the owner] to exercise any right
under the [c]ontract [d]ocuments shall not constitute a
waiver of that or any other right or subsequent right
hereunder’ ’’);6 EPC Corp. v. Travelers Casualty &
Surety Co. of America, 423 F. Supp. 2d 1016, 1026 (D.
Ariz. 2006) (concluding that court must give effect both
to termination for convenience clause providing for
payment of subcontractor for work actually performed
in amount proportionate to sum payable under
agreement and to provision allowing contractor to off-
set any sums due subcontractor by amount of any
‘‘backcharges’’ for defective work, absent evidence that
parties intended provisions to have meaning other than
what is contained in contract itself).
In the absence of any express limitation on the reser-
vation of rights in the termination for convenience
clause, we consider whether any limitation is implied
by other provisions in the contract. See, e.g., Plainfield
v. Paden Engineering Co., 943 N.E.2d 904, 913 (Ind.
App. 2011) (termination-on-certificate clause providing
that termination procedure therein prescribed is ‘‘with-
out prejudice to any other rights or remedies of the
[o]wner’’ preserves owner’s common-law rights to
extent that exercise of those rights is not in conflict
with duties specified in contract). The only potential
limitation on the termination for convenience provision
that may be gleaned is one yielded by a comparison to
the provision setting forth a reservation of rights when
terminating for cause. That provision, paragraph 15.02
(C) of the general conditions, provides in relevant part
that ‘‘termination [for cause] will not affect any rights
or remedies of [the town] against [Old Colony] then
existing or which may thereafter accrue. . . .’’ The
absence of similar temporal language in the termination
for convenience provision arguably could imply that
rights and remedies cannot accrue after termination.
Cf. Armour & Co. v. Nard, supra, 463 F.2d 11 (‘‘gener-
ally, the exercise of a power of termination will have
prospective operation only; discharging both parties
from their contractual duty to perform promises that
are still wholly executory, but not discharging liability
for breaches that have already occurred’’). Even if we
were to assume, however, that such a limitation exists
following a termination for convenience, the town’s
claim for liquidated damages in the present case would
not be impaired because its right to such damages arose
as soon as the substantial completion date passed and
continued to accrue until termination of the contract.
The case law on which Old Colony relies for the
proposition that all default based remedies are unavail-
able if an owner terminates for convenience, neither
stands for such a sweeping proposition nor is applicable
under the facts of the present case. None of the cases
involved a liquidated damages provision. Only one of
the cases involved a similar reservation of rights and
remedies in the termination for convenience provision
itself. See Shelter Products, Inc. v. Steelwood Construc-
tion, Inc., 257 Or. App. 382, 385, 307 P.3d 449 (2013)
(citing clause providing that ‘‘ ‘[t]he [c]ontractor may,
upon seven . . . days written notice to the [s]ubcon-
tractor, without cause and without prejudice to any
other right or remedy, terminate this [s]ubcontract, in
whole or in part, for its convenience’ ’’). In that case,
the court recognized the significance of this reservation
and limited its holding to the particular circumstances
of the case. See id., 399 (‘‘we agree with the trial court
that . . . the text of the termination for convenience
clause, in context, does not under the circumstances
of this case permit [the contractor] to both terminate
[the subcontractor] without cause and subsequently
proceed against [the subcontractor] as if it had termi-
nated the agreement for cause’’ [emphasis added]). The
contractor in Shelter Products, Inc. had sought damages
for curing a subcontractor’s defective work after it had
terminated the subcontract for convenience. In
rejecting that claim, the court emphasized the fact that,
had the subcontractor been terminated for cause, the
contractor would have been required to provide the
subcontractor with notice and an opportunity to cure
the defective work. See id., 400 (noting no ‘‘generally
applicable legal rule or provision of the contract that
. . . would permit [the contractor] to both terminate
without cause, fail to provide an opportunity to cure,
and, at the same time, proceed against [the subcontrac-
tor] as if it had terminated the agreement for cause and
given an opportunity to cure’’); id., 402 (‘‘at least in the
absence of an opportunity to correct allegedly defective
work . . . where a party has terminated a contract for
convenience, that party may not then counterclaim for
the cost of curing any alleged default’’). Indeed, all of
the cases relied on by Old Colony share this general
concern about a party seeking to recover the costs of
curing defective or incomplete work after terminating
for convenience,7 a matter on which the law is not fully
settled. See TRG Construction, Inc. v. Water & Sewer
Authority, 70 A.3d 1164, 1168 (D.C. 2013) (‘‘[w]e recog-
nize that the Federal Circuit, in [Lisbon Contractors,
Inc. v. United States, 828 F.2d 759, 769 (Fed. Cir. 1987)],
specifically refused to rule on the question of whether
the government may deduct the cost of replacing defec-
tive work from a termination for convenience
recovery’’).
In the present case, the town’s pursuit of liquidated
damages does not deprive Old Colony of any rights that
it would have been afforded had it been terminated for
cause. Similarly, it does not expose Old Colony to the
costs of completing the project, as would be the case
had it been terminated for cause. We disagree, there-
fore, with Old Colony that permitting liquidated dam-
ages in the present case renders the distinction between
terminating for convenience and for cause illusory.
Accordingly, we conclude that the trial court properly
determined that, in light of the express terms of the
parties’ contract, the town’s election to terminate the
contract for convenience did not preclude it from recov-
ering liquidated damages.8
B
We next turn to the question of whether, in light
of findings by the trial court indicating that certain
misinformation by the town had contributed to some
of the delay, the liquidated damages clause was unen-
forceable as a matter of law under Hartford Electric
Applicators of Thermalux, Inc. v. Alden, supra, 169
Conn. 177. In Alden, this court stated: ‘‘The majority of
jurisdictions in this country hold that where there are
delays attributable to both parties, as in the present
case, the liquidated damages clause based upon the
contract date is entirely abrogated; the contract is to
be performed within a reasonable time. . . . In a lead-
ing case, Mosler Safe Co. v. Maiden Lane Safe Deposit
Co., [supra, 199 N.Y. 486], the court explained . . .
‘While such an agreement has not the harshness of a
penalty, it is, nevertheless, in its nature, such that its
enforcement, where the party claiming the right to
enforce has, in part, been the cause of delay, would be
unjust. It is a reasonable view of the situation that
denies, in such a case, the right to strict enforcement
and, where both parties are at fault with respect to the
delay, remits the injured party to the remedy of an
action at law; in which he can recover his actual loss
from the contractor’s failure to complete within what
was a reasonable time.’ Thus, the party injured by the
delay ‘must be content to recover such damages as it
is able to prove were actually suffered.’ ’’ (Citations
omitted.) Hartford Electric Applicators of Thermalux,
Inc. v. Alden, supra, 184–85.
In the case on which Alden relied, however, the New
York court had acknowledged that the parties could by
contract avoid abrogation: ‘‘It was competent for the
parties, anticipating mutations of mind and of condi-
tions, to have provided against a forfeiture of the right
to liquidated damages by, further, agreeing that the
architect was empowered to certify an extension of the
time for completion, if the contractor was delayed in his
work in certain specified events, or by causes specified.
With such a provision, the obligation to pay liquidated
damages might be preserved and its commencement
deferred to a substituted date.’’ Mosler Safe Co. v.
Maiden Lane Safe Deposit Co., supra, 199 N.Y. 486–87.
Alden did not address this aspect of the decision in
Mosler Safe Co.
We note that the modern trend has been for jurisdic-
tions to abandon the strict abrogation rule in favor of
one that apportions liquidated damages between at fault
parties. D. Rosengren, 13 Connecticut Practice Series:
Construction Law (2005) § 1:8, p. 11 and n.9. In the
present case, however, we need not consider whether
the default rule set forth in Alden should be abandoned.
We agree with the town that the trial court was not
bound to blindly follow the holding in Alden without
considering whether it applies in different circum-
stances than those implicated in that case, namely,
when the liquidated damages clause provides a mecha-
nism to reduce damages for delays not attributable to
the contractor. Although the court in Alden relied on
Mosler Safe Co. without addressing the court’s recogni-
tion in that case of the parties’ ability to craft a liqui-
dated damages provision that could be enforced despite
delay on the part of the property owner, we are not
persuaded that Alden implicitly rejected such a limita-
tion on its general rule. We further agree with the trial
court that the exception to the abrogation rule in Mosler
Safe Co. should govern the present circumstances.
Accordingly, because the liquidated damages provision
in the present case satisfied this exception, abrogation
under Alden is inapplicable.
C
Finally, we briefly address Old Colony’s claim that
the town could not prevail on its claim for liquidated
damages in the absence of a specific finding, or proof, of
actual loss. As support for this contention, Old Colony
relies on Hartford Electric Applicators of Thermalux,
Inc. v. Alden, supra, 169 Conn. 177, and Norwalk Door
Closer Co. v. Eagle Lock & Screw Co., 153 Conn. 681,
689–90, 220 A.2d 263 (1966). We disagree.
For the reasons discussed in part I B of this opinion,
Alden is inapplicable. We also are not persuaded that
Norwalk Door Closer Co. v. Eagle Lock & Screw Co.,
supra, 153 Conn. 681, supports Old Colony’s position.
In that case, the court noted that it previously had
approved the general proposition that ‘‘no provision in
a contract for the payment of a fixed sum as damages,
whether stipulated for as a penalty or as liquidated
damages, will be enforced in a case where the court sees
that no damage has been sustained.’’ (Internal quotation
marks omitted.) Id., 688. Notably, the court went on to
state: ‘‘This is not to say that any burden is placed on
a plaintiff to prove actual damage in order to recover
under a valid contract for liquidated damages. The prop-
osition is only that equitable principles will be invoked
to deny recovery when the facts make it apparent that
no damage has been suffered.’’ Id., 688–89. In that case,
the trial court had made a specific determination that
the party seeking liquidated damages suffered no dam-
age as a result of the opposing party’s breach of con-
tract. Id., 688.
In the present case, there is no such finding in the
record. Nor is it apparent from the facts found that
the town suffered no damages. Moreover, we note that
requiring proof of actual damages is in direct tension
with the rationale for permitting liquidated damages.
Cf. Hanson Development Co. v. East Great Plains Shop-
ping Center, Inc., 195 Conn. 60, 64–65, 485 A.2d 1296(1985) (noting three conditions for recovering liqui-
dated damages, including that ‘‘the damage which was
to be expected as a result of a breach of a contract
was uncertain in amount or difficult to prove,’’ and
concluding that party may not recover both liquidated
damages and actual damages). Therefore, this argument
also fails.
II
Having concluded that the trial court properly
awarded liquidated damages, we turn to Old Colony’s
claim that the trial court improperly denied its request
for an equitable adjustment in the contract. Specifically,
Old Colony contends that the court improperly relied
on Old Colony’s failure to strictly comply with the notice
and claim requirements for obtaining adjustments due
to delay when rejecting its claim. Old Colony contends
that such compliance was unnecessary in light of the
change orders, which ‘‘modified the contract and
acknowledged that time extensions were due [Old Col-
ony].’’ We disagree with the import that Old Colony
ascribes to the change orders.
‘‘The term equitable adjustment is a legal term of
art’’ and it signifies a principle designed ‘‘to keep a
contractor whole when the [g]overnment modifies a
contract.’’ (Internal quotation marks omitted.) M.J.
Paquet, Inc. v. Dept. of Transportation, 171 N.J. 378,
392, 794 A.2d 141 (2002); see also Southern Seeding
Service, Inc. v. W.C. English, Inc., 735 S.E.2d 829, 833
(N.C. App. 2012) (citing treatise that ‘‘defines ‘equitable
adjustment’ as ‘the difference between the cost of the
work required by the contract and the cost of the
changed work, plus profit, whether or not the fair mar-
ket value is the same’ ’’). ‘‘ ‘Equitable adjustment’ can be
defined by the parties to a contract. Normally, standard
form contracts or government contracts allocate the
risks of an equitable adjustment to the parties by provid-
ing an accounting methodology by which the parties
can calculate the amount of any adjustment.’’ Southern
Seeding Service, Inc. v. W.C. English, Inc., supra,
832–33; see also Washington Metropolitan Area Tran-
sit Authority v. Nello L. Teer Co., 618 A.2d 128, 131 (D.C.
1992) (when contract makes provision for equitable
adjustment of particular claims, nature and scope of
relief are controlled by contract itself). When the con-
tract, or other governing law, sets forth conditions
under which an equitable adjustment may be obtained,
the failure to strictly satisfy those conditions will pre-
clude relief. See Sutton Corp. v. Metropolitan District
Commission, 423 Mass. 200, 207, 667 N.E.2d 838 (1996);
see, e.g., Skopek Bros., Inc. v. Housing Authority, 11
Mass. App. 947, 416 N.E.2d 1006 (1981) (contractor was
not entitled to equitable adjustment in contract price
by reason of contractor’s encountering conditions mate-
rially different from those anticipated because contrac-
tor failed to meet statutory requirements of submitting
written request for adjustment as soon as possible after
such conditions are discovered); J & H Reinforcing &
Structural Erectors, Inc. v. Ohio School Facilities Com-
mission, Docket No. 12AP-588, 2013 WL 4779008, *17
(Ohio App. September 5, 2013) (failure to provide timely
written request for extension of time as required under
contract precluded claim for equitable adjustment, even
if opposing party had actual notice of conditions neces-
sitating extension); see also CAS Construction Co. v.
East Hartford, 82 Conn. App. 543, 550, 845 A.2d 466(2004) (failure to file timely written request for contract
adjustment precluded plaintiff’s claim for remobiliza-
tion costs). A party may, however, by subsequent,
unequivocal conduct waive conditions precedent to an
equitable adjustment, such as timely written notice. See
Glynn v. Gloucester, 9 Mass. App. 454, 462, 401 N.E.2d
886 (1980); Tupelo Redevelopment Agency v. Gray
Corp., 972 So. 2d 495, 507 (Miss. 2007); Niagara Fron-
tier Transportation Authority v. Computer Sciences
Corp., 209 App. Div. 2d 1009, 1009–10, 619 N.Y.S.2d 449(1994), appeal denied, 85 N.Y.2d 804, 650 N.E.2d 414,
626 N.Y.S.2d 755 (1995).
In the present case, Old Colony does not dispute
that the contract provides means by which to obtain
equitable adjustments in time or costs due to delays
beyond its control and requires specific procedures to
be followed in order to obtain such relief. Old Colony
also does not dispute that it did not adhere to those
requirements: written notice stating the general nature
of the claim within thirty days of the event giving rise
to the claim; and notice of the amount or extent of the
claim with supporting data prepared in accordance with
contract requirements within sixty days of the event.
Old Colony does not contend that the town waived
these requirements. Rather, it contends that the town
modified the contract through its approval of the
change orders.
‘‘Whether the parties to a contract intended to modify
the contract is a question of fact. . . . The resolution
of conflicting factual claims falls within the province
of the trial court. . . . The trial court’s findings are
binding upon this court unless they are clearly errone-
ous in light of the evidence and the pleadings in the
record as a whole.’’ (Citations omitted; internal quota-
tion marks omitted.) Herbert S. Newman & Partners,
P.C. v. CFC Construction Ltd. Partnership, 236 Conn.
750, 762, 674 A.2d 1313 (1996). We conclude that the
trial court’s finding that there was no contract modifica-
tion was not clearly erroneous.
The record reveals the following relevant facts. As
we previously indicated, in three instances in which
Old Colony encountered unanticipated conditions, the
project engineer signed off on change orders drafted
by Old Colony. Those change orders itemized unit costs
for additional work. Above those details, under the
heading of description of change or proposal, Old Col-
ony had noted in each order that the impact to the
schedule had not been determined and that additional
time was warranted or would be incorporated into the
schedule. Nothing in the change orders addressed the
contractual provisions for notice or the subject of
notice. Nothing in the change orders indicated how
much additional time would be warranted or whether
further documentation would be necessary. ‘‘For a valid
modification to exist, there must be mutual assent to
the meaning and conditions of the modification and the
parties must assent to the same thing in the same sense.’’
(Internal quotation marks omitted.) Torgerson v.
Kenny, 97 Conn. App. 609, 616, 905 A.2d 715 (2006),
cert. denied, 281 Conn. 913, 916 A.2d 54 (2007). There
is no such evidence in the present case.
The judgment is affirmed.
In this opinion the other justices concurred.
1
Although our appellate courts have not previously examined termination
for convenience clauses, they are a common feature in government and
private construction contracts. See D. Rosengren, 13 Connecticut Practice
Series: Construction Law (2005) § 1:18, p. 24. Termination for convenience
clauses originated in federal military contracts in order to avoid contractual
procurement requirements after the cessation of hostilities, but have
‘‘evolved into a principle for [g]overnment contracts of far-ranging varieties,
both civilian and military.’’ Krygoski Construction Co. v. United States, 94
F.3d 1537, 1540–41 (Fed. Cir. 1996), cert. denied, 520 U.S. 1210, 117 S. Ct.
1691, 137 L. Ed. 2d 819 (1997). Unlike federal contracts, no state regulations
dictate the requirements and obligations attendant to termination for conve-
nience in municipal contracts. As in the present case, such obligations are
generally dictated by the terms of the contract.
2
The complaint also sought recovery under the theories of quantum meruit
and breach of the duty of good faith and fair dealing. The trial court deemed
the former unavailable to Old Colony after determining that it had a remedy
under a valid, enforceable contract. The trial court dismissed the latter for
failure to make out a prima facie case. Those determinations are not at
issue in this appeal.
3
The town also asserted counterclaims relating to allegedly defective
work performed by Old Colony, but it abandoned those claims.
4
The plaintiff appealed from the judgment of the trial court to the Appellate
Court, and we transferred the appeal to this court pursuant to General
Statutes § 51-199 (c) and Practice Book § 65-1.
5
As examples of remedies not premised on default, Old Colony suggests
that the town could seek relief for noncompliance with laws and regulations,
the correction and removal of defective work, and insurance and indemnifi-
cation obligations that survived the default. We note, however, that conduct
relating to several of these concerns also constitutes events that justify
termination for cause under the contract.
6
In Tishman Construction Corp. v. New York, 228 App. Div. 2d 292, 293,
643 N.Y.S.2d 589 (1996), a case cited by Old Colony, the court reached a
contrary result in the context of counterclaims for damages incurred to
cure the contractor’s alleged breach as well as for alleged overpayments.
In that case, the city had contended that it was permitted to assert claims
that otherwise would have been available had it terminated for cause by
virtue of certain generic contract provisions reserving defenses. The New
York court rejected the city’s position, noting: ‘‘[T]he [c]ity cannot prevail
by citing [§§] 20.4 (‘All Defenses Reserved’) and 21.2 (‘No Waivers’) for the
proposition that the [c]ity’s rights in any and all circumstances were without
limitation. Such a sweeping claim—or, rather, disclaimer—defeats the princi-
ple that a contract sets forth the respective rights and liabilities between
the parties.’’ Id. In the present case, by contrast, the town is not relying on
such generic reservations, which also are included in the parties’ contract,
but, rather, a broad reservation of rights and remedies in the termination
for convenience provision itself.
7
See United Partition Systems, Inc. v. United States, 90 Fed. Cl. 74, 95
(2009) (after terminating contract for convenience, ‘‘the government may
not obtain reprocurement costs for work that it prevented [the contractor]
from performing’’); TRG Construction, Inc. v. Water & Sewer Authority,
70 A.3d 1164, 1167–68 (D.C. 2013) (‘‘[u]pon terminating a contract for conve-
nience, the government loses whatever right it has to hold the contractor
responsible for correcting deficiencies in the work included in the terminated
portion of the contract’’ [internal quotation marks omitted]); Paragon Resto-
ration Group, Inc. v. Cambridge Square Condominiums, 42 App. Div. 3d
905, 906, 839 N.Y.S.2d 658 (2007) (‘‘[w]e conclude that the first counterclaim
should have been dismissed against [the] plaintiff to the extent that it sought
an offset for the costs of completing the project because, [w]here [the
defendant] elects to terminate for convenience . . . whether with or with-
out cause, it cannot counterclaim for the cost of curing any alleged default’’
[internal quotation marks omitted]); Tishman Construction Corp. v. New
York, 228 App. Div. 2d 292, 293, 643 N.Y.S.2d 589 (1996) (‘‘Had the [c]ity
wished to pursue these claims, [the] plaintiff should have been terminated
under [§] 16 of the agreement, which provides for recouping the expense
of curing [the] plaintiff’s default. Where the [c]ity elects to terminate for
convenience, as provided in [§] 15, whether with or without cause, it cannot
counterclaim for the cost of curing any alleged default . . . .’’).
8
In light of this conclusion, we need not reach Old Colony’s claim that
Judge Tanzer improperly adopted Judge Young’s decision on this issue as
the law of the case.