The plaintiffs in Paul Ippolito et al. v. Olympic Construction, LLC (AC 37437) are homeowners whose house suffered water damage resulting from a storm. Consequently, the plaintiffs entered into a contract with the defendant to repair the damage to their home. The contract entered into was AIA Document A133 - Standard Form of Agreement between Owner and Construction Manager as Constructor Where the Basis of Payment is the Cost of the Work plus a Fee with a Guaranteed Maximum Price. AIA A201 – General Conditions of the Contract for Construction was also incorporated into the executed contract through reference. Contained within the contract was the provision that all disputes arising out of the agreement would be subject to arbitration in accordance with AAA’s Construction Industry Arbitration Rules. At some point during construction operations, another storm further damaged the plaintiff’s home and plaintiffs terminated the contract with the defendant. The defendant filed a claim for contractually mandated arbitration in order to recover its lost profits for work it had not been allowed to complete under the contract.
The plaintiff’s defense at arbitration was that the contract was unenforceable against them because it did not comply with certain statutory requirements of Connecticut’s Home Improvement Act (HIA). The HIA (through the Home Solicitation Sales Act) requires clear notice of the owner’s cancellation rights in the contract as well as a defined start date and completion date. The plaintiffs claimed that the contract contained neither of these provisions. The arbitrator found for the defendant and awarded it lost profits based upon the plaintiff’s breach of duty. The plaintiffs moved to vacate the arbitration award in Superior Court claiming the award violated public policy of the state because it ran counter to the HIA and in turn, the arbitrator had manifestly disregarded the law. The Superior Court found for the defendant and granted the defendant’s motion to confirm the arbitrator’s award. The plaintiffs appealed.
The Appellate Court of Connecticut began its review of the arbitrator’s award by examining the plaintiff’s claim that even though the contract did contain the required notice of cancellation, its location in the contract made it deficient. The statute requires that the cancellation notice be in proximity to the signature of the owner and that there be a captioned notice of cancellation attached to the contact. The plaintiff claimed that the provision was “buried” on page thirty-eight of the thirty-nine page 201 General Conditions attachment. The Appellate Court agreed with the arbitrator’s finding that the contract’s notice of cancellation complied in substance with the requirements of the HIA because A201 had been incorporated by reference in a contract line item directly above the plaintiff’s signature.
The Appellate Court next reviewed the plaintiff’s claim that there was no statutorily required start and completion date. The arbitrator found that, “[t]he General Conditions state in section 8.1.2: ` [t]he date of commencement of the Work is the date established in the agreement.' Section 2.3.1.1 of the agreement states: `For purposes of Section 8.1.2 of A201-2007, the date of commencement of the Work shall mean the date of commencement of the Construction Phase.' In the following section 2.3.1.2, it states, `The Construction Phase shall commence upon the Owner's acceptance of the Construction Manager's Guaranteed Maximum Price proposal or the Owner's issuance of a Notice to Proceed, whichever occurs earlier.' The completion date for the contract is defined in Section 9.8 of the General Conditions.[8] In this matter, the start dates and the completion date can be readily adduced by looking at the entire contract. . . ." The Appellate Court stated that even if there were some “explicit, well defined, and dominant public policy” of enforcing the start and completion date requirement of the HIA, in this instance, it would fail because the current contract does not violate the requirement.
Finally, the Appellate Court agreed with both the arbitrator and Superior Court’s findings that the contract deviated from the strict requirements of the HIA’s notice of cancellation only in a minor and technical manner and that the contract did in fact contain a starting and completion date. Accordingly, the court found that the plaintiffs failed to prove that arbitrator “ignored the requirements of a well-defined, explicit, and clearly applicable law” and affirmed the Superior Court’s decision.
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The author, Brendan Carter, is a contributor to The Dispute Resolver and a former Student Division Liaison to the Forum on Construction Law. He is an attorney and a Senior Consultant with Navigant’s Global Construction Practice based out of Boston, MA. He may be contacted at 617.748.8311 or brendan.carter@navigant.com.
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