E & M CUSTOM HOMES, LLC v. ALBERTO NEGRON et al., SC 19118

Judicial District of Waterbury

 

      Construction Contracts; Whether Award of Damages on CUTPA Counterclaim Proper Where Plaintiff Claims that Amount due it Under Contract Exceeded Amount of Damages Claimed by Defendants. The plaintiff home builder brought this action seeking to foreclose a mechanic’s lien and to recover damages for breach of a home construction contract.  Subsequently, the defendants had their debts discharged in bankruptcy, which caused the plaintiff to withdraw the breach of contract count.  The defendants counterclaimed, alleging that the plaintiff violated provisions of the New Home Construction Contractors Act and that the violations constituted per se violations of the Connecticut Unfair Trade Practices Act (CUTPA).  The trial court found for the plaintiff on its mechanic’s lien claim.  The court also awarded the defendants CUTPA damages on their counterclaim, finding that the plaintiff had engaged in unfair or deceptive business practices in constructing the home and that the defendants had proven an ascertainable loss in terms of the costs to repair and finish the house.  In calculating the defendants’ damages, the court subtracted the value of the mechanic’s lien from the cost of completing the home.  The plaintiff appealed to the Appellate Court (140 Conn. App. 92), claiming that the trial court improperly awarded damages to the defendants on their counterclaim when it failed to deduct the cost of completion from the balance due on the construction contract.  The plaintiff argued that the contract, although unenforceable due to the bankruptcy discharge, remained valid and that, under traditional contract damages law, the court should have reduced the damages by the unpaid contract balance.  It maintained that because the amount due under the contract exceeded the amount of damages that the defendants had proven, the defendants had not suffered an ascertainable loss entitling them to CUTPA damages.  The Appellate Court disagreed, noting that the term “loss” has a broader meaning than the term “damages” and that the determination of whether a party has suffered an ascertainable loss focuses not on whether the party can recover damages for a loss, but rather on whether a loss has occurred.  The court reasoned that the defendants suffered a loss in that they received something less than what they had bargained for in that, as the plaintiff conceded, certain tasks had not been completed such that the defendants were entitled to a credit for the incomplete work.  The Supreme Court will now decide whether the Appellate Court properly affirmed the award of damages on the counterclaim where the plaintiff claims that the amount due under the contract exceeds the amount of damages claimed by the defendants.