OLD COLONY CONSTRUCTION, LLC v. TOWN OF SOUTHINGTON, SC 19346
Judicial District of New Britain
Contracts; Construction; Whether Town Entitled to Liquated Damages for Delay After it Terminated Contract for Convenience; Whether Liquidated Damages are Proper Where Delays are Caused by Both Parties; Whether Plaintiff Entitled To Equitable Adjustment of Contract Price. The plaintiff contractor and the defendant town entered into a contract for the construction of a new sewer pump station. The contract permitted the town to recover liquidated damages if the plaintiff failed timely to complete the project. The contract also established a protocol for requesting an extension of the contract period and an increase in the contract price, and it allowed the town to terminate the contract for convenience. After the project fell behind schedule due to problems with the design and disputes about payment and methods of construction, the town terminated the contract for convenience. The plaintiff requested payment for its work in an amount that exceeded the contract price, and the town rejected its request. The plaintiff then brought this action claiming breach of contract and the town counterclaimed seeking liquidated damages. The plaintiff claimed that the town was not entitled to recover liquidated damages because it elected to terminate the contract for convenience. The trial court rejected that claim, noting that the contract provided that the town could terminate the contract for convenience "without cause and without prejudice to any other right or remedy of the [town]" and that there would be no purpose to that language if the town's election of its right to terminate the contract for convenience precluded it from seeking liquidated damages or other remedies for prior default. The court found that the plaintiff was entitled to $164,440.64 for breach of contract and that the town was entitled to $315,000 in liquidated damages. The plaintiff appeals, claiming the court erred in awarding the town liquidated damages after it terminated the contract for convenience and without cause. The plaintiff also argues that the award of liquidated damages here violated the rule of Hartford Electric Applicators of Thermalux, Inc. v. Alden, 169 Conn. 177 (1975), which held that a liquidated damages clause is abrogated where there are delays attributable to both parties. Finally, the plaintiff contends that the court erred in denying its claim for an equitable adjustment of the contract price allowing it to recover for its claimed delay expenses on the ground that the plaintiff failed to comply with the contract’s notice provisions governing delay claims and changes in the contract price.