Connecticut Appellate Court Holds That Owner’s Loss in Arbitration to General Contractor on Claims of Defective Work Operates as Res Judicata to Bar Owner’s Claim Against Subcontractors Who Were Not Parties to the Arbitration

Girolametti v. Michael Horton Assoc., 2017 Conn. App. Lexis 228 (June 6, 2017)

A General Contractor brought claims for unpaid added work, via mandatory arbitration, against a building owner who asserted defective work claims in response.  The Owner abandoned the arbitration mid-process after a partial presentation of its claims.  The arbitrator ruled in favor of the General Contractor, awarding $508,597 in damages, which was affirmed by the Superior Court and Appellate Court.  The Owner then attempted to bring the same defective work claims in state court against the General Contractor, its subcontractors, and the Owner’s testing company on the project.  The defendants all filed motions for summary judgment asserting the defenses of collateral estoppel and res judicata.

The trial court granted the General Contractor’s motion but denied the subcontractors’ and testing company’s motions on the basis that both collateral estoppel and res judicata required privity between those entities and the General Contractor.

The Court of Appeals discussed each motion in detail.  As to the Owner’s claims against the General Contractor, the Court found that the Owner’s complaint involved the same claims of design and installation defects as had been raised or could have been raised in the arbitration.  The Owner had a full and fair opportunity to present his claims against the General Contractor in arbitration.  Thus, the trial court’s grant of summary judgment was affirmed on the basis of res judicata.

As to the Owner’s claims against the subcontractors, the Court of Appeals held that collateral estoppel and res judicata do not require direct privity between the parties.  The Court held, however, that there was insufficient evidence to show that the claims concerning the defects asserted by the Owner were specifically decided by the arbitrator or that this determination was necessary to the ultimate award.  Thus, collateral estoppel did not apply.

As to res judicata, the Court found that the claims made by the Owner against the subcontractors dealt with the same claims as were made by the Owner against the General Contractor in the arbitration.  As such, the Owner had sufficient opportunity to provide evidence at the arbitration for those claims.  The Court also held that there was privity between the subcontractors and the General Contractor, as they “shared the same legal rights, binding them in privity for the purpose of the project.”  The Court pointed to the contracts between the General Contractor and its subcontractors, that required the subcontractors to assume all obligations and risks which the General Contractor was to assume versus the Owner, to evidence the same or similar legal rights and responsibilities between the parties.  Further, if the subcontractors were found to have provided defective work, the General Contractor would have been liable to the Owner.  Therefore, the Court held that summary judgment in favor of the subcontractors should have been granted by the trial court, on the basis of res judicata.

The Testing Company was not in any chain of responsibility relating to the General Contractor’s obligations under its contract with the Owner.  Rather, it entered a contract directly with the Owner to provide inspection services.  As such, the Owner could not have made any claims against the General Contractor based on the acts of the Testing Company.  Thus, the Court held the Testing Company had no basis to assert a defense of res judicata based on the arbitration award.  The Court of Appeals did remand the issue of collateral estoppel to the trial court to determine whether the factual record could provide evidence that the claims against the Testing Company were fully litigated and decided adverse to the Owner in the arbitration.

To view the full text of the court’s decision, courtesy of Lexis®, click here.

John H. Conrad

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