Electrical Contractors, Inc. v. Ins. Co. of the State of Pennsylvania ( 2014 )

******************************************************
The ‘‘officially released’’ date that appears near the
beginning of each opinion is the date the opinion will
be published in the Connecticut Law Journal or the
date it was released as a slip opinion. The operative
date for the beginning of all time periods for filing
postopinion motions and petitions for certification is
the ‘‘officially released’’ date appearing in the opinion.
In no event will any such motions be accepted before
the ‘‘officially released’’ date.
All opinions are subject to modification and technical
correction prior to official publication in the Connecti-
cut Reports and Connecticut Appellate Reports. In the
event of discrepancies between the electronic version
of an opinion and the print version appearing in the
Connecticut Law Journal and subsequently in the Con-
necticut Reports or Connecticut Appellate Reports, the
latest print version is to be considered authoritative.
The syllabus and procedural history accompanying
the opinion as it appears on the Commission on Official
Legal Publications Electronic Bulletin Board Service
and in the Connecticut Law Journal and bound volumes
of official reports are copyrighted by the Secretary of
the State, State of Connecticut, and may not be repro-
duced and distributed without the express written per-
mission of the Commission on Official Legal
Publications, Judicial Branch, State of Connecticut.
******************************************************
ELECTRICAL CONTRACTORS, INC. v. INSURANCE
COMPANY OF THE STATE OF PENNSYLVANIA
(SC 19105)
Palmer, Zarella, Eveleigh, McDonald, Espinosa and Robinson, Js.
Argued January 9—officially released December 16, 2014
Steven B. Kaplan, with whom was Paul R. Fitzgerald,
for the appellant (plaintiff).
Todd R. Regan, for the appellee (defendant).
Matthew M. Horowitz and Susan Evan Jones filed
a brief for the Surety and Fidelity Association of
America as amicus curiae.
Opinion
PALMER, J. Under General Statutes §§ 49-41 through
49-43, popularly known as the ‘‘Little Miller Act’’ (act),1
a general contractor on a public works construction
project must provide a payment bond with surety to
the state or governmental subdivision guaranteeing pay-
ment to those who supply labor and materials to the
project, and any person who has performed work or
supplied materials for the project, but has not been
paid for such materials or work, may enforce his right
to payment under the payment bond. The dispositive
issue in this case, which comes to us upon our accep-
tance of certified questions from the United States Dis-
trict Court for the District of Connecticut pursuant to
General Statutes § 51-199b (d),2 is whether a surety on
a public construction project, which fails either to pay
or to deny a notice of claim within ninety days, as
required by General Statutes § 49-42 (a),3 thereby
waives any substantive defenses and becomes automat-
ically liable for the full amount of the claim. We answer
that question in the negative.
The record certified by the District Court contains
the following undisputed facts and procedural history.
The Morganti Group, Inc., was the general contractor on
the Newtown High School renovations and expansion
project. Morganti entered into a subcontract with the
plaintiff, Electrical Contractors, Inc., for the latter to
provide labor, equipment, and materials relating to the
electrical work for the project. In July, 2009, pursuant
to § 49-41 (a),4 Morganti, as principal, obtained from
the defendant, Insurance Company of the State of Penn-
sylvania, a $33.7 million labor and materials payment
surety bond on the project.
In April, 2011, the plaintiff submitted to Morganti a
request for equitable adjustment to the subcontract
price in the amount of $751,190.63 to recoup additional
costs allegedly incurred as a result of Morganti’s defi-
cient performance. In May, 2011, the plaintiff updated
and adjusted its claim to $746,300.25. Morganti did not
respond substantively to these claims.
On June 3, 2011, the plaintiff sent the defendant notice
of its claim via certified mail, pursuant to § 49-42 (a).
The defendant received the notice of claim on June 10,
2011. On June 13, 2011, the defendant wrote to the
plaintiff acknowledging receipt of the claim and
requesting additional information to substantiate the
claim. By letter dated July 1, 2011, the plaintiff
responded to this request and provided the requested
documentation, notwithstanding its stated belief that it
had already fully complied with the statutory notice
requirements of § 49-42. The defendant responded by
letter dated July 6, 2011, acknowledging receipt of the
plaintiff’s further documentation. In that letter, the
defendant indicated that it was immediately taking the
matter up with Morganti to ascertain the latter’s posi-
tion on the claim, and that it would be in contact with
the plaintiff in due course.
On September 16, 2011, the plaintiff commenced an
action in the United States District Court for the District
of Connecticut, claiming, inter alia, that: (1) the defen-
dant was obligated to pay the full sum of $746,300.25
allegedly due under the payment bond; and (2) the
defendant, acting in bad faith and without legal basis,
had failed to (a) make any payment under the surety
bond, (b) assert a good faith dispute, or (c) serve notice
on the plaintiff denying liability for the unpaid portions
of the claim. The parties subsequently filed cross
motions for summary judgment. In its motion, the plain-
tiff alleged that because the defendant had failed to
make payment, dispute the claim in good faith, or deny
liability on the claim within the ninety day notice period
provided by § 49-42 (a), the defendant had waived any
substantive defenses and the plaintiff was therefore
entitled to judgment in the full amount of the claim.
The defendant disagreed with this interpretation of the
statute, contending instead that a surety’s failure to
satisfy the ninety day deadline imposed by § 49-42 (a)
should merely be deemed an exhaustion of remedies
entitling a claimant to bring an action on its claim.5
The District Court determined that the proper resolu-
tion of the parties’ claims turns on the correct interpre-
tation of § 49-42 (a). The District Court further observed
that the question of law presented by the parties’
motions involves a matter of public interest for which
there is no controlling appellate decision, constitutional
provision, or state statute. Accordingly, the District
Court certified the following two questions of law to
this court, which we accepted: ‘‘(1) (a) Is a surety’s
failure to meet the [ninety] day deadline under [§] 49-
42 deemed to be an exhaustion of remedies entitling
claimants to bring suit for an adjudication of their claim
or (b) [d]oes the failure to meet the [ninety] day deadline
operate as a waiver of a surety’s defenses directing the
[c]ourt to enter judgment for the claimant in the full
amount of the claim?’’ and ‘‘(2) Does a surety’s request
for further information to substantiate a claim consti-
tute: (a) a ‘denial’ of the claim under [§] 49-42, or (b)
a ‘good faith dispute’ of the claim under [§] 49-42?’’ The
parties suggest, and we agree, that our analysis should
begin with part (1) (b) of the certified question, because
the crux of their dispute is whether a surety’s failure
to satisfy its notice requirements under § 49-42 (a) con-
stitutes a waiver of its substantive defenses and a forfei-
ture of its right to contest a surety bond claim.6 We
conclude that a surety’s failure to make payment on or
serve notice denying liability on a claim under § 49-
42 (a), within that provision’s ninety day deadline, is
tantamount to a denial of the claim and does not consti-
tute a waiver of the surety’s right to defend the claim
on the merits. We therefore answer part (b) of the
first question in the negative and, accordingly, need not
address the remaining questions certified by the District
Court, except insofar as those matters bear on our reso-
lution of question (1) (b).
Resolution of this question involves an issue of statu-
tory interpretation over which we exercise plenary
review. Parrot v. Guardian Life Ins. Co. of America,
273 Conn. 12, 18, 866 A.2d 1273 (2005). We therefore
begin our analysis with the language of § 49-42 (a);
see id., 19; General Statutes § 1-2z;7 which provides in
relevant part: ‘‘Any person who performed work or sup-
plied materials for which a requisition was submitted
to . . . the awarding authority and who does not
receive full payment for such work or materials within
sixty days of the applicable payment date provided for
in subsection (a) of section 49-41a . . . may enforce
such person’s right to payment under the bond by serv-
ing a notice of claim on the surety that issued the bond
and a copy of such notice to the contractor named as
principal in the bond not later than one hundred eighty
days after the last date any such materials were supplied
or any such work was performed by the claimant. . . .
Not later than ninety days after service of the notice
of claim, the surety shall make payment under the
bond and satisfy the claim, or any portion of the claim
which is not subject to a good faith dispute, and shall
serve a notice on the claimant denying liability for
any unpaid portion of the claim. . . . If the surety
denies liability on the claim, or any portion thereof, the
claimant may bring action upon the payment bond in
the Superior Court for such sums and prosecute the
action to final execution and judgment. . . .’’ (Empha-
sis added.) General Statutes § 49-42 (a).
On its face, the statute contains no default provision
and nowhere provides that a surety waives its right to
raise substantive defenses or is subject to automatic
forfeiture if it fails to satisfy the ninety day response
requirement. Indeed, § 49-42 (a) does not expressly
impose any penalty in the event of a surety’s noncompli-
ance. Nevertheless, the plaintiff maintains that the legis-
lature’s repeated use of the term ‘‘shall’’ indicates that
the duty of the surety to timely pay or deny a claim is
mandatory in nature, and hence that failure to do so
necessarily renders a subsequent denial null and void.
The defendant, by contrast, asserts that the relevant
statutory language is merely directory,8 and therefore
that failure to deny a claim within ninety days does
not automatically result in waiver or forfeiture. The
defendant further contends that it would be inappropri-
ate for the courts to read into the act a penalty provision
that the legislature declined to impose expressly. See
Ghent v. Planning Commission, 219 Conn. 511, 515,
594 A.2d 5 (1991) (court may not ‘‘read into clearly
expressed legislation provisions which do not find
expression in its words’’ [internal quotation marks omit-
ted]). We agree with the defendant’s construction of
the statute.
Although ‘‘we generally will not look for interpreta-
tive guidance beyond the language of the statute when
the words of that statute are plain and unambiguous
. . . our past decisions have indicated that the use of
the word shall, though significant, does not invariably
create a mandatory duty.’’9 (Internal quotation marks
omitted.) State v. Trahan, 45 Conn. App. 722, 730, 697
A.2d 1153, cert. denied, 243 Conn. 924, 701 A.2d 660
(1997). Indeed, we frequently have found statutory
duties to be directory, notwithstanding the legislature’s
use of facially obligatory language such as ‘‘shall’’ or
‘‘must.’’ See, e.g., Weems v. Citigroup, Inc., 289 Conn.
769, 788–94, 961 A.2d 349 (2008) (employer’s use of
improper form did not invalidate wage deductions);
United Illuminating Co. v. New Haven, 240 Conn. 422,
462–67, 692 A.2d 742 (1997) (assessor’s failure to pro-
vide notice within thirty days of hearing did not invali-
date assessment); Metropolitan District Commission
v. AFSCME, Council 4, Local 184, 237 Conn. 114, 122,
676 A.2d 825 (1996) (failure to hold executive session
did not require that arbitrators’ award be vacated); Katz
v. Commissioner of Revenue Services, 234 Conn. 614,
617, 662 A.2d 762 (1995) (commissioner’s failure to act
on refund claim within ninety days did not preclude
denial of claim); Leo Fedus & Sons Construction Co.
v. Zoning Board of Appeals, 225 Conn. 432, 446, 623
A.2d 1007 (1993) (zoning board of appeals not subject
to automatic approval doctrine on basis of its failure
to hold public hearing within statutory time limit); Jones
v. Mansfield Training School, 220 Conn. 721, 726–28,
601 A.2d 507 (1992) (use of word ‘‘shall’’ was directory
and did not create exclusive remedy for injured
worker); Ghent v. Planning Commission, supra, 219
Conn. 516 and n.4 (commission’s failure to file tran-
script of hearing with court did not invalidate appeal);
Tramontano v. Dilieto, 192 Conn. 426, 433, 472 A.2d
768 (1984) (acts of public official performed at time
beyond limit prescribed are nonetheless effective);
Broadriver, Inc. v. Stamford, 158 Conn. 522, 529–30,
265 A.2d 75 (1969) (redevelopment agency’s failure to
file return within ninety days of notice to property
owner did not invalidate statutory taking), cert. denied,
398 U.S. 938, 90 S. Ct. 1841, 26 L. Ed. 2d 270 (1970);
Gallup v. Smith, 59 Conn. 354, 356–58, 22 A. 334 (1890)
(that judge of adjoining district was cited in by disquali-
fied judge, rather than by clerk, did not invalidate subse-
quent appointment of trustee); see also J. Evans,
‘‘Mandatory and Directory Rules,’’ 1 Legal Stud. 227,
252–53 (1981) (arguing for presumption in favor of treat-
ing ambiguous rules as directory because legislature
always has option to expressly identify rules as manda-
tory and holding rules directory provides courts greater
flexibility in deciding consequences of breach). We
therefore look to other relevant considerations, beyond
the legislature’s use of the term ‘‘shall,’’ to ascertain
the meaning of the statute.
Our prior cases have looked to a number of factors
in determining whether such requirements are manda-
tory or directory. These include: (1) whether the statute
expressly invalidates actions that fail to comply with
its requirements or, in the alternative, whether the stat-
ute by its terms imposes a different penalty; (2) whether
the requirement is stated in affirmative terms, unaccom-
panied by negative language; (3) whether the require-
ment at issue relates to a matter of substance or one
of convenience; (4) whether the legislative history, the
circumstances surrounding the statute’s enactment and
amendment, and the full legislative scheme evince an
intent to impose a mandatory requirement; (5) whether
holding the requirement to be mandatory would result
in an unjust windfall for the party seeking to enforce
the duty or, in the alternative, whether holding it to be
directory would deprive that party of any legal recourse;
and (6) whether compliance is reasonably within the
control of the party that bears the obligation, or whether
the opposing party can stymie such compliance.10 See,
e.g., Weems v. Citigroup, Inc., supra, 289 Conn. 790–91;
Teresa T. v. Ragaglia, 272 Conn. 734, 744, 746, 865 A.2d
428 (2005); Katz v. Commissioner of Revenue Services,
supra, 234 Conn. 617–19; Broadriver, Inc. v. Stamford,
supra, 158 Conn. 529–31; Kindl v. Dept. of Social Ser-
vices, 69 Conn. App. 563, 568, 795 A.2d 622 (2002). Each
of these factors supports the defendant’s interpretation
of the statute.
The first two factors are addressed to the statutory
text. ‘‘A reliable guide in determining whether a statu-
tory provision is . . . mandatory is whether the provi-
sion is accompanied by language that expressly
invalidates any action taken after noncompliance with
the provision.’’ Katz v. Commissioner of Revenue Ser-
vices, supra, 234 Conn. 617. By contrast, where a statute
by its terms imposes some other specific penalty, it is
reasonable to assume that the legislature contemplated
that there would be instances of noncompliance and
did not intend to invalidate such actions. Id., 618; Ghent
v. Planning Commission, supra, 219 Conn. 515–16.
‘‘Furthermore, a requirement stated in affirmative terms
unaccompanied by negative words . . . generally is
not viewed as mandatory.’’ Teresa T. v. Ragaglia, supra,
272 Conn. 744.
In the present case, the statute does not provide any
express penalty for a surety that fails to comply with
the ninety day response requirement. This ‘‘lack of a
penalty provision or invalidation of an action as a conse-
quence for failure to comply with the statutory directive
is a significant indication that the statute is directory.’’
Weems v. Citigroup, Inc., supra, 289 Conn. 791. That
conclusion is bolstered here by the fact that § 49-42 (a),
which imposes the ninety day response requirement,
does include several express penalty provisions. The
statute (1) awards costs to the prevailing party in a
legal action, (2) allows interest upon any amount recov-
ered, and (3) permits the court to award attorney’s fees
if it appears that any claim, denial, or defense is without
substantial basis in fact or law. General Statutes § 49-
42 (a). The fact that the legislature provided for such
penalties, but did not elect to impose any express pen-
alty on a surety that fails to comply with the ninety day
response requirement, counsels against reading such a
draconian penalty as a judicial default provision into
the statute. Moreover, although the language in § 49-42
establishing the surety’s response requirement begins
with the phrase ‘‘[n]ot later than ninety days after ser-
vice of the notice of claim,’’ the duty of the surety to
pay or to deny a claim prior to the statutory deadline
is otherwise framed solely in affirmative terms, with
no language expressly prohibiting a surety from denying
a claim after ninety days have passed. The text and
structure of the statute, then, strongly suggest that the
legislature intended the response requirement to be
directory.
The next factor we consider ‘‘in determining whether
a statute is mandatory or directory is whether the pre-
scribed mode of action is the essence of the thing to
be accomplished, or in other words, whether it relates
to a matter of substance [as opposed to] a matter of
convenience. . . . If it is a matter of substance, the
statutory provision is [generally held to be] mandatory.
If, however, the legislative provision is designed to
secure order, system and dispatch in the proceedings,
it is generally held to be directory . . . .’’ (Internal quo-
tation marks omitted.) Metropolitan District Commis-
sion v. AFSCME, Council 4, Local 184, supra, 237 Conn.
120. In the present case, the defendant contends that
the purpose of the ninety day response period is simply
to create order and facilitate the claim process by pro-
viding a brief opportunity for a surety to evaluate and
potentially resolve a claim prior to the initiation of
litigation. The plaintiff, on the other hand, maintains
that the ninety day response deadline is substantive,
and hence mandatory, because, in its view, an essential
purpose of the act is to guarantee that subcontractors
who perform work on public construction projects in
Connecticut receive prompt payment for their labor
and materials. We agree with the defendant.
We acknowledge that where the legislature has
imposed a statutory deadline we may assume that it
intends for the action in question to be accomplished
expeditiously. Nevertheless, the inclusion of a relatively
brief deadline does not necessarily imply that expedi-
ency is an essential purpose of the statute. Indeed, in
a number of cases, both this court and the Appellate
Court have concluded that such statutory deadlines are
directory where there is no express legislative guidance
to the contrary and no indication that the legislature
intended the deadline to be jurisdictional. Compare
United Illuminating Co. v. New Haven, supra, 240
Conn. 463 (requirement that assessor provide notice of
assessment within thirty days of hearing held direc-
tory), Katz v. Commissioner of Revenue Services,
supra, 234 Conn. 617 (requirement that commissioner
act on tax refund claim within ninety days held direc-
tory), Leo Fedus & Sons Construction Co. v. Zoning
Board of Appeals, supra, 225 Conn. 446 (zoning board
of appeals not subject to automatic approval doctrine
on basis of its failure to hold public hearing within
statutory time limit), Broadriver, Inc. v. Stamford,
supra, 158 Conn. 529–30 (requirement that redevelop-
ment agency return notice of proposed taking to clerk
of Superior Court within ninety days held directory),
and In re Adrien C., 9 Conn. App. 506, 509, 512, 519
A.2d 1241 (requirement that commissioner file petition
to terminate parental rights at least ninety days prior
to expiration of child’s commitment held directory),
cert. denied, 203 Conn. 802, 522 A.2d 292 (1987), with
Vartuli v. Sotire, 192 Conn. 353, 359, 472 A.2d 336 (1984)
(compliance with sixty-five day decision requirement
held mandatory where statute provided that approval
would be presumed in absence of timely commission
decision to contrary).
The legislative history of the act is instructive in this
regard. Prior to 1987, § 49-42 (a) provided in relevant
part: ‘‘Every person who has furnished labor or material
in the prosecution of the work provided for in such
contract . . . and who has not been paid in full there-
for before the expiration of a period of ninety days after
the day on which the last of the labor was done or
performed by him or material was furnished or supplied
by him for which the claim is made, has the right to
sue on the payment bond [required under § 49-41] for
the amount . . . unpaid . . . and to prosecute the
action to final execution and judgment for the sum or
sums justly due him. . . .’’ (Emphasis added.) General
Statutes (Rev. to 1985) § 49-42 (a). The essential pur-
pose of the act, then, was to provide a remedy at law
for subcontractors and suppliers on public construction
contracts who cannot avail themselves of mechanic’s
liens to obtain payments improperly withheld. Blakeslee
Arpaia Chapman, Inc. v. EI Constructors, Inc., 239
Conn. 708, 714, 687 A.2d 506 (1997); R. Robinson, ‘‘Con-
necticut’s Little Miller Act: A Primer,’’ Connecticut Law-
yer, Vol. 13, No. 5 (February 2003), p. 22.
The 1987 amendments to the act did nothing to alter
this legal remedy. See Public Acts 1987, No. 87-345
(P.A. 87-345). The amendments merely extended the
prematurity period during which the parties may
resolve the dispute among themselves prior to the com-
mencement of litigation, and imposed a formal struc-
ture for this process: adding the requirement that the
claimant provide the surety with notice of the claim
and a detailed description of the project, and that the
surety in turn notify the claimant of its response. Noth-
ing in the legislative history suggests that the legislature
viewed the new ninety day response requirement as an
essential, substantive component of the act, as
amended, or that it intended to impose thereby a judicial
default provision.11 If anything, the 1987 amendments
support the opposite conclusion, as the legislature at
that time elected to impose various other penalty provi-
sions designed to encourage parties to resolve their
disputes promptly, without the need for litigation, but
did not impose the penalty that the plaintiff seeks. In
fact, in 2006, the legislature rejected proposed language
that would have amended § 49-42 to provide expressly
that ‘‘[f]ailure of the surety to either pay or identify the
portion of the claim that is subject to a good faith
dispute within such ninety-day period shall operate as
a waiver of such surety’s defenses to the entire claim.’’
Raised Senate Bill No. 493, 2006 Sess. That the ‘‘compro-
mise’’ amendment the legislature ultimately adopted
omitted the proposed penalty provision; see 49 H.R.
Proc., Pt. 15, 2006 Sess., p. 4680, remarks of Representa-
tive Christopher R. Stone; provides further support for
the defendant’s contention that the legislature has never
viewed the surety’s duty to respond within ninety days
as an essential component of the act.
We next consider whether holding a requirement to
be mandatory would result in an unjust windfall for the
party seeking to enforce the duty or, in the alternative,
whether holding it to be directory would deprive that
party of any legal recourse. Compare Weems v. Citi-
group, Inc., supra, 289 Conn. 794 (treating rule requiring
use of authorized forms for payroll deductions as man-
datory would result in unwarranted windfall for employ-
ees), with Angelsea Productions, Inc. v. Commission
on Human Rights & Opportunities, 236 Conn. 681,
692–93, 674 A.2d 1300 (1996) (time limits held manda-
tory where neither party could take further legal action
until commission had made finding of reasonable cause
or no reasonable cause); see also J. Evans, supra,1 Legal
Stud. 245 (purpose of mandatory/directory distinction
is to avoid injustice and honor purposes of statute while
not imposing unreasonably harsh consequences for triv-
ial breaches). In the present case, we agree with the
defendant and the amicus supporting the defendant’s
position that this balancing weighs heavily in favor of
treating the ninety day response period as directory.
At oral argument, the plaintiff conceded that when
a surety first receives notice of a claim under a payment
bond, the surety may have little, if any, familiarity with
the specifics of the project, and in particular is likely
to be ignorant as to the details and history of the dispute
between its principal and the claimant. Moreover, the
statute itself requires only that the claimant provide the
surety with a ‘‘notice of claim [stating] with substantial
accuracy the amount claimed and the name of the party
for whom the work was performed or to whom the
materials were supplied, and [providing] a detailed
description of the bonded project for which the work
or materials were provided.’’ General Statutes § 49-42
(a). There is no requirement, for example, that the
claimant provide with its notice of claim any relevant
bids, quotes, estimates, project specifications, take-off
sheets, labor records, purchase orders, invoices, job
diaries, cost reports, or other documentation of the
dispute.
Accordingly, upon receiving notice, the surety has
just ninety days to educate itself as to the particulars
of the project, investigate the claim, collect all relevant
documentation, and then determine which portions of
the claim to pay and which to deny. To accomplish
these tasks, the surety is heavily dependent on the expe-
ditious cooperation of its principal and the claimant,
who will typically possess most, if not all, of the relevant
information and documentation. Furthermore, if a
surety were to prematurely deny a claim without having
completed a thorough and adequate investigation, it
could be found to have acted ‘‘without substantial basis
in fact or law,’’ thereby incurring liability for the claim-
ant’s attorney’s fees. General Statutes § 49-42 (a). Under
these circumstances, it would be unreasonable to hold
that a surety that engages in a good faith investigation,
but is unable to reach an educated conclusion before
ninety days have elapsed, necessarily waives any sub-
stantive defenses to the claim and becomes obligated
to pay it in full, regardless of how exaggerated, baseless,
or even fraudulent it may be. We perceive no legislative
intent to afford claimants that sort of undeserved
windfall.
On the other side of the scale, we also perceive no
prejudice to a claimant who, at the end of the ninety
day response period, receives neither a yea nor a nay
from the surety. As we have noted, the notice procedure
that the legislature created in the 1987 amendments to
the act; P.A. 87-345; did not replace or supplant the
primary remedy available to the claimant, which is the
right to ‘‘bring action upon the payment bond in the
Superior Court . . . and prosecute the action to final
execution and judgment.’’ General Statutes § 49-42 (a).
Rather, the ninety days simply provide a brief window
during which the parties have an opportunity and are
encouraged to try to resolve the claim without the need
for litigation. If the surety has not agreed to pay the
claim within that time period—whether the surety
expressly denies the claim or, as in the present case,
simply does not respond substantively to the claim—
this window of opportunity has closed, and the position
of the claimant is exactly the same in either case: it
is free to proceed with litigation in order to enforce
its rights.12
Finally, our conclusion that the equities favor treating
the response requirement in § 49-42 (a) as directory
rather than mandatory is bolstered by the fact that
prompt compliance may not be within the complete
control of the surety. As the amicus explains, the surety
is caught in the middle between the claimant and the
principal; it cannot compel either party to provide the
information and documentation it needs to determine
the relevant facts, resolve the dispute, and evaluate the
validity of the claim. Moreover, the surety may need to
solicit additional information from third parties such
as the project owner, the architect, or other contractors
and vendors associated with a project. Their coopera-
tion also may not be timely forthcoming.
At the same time, the claimant may be in a position
to stymie the ability of the surety to investigate its claim
expeditiously. In the present case, for instance, the
defendant contends that the plaintiff repeatedly failed
to provide full documentation of its allegations. That
factual dispute is not before us, and, in any event it is
not material to the purely legal questions the District
Court has certified. As a general matter, however, a
claimant subcontractor will often be the party best posi-
tioned to document the work and materials that it con-
tributed to a project, as well as any losses it allegedly
suffered as a result of the principal’s misconduct.
Accordingly, to hold that a claimant is automatically
entitled to full payment on all of its bond claims when-
ever a surety is unable to fully assess those claims
within ninety days would create a strong incentive for
claimants to withhold key information and otherwise
fail to cooperate with the surety. We do not believe
that the legislature intended to open the door to that
sort of mischief. See Broadriver, Inc. v. Stamford,
supra, 158 Conn. 530–31 (reasoning that treating ninety
day deadline for statutory taking as mandatory would
allow property owner to defeat taking through dilatory
legal tactics).
Considering all of the relevant factors, then, including
the text, legislative history, and purpose of the act,
we conclude that the ninety day response requirement
contained in § 49-42 (a) is directory, rather than manda-
tory, and that the legislature did not intend that a surety
that fails to pay or to deny a claim by the statutory
deadline thereby waives any substantive defenses and
forfeits its right to contest the merits of the claim. We
next consider the three additional arguments the plain-
tiff makes in support of its interpretation of § 49-42 (a),
none of which we find persuasive.13
First, the plaintiff contends that it would be unfair
to hold that a surety’s duty to respond to a claim under
§ 49-42 is merely directory when the claimant’s corres-
ponding obligations under that statute, to provide
notice of a claim and to file an action in a timely manner,
have been held to be mandatory. See Millgard Corp. v.
White Oak Corp., 224 F. Supp. 2d 425, 429–32 (D. Conn.
2002) (granting summary judgment for surety on basis
of claimant’s failure to comply with 180 day notice
requirement of § 49-42 [a]);14 American Masons’ Supply
Co. v. F. W. Brown Co., 174 Conn. 219, 224, 384 A.2d
378 (1978) (action brought after one year limitations
period established by § 49-42 [b] was time barred);
Wickes Mfg. Co. v. Currier Electric Co., 25 Conn. App.
751, 759, 596 A.2d 1331 (1991) (same). Although the
plaintiff’s suggestion that claimants and sureties should
be treated alike with regard to their respective statutory
deadlines is facially appealing, it overlooks the signifi-
cant distinction between statutes of limitations, which
govern when a legal action may be brought, and dead-
lines of other sorts. See Federal Deposit Ins. Corp. v.
Hillcrest Associates, 233 Conn. 153, 172–73, 659 A.2d
138 (1995). The purpose of a statute of limitations is
to prevent stale claims and unnecessary delays in the
presentation of issues. Austin-Casares v. Safeco Ins.
Co. of America, 310 Conn. 640, 658, 81 A.3d 200 (2013).
A plaintiff’s timely filed action provides notice to the
defendant and ensures that the defendant does not find
itself ‘‘in a situation where, because of the lapse of time,
[the defendant] is unable to gather facts, evidence, and
witnesses necessary to afford . . . a fair defense.’’
(Internal quotation marks omitted.) Nichols v. Light-
house Restaurant, Inc., 246 Conn. 156, 166, 716 A.2d
71 (1998); see also Russell v. Mystic Seaport Museum,
Inc., 252 Conn. 596, 616, 748 A.2d 278 (2000) (purpose
of notice requirement is to allow defendant to conduct
timely investigation of claim). Statutes of limitations
also allow persons, ‘‘after the lapse of a reasonable
time, to plan their affairs with a reasonable degree of
certainty, free from the disruptive burden of protracted
and unknown potential liability . . . .’’ (Internal quota-
tion marks omitted.) St. Paul Travelers Cos. v. Kuehl,
299 Conn. 800, 809–10, 12 A.3d 852 (2011). The one year
statute of limitations set forth in the act also has a
distinct importance, as insurance policies issued pursu-
ant to an owner-controlled insurance program under
the statute must provide coverage for work performed
and materials furnished from the completion of the
work until the date that all causes of action are barred
under any applicable statute of limitations. General
Statutes § 49-41 (e) (3) (A). None of these rationales
applies to the duty of a surety to either pay or deny a
bond claim within ninety days.
The plaintiff’s argument also overlooks a number of
relevant distinctions between the surety’s response
requirement and the claimant’s duty to provide timely
notice. The claimant, which has 180 days to serve notice
of a claim, need only present its own version of the
dispute in order to comply with the statutory deadline.
It will presumably already be intimately familiar with
the project, as well as the history and nature of its
dispute with the principal, and will have access to many
of the relevant documents. Indeed, the claimant may
have begun to prepare and document a potential claim
long before the statutory notice period ever begins to
run. Under those circumstances, we are hard pressed
to imagine why nearly one half of a year would not
afford adequate time for a claimant, acting diligently,
to prepare and present such a claim.
As we have described previously herein, the surety,
by contrast, may have little familiarity with the details
of the project and no knowledge of the dispute giving
rise to the claim prior to receiving notice from the
claimant. At that point, the surety has just ninety days—
one half of the time allotted to the claimant—to educate
itself about the project, obtain all relevant documents
and accounts of the dispute from the claimant, the prin-
cipal, and various third parties (all of whose timely
assistance may not be forthcoming), and make a deter-
mination as to which portions of the claim, if any, are
properly payable. However it decides, the surety must
anticipate that it may ultimately be drawn into litigation
involving one or more parties to the dispute. If it is
later found to have denied a claim in bad faith, the
surety also will be liable for the claimant’s attorney’s
fees. Under those circumstances, it does not strike us
as unreasonable to conclude that a surety, acting dili-
gently, may not always be able to determine fully the
merits of a claim, in good faith, within ninety days of
notice. Accordingly, because the claimant and the
surety are not similarly situated with regard to their
statutory obligations, we do not believe it unreasonable
or unfair that the legislature would have imposed a
mandatory duty on the one and a directory duty on
the other.
The plaintiff’s second argument is that because the
act is a remedial statute; Blakeslee Arpaia Chapman,
Inc. v. EI Constructors, Inc., supra, 239 Conn. 716; it
should be construed broadly in favor of protecting the
interests of claimants. We have indicated that the act
is to be liberally construed with regard to whether a
particular class of subcontractors or suppliers is eligible
for statutory protection. Okee Industries, Inc. v.
National Grange Mutual Ins. Co., 225 Conn. 367, 373–
74, 623 A.2d 483 (1993). We do not, however, construe
remedial statutes so liberally as to provide windfalls
for technical violations. Weems v. Citigroup, Inc.,
supra, 289 Conn. 794. The purpose of the act is to ensure
that subcontractors and suppliers on state projects have
an adequate remedy at law should the principal contrac-
tor fail to pay them moneys properly due. There is no
indication that the legislature, in protecting the legiti-
mate interest of these groups in being paid for their
work, intended that they would automatically prevail
on any claim, no matter how lacking in merit, simply
because of a surety’s nonprejudicial delay in evaluating
such claim.
The plaintiff’s third argument is that if the ninety day
response requirement is deemed to be merely directory,
there will be no penalty for noncompliance and sureties
will have no incentive to satisfy their statutory obliga-
tions. We disagree. Section 49-42 (a) provides that a
court may award reasonable attorney’s fees to the
claimant if the surety’s denial of liability or the defense
interposed to the claim is found to be ‘‘without substan-
tial basis in fact or law.’’ As we have indicated, a surety
that fails to respond substantively to a notice of claim
within ninety days has effectively denied the claim;
see Fisher Skylights, Inc. v. CFC Construction Ltd.
Partnership, 79 F.3d 9, 11 (2d Cir. 1996) (claimant must
treat surety’s silence as denial of claim and file action
prior to running of statute of limitations); such that the
claimant may bring an action at that time. Id. If the
surety is later determined to have demonstrated bad
faith in failing to respond within ninety days, it may be
liable for the claimant’s resulting attorney’s fees.15 We
believe that this provision of the act provides sufficient
incentive for a surety to promptly and diligently investi-
gate any claims against its principal.
For the foregoing reasons, we conclude that the
answer to part (b) of the first certified question is: No.
With regard to part (a) of the first certified question,
we hold that, assuming, without deciding, that § 49-42
establishes an ‘‘exhaustion requirement’’ by which a
claimant may not file an action unless and until a surety
has denied part or all of its claim, the surety’s failure
to pay or to deny the claim by the ninety day response
deadline is to be treated as a denial for that purpose.16
Because we answer part (b) of the first certified ques-
tion in the negative, we need not address in depth the
second certified question, which asks, in essence,
whether a surety’s request for further information satis-
fies its obligations under the act’s response require-
ment. We simply observe that where a surety fails to
pay or to deny a claim within ninety days and the claim-
ant later prevails on the merits, whether the surety made
a timely, sincere, and warranted request for additional
information during the response period is one factor
to be considered by the court in assessing whether to
hold the surety liable for the claimant’s attorney’s fees.
Part (b) of the first certified question is answered in
the negative. Guidance is provided as to the remaining
certified questions.
In this opinion the other justices concurred.
1
The act was patterned after the federal Miller Act, 40 U.S.C. § 3131 et
seq. (2012) (formerly 40 U.S.C. § 270a et seq.). See Blakeslee Arpaia Chap-
man, Inc. v. EI Constructors, Inc., 239 Conn. 708, 716, 687 A.2d 506 (1997).
2
General Statutes § 51-199b (d) provides in relevant part: ‘‘The Supreme
Court may answer a question of law certified to it by a court of the United
States . . . if the answer may be determinative of an issue in pending
litigation in the certifying court and if there is no controlling appellate
decision, constitutional provision or statute of this state.’’
3
General Statutes § 49-42 (a) provides in relevant part: ‘‘Any person who
performed work or supplied materials for which a requisition was submitted
to, or for which an estimate was prepared by, the awarding authority and
who does not receive full payment for such work or materials within sixty
days of the applicable payment date provided for in subsection (a) of section
49-41a, or any person who supplied materials or performed subcontracting
work not included on a requisition or estimate who has not received full
payment for such materials or work within sixty days after the date such
materials were supplied or such work was performed, may enforce such
person’s right to payment under the bond by serving a notice of claim on
the surety that issued the bond and a copy of such notice to the contractor
named as principal in the bond not later than one hundred eighty days
after the last date any such materials were supplied or any such work was
performed by the claimant. . . . The notice of claim shall state with substan-
tial accuracy the amount claimed and the name of the party for whom the
work was performed or to whom the materials were supplied, and shall
provide a detailed description of the bonded project for which the work or
materials were provided. . . . Not later than ninety days after service of
the notice of claim, the surety shall make payment under the bond and
satisfy the claim, or any portion of the claim which is not subject to a good
faith dispute, and shall serve a notice on the claimant denying liability for
any unpaid portion of the claim. . . . If the surety denies liability on the
claim, or any portion thereof, the claimant may bring action upon the pay-
ment bond in the Superior Court for such sums and prosecute the action
to final execution and judgment. An action to recover on a payment bond
under this section shall be privileged with respect to assignment for trial.
. . . In any such proceeding, the court judgment shall award the prevailing
party the costs for bringing such proceeding and allow interest at the rate
of interest specified in the labor or materials contract under which the claim
arises or, if no such interest rate is specified, at the rate of interest as
provided in section 37-3a upon the amount recovered, computed from the
date of service of the notice of claim, provided, for any portion of the claim
which the court finds was due and payable after the date of service of the
notice of claim, such interest shall be computed from the date such portion
became due and payable. The court judgment may award reasonable attor-
neys fees to either party if upon reviewing the entire record, it appears that
either the original claim, the surety’s denial of liability, or the defense
interposed to the claim is without substantial basis in fact or law. . . .’’
4
General Statutes § 49-41 (a) provides in relevant part: ‘‘Each contract
exceeding one hundred thousand dollars in amount for the construction,
alteration or repair of any public building or public work of the state or a
municipality shall include a provision that the person to perform the contract
shall furnish to the state or municipality on or before the award date, a
bond in the amount of the contract which shall be binding upon the award
of the contract to that person, with a surety or sureties satisfactory to the
officer awarding the contract, for the protection of persons supplying labor
or materials in the prosecution of the work provided for in the contract for
the use of each such person . . . . Any such bond furnished shall have as
principal the name of the person awarded the contract.’’
5
In support of its motion for summary judgment, the defendant claimed
that it is entitled to judgment as a matter of law because § 49-42 (a) contains
no penalty provision.
6
The amicus, Surety and Fidelity Association of America, similarly
restricts its argument to part (b) of the first certified question.
7
General Statutes § 1-2z provides: ‘‘The meaning of a statute shall, in the
first instance, be ascertained from the text of the statute itself and its
relationship to other statutes. If, after examining such text and considering
such relationship, the meaning of such text is plain and unambiguous and
does not yield absurd or unworkable results, extratextual evidence of the
meaning of the statute shall not be considered.’’
8
‘‘A statutory provision that is directory prescribes what shall be done
but does not automatically invalidate action upon a failure to comply.’’
(Internal quotation marks omitted.) Hall Manor Owner’s Assn. v. West
Haven, 212 Conn. 147, 153, 561 A.2d 1373 (1989).
9
See footnote 7 of this opinion.
10
Although we have referred to some of these considerations as ‘‘tests,’’
we generally have not treated any one consideration as dispositive, and in
most cases we have evaluated the relevant language, structure, history,
and purpose of the statute in determining whether the duty at issue was
mandatory or directory. See, e.g., United Illuminating Co. v. New Haven,
supra, 240 Conn. 465–66; Katz v. Commissioner of Revenue Services, supra,
234 Conn. 618–19. Accordingly, such considerations are more accurately
identified as factors.
11
See 30 S. Proc., Pt. 4, 1987 Sess., p. 1468, remarks of Senator James
Maloney (‘‘The amendment [to § 49-42] revises the procedures for claims
under materialmen’s bonds. What it does is in effect require that non-disputed
claims be paid, and only the contested portion of a claim would go to
litigation. This will . . . eliminate a number of cases that otherwise might
be brought . . . [a]nd will generally improve the orderliness of the material-
men’s bonds procedure.’’).
12
The present case is, thus, readily distinguishable from Angelsea Produc-
tions, Inc. v. Commission on Human Rights & Opportunities, supra, 236
Conn. 681. In that case, neither party could take further action on the
employee’s complaint until the Commission on Human Rights and Opportuni-
ties complied with its statutory obligations to complete an investigation
within nine months, make a written finding of reasonable cause or no
reasonable cause, and hold a hearing not later than ninety days after finding
reasonable cause. Id., 689, 697.
13
The plaintiff also directs our attention to several Superior Court deci-
sions concluding that the relevant statutory language is mandatory. See
Barreira Landscaping & Masonry v. Frontier Ins. Co., 47 Conn. Supp. 99,
110, 779 A.2d 244 (2000); Acoustics, Inc. v. Travelers Ins. Co., Superior
Court, judicial district of New Britain, Docket No. CV-03-0519565-S (January
13, 2004) (36 Conn. L. Rptr. 476, 479); Elwell v. United States Fidelity &
Guaranty Co., Docket No. 99527, 1993 WL 407974, *1 (Conn. Super. October
1, 1993). For the reasons discussed herein, we are not persuaded by the
reasoning of those decisions.
14
We express no view on the determination of the federal District Court
in Millgard Corp. that the requirement in § 49-42 (a) that a claimant notify
the surety of any potential claims within 180 days is mandatory rather
than directory.
15
That is not to say that a surety’s failure to resolve a claim within ninety
days necessarily subjects the surety to liability for a bad faith denial of the
claim. Even if it ultimately becomes clear that there was no substantial
basis in law or fact for denying a claim, a surety does not subject itself to
liability for the claimant’s attorney’s fees if, after a diligent and good faith
effort to document and evaluate the claims, ninety days do not prove suffi-
cient time for the surety to draw an informed conclusion. A surety’s failure
to promptly and diligently investigate a claim, however, may justify an award
of fees should the claimant ultimately prevail on the merits.
In addition, we do not foreclose the possibility that judicial default could
be an appropriate remedy in a situation in which the surety’s failure to meet
the ninety day response deadline results in substantial prejudice to the
claimant. See United Illuminating Co. v. New Haven, supra, 240 Conn. 467
(assessor’s failure to comply with statutory notice requirement did not entitle
taxpayer to relief in absence of showing of prejudice); J. Evans, supra, 1
Legal Stud. 254–55 (actions taken pursuant to breach of directory duties
may be voidable upon demonstration of prejudice). As we have noted,
however, in most cases it will be difficult, if not impossible, for a claimant
to establish that a surety’s failure to respond within ninety days placed it
in any worse position than the claimant would have found itself had the
surety simply denied the claim on the ninetieth day.
16
The dispute between the parties does not require that we resolve the
question whether there is in fact such an exhaustion requirement, and
whether, for example, a claimant may file an action under § 49-42 during
the ninety day response period, without first waiting for the surety’s
response. See Fisher Skylights, Inc. v. CFC Construction Ltd. Partnership,
supra, 79 F.3d 11.