GERALD HEES et al. v. BURKE CONSTRUCTION, INC., SC 18075

Judicial District of Stamford-Norwalk

 Contracts; Damages; Home Improvement Act; Whether the Amount That the Plaintiffs Owed Under a Construction Contract Should Have Been Deducted from the Damages They Suffered as a Result of the Contractor's Breach Notwithstanding the Fact That the Contract Violated the Home Improvement Act.  In 2002, the parties entered into a contract in which the defendant general contractor agreed to perform certain construction services on the plaintiffs' residence.  Before the construction project had been completed, the defendant terminated the contract, claiming that the plaintiffs had failed to make a scheduled payment.  Thereafter, the plaintiffs initiated this action, alleging that the defendant breached the contract by failing to complete the required work and by performing certain work in a defective manner.  In response, the defendant filed an answer and three counterclaims, alleging, among other things, that the plaintiffs failed to pay the total amount due under the contract.  The matter was referred to an attorney trial referee, who opined in his report that the defendant could not recover on its counterclaims because the contract did not contain a three day right of rescission as required by General Statutes § 20-429 (a) (6) of the Home Improvement Act.  He also found that the plaintiffs suffered damages as a result of the defendant's breach of the agreement.  In light of the defendant's violation of the Home Improvement Act, the referee found that the defendant was not entitled to any offset as a result of the plaintiffs' alleged failure to pay all amounts owed under the contract.  Accordingly, he recommended that the plaintiffs be awarded damages on their complaint and that judgment enter in their favor as to the defendant's counterclaims.  The defendant subsequently filed an objection to the acceptance of the referee's report, arguing that in calculating the plaintiffs' damages, the referee should have deducted the unpaid contract balance from the reasonable cost to repair and complete the work.  It maintained that the mere fact that it may not have been entitled to recover under its counterclaims due to its purported violation of the Home Improvement Act did not eliminate the referee's obligation to apply the appropriate method for determining the measure of damages.  According to the defendant, because the unpaid balance due under the contract exceeded the cost to repair and complete the work, the plaintiffs were not entitled to any damages.  The trial court overruled the defendant's objection and rendered judgment in accordance with the referee's report.  In this appeal, the Supreme Court will determine whether the referee properly calculated the plaintiffs' damages.