Pacella Bros., Inc., Plaintiff-appellant, v. the Metropolitan District, Defendant-appellee, 366 F.2d 777 (2d Cir. 1966)

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US Court of Appeals for the Second Circuit - 366 F.2d 777 (2d Cir. 1966) Argued September 26, 1966
Decided October 3, 1966

Robert J. Sherer, Boston, Mass. (Maxwell Heiman, Hartford, Conn., O'Donnell, Furey, Donovan & Heiman, Bristol, Conn., Roche & Leen, Boston, Mass., on the brief), for appellant.

Robert L. Trowbridge, Glastonbury, Conn. (Alfred F. Wechsler, Hartford, Conn., Richard Goodman, Hartford, Conn., on the brief), for appellee.

Before MOORE, FRIENDLY and KAUFMAN, Circuit Judges.


On January 11, 1962, plaintiff, Pacella Bros., Inc. (Pacella), contracted to construct a sewerage pipeline for defendant, The Metropolitan District (District). During the course of the construction, several owners of property abutting the proposed line sued Pacella, District, and a subcontractor of Pacella in the Superior Court (Connecticut) for property damage allegedly due to the construction activities. Pending the outcome of these state court suits, District withheld the final payment to Pacella, otherwise due under the contract, pursuant to indemnity and retainage clauses in the contract.

Pacella sued District to recover the withheld final payment. Upon Pacella's motion for summary judgment, the complaint was dismissed as being premature. Since the state court suits against Pacella, District, and the subcontractor may yet be resolved in such a way as to entitle District to indemnity from Pacella under the contract, the contract clearly permits District to withhold funds otherwise due Pacella until the claims are settled. Consequently, it is too early to compel surrender by District of the final payment to Pacella.

In a well-reasoned opinion, 259 F. Supp. 715, which we adopt, Judge Blumenfeld has accurately set forth the legal issues and the correct conclusions thereon.