In a case of first impression, the court in Kapiloff’s Glass, Inc. et.al. v. University of Massachusetts (UMASS), et.al., MICV2014-08766 will consider whether the public awarding authority has a duty under M.G.L. c. 149, §29 to ensure that the payment bond provided by the general contractor on public construction projects is valid.
On the University of Massachusetts at Lowell Dry Lab Renovations construction project, several subcontractors brought claims on the general contractor’s payment bond, for nonpayment by the general contractor. The subcontractors obtained favorable judgments, but the payment bond surety failed to pay. The payment bond proved to be fake, and the surety was not registered to do business with the Massachusetts Division of Insurance.
Strang Scott brought claims against the University of Massachusetts on behalf of four of the subcontractors for the awarding authority’s failure to ensure that the payment bond provided at the time of bid was valid. The University of Massachusetts filed a motion to dismiss, arguing that it had no duty to ensure the authenticity of either the payment bond itself, or the surety issuing it. Strang Scott opposed the motion, arguing that the statute imposes such a duty, without which security on public projects would not exist for the subcontractors that rely upon the payment bonds.
In November, the Middlesex Superior Court heard oral arguments on the dispute, and a decision is expected in the near future. The impact of that decision will be far reaching, as it will ultimately determine whether subcontractors submitting bids on public construction projects in Massachusetts can rely upon the legitimacy of the general contractor’s payment bond.