Author Archives: Chris Strang

About Chris Strang

Mr. Strang is a founding partner of the firm and specializes in business litigation and construction law. He has represented clients through all phases and forms of dispute resolution including bid protests at the Attorney General’s office, mediations, arbitrations and first-chairing at trial.

Getting Direct Payment for Subcontractors when General Contractors Fail to Pay

By on March 20, 2019

Massachusetts law provides a mechanism through which subcontractors on public projects may get paid directly from awarding authorities. If a general contractor does not pay a subcontract balance due within seventy days after the subcontractor substantially completes the work, the subcontractor may demand payment directly from the awarding authority in certain circumstances. These requirements are outlined in M.G. L. c. 30, § 39F.

First, for a subcontractor to recover via direct payment it must be either a filed sub-bidder or been approved in writing by the awarding authority. A proper demand is made by sending a letter to the awarding authority detailing the balance owed under the subcontract with a breakdown of the accounting, and the status of the subcontract work. The letter must be under oath and sent via certified mail to both the awarding authority and general contractor. The general contractor must respond with any disputes within 10 days. If the general contractor timely disputes the claim the awarding authority must place the disputed amount in a joint bank account for the subcontractor and general contractor. If the dispute is for only part of the claim, the awarding authority must pay the subcontractor the undisputed balance, and place the disputed portion in a joint account until the dispute is settled. Once the general contractor and subcontractor come to an agreement, the bank must release the amount as instructed by them. If they do not reach an agreement, the bank can release the amount in accordance with a court order. The awarding authority must pay the subcontractor the undisputed balance due within 15 days of receipt of the demand.

It is best to consult with a construction attorney to ensure strict compliance with statutory requirements when making direct payment demands.

Promise to Pay Doesn’t Change Mechanic’s Lien Deadline

By on February 20, 2018

In a recent decision, D5 Iron Works, Inc. v. Danvers Fish & Game Club, Inc., & Others, the Appeals Court of Massachusetts ruled that an owner’s promise to make payment to the subcontractor did not excuse the subcontractor’s failure to timely file suit.

In the case, the general contractor was delinquent in paying the subcontractor. The subcontractor timely filed a Notice of Contract  as well as a Statement of Account .  Nevertheless, Massachusetts lien law requires that a lawsuit be filed within 90 days of filing the Statement of Account.

According to the Subcontractor, the project owner represented that the subcontractor would be paid. The subcontractor testified that it relied on that representation in not timely filing the lawsuit.

Consistent with its prior decisions, the court ruled that mechanic’s lien statutory deadlines are to be strictly enforced, and denied the subcontractor’s claims.*  This case stands as a fresh reminder that the statutory deadlines for mechanic’s lien filings are enforced strictly, and not generally subject to extension or modification by private agreement.  Contractors and subcontractors should take care to observe deadlines ardently in order to avoid losing their mechanic’s lien rights.

 

*At the time of this article, it remains unclear whether either party will appeal the decision, which went unpublished. 

 

Massachusetts Awarding Authorities Must Allow Sub-bidders to Respond to Negative Reviews

By on January 9, 2018

The Massachusetts Attorney General’s Bid Protest Unit (“AG”) recently decided that when an awarding authority seeks references not listed by the sub-bidder, it must give the sub-bidder the opportunity to respond when such reviews are negative.

In the case, the Barre Housing Authority (“BHA”) sought public bids for a panel replacement project. BHA checked the references for the low sub-bidder, but also reached out to an unlisted public entity for which the sub-bidder had previously performed work. That public entity gave the sub-bidder a negative review, which caused BHA to reject the low sub-bidder’s bid.

The sub-bidder filed a bid protest. Pursuant to Massachusetts public bidding laws the AG’s office conducted an investigation and held a hearing. The AG decided that while BHA reaching out to references not listed by the sub-bidder was not improper, by doing so they implicitly created an obligation to offer the sub-bidder a chance to rebut the negative reference.

The AG ordered BHA to reconsider its decision to reject the low sub-bidder, in light of the ruling.  Should you have questions concerning your rights as a bidder, you’d be well-advised to consult with an experienced construction attorney versed in public bidding protests.

Selecting the Right Home Improvement Contractor in Massachusetts

By on August 14, 2017

Selecting a contractor for a home improvement project is both exciting and fraught with peril. The right one can deliver your dream home, and the wrong one can make your living space a nightmare for an extended period of time.  Fortunately, Massachusetts maintains strong consumer protections against the latter in M.G.L. c. 142A, the Home Improvement Contractor statute.

Contractors are required by law to include specific provisions and notices in contracts with consumers. Homeowners should thoroughly investigate the contractor up front and be well-versed in their rights

Construction consumers should consider some practical tips is selecting their residential construction or home improvement contractor:  

(1)      Do thorough research and get multiple quotes. Many websites provide reviews and commentary on contractors from prior customers, such as yelp and angies’s list.

(2)      Make sure the contractor you choose is registered as a Massachusetts home improvement contractor;   

(3)      Verify that the construction supervisor the company plans to use to oversee the project day-to-day has a valid construction supervisor’s license; and  

(4)      Insist upon a complete written contract, signed by both parties, prior to making any deposits or starting any work.  At a minimum, your contract should include the following information:

          a physical address for the contractor, not just a post office box, along with the name of the salesperson and the construction supervisor for your project;

          a start date and a completion date for work, so that you don’t find yourself lower on the contractor’s priority list than other projects soon after making your deposit;

          a clear scope of work, including as much detail as possible.  If you’ve agreed upon certain brands for hardware or fixtures, be sure those brands appear in the contract; and

          specific benchmarks for making progress payments, including the amount for each such payment.

Do not make final payment to your contractor until all of the work is completed to your satisfaction.  Be sure to ask for a copy of the contractor’s insurance policy and call the insurance company to verify that it is current.

For substantial projects, have a qualified construction lawyer review your contract prior to signing it.  A small investment with a construction attorney can save thousands of dollars and immense frustration by avoiding traps for the unwary hidden in contract documents and by adding appropriate layers of protection into your contract that homeowners are not likely to add on their own.

Jury Awards $1,000,000 For Business Defamation Claim

By on August 3, 2017

     In a recent decision in Dallas, Texas District Court, a jury awarded $1,000,000 in damages to a wedding photographer due to defamatory statements published in the media, and in particular on internet sites and social media. 

     Every business owner fears the damage that negative comments made online can do to their reputation. With the advent of social media and ratings websites, any post can take on a life of its own, making its way around the world. In many cases there’s not much a business owner can do to combat negative opinions. However, when the posts are actually false and defamatory there may be recourse.

     In this instance, an unhappy bride and groom went public with their dispute over a $125 fee with their wedding photographer. Instead of sticking to the facts, a jury found they went far beyond that. The jury’s opinion was that many of the statements, including that the photographer stole money and did this to many other customers, were malicious and defamatory. The photographer put on evidence of severe decline in revenue immediately following the statements. The jury compensated her $1,000,000 as a result.

      While the case remains subject to appeal, it gives hope to business owners that enraged customers might think twice before getting carried away with online retribution.  If false and defamatory statements are posted about your business online, you should consult with an attorney that practices online business defamation law to consider your options.

Court Awards Damages Despite “No Damage for Delay” Clause

By on March 29, 2017

The Massachusetts Appeals Court recently upheld a trial court’s award of damages to a subcontractor in spite of a “no damages for delay clause” in the subcontract.

On a public construction project, the subcontractor entered into a subcontract that contained a clause making extensions of time the exclusive remedy for delays to the subcontractor. The project coordination did not go according to the original schedule, and the subcontractor was not able to start on various phases at the expected times. Despite this, the general contractor did not grant the subcontractor any time extensions. Instead, it insisted that the subcontractor increase the onsite labor, along with other accommodations.

The subcontractor filed suit, seeking payment for additional labor costs incurred due to the site not being ready for that trade’s work and related inefficiencies. The court awarded such damages, finding the failure to grant warranted time extensions to be a “deprivation of remedy.” In other words, the general contractor could not use the defense of the “no damage for delay” clause if it itself did not abide by the terms of the clause.

You can read the full decision here:  Central Ceilings, Inc. v. Suffolk Construction Company, Inc. *This decision may still be subject to further appeal.

Negotiate Your Lien Waiver Terms with Your Contract

By on January 24, 2017

Most construction project owners require general contractors to provide periodic lien waivers from subcontractors and material suppliers to verify they received payment. This is generally a good thing, as it helps ensure payment is flowing down to the proper parties. Lien waivers, however, can become the source of conflict when parties can’t agree on their terms.

Lien waivers frequently become contentious because they are presented for the first time when payment is due. Almost inevitably the lien waiver will contain terms that are inconsistent with or in addition to existing contract terms, and every day spent negotiating the particular language of the lien waivers delays payment already due. Delayed payments have a ripple effect, as contractors rely on prompt payments to keep up with labor and material costs, and to keep the project running on schedule.

Among the most common sticking points is waiver language that is simply too broad. Payment is being made in exchange for labor and materials provided on a project through a particular date. Yet owners often propose lien waivers that try to force contractors to release much more than that. Commonly owners propose clauses that require the payee to promise to indemnify the payor for other liens filed on the project, among others. Of course, the party holding the money maintains some unfair leverage to force the other to sign away rights not contemplated when negotiating the original contract in order to get paid.

To prevent disruptive disputes during the course of construction, prudent parties should review and negotiate the actual lien waiver forms as appendices to contracts, prior to signing anything. This practice is wise for contracts between owners and general contractors as well as between general contractors and subcontractors or material suppliers. It is also always best to have a construction attorney review your contracts and lien waivers to fully understand the rights and responsibilities included in them.

Massachusetts Attorney General Finds Minority-Owned Business Goals to be Statutorily Mandated

By on June 27, 2016

In a recent bid protest decision the Massachusetts Attorney General allowed a protest contesting a bidder’s right to submit Minority Business Enterprise (“MBE”) or Women’s Business Enterprise (“WBE”) qualifications after the bid opening. The opinion deemed MBE and WBE goals to be statutory and therefore not waivable by the awarding authority. The decision also found that allowing such post-bid submissions would violate the equal-footing principles upon which bidding laws rely.

The Fall River project required M/WBE compliance forms to be included with bids. The low bidder listed itself as an MBE in its bid. However, it soon learned that a change in the law made it no longer qualified to be a certified MBE. It then provided the city with the name of a qualifying subcontractor, albeit post bid opening. The city was willing to accept this post-bid supplement, however, another bidder filed a protest.

Generally speaking, cities may use their discretion in waiving their own public bidding requirements in certain circumstances. However, they are not authorized to waive statutory requirements. M.G.L. c. 7C, § 6(a)(6), enacted in 2013, provides that “state assisted construction contracts shall include language… setting forth the participation goals of minority and women workers to be employed on each such contracts.” Given the mandate of the “shall” language, the AG hearing officer found the M/WBE participation requirements to be statutory and therefore the city could not waive them.

The decision went further in finding that accepting the supplement post-bid would violate equal footing principles. An entity that already has the low bid will tend to have more leverage in negotiating prices with subcontractors and suppliers than competitors had pre-bid. Such advantages are not allowed.

Bidders should use caution going forward in verifying the current status of the M/WBE components of their bids and including thoroughly completed participation compliance forms in bid submissions.

Sub-Subcontractor’s Ambiguous E-mail Insufficient to Satisfy Statutory Notice Requirements for Claim on General Contractor’s Payment Bond

By on March 14, 2016

In an opinion issued this week in N-Tek Construction Services, Inc. v. Hartford Fire Insurance Company, the Massachusetts Appeals Court ruled that a sub-subcontractor’s e-mail to a general contractor on a public construction project failed to clearly present a claim that would satisfy the notice requirements of M.G.L. c. 149, s. 29.

The unpaid sub-subcontractor on a public bridge painting project sent an e-mail to the general contractor that stated the following. “Enclosed is the January 15, 2010 Statement to [subcontractor] for services through that date by [sub-subcontractor] for the [project] that are still unpaid. Please give me a call at [telephone number] when you have a chance.” The attached Statement listed ten invoices. The general contractor’s project manager testified to having never heard of this sub-subcontractor prior to the e-mail, and did not understand the e-mail to be some form of claim.

M.G.L. c. 149, s. 29, requires parties that do not have a direct contractual relationship with the general contractor to provide written notice to that general contractor of any claims of non-payment within 65 days of last providing labor or material on the project. The statue merely requires that the notice state “with substantial accuracy the amount claimed, [and] the name of the party for whom such labor was performed.”

The Court’s opinion included a nuanced analysis of the purpose of this notice requirement. It held that the implied purpose is to give general contractors a clear, timely understanding that a claim is being directed against them. This is to allow an opportunity to attempt to resolve the claim prior to litigation and involvement of the payment bond surety.

In ruling against the sub-subcontractor, the Court looked at all of the circumstances surrounding the e-mail and deemed it inadequate, for failing to state “explicitly or implicitly” that the e-mail constituted a claim for an unpaid balance due on the project.

Sub-subcontractors and material suppliers on public construction projects in Massachusetts should consult with a construction attorney prior to sending 65-day notices to general contractors to insure the preservation of their payment bond rights.

Contractual Arbitration Clauses Can’t Supersede Arbitration Statute

By on March 9, 2016

Arbitration clauses for dispute resolution are a common component of all manner of contracts. While the pros and cons of arbitrating in lieu of litigating are hotly debated, the finality of arbitrators’ decisions is often cited favorably. A reduced chance of future appeals generally keeps costs down.

That finality can prove to be a bit too harsh, for some. Massachusetts courts have consistently refused to vacate arbitration awards even for errors of law or fact. In an effort to minimize the probability of such a result, the parties negotiating a certain arbitration clause included language addressing it. The clause stated, in part, that a judge could overturn the award in the event of an arbitrator’s “material, gross and flagrant error.”

As luck would have it, the parties ended up taking various disputes to arbitration. Not surprisingly, the losing party sought relief it court for what it argued, among other things, was such an arbitrator’s error.

This week the Supreme Judicial Court of Massachusetts issued a decision, Katz, Nannis & Solomon, P.C., & Others v. Bruce C. Levine & Another, in which it denied that request for relief.

The court reasoned that the state statute governing arbitrations, M.G.L. 251, does not allow for alteration of the standards for judicial review. Specifically, Section 11 mandates “the court shall confirm an award” except in the specific situations listed in other sections of the statute. Katz, citing M.G.L. c. 251, s. 11.  Since the language in the parties’ arbitration clause differed from the limited statutory exceptions, the court refused to apply it.

Contracting parties in Massachusetts should use caution in selecting the right arbitrators. Arbitrators’ mistakes can still be binding, even when all parties agree they should not be.