Category Archives: News

Airbnb Tax Dropped from Budget after House Negotiations

By on August 8, 2017

This post updates our previous post regarding proposed taxation of revenue generated by Airbnb rentals.  Despite prior consideration of an Airbnb tax as early as July 2017, the proposal was dropped from the fiscal year 2018 budget proposal. Earlier this year, the state Senate pushed to apply Massachusetts’ state hotel tax, and local levies, on private residences rented for short stays by Airbnb and its competitors, but lawmakers in the House could not agree on a budget measure.

Although the so-called Airbnb tax will not be included in the 2018 fiscal year budget, Representative Aaron Michlewitz, a leader in the efforts to install an Airbnb tax, remains confident that the legislature will institute a tax plan for short-term housing. It seems all parties concerned — from Governor Charlie Baker to industry leader Airbnb — agreed that short-term housing in Massachusetts should be subject to some taxation along the way.  Thus far, however, no consensus could be reached to keep the tax on the 2018 budget proposal.  Expect more updates on this matter as they develop in state government.

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.

Massachusetts Proceeds with Proposal to Impose Tax on Short-Term Rentals like Airbnb

By on June 19, 2017

As discussed in one of our previous posts , Massachusetts legislators have continued to discuss imposing a tax on short-term rental companies like Airbnb. Recently, the Massachusetts Senate decided to proceed with Governor Charlie Baker’s proposal to expand the room occupancy tax to include short-term rentals, but not without a few modifications. Back in January, Governor Baker proposed to expand hotel taxes to include users of services like Airbnb who rent out private rooms for more than five months (150 days) per year. The proposal stated that the 5.7% state tax – and up to 6% local tax – should apply to all providers of “transient accommodations.”

The Senate’s proposal, which was published in late May, adopts and expands upon Governor Baker’s initial proposal. Instead of only applying the room occupancy tax to private rooms that are rented out for more than five months per year, the Senate proposes imposing the tax on all “transient accommodations.” In contrast to Governor Baker’s proposal, which suggested encompassing long-term Airbnb providers under the definition of “hotels,” the Senate’s proposal introduces an entirely new category of housing that would be subjected to the room occupancy tax. “Transient accommodation” would encompass all “owner-occupied, tenant-occupied or non-owner occupied property . . . that is not a hotel, motel, lodging house or bed and breakfast establishment” where at least one room is rented to an occupant and all accommodations are reserved in advance. This new category of accommodation would expand the application of the room occupancy tax to all Airbnb-type services, regardless of their frequency. As a result of this proposed expansion, the state Senate’s proposal is projected to raise $18 million in 2018.

In a television ad Airbnb declared its support for the proposed rental tax in Massachusetts. Although similar ads ran last summer, the new ad reaffirms the company’s “commit[ment] to working with Massachusetts on new, common-sense home sharing rules. We want to collect and pay taxes for our hosts and protect affordable housing. Together, we can make sure all of Massachusetts benefits.” At this point it appears that at least some tax will be levied on companies like Airbnb in the very near future. The effect on hosts and customers remains unknown.  Strang Scott will continue to follow the progress of the proposed tax.

Strang Scott Welcomes Summer Associate Nicole Rushovich

By on May 24, 2017

RushovichNicole Rushovich, a rising third year student at Boston University Law School, will spend the summer working as a summer associate in Strang Scott’s Boston office. Nicole obtained her B.A. at the University of Colorado at Boulder, earning summa cum laude honors with a dual degree in Psychology and Political Science. While there she was a member of the Delta Epsilon Iota academic honor society, and wrote a thesis on negative political advertisements and effects on system-based beliefs. She also enjoyed honing her French during a semester in Paris at the Institut D’Etudes Politiques. After college she spent some time working as a legal assistant and paralegal in Colorado law firms.

Since starting at Boston University School of Law, Nicole has excelled both academically and in extracurricular activities. She participated in the ABA Negotiation Competition, advancing to be a school representative in the regional rounds. She excelled in the Stone Moot Court competition, advancing to the honors Albers Moot Court competition. She spent last summer as a legal intern at The Wilderness Society. During the past year she served as a student attorney at The Environmental Law Practicum, working on environmental justice litigation, as well as working as a legal intern for the Solicitor’s Office at the Department of the Interior.

In her very limited spare time Nicole enjoys hiking and Corepower yoga. She is excited to join Strang Scott for the summer  to learn the practice of business litigation and commercial real estate law.

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.

Understanding the Limitations of Chapter 93A – Pursuing Litigation Is Not Unfair or Deceptive

By on February 26, 2017

Companies operating or conducting business in Massachusetts are aware of an all-too-familiar statute, Massachusetts General Laws Chapter 93A. This statute provides individual consumers and businesses a right to bring legal action if they are harmed by an unfair business practice. The statute eloquently, although perhaps ambiguously, states that a violation shall exist when a company commits an “unfair or deceptive act or practice, or unfair method of competition,” against another who is engaged in commerce within the Commonwealth.  Violations can cover a litany of topics, such as a company that unfairly demands more money to complete its contract obligations after having already executed the contract (Anthony’s Pier Four, Inc. v. HBC Associates, 411 Mass. 451), or where insurance providers fail to offer a fair and equitable settlement amount within the required time period (Rhodes v. AIG Domestic Claims, Inc., 461 Mass. 486), or against landlords who fail to provide habitable units to their residential tenants (Haddad v. Gonzalez, 410 Mass. 855).  Although Chapter 93A is far-reaching, it does have its limitations.

Recently, Strang Scott attorneys Cole Young and Jennifer Lynn argued to the Massachusetts Appeals Court that litigation tactics alone are not unfair or deceptive acts or practices, such that they violate Chapter 93A.  Agreeing, the Appeals Court held that demanding payment under a contract, filing suit, and continuing to litigate a claim over a disputed amount is a simple contract dispute and nothing more. Aggregate Industries ­– Northeast Region, Inc. v. Hugo Key & Sons, Inc., 90 Mass.App.Ct. 146 (2016).   Said another way, the Appeals Court held that plaintiffs should not be punished for deciding to litigate, rather than accepting a lower settlement amount.  The Appeals Court went on to hold that the unfair or deceptive practice must arise from an independent act of trade or commerce, “not tangentially from litigation concerning that conduct.” 

The precedent of this case will be far-reaching and provides security to companies and businesses who choose to file suit, as opposed to being forced into settlement for fear of committing an “unfair” act.  Because the breadth of Chapter 93A can be complicated and nuanced, potential litigants should speak with an experienced Massachusetts litigator.

Keeping up Formalities: Protecting Assets Across Commonly Owned Companies

By on February 2, 2017

A recent Massachusetts Bankruptcy Court decision should serve as a clear reminder to business owners that, in order to enjoy the benefits that limited liability entities afford, one must respect established corporate formalities and comport business accordingly. Briefly, in In Re: Cameron Construction & Roofing Co., Inc. the  Bankruptcy Court held that the assets of a Massachusetts limited liability company, closely related to a Massachusetts construction business subject to Chapter 7 bankruptcy proceedings, could be reached to satisfy the claims of the creditors of the construction business. 

The two separate entities shared a common owner yet were formed as distinct enterprises. In this case, however, the Court determined that the owner controlled both the non-debtor LLC and debtor construction business and had allowed for the intermingling of assets. Further, the Court noted that the common owner “was thinly capitalized, and the two entities observed only minimal corporate formalities by filing separate tax returns and Annual Reports.” Thus, the Court held that ‘substantive consolidation’ was the appropriate remedy- effectively disregarding the sovereignty of the separate entities and combining their assets as a means to satisfy the liabilities of one.  Had the owner resected the separate corporate forms of his commonly owned entities in his everyday operations he likely would have been in a better position to shield assets held by the  non-debtor LLC from creditor access.

Proposed Legislation to Restrict Reasons for Evicting Tenants in Boston

By on January 31, 2017

Mayor Walsh’s administration recently proposed a new bill aimed at limiting the available reasons to evict a residential tenant. The proposal, known as the “Jim Brooks Community Stabilization Act,” would eliminate no-fault evictions in many instances, a common practice used to remove tenants without listing a violation. Proponents of the act claim that it is designed to protect renters from “arbitrary” or unreasonable evictions, without unfairly restricting the landlord. Opponents cite concerns that it would deter further development and hinder private property rights.  

Under current law, landlords may evict tenants for a specific reason, or for no reason at all, depending on the type of rental agreement. For tenancies with an ongoing, written agreement, landlords may give notice to evict for nonpayment of rent or for a specific reason, including violation of a provision of the lease. For tenants who are at-will, meaning those who do not have a written lease for a specific term, landlords may give notice to evict for failure to pay rent or for no reason.

Should the proposed Act pass, the new law would severely restrict the “no-fault eviction,” and limit evictions to instances where the tenant has not paid rent, created a nuisance, used the unit for an illegal purpose, violated the lease agreement, refused to extend or renew the lease, refused to permit the landlord to make necessary repairs, or offered subtenants not approved by the landlord. Exceptions to these restrictions have been offered, but are narrow in scope, applying to sober homes, college housing, or buildings owed by a Massachusetts resident who has six or less residential units. For larger scale, commercial landlords, they would be stuck with a tenant until a material issue arises.

Moreover, if passed, the Act would prevent landlords from clearing an entire building for the purpose of selling, renovating, or converting the use of the building. Under the new law, landlords would have to renovate a building or unit while the tenants continue to reside in their unit or force the landlord to provide alternative housing to the tenant while construction is ongoing.

If you are a landlord renting residential units in Boston, make sure you continue to monitor the Jim Brooks Community Stabilization Act. If it becomes law, your ability to remove tenants from a unit may become dramatically restricted. Should you have questions about evicting a residential tenant, you should contact a Boston property management attorney.

Attorney Fees Awards are Mandatory for Prevailing Massachusetts Subcontractors and Suppliers Under MGL c. 149, s. 29

By on January 18, 2017

In Aggregate Industries – Northeast Region, Inc. v. Hugo Key & Sons, Inc., 90 Mass.App.Ct. 146 (2016), the Massachusetts Appeals Court ruled in favor of Strang Scott’s position, reversing part of the trial court’s earlier decision. The Massachusetts Supreme Judicial Court (“SJC”) recently declined to further review the case. As such, the Appeals Court’s decision is now clear precedent on the standard for attorney fees under the Massachusetts Payment Bond Statute, G.L. c. 149, § 29 (“Section 29”).

The case arose over materials and services that a subcontractor / material supplier provided to a general contractor for use on a public construction project in Salem, Massachusetts. The general contractor refused to pay in full, so the subcontractor brought suit against it and the payment bond surety. The trial court awarded damages to the subcontractor for the value of certain services provided but refused to include an award of attorneys’ fees. The trial court incorrectly held that Section 29, which provides for mandatory attorneys’ fees awards to prevailing subcontractors and material suppliers, was inapplicable.

On appeal, the plaintiff argued, through counsel (Cole Young and Jennifer Lynn, at Strang Scott), that Section 29 is a remedial statute with a clear purpose of protecting unpaid subcontractors and material suppliers on state-owned projects.  Said another way, an attorneys’ fee award is mandatory for prevailing claimants and is not within the court’s discretion. The statutory purpose is clearly to level the playing field where general contractors could otherwise hold back payment to deserving subcontractors and material suppliers, using litigation costs as leverage to deter them from filing suit. Now they have greater incentive to make those payments when they become due, or face greater consequences.

The precedent of this case will be far-reaching and will benefit Massachusetts suppliers and subcontractors for years to come.  To learn more about securing payment on construction projects, contact an experienced Massachusetts construction attorney.