Strang, Scott & Giroux, LLP is pleased to announce that Partner David Travers has been named by Massachusetts Lawyer’s Weekly as a “Go To” Construction Attorney. Mr. Travers works with owners, general contractors, and specialty subcontractors across the country to deliver successful projects and, when necessary, resolve disputes.
Massachusetts Go To Lawyers: Construction
Home improvement projects can go very wrong, very quickly. Disagreements between contractors and homeowners can arise at any stage of construction, and parties that were once committed to working together may find themselves on opposite sides of the courtroom. Although it’s impossible to eliminate all potential areas of conflict, there are a number of steps that contractors can take to reduce the areas of potential dispute.
Ensuring that the contractor’s contract with the homeowner complies with the requirements of Massachusetts General Law Chapter 142A, § 2 (Regulation of Home Improvement Contractors in Massachusetts) should be a top priority. Unfortunately, many contractors overlook the requirements of M.G.L. c. 142A, opening themselves up to increased liability in the event the homeowner decides to sue.
Violations of M.G.L. c. 142A are by law, violations of Massachusetts General Law c. 93A (the Consumer Protection Statute). Contractors who fail to comply with M.G.L. c. 142A may find themselves liable for violations of M.G.L. c. 93A and potentially liable for triple damages, as well as the homeowner’s attorney’s fees and court costs.
So what is M.G.L. c. 142A? M.G.L. c. 142A is a law designed to protect both homeowners and contractors from unfair and dishonest practices arising out of residential construction projects. Chapter 142A only applies to home improvement contracts for one to four family residences where the total contract price is greater than $1000.00.
A common mistake contractors make, especially in smaller projects, is entering into a verbal agreement with the homeowners, beginning work, and then sending the homeowners some written description of the work to be done. However, M.G.L. c. 142A makes it clear that if your home improvement contract is for $1000.00 or more, certain pieces of information must be included in the contract and the complete contract must be signed before the contractor can begin work on the project. The following paragraphs provide a guide to the contract provisions required by M.G.L. c. 142A.
Identifying Information. Your Home Improvement Contractor number and/or your Construction Supervisor License number must appear on the first page of the contract. The first page of the contract must also include your name, your business’s name, your Federal Employment ID Number or your social security number, your phone number, the name of any salesperson that was involved in the transaction, and your address. The address on the contract cannot be a P.O. Box, it has to be a physical address. Additionally, the first page must have the date the contract was signed.
Description of Work and Materials. After you lay out all the identifying information on the first page, you can move on to the substance of the contract. Importantly, the contract should include a clear and detailed description of all work to be done on the residence, including materials to be used and should state what, if any, other documents are included as part of the contract. These documents can include materials lists, designs, plans, and specifications.
Dates. There are also important dates that must be included in the contract. Specifically, the contract must state when you are going to start work on the project and when the project will be substantially completed.
Payments. One of the most common problems with home improvement contracts involves the deposit. By law you cannot require the homeowner to pay a deposit of more than one third the total contract price. This means that if your contract price is $15,000.00, you cannot require a deposit of $5,001.00, because that is more than one third the total contract price. There is an exception for custom made materials that have to be ordered before the project begins in order for the project to proceed as scheduled. In those cases, the deposit may be equal to the actual cost of the custom materials if the actual cost of the materials is greater than one-third of the total contract price.
The contract must also include a schedule of when you will be paid. This schedule can be set dates, or it can be based upon when you complete certain portions of the project. Either one is acceptable, but you need to make sure that a payment schedule is included in the contract.
Permits. As the contractor, you are generally responsible for obtaining the permits for the project. Your contract should include a list of all permits that are required for the project and a notice stating that you will be responsible for acquiring the permits. The contract must also include a clause that states that homeowners who obtain their own permits will not be eligible to access the Guaranty Fund established by M.G.L. c 142A, § 5.
Notices. There are certain notices regarding the homeowner’s rights that also must be included in the contract. The contract is required to include a 3-day cancellation notice that informs homeowners of their right to cancel the contract within three business days after signing the contract. Contractors should place the 3-day cancellation notice on a separate page so the homeowner can easily sign the notice and mail back to the contractor should the homeowner choose to cancel.
Additionally, the contract must include a clause that states that all home improvement contractors and subcontractors are required to be registered, and that any inquiries about a contractor or subcontractor relating to their registration, should be addressed to the Office of Consumer Affairs and Business Regulation Home Improvement Contractor Program at 1000 Washington Street, Suite 710, Boston, MA 02118, (617) 973-8787.
The last set of notices should inform the homeowner of all warranties on the homeowner’s rights, and whether any lien or security interest has been placed on the residence as a result of the contract. Even if no lien or security interest has been created by the contract, it is important to include notice of that.
Signature. Something that may seem obvious but can be overlooked in smaller home improvement contracts is the signature. Both the contractor and the homeowner must sign the contract, and a copy of the signed contract must be given to the homeowner before the contractor is legally allowed to begin work on the project. Above the lines for the signatures there must be a notice, in no smaller than 10-point, bold font that states “Do not sign this contract if there are any blank spaces.”
Arbitration. As the contractor, if you want to give yourself the option of taking any dispute that might arise to arbitration, you need to include a separate arbitration clause in the contract. The clause should state
“The contractor and the homeowner hereby mutually agree in advance that in the event that the contractor has a dispute concerning this contract, the contractor may submit such dispute to a private arbitration service which has been approved by the Office of Consumer Affairs and Business Regulation and the consumer shall be required to submit to such arbitration. Note: The signatures of the parties above apply only to the agreement to the parties to alternate dispute resolution initiated by the contractor. The owner may initiate alternative dispute resolution even where this section is not signed separately.”
Both the contractor and the homeowner must sign and date the arbitration clause for it to be valid.
Conclusion
M.G.L. c. 142A is an incredibly significant law for contractors, and it is important for contractors to be aware of the requirements of the law. The law is very specific about what must be included in a contract for the renovation of a one to four family residence. If you have any questions about whether your home improvement contract complies with M.G.L. c. 142A, you should contact an attorney who specializes in construction law who can review the contract and provide you with guidance. Making sure you comply with M.G.L. c. 142A prior to starting work on a project can reduce the areas for possible disagreement later on.
Massachusetts Reopens: Construction Guidelines
On May 18, 2020 Governor Charlie Baker released his four-phase plan for reopening Massachusetts. During Phase 1 beginning on May 18, essential businesses, manufacturing and construction will be allowed to resume operations. The Commonwealth published both general and industry specific guidelines that business must adhere to in order to reopen. Although the following guidelines apply to projects across Massachusetts, many cities and towns have developed additional guidance and protocols for construction sites, and it is important for owners and contractors to check with the municipalities where their projects are located for additional requirements prior to reopening.
Requirements Applicable to All Industries
In addition to industry specific reopening guidelines, the Commonwealth has released three requirements applicable to all industries; (1) the COVID-19 Control Plan; (2) the Compliance and Attestation Poster; and (3) the Mandatory Workplace Safety Posters.
First, businesses must develop and implement a written COVID-19 control plan. The COVID-19 Control Plan addresses social distancing measures, hygiene protocols, staffing and operations, and cleaning and disinfecting procedures. A sample COVID-19 Control Plan template is available from the Commonwealth. This plan does not need to be submitted and approved, but it must be kept onsite in the event of an inspection or COVID-19 outbreak.
After creating the COVID-19 Control Plan, customer-facing business must complete, sign, and display a Compliance and Attestation Poster. The Poster informs visitors and employees that the business has implemented social distancing measures, cleaning and disinfecting protocols, provided hygiene instruction, and requires the employees to wear masks. The Poster must be visible to employees and visitors. The Commonwealth has provided a template Compliance and Attestation Poster.
As part of the implementation of the COVID-19 Control Plan, businesses are required to display posters detailing the Mandatory Safety Standards outlined in the Plan. The Commonwealth has developed separate posters for workers and employers which must be displayed where employees can see.
Specific Guidelines for the Construction Industry
In addition to the general requirements applicable to all industries, the Commonwealth has released guidelines specifically for construction sites. Many of the site safety requirements have been in place since the beginning of the COVID-19 emergency, and continue to be in effect. Additionally, the processes for addressing a confirmed case of COVID-19 on site is still in place.
General Requirements for Construction Sites
Workers on all sites must continue to self-certify prior to every shift that they have had no fever over 100.3 degrees or other signs of fever, cough, or shortness of breath within the past 24 hours; they have not been in close contact with a person who was diagnosed with COVID-19; and have not been asked to self-isolate or quarantine by their doctor or public health officials. However, there are other important details that contractors, project managers, and owners should be aware of.
All construction sites, other than construction on 1- 3 family residences, must have a site-specific COVID-19 officer who is required to submit daily written reports to the project owner certifying that the contractor and all subcontractors are in compliance with the COVID-19 Construction Safety Guidance.
Additionally, all outdoor construction projects without easy access to an indoor bathroom are required to install wash stations, with adequate stocks of soap and paper towels, and hot water if possible. For 1-3 family residential projects without ready access to indoor restrooms, contractors may provide adequate supplies of hand sanitizer to each worker rather than installing wash stations.
Special Considerations
Large, Complicated Construction Projects
For large, complicated construction projects, the city or town where the project is located may require the owner to develop a site-specific risk analysis and enhanced COVID-19 safety plan. The city or town reviews then reviews and approves the plan, and the plan is implemented. The city or town may require the project to stop work until an enhanced plan is submitted and approved. Any violations of the enhanced COVID-19 safety plan are treated the same as violations of the Commonwealth’s COVID-19 Construction Safety Guidance.
Importantly, a city or town has the authority to require the Owner of a large, complicated private construction project to pay for, or pay into a pooled fund, for an independent third-party inspector or inspection firm to enforce the COVID-19 Construction Safety Guidance and any enhanced COVID-19 safety plan. The third-party inspector is only accountable to the city or town, and the city or town has the authority to pause work on a project until a third-party inspector has been retained. The Commonwealth has provided no guidance on how projects may be classified as “large” and “complicated.”
Special Guidelines for Large, Complicated Public Construction Projects
For projects undertaken, managed, or funded by a state agency or authority, there is joint responsibility between the state agency and the town or municipality in which the project is located. The Owner has the lead responsibility for compliance and enforcement including frequent on-site inspections by an employee or contractor who is familiar with COVID-19 guidance and is authorized to enforce the guidance and shite down the work site if violations are found. The owner must notify the municipality where the project is located if the project is shut down or when it finds violations of the COVID-19 guidelines and a plan for corrective action. Work can be paused on a construction project until a plan is developed, approved and implemented.
1-3 Family Residential Construction Projects
1-3 family residential projects that have 5 or fewer workers on site at any given time, do not need a site-specific COVID-19 officer. A contractor may designate a COVID-19 officer to be responsible for all the small construction sites in a city or town. The COVID-19 officer should be in daily contact with each of the sites to ensure they are in full compliance with the COVID-19 guidelines and the COVID-19 officer must still prepare daily reports covering all the small sites.
Consequences of Non-Compliance
If construction sites fail to adhere to the COVID-19 guidelines, the municipality has the authority to shut down work on the project until a plan for corrective action addressing each area of noncompliance is developed and approved by the owner. If the site is found to have additional issues of non-conformance, action may be taken against the contractor’s prequalification and certification status.
Despite taking all required and recommended precautions, there is still a chance that someone
on your site might test positive for COVID-19. If a worker on your site tests positive for COVID-19, there are steps you must take to ensure the health and safety of your workforce and to comply with the requirements established by the Commonwealth of Massachusetts.
Most importantly, if any worker on your site is exhibiting symptoms of COVID-19 such as fever,
cough, or shortness of breath, instruct them to leave the worksite immediately and to contact their healthcare provider. Once a worker is confirmed to be COVID-19 positive, the Massachusetts Department of Health or a local board of health will notify the people who were in close contact with the COVID-positive worker. The contractor or site supervisor will be required to work with the Department or local board of health to identify anyone who may have had close contact with the COVID-positive worker. These people may include other workers, vendors, inspectors, subcontractors or visitors to the work site. Any person who is deemed to have been in close contact with the COVID-positive worker should be sent home and should not return to the construction site for fourteen days. Any person who is subsequently confirmed to be COVID-19 positive should not return to work until cleared by their healthcare provider.
Once a supervisor becomes aware that one of their workers is COVID-positive, they must inform the designated site COVID-19 safety officer, the site safety officer (if different from the COVID-19 safety officer), and the owner of the project that there was a confirmed positive case of COVID-19 on site. Importantly, supervisors must keep the identity of the COVID-positive worker confidential in compliance with health information privacy laws.
Additionally, immediately after learning of a COVID-positive worker on-site, the site supervisor
or contractor should identify surfaces that the infected worker may have touched. These surfaces include high-contact areas like door handles and light switches, as well as supply cabinets, designated work stations, shared tools and equipment, and common areas such as bathrooms, break rooms, tables, vending machines. The contractor or site supervisor must use personnel, equipment, and material approved for COVID-19 sanitization to thoroughly disinfect all identified surfaces and areas. Workers may, but are not required to be sent home during this cleaning. It’s important that healthy workers not return to these areas until the sanitization process is complete and it is deemed safe to enter.
A positive case of COVID-19 is not in and of itself cause for a town or municipality to shut down
a construction site. However, if the town or municipality determines that your construction site is not in compliance with COVID-19 safety requirements, or that you are unable to comply with the safety requirements, the town or municipality may shut down your project for the duration of the state of emergency. Therefore, it is important to make sure your site is in full compliance with all guidelines and regulations in order to keep your site up and running.
Strang Scott partner, Chris Strang, co-authored and article with Brendan Carter from the Associated General Contractors of Massachusetts that was published recently on the cover of the American Bar Association’s “Under Construction” quarterly newsletter. The article details a case where Strang Scott prevailed against the Commonwealth of Massachusetts, successfully arguing that the awarding authority has a duty to ensure the validity of payment bonds provided by general contractors on public construction projects in Massachusetts. The case was a matter of first impression in Massachusetts courts.
Since the early 1900’s, Massachusetts courts have held that a contractor cannot recover on the contract itself without showing complete and strict performance of all terms or, in the event the contract cannot be completed fully, that the contractor substantially performed and attempted, in good faith, to perform fully. Under this rule, if the court finds that the contractor intentionally departed from the specifications of the contract, the contractor is prohibited from recovering under the contract, forfeiting its right to contract damages.
The Massachusetts Supreme Judicial Court (SJC) will hear arguments this week requesting the forfeiture rule in construction cases to be overturned. The appellant in G4S Technology LLC v. Mass. Tech. Park Corp., SJC-12397, appeals a prior summary judgment ruling, wherein the trial court denied the contractor’s claims for approximately $10 million in delay-and-impact damages on the basis of the forfeiture rule. Despite ultimately completing the project, it was determined that the contractor paid some of its subcontractors late and submitted false certifications. Those actions were in breach the contract, and the trial court determined that those actions were sufficient to deny the contractor’s claims.
The SJC will consider whether Massachusetts should adopt an alternative standard that considers whether a breach was an uncured, material breach that alleviates the non-breaching party’s obligation to pay and weigh a breaching party’s lack of good faith or willfulness, among other factors to be considered by the court. This multi-factor analysis is applied currently by Massachusetts courts in other contract disputes, but not in connection with construction disputes.
Should the forfeiture rule be overturned, it would have wide-reaching consequences and create greater flexibility in arguing an entitlement to damages on breach of contract claims. Contractors would be wise to keep track of this case as it proceeds. If you have questions concerning your rights in connection with a construction dispute, consult an experienced Massachusetts construction attorney.
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.
The White House recently released its “Legislative Outline for Rebuilding Infrastructure in America.”
In the preamble to the outline, The White House requested that Congress act to implement the infrastructure program in short order through new legislation. In broad strokes, the outline calls for new spending to stimulate $1.5 trillion dollars in infrastructure investments, from federal and state governments, agencies and localities, to address American infrastructure projects.
Should the program be implemented by Congress in any meaningful way, it would mean a boon for public construction projects and contractors. Contractors would be wise to keep a careful eye on this proposed legislation as it develops.
The Regulation of Business Practices for Consumer Protection Act, commonly referred to by its statutory chapter number, “Chapter 93A,” is a frequently utilized statute that provides individual consumers and businesses with a right to bring legal action and recover damages if they are harmed by an unfair business practice. Under the statute, “unfair or deceptive acts or practices” or “unfair methods of competition” committed while conducting business in Massachusetts permit the harmed party to recover their actual damages, or a statutory minimum of $25 per offense (whichever is greater), and up to three times such damages for knowing and willful violations of the statute, plus an award for reasonable attorneys’ fees and the costs of the lawsuit. Chapter 93A creates harsh penalties, with a wide-reaching scope, to deter unfair business acts, however, it does have limitations.
Previously, we explained the prohibition on Chapter 93A recovery with regard to a party’s decision to litigate a dispute, rather than settle with the opposing party.
A second limitation on recovery under Chapter 93A relates to the timing of when a party’s legal fees are incurred. Recently, the Suffolk County Superior Court considered the issue of whether pre-litigation attorneys’ fees are recoverable under Chapter 93A in Beninati, et al. v. Borghi, et al. The court awarded double damages to one of the plaintiffs under Chapter 93A. The defendants who were found liable under Chapter 93A then moved the court to reduce the attorneys’ fees award by $170,000 for fees incurred prior to the filing of the lawsuit, relating to “extensive settlement discussions.” The court agreed that pre-litigation fees are not recoverable under Chapter 93A, stating that it “is aware of no authority that permits the award of fees incurred before the litigation began and that do not bear directly on its preparation.” Accordingly, the court excluded the pre-litigation attorneys’ fees from the award.
This case is just one example of the importance of understanding the process of litigating claims and the implications of dealing with an adverse party. Depending on the circumstances of a dispute, it can be wise to initiate litigation sooner to ensure large portions of incurred attorneys’ fees are ultimately recoverable from the party causing the harm. To learn more about scope and application of Chapter 93A, contact an experienced Massachusetts litigation attorney.
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.