Category Archives: Construction

New Hampshire Supreme Court Refuses to Extend Statute of Limitations for Municipalities in Public Construction Context

By Corey Giroux on January 6, 2017

In the matter of City of Rochester v. Marcel Payeur et al., the New Hampshire Supreme Court had occasion to consider whether the common law doctrine of Nullum Tempus Occurit Regi (literally “time does not run against the king”) tolled the the statute of limitations against breach of contract claims against private entities filed by municipalities.

The doctrine of Nullum Tempus derives from common law and serves to protect the public’s interest in public rights and revenue and against injury to public property and lands. The policy underlying the doctrine suggests that it is in the public’s interest to toll the statute of limitations for claims asserted by the government because the government is in a disadvantaged position to enforce the public’s rights against injury vigilantly, as the government’s agents are too few in number and too occupied with ordinary governmental duties to prevent or redress injuries to public rights seasonably.

In the instant matter, the City of Rochester engaged the primary defendant to recoat a public water tank, to modify the tank and to install a mixer in the tank. After the work was performed, the tank developed a leak. During the investigation of the leak, the City of Rochester determined that in addition to improper modification work, the tank was constructed improperly when it was built. The construction of the tank was completed in 1985. Following its investigation, the City of Rochester filed suit against the contractor that performed the repair and modification work and the contractor that built the tank in 1985, among others. The company that initially built the tank moved to dismiss the claims against it citing the statute of limitations found in NH RSA 508:4. The Superior Court agreed with the company, and dismissed the claims against it as time barred. The City of Rochester appealed.

On appeal, the New Hampshire Supreme Court affirmed the trial court ruling. In the opinion, the court reasoned that the public policy rationale supporting Nullum Tempus was inapplicable to municipal contracts, because municipalities function like private parties in the contracting context. The court determined that municipalities are not disadvantaged in their contractual relationships and are equally equipped as private parties to enforce the terms of their agreements. Accordingly, the court concluded that public policy ends advanced by Nullum Tempus were not served by application of that doctrine in connection with municipal contracts with private entities.

Additionally, the court resolved that applying Nullum Tempus in this circumstance would undermine the public policy interests supporting the statute of limitations. Namely, that permitting municipalities to assert claims against contractors on an almost limitless basis would be contrary to the policy end of providing defendants timely notice of claims against them, which protects defendants from stale claims. Further, the court noted that in this context, Nullum Tempus would likely subject contractors to claims that would be unduly difficult to defend, costly, and time-consuming, due to faded memories, lost or destroyed evidence and witnesses that may be dead, unavailable or simply not able to be located after a long passage of time. In short, the court determined that the policy interests supporting the application of statute of limitations were more compelling in this context than those supporting Nullum Tempus. Accordingly, the court affirmed the Superior Court’s dismissal of the claims as time barred.

The decision in City of Rochester is a favorable one for contractors and subcontractors. Not only does it reaffirm contractors’ expectations regarding the duration of their potential exposures, it signals the New Hampshire Courts’ intention to treat municipalities more like private entities in contracting. For contractors, this decision should provide more certainty that municipalities will be held to the terms of the agreements they reach with private entities performing work for them. Contractors, however, should anticipate that sophisticated municipalities will take additional steps to limit future exposures of this kind in light of the court’s decision. As a result, contractors should exercise care in reviewing the terms of contracts with municipalities subsequent to this decision. In order to limit exposure and fully understand the risks associated with any municipal contract, contractors should review proposed contracts with their New Hampshire construction attorney.

Strang Scott Prevails on Summary Judgment in Case Involving Falsified Payroll Reports on Federal Construction Project

By Strang Scott on October 13, 2016

In the case of United States for the Use and Benefit of Metric Electric, Inc. v. CCB, Inc. and the Hanover Insurance Company, Civil Action No. 15-11934, in the United States District Court in Massachusetts, the court ruled in favor of Strang Scott’s motion for summary judgment, dismissing all of the plaintiff’s claims.

The case arose over construction work in the John F. Kennedy Federal Building in Boston. The electrical subcontractor submitted periodic certifications that it paid its employees for work performed on the project. These statements turned out to be false. Six of the subcontractor’s employees brought suit against it for failure to pay wages over several months.

The general contractor terminated the subcontract shortly thereafter. The electrical subcontractor brought suit against the general contractor and its payment bond surety, claiming an unpaid subcontract balance was due. The claims were brought under the Miller Act, as well as for breach of contract, quantum meruit, and violations of M.G.L. c. 93A (the Massachusetts law governing unfair or deceptive business practices).

Attorney Christopher Strang argued that intentionally submitting false certified payroll documents constitutes a material breach of contract, justifying termination and also extinguishing any right to further payment. The judge agreed, finding “[i]ts failure to pay its employees in a timely fashion as required by state and federal law (as well as by the terms of the Subcontract), compounded by Sampson’s filing of perjured certifications of payment, bars Metric from entering any chamber of equity.”

Contractors should use caution when submitting certifications on public, or any, construction projects. Making false statements on these documents can preclude any future recovery of contract payments. Concerned contractors should contact an experienced Massachusetts construction attorney.

Contractors Beware: OSHA Penalties Set to Increase on August 1, 2016

By Corey Giroux on July 27, 2016

On August 1, 2016, the Occupational Health and Safety Administration (“OSHA”), will raise the limits of its maximum penalties for the first time in nearly twenty-six years.

Current maximum penalties for “serious,” “other than serious” and “posting requirement” penalties will increase from $7,000.00 per violation to $12,471.00 per violation. Penalties for failure to abate hazards or violations will increase from $7,000.00 to $12,471.00 per day for each failure to abate the condition subsequent to the abatement date. Finally, the maximum penalties for “willful” or “repeat” violations will increase from $70,000.00 to $124,709.00 per violation.

All contractors, and especially those with a history of violations or alleged violations with OSHA, would be wise to insure that all personal protective equipment, tools and equipment are OSHA compliant in advance of the changes in maximum penalties. If your firm hasn’t recently revisited its safety procedures, practices and documentation, now is the time to review your firm’s safety program in order to avoid exposure to increased maximum penalties for OSHA violations set to take effect.

For contractors in states that operate their own, state run, “mini-OSHAs,” OSHA has required that those agencies adopt maximum penalties that meet or exceed those imposed by OSHA. Accordingly, contractors operating in states with “mini-OSHA” agencies should be mindful to consider whether they’re subject to penalties for any violation that may exceed the penalty that OSHA might impose for any similar violation.

Of course, the best way to avoid an increased OSHA penalty for a violation is to refrain from committing any violation. As a practical matter, violations frequently occur despite your firm’s best efforts and dedication to providing a safe and compliant work environment. If OSHA requests to inspect your work site or office, you’d be well-advised to immediately contact an attorney experienced in OSHA practice to help guide your firm through the process and to achieve best results.

Show Me the Money: Getting Paid on Federal Public Construction Projects

By Andrea Jacobs on July 18, 2016

It is imperative that subcontractors and material suppliers seeking payment for completed work on federal-level public construction projects be aware of the paradigm of laws and policies that exist governing such matters. To start, The Miller Act, codified as 40 U.S.C. §§ 3131-3134, exists to provide subcontractors on federal-level public construction projects a means by which to secure their right to payment in an analogous manner to how M.G.L. c. 149, § 29 operates to provide Massachusetts subcontractors and material suppliers on state-level public construction projects a means by which to secure the same. Specifically, the Miller Act requires general contractors on federal projects to provide performance bonds and payment bonds to the awarding authority where the prime contract exceeds $100,000. (for a comprehensive overview of subcontractor Miller Act rights see, “Federal Subcontractors – Understanding the Basics of Your Rights Under the Miller Act.”).

While the legal framework behind federal-level public construction projects and state-level public construction projects often operate in tandem it is imperative to note that Federal law and Massachusetts law treat the enforceability of “pay-if-paid” and “pay-when-paid” subcontract clauses somewhat differently. This distinction is one that subcontractors need be wary of when entering into public construction contracts.

“Pay-if-paid” clauses create a condition precedent to subcontractor payment. That is, a subcontractor has no right to payment for completed work until the general contractor has received payment from the owner. “Pay-when-paid” clauses create no such condition precedent to subcontractor payment. Rather, the general contractor has a ‘reasonable time’ to obtain payment from the project owner, but in the event the owner does not pay the general contractor within the ‘reasonable time’ the subcontractor still has the right to seek payment from the general contractor. Ambiguous contract language often complicates the subtle, yet substantial, differences between the two types of clauses leading to high stakes contract interpretation disputes.

In 2004, Massachusetts did away with the fraught distinction between “pay-if-paid” and “pay-when-paid” clauses on state-level public construction projects. See, Framingham Heavy Equip. Co., Inc. v. John T. Callahan & Sons, Inc., 807 N.E.2d 851, 855 (Mass. App. 2004). Thus with regard to Massachusetts state-level public construction projects “pay-if-paid” causes have been effectively eliminated in favor of “paid-when-paid” clauses.”

Federal-level public construction projects, on the other hand, have not completely eliminated the distinction between “pay-if-paid” and “pay-when-paid” contract clauses. Thus, on federal-level public construction projects “pay-if-paid” language included in a subcontract could complicate subcontractor recovery in relation to the principal contractor. The limited amount of Federal case law on the issue, however, leads to the inference that Federal Courts disfavor allowing “pay-if-paid” clauses to operate in the federal-level public construction context, particularly on Miller Act projects.

According to Federal Courts in both the First and Ninth Circuits, “the Miller Act is ‘highly remedial in nature,’ and should be construed and applied liberally to ‘effectuate the Congressional intent to protect those whose labor and materials go into public projects.’” United States ex rel. J.H. Lynch & Sons v. Travellers Cas. & Surety Co. of Am., 783 F. Supp. 2d 294, 296 (D.R.I. 2011) quoting, United States ex rel Walton Tech., Inc. v. Weststar Eng’g, Inc., 290 F.3d 1199, 1209 (9th Cir. 2002). Furthermore, according to the reasoning of the Ninth Circuit, because the Miller Act itself conditions payment, not on whether prime contractor is paid, but rather, whether the subcontractor has performed AND whether the statutory amount of time to bring a Miller Act claim has passed, it then follows that the terms of the Miller Act trump subcontract “pay-if-paid” language absent a “clear and explicit” waiver on the part of the subcontractor. Of particular note, the Ninth Circuit, specifically states, and the District Court of Rhode Island, located in the First Circuit, specifically quotes, the following language; “A subcontractor that has performed as agreed need not await the Government’s payment of the contractor before initiating an action under the Miller Act against the contractor or the surety.” United States ex rel Walton Tech., Inc. v. Weststar Eng’g, Inc., (9th Cir. 2002); United States ex rel. J.H. Lynch & Sons v. Travellers Cas. & Surety Co. of Am., (D.R.I. 2011).

The law is far from settled regarding the enforceability and distinction between “pay-if-paid” and “pay-when-paid” subcontract clauses on federal-level public construction projects. While there is some guidance on this issue in the context of the Miller Act, the distinction between the two clauses may still prove thorny for subcontractors seeking to enforce their right to payment. Thus, subcontractors should keep an eye towards the development of the law in this area as it is likely that more distinct legal trends will begin to emerge. If you have any questions about payment issues on public construction projects you should contact a Massachusetts construction lawyer.

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

By Chris Strang 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.

Considerations for the Effective Use of Email in Connection with Construction Projects

By Corey Giroux on June 7, 2016

Email is an indispensable tool for contractors that can streamline communication regarding the many facets of a construction project that aren’t strictly found in a project’s plans and specifications, or in the relevant contract documents. When used well, email can be invaluable to document the course of a project. When it’s disregarded or treated haphazardly, email can fail for its essential purpose – meaningful communication – or worse still it can be used to turn your own words against you. The following are several considerations when using email to communicate regarding your construction project.

Who is my audience?

This isn’t a trick question, but it is more nuanced than it might initially seem. In the first, instance, the obvious audience for each email is its addressees. Those addressees, however, may be only the first audience for your email. If a dispute arises regarding your project, you should anticipate that the audience for your email might grow exponentially to include corporate principals, engineers, architects, attorneys, arbitrators, judges or juries. As a result email correspondence regarding your project should be limited to professional matters, focused on the subject matter to be addressed and as clear as possible regarding the subject matter being addressed. When developing your email practices, it’s important to remember that your audience could extend beyond the initial addressees. This should help you to focus your message on the relevant considerations for your communication and help you avoid sending emails that you’ll later need to explain.

Why am I sending this email?

If you can answer this question succinctly, you’re off to a good start in drafting an effective project email. The “high-level” answer to this question generally should be reflected in the subject line of your email. The details that follow in the email should be limited to addressing the matter(s) in the subject line. Discussion of matters unrelated to the expressed subject should be avoided and saved for another email, letter or conversation. Consider writing a new email, with a new subject line, when your message no longer addresses matters in the subject line, rather than continuing a chain of email that has gone off point. If you follow this practice, you’ll help the recipient to quickly identify the reason for your email, prioritize your email among the many received on a given day and help both you and your recipient to refer back to the email, or chain of emails, later regarding the particular issue(s) addressed. As a side benefit, you’ll appear focused, organized and professional in your communication regarding the project.

Conversely, if you can’t answer this question, whatever you intend to write is probably best left unsaid, or at least, unrecorded. Among the reasons you should avoid sending a project email are anger, annoyance, personal reasons, sarcasm or humor. Nobody like a humorless person, but email is tone-deaf or worse – susceptible to multiple tones. Like a diamond, email is forever. Once you’ve pressed “send,” it’s safe to assume that your email will be part of the project record forever. And like a diamond, it’s for “better or worse.”

When is an email (or letter) absolutely necessary?

There are instances when it’s critical to communicate to another party with email or a letter.

Deviations from plans, specifications or the contract: Each time you’re asked or told to do something beyond the scope of work or that differs from the plans, specifications or your contract, you should confirm what you’re asked or told to do in writing. An email confirming your prior communication(s), your understanding of what’s been requested and your intended resolution of that matter is critical to documenting your project accurately and favorably. An email or letter addressing these matters achieves at least three important objectives; it provides a contemporaneous record of the event, it provides the requesting party notice of your intentions and it provides the party receiving your correspondence the opportunity to respond, to object or to further clarify the information you’ve provided.

Particularly with respect to change directives from an owner or general contractor, often it will not be enough to correspond with the opposing party regarding the change, and other steps will need to be taken. It is important, however, to use the email as a means to establish the circumstances of the change request, your understanding of what has been requested and how and when you intend to address the request. These matters can significantly affect the likelihood that you’ll be compensated for change requests later if a dispute regarding your performance arises.

Disputes: Because your project communication is a significant piece of the overall record of a project, it’s critical to fill in details regarding matters of dispute with your communications. For the reasons previously noted, your email communications can be used to reflect and confirm oral communications between parties whose positions and recollections may differ and change over time. An email confirming the contents of a recent discussion, particularly regarding matters in dispute, can prove invaluable to establishing the circumstances, your actions and your position if a dispute ripens into arbitration or litigation. Your contemporaneous email correspondence can serve as a powerful and credible tool to establish your version of the events regarding any dispute.

Setting the Record Straight: For the same reasons that the record of events created in your email can be used to support your version of events, it is vital to respond to inaccurate recitations of conversations or events from another party. In the long hindsight of a project, inaccuracies that go unchallenged by simple omission become more difficult to discredit. This is not to say that you must respond vigilantly to each and every minor inaccuracy. Rather, it is important that you do not let another party’s version of events control the written narrative of the course of the project. Long before any matter becomes contentious, you’re well served by addressing, in writing, significant inaccuracies in another party’s written narrative of events that are important to explain your actions or address historical inaccuracies. Sometimes it will be important to make sure the record is accurate as to whether something was done on a Monday or Tuesday, but more often than not, it’s more important to know in what sequence a particular task was performed or whether a certain discussion took place before or after certain work was performed.

It’s not essential that you resolve whose version of events are correct: generally, you’ll be able to verify what happened by other means as well. It is crucial, however, that your version of events exists in the written record so as to avoid the scenario where only your testimony is left to challenge the other party’s testimony and their unchallenged written version of events that you failed to address contemporaneously. Under those circumstances, it is significantly more difficult to establish your version of the events or challenge the credibility of another party whose testimony is corroborated by a written record of the events.

Developing consistent email practices can be a powerful, if underappreciated tool in the contractor’s toolbox. In addition to developing clear and credible records of your projects, you’ll be prepared to address questions regarding the performance of your work in a consistent and compelling way. Better still, you may limit or avoid disputes through consistent application of your good email practices. And for those disputes that can’t be avoided, when you sit down with your construction attorney to discuss the matter and review your records of the project, it’s likely that you will have a better prepared project file than your opposing party.

Federal Subcontractors – Understanding the Basics of Your Rights Under the Miller Act.

By Strang Scott on May 31, 2016

By Jennifer Lynn

Subcontractors commonly inquire as to what they can do to ensure they receive payment on a project. For federally-owned construction projects, subcontractors can look to the Miller Act as a source of security. The Miller Act, codified as 40 U.S.C. §§ 3131-3134, requires general contractors on federal projects to provide performance bonds and payment bonds to the awarding authority where the prime contract exceeds $100,000. The general contractor’s payment bond must list a “satisfactory” surety and cover the total amount of prime contract. 40 U.S.C. § 3131(b)(2).

The primary purpose behind the Miller Act is to provide security to subcontractors. Because federal projects are immune from lien claims, the Miller Act provides an alternative to a traditional lien, which instead calls for subcontractors to file claims against the general contractor and its surety under the payment bond. See U.S. ex rel. Metric Electric, Inc. v. Enviroserve, Inc., 301 F.Supp.2d 56, 66 (D.Mass. 2003). As with any claim for payment, the subcontractor must establish that it is owed payment in order to establish an enforceable claim under the bond. In addition to establishing a basic right to payment, subcontractors must meet other specific requirements to secure the benefits of the Act.

Who is Protected Under Miller Act Payment Bonds?

The Miller Act requires payment bonds to secure the claims of “all persons supplying labor and material in carrying out the work provided for in the contract.” 40 U.S.C. § 3131(b)(2). “All persons,” for purposes of the Miller Act, applies to (1) first-tier subcontractors, which are contractors who directly contract with the general contractor; (2) second-tier subcontractors, those contractors with a subcontract with a first-tier subcontractor; (3) first-tier suppliers, which are suppliers who contract with the general contractor; and (4) second-tier suppliers that have a contract with a first-tier subcontractor but not a first-tier supplier. See U.S. ex rel. Water Works Supply Corp. v. George Hyman Constr. Co., 131 F.3d 28, 31 (1st Cir. 1997).

Third-tier and more remote subcontractors and suppliers cannot recover under the Miller Act. Subcontractors and suppliers too remote to file a claim under the Miller Act can file ordinary claims for nonpayment for breach of contract or quasi-contract. The Miller Act does not alter contractors’ rights in connection with claims for nonpayment, but rather provides security for payment to the “persons” covered by the Act.

What Must a Subcontractor Do to Obtain Security Under the Miller Act?

Much like comparable statutes for state-owned construction projects, subcontractors must wait the requisite time to file a Miller Act bond claim and may need to provide initial notice to the general contractor. All subcontractors must wait 90 days after they last furnished labor or material to the project[1] before they may file a claim under a Miller Act payment bond. 40 U.S.C. § 3113(b)(2). The wait period serves the purpose of setting aside a reasonable amount of time for the subcontractor to receive payment for completed work. Bond claims filed before expiration of the notice period will be considered premature.

Second-tier contractors must comply with the 90 day wait period and must also provide written notice of its claim to the general contractor. The notice must be in writing; it must be received by the general contractor within the first 90 days after the second-tier subcontractor last furnished labor or material on the project; it must state “with substantial accuracy” the amount claimed unpaid and due and the name of the party to whom the material or labor was supplied or performed (i.e. the first-tier subcontractor); and it must be delivered by a method that provides verification of delivery (i.e. certified or registered mail) or served by a U.S. marshal. 40 U.S.C. § 3133(b)(2). The required notice must specifically demand payment from the general contractor. See U.S. ex rel. John D. Ahern Co., Inc. v. J.F. White Contracting Co., 649 F.2d 29, 31-32 (1st Cir. 1981). The notice requirement is strictly construed, and failure to fully comply will bar the subcontractor from raising a recoverable bond claim.

Subcontractors must file their claim on the bond within 1 year after the day of last furnishing labor or material on the project, 40 U.S.C. § 3133(b)(4), in the federal court in the district in which the project is located. 40 U.S.C. § 3133(b)(3)(B). Failure to file within the 1 year period will result in an absolute bar against the subcontractor’s bond claim. While a claim will be filed “in the name of the United States for the use of the person bringing the action,” 40 U.S.C. § 3133(b)(3)(A), the claim is a private one brought by the subcontractor and the federal government is explicitly exempt from liability to the subcontractor.

The above summary covers the general parameters for subcontractors to file a bond claim on federally-owned public construction projects. Because each project presents a different set of facts, the process and outcome to recover for nonpayment and filing under the Miller Act will vary. If you are uncertain regarding your company’s ability to recover payment for its work on a federal construction project, or if your company has complied with the regulations or process governing Miller Act claims, you should contact a Massachusetts construction attorney to achieve the best possible outcome.

[1] For more information about “last date of work” and how it is calculated, read Payment Bonds on Federal Construction Projects – Last Date of Work.

Contractors: Do You Know Your Rights Under the New Hampshire Residential Construction Defect Dispute Resolution Statute?

By Corey Giroux on April 12, 2016

New Hampshire has enacted a dispute resolution statute for residential construction defect claims made by homeowners that, among other things, provides contractors notice and opportunity to resolve alleged construction defects prior to a disgruntled owner instituting litigation against them. Despite its obvious benefits to residential contractors, many contractors fail to preserve the right to rely on the statute in contracts with homeowners.

The residential construction dispute resolution law’s stated purpose is “to encourage the out-of-court resolution of disputes between homeowners and contractors relative to residential construction defects.” NH RSA 359-G encourages the resolution of residential construction defect claims by mandating a procedure that homeowners must follow prior to instituting litigation against a contractor, provided that the contractor preserves its right to rely on the statute in its written contract with the owner.

Assuming the right to rely on RSA 359-G has been preserved, the homeowner must provide notice of any claim of an alleged defect to the contractor no later than sixty days prior to filing an action against the contractor in court. The homeowner’s notice to the contractor must contain a description of the alleged defect(s) “in detail sufficient to explain the nature of the alleged construction defect and the result of the defect … [and] provide to the contractor any evidence in possession of the homeowner that depicts the nature and cause of the construction defect.” In other words, the homeowner’s notice must contain more than a simple notification to the contractor that there is a problem. In so doing, the statute requires homeowners to provide contractors with adequate notice of the actual issue(s) for which the homeowner claims a defect and not simply a notice that there are alleged defects in the work.

Provided that the contractor receives adequate notice from the homeowner, the contractor must, within 30 days, respond in writing to the homeowner disclosing any information the contractor has regarding the specific alleged defects and:

Offer to settle the claim made by making repairs, paying money to the homeowner or both, without performing any inspection of the claim;
Offer to inspect the claim; or
Reject the claim.

Generally speaking, if a contractor offers to inspect the claim, the contractor will have 15 days to do so and then another 15 days to provide written notice to the homeowner of the contractor’s findings from the inspection. In the written notice the contractor must:

Make a written offer to fully or partially remedy the construction defect at no cost to the homeowner, and provide the anticipated schedule to complete repairs;
Make a written offer to settle the claim by payment;
Make a written offer to resolve the issue by payment and repair; or
Issue a written statement that the contractor will not remedy the defect.

After the homeowner elects to accept or reject the offer made by the contractor, the matter may proceed with payment, repairs or to the courts if the contractor rejects the claim and the homeowner disagrees.

Importantly, if the homeowner accepts the contractor’s offer to remedy the alleged defects and the contractor does so, the homeowner is barred from later bringing suit against the contractor for issues related to the defect. Similarly, provided that the contractor has preserved its right to assert 359-G, this dispute resolution mechanism provides the exclusive remedy for homeowners to utilize in the first instance. Actions filed in court prior to exhausting the remedies in 359-G shall be stayed until such time as the homeowner has complied with the statute.

RSA 359-G provides contractors and homeowners with a great tool to resolve disputes before they ripen into time-consuming and costly litigation. The statute provides a common sense framework for the parties to a residential construction contract to address perceived deficiencies in the work in a prompt and orderly fashion without initial resort to a legal process that is ill-equipped to deal with residential construction defect issues efficiently. Savvy contractors and homeowners do well by insisting that RSA 359-G be incorporated into their contracts.

It is important to note that RSA 359-G contains many other meaningful timing, notice and additional requirements that are beyond the basic operation of the statute addressed here. In order to gain a full understanding of the statute, how to preserve your rights under the statute, and how the statute operates in any particular situation, homeowners and contractors would be wise to consult with a New Hampshire construction attorney regarding the particulars of the situation.

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

By Chris Strang 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 Chris Strang 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.