Category Archives: Construction

Prime Contractors Can Use Subcontractor’s Qualifications to Meet Specification Requirements

By on February 22, 2016

In a recent decision, the Massachusetts Attorney General’s Bid Protest Unit ruled that in certain circumstances a prime or general bidder on public construction projects can use the experience and qualifications of a subcontractor to meet the requirements of the project specifications.

The case, In re Department of Mental Health, Attorney General Bid Protest Decision (February 19, 2016), involved bid documents that required bidders to have at least five years of experience with smoke and fire damper maintenance. The protester argued that the general contractor submitting the low bid did not have such experience. In rejecting the protest, the hearing officer found that the low bidder’s subcontractor’s experience met the qualification.

The ruling is expressly limited to unique circumstances. The word “bidder” usually is limited to the general or prime bidder in public construction. Here, however, the bid documents stated that a sub-bid is called a “bid.” It appears that future bid documents will need similar language for the general or prime bidders to be able to rely on subcontractors’ experience in meeting the requirements for bidders.  Our Massachusetts construction lawyers will continue to monitor the impact of this decision.

Punch List and Remedial Work May Not Extend the 120 Day Period to Secure a Mechanic’s Lien in New Hampshire

By on February 8, 2016

A recent ruling in the Rockingham County Superior Court offers further guidance to contractors regarding the extent of the right to maintain a mechanic’s lien in New Hampshire.  In the matter of Fabcon Precast, LLC, v. Zirkelbach Construction, Inc., et al. Strang Scott attorney Corey N. Giroux secured a discharge of the plaintiff’s mechanic’s lien as untimely for its client, Zirkelbach Construction, Inc., of Florida, despite the plaintiff performing work within the statutory 120 period to perfect a mechanic’s lien.

The plaintiff, Fabcon Precast, LLC, secured a mechanic’s lien against the subject project, on an ex parte basis, in September of 2015.  Fabcon completed its scope of work on the project in January of 2015, and issued a sworn payment application to the general contractor indicating that it had completed 100% of its scope of work on the project at that time.  Subsequently, in May of 2015, Fabcon returned to address punch list items related to its scope of work.  While on site to complete the punch list work, Fabcon’s workers performed some limited work that they had failed to perform initially that was properly part of Fabcon’s original scope of work on the project.

In order to secure a mechanic’s lien against the project, it was necessary for Fabcon to perfect its mechanic’s lien within 120 days of its last date of work on the project.  Thus, in order for its September 2015 attachment to be proper, Fabcon relied upon the punch list work and other work performed in May of 2015 to support its right to the mechanic’s lien.  Fabcon argued that its punch list work, and the “new” work performed – that is, the work it failed to perform that was part of its subcontract — was sufficient to support its mechanic’s lien pursuant to NH RSA 447, New Hampshire’s mechanic’s lien statute.

On behalf of its client, Strang Scott argued that the September 2015 lien was defective because Fabcon’s work in May of 2015 was insufficient to support the mechanic’s lien and therefore insufficient to extend the 120 day statutory period to perfect its lien.  In particular, it was argued that Fabcon’s sworn payment application in January 2015, which averred that Fabcon had completed 100% of its work in January 2015, commenced the running of the 120 period for Fabcon to perfect its lien, despite the subsequent performance of punch list, remedial, or original scope work by the plaintiff.  The Court agreed. 

The Court directed the plaintiff “could have preserved its right to extend the lien by representing [in January] that it still needed to complete some work.”  “Because it represented that the work was 100% complete, the Court finds that the work performed …. was remedial.  The 120 days [to perfect the plaintiff’s lien] began to run on January 15, 2015.”

This ruling should be instructive for subcontractors and general contractors alike.  Subcontractors should be careful to avoid representing to general contractors that they have fully completed their scope of work if punch list or other work remains to be performed on their subcontracts.  General contractors should take care to insure that their payment applications contain sworn statements from subcontractors as to the extent of the work performed or which payment is sought.  Contractors with questions regarding the extent, duration or nature of their mechanic’s lien rights would be well-advised to consult with their New Hampshire construction attorney.

How to Know if Proprietary Bidding is Proper: A Public Construction Conundrum

By on December 14, 2015

Public construction projects are as necessary as they are numerous, which is to say very. Given that taxpayer money is at stake on these projects the state has an interest in regulating them from inception to completion to ensure that funds are spent efficiently. One specific statutory protection that Massachusetts provides at the inception of public construction projects is the competitive bidding requirement encompassed in MA G.L. c. 30, § 39M (b) (“Competitive Bidding Statute”).

The Competitive Bidding Statute serves to ensure that there is sufficient market competition for bids on public projects such that prices are kept low while the quality standards of the work remain high.  The statute accomplishes this by requiring that public bids,  “be written to provide for full competition for each item of material to be furnished under the contract; except, however, that said specifications may be otherwise written for sound reasons in the public interest.” It is important that contractors and subcontractors understand the implications of this statutory language so they are able to make fully informed and accurate bids.

The statute allows for two types of bids: competitive or proprietary. Competitive bidding is the norm and proprietary is the very narrow exception. The requirements of a competitive bid are that, “[f]or each item of material the specifications shall provide for either a minimum of three named brands of material or a description of material which can be met by a minimum of three manufacturers or producers.

Proprietary bids, or bids that do not meet the competitive bid standard, are allowed only if there are, “sound reasons in the public interest,” and only if those sound reasons are, “stated in writing in the public records of the awarding authority or promptly given in writing by the awarding authority to anyone making a written request therefor, in either instance such writing to be prepared after reasonable investigation.

In the case of both competitive and proprietary bidding, the awarding authority must allow contractors to submit alternative sources for materials that are the functional equivalents to materials described in the bidding document specifications. These are called equals. Specifically, “an item shall be considered equal to the item so named or described if, in the opinion of the awarding authority: (1) it is at least equal in quality, durability, appearance, strength and design, (2) it will perform at least equally the function imposed by the general design for the public work being contracted for or the material being purchased, and (3) it conforms substantially, even with deviations, to the detailed requirements for the item in the said specifications.”

The principal case on the matter of proper competitive bidding is  E. Amanti & Sons, Inc. v R.C. Griffin, Inc. (2001). This case illustrates the importance of correct bidding practices by highlighting the financial consequences for violation of the Competitive Bidding Statute.  In this case, the Massachusetts court made it clear that the distinction between proprietary and competitive bidding is meaningful and that subcontractors should not bear the burden of competitive bidding violations.

In this case, a subcontractor sought, and won reimbursement for, costs incurred when the subcontractor was forced to use a different and more expensive item than it included in its accepted bid. The specifications for the job required that the exhaust system be “as specified and manufactured by PlymoVent, or approved equal by the Fire Department.”  The subcontractor’s accepted bid contained a different and less expensive exhaust system manufactured by a company other than PlymoVent.

While the “or approved equal” language gave the appearance of a competitive bid and led the subcontractor to believe that other exhaust systems could satisfy the specifications, in reality only the PlymoVent system could meet the architects requirements. The bidding authority did not make this fact clear to the subcontractor up front. Thus, the court held that form lost to substance, and the addition of the words “or equal” did not suffice for a competitive bid. The court determined that the awarding authority attempted to circumvent the statutory requirements for a proprietary bid by attaching the “or equal” language giving the false impression that competition was welcome. Ultimately, the court held that awarding authority had to bear the burden of the extra cost incurred by the subcontractor in reliance on the improperly proprietary bid.

Thus, it is imperative that contractors and subcontractors on public construction projects are aware of the Competitive Bidding Statute and its implications. Competitive bidding is the default unless the awarding authority explicitly indicates otherwise. Case law suggests the burden for improper proprietary bids should fall on the awarding authority. Nothing is certain, however, thus vigilance is key for contractors and subcontractors when it comes to bidding on public projects and that vigilance is bolstered by awareness of whether bidding documents are soliciting competitive or proprietary bids.  If you have any questions about bidding on public construction contracts, you should contact a Massachusetts construction lawyer.   

By Andrea Jacobs, Esq. 

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Subcontractor’s Indemnification with General Contractor: Is it Void?

By on November 9, 2015

In most construction projects, general contractors require subcontractors to indemnify the general contractor for the subcontractor’s negligent actions.  Meaning, if the subcontractor’s negligence causes injury to a third-party and that third-party sues the general contractor, the subcontractor agrees to defend the general contractor.  Often times, general contractors will attempt to go a step further and seek indemnification from the subcontractor for injuries beyond the subcontractor’s control.  In Massachusetts, such provisions are void.   

The Massachusetts statute, MGL 149 § 29C, provides the following:

Any provision for or in connection with a contract for construction, reconstruction, installation, alteration, remodeling, repair, demolition or maintenance work, including without limitation, excavation, backfilling or grading, on any building or structure, whether underground or above ground, or on any real property, including without limitation any road, bridge, tunnel, sewer, water or other utility line, which requires a subcontractor to indemnify any party for injury to persons or damage to property not caused by the subcontractor or its employees, agents or subcontractors, shall be void.

A contractual indemnification clause is valid against a subcontractor where the clause is limited to indemnification for injuries or damages that were caused by the subcontractor.  See Collins v. Kiewitt Constr. Co., 2 Mass.L.Rptr. 416 (Mass.Super. 1994).  Moreover, there is nothing in MGL 149 § 29C that specifically prohibits a proportionate indemnification in subcontracts (e.g. a subcontractor can be required to indemnify a general contractor for the subcontractor’s “share” of the fault).  However, MGL 149 § 29C specifically prohibits provisions that “obligate a subcontractor to provide indemnification for losses that it in no way caused.”  N. Am. Site Developers, Inc. v. MRP Site Dev., Inc., 63 Mass.App.Ct. 529, 535 (2005).

If you are a general contractor, it is important to review the contracts you have with your subcontractors.  If drafted in contravention of MGL 149 § 29C, your indemnification provision may be rewritten by a court, which can have unpredictable consequences.  If you are a subcontractor, you should carefully review the contract with your general contractor to ensure that the general contractor is not attempting to force you into an indemnification that is otherwise unenforceable.  If you have any questions or concerns about the indemnification provision in your contract, you should contact a Massachusetts construction lawyer. 

 

Massachusetts Attorney General’s Bid Protest Decisions Finds No Violation of Public Construction Bidding Laws Where Low Bidder Included Minor Deviation on Bid Form

By on October 27, 2015

In a recent decision, In re: Town of Danvers; Thorpe School Library Project (October 8, 2015), the Massachusetts Attorney General’s Bid Unit rejected a protest from the second low sub-bidder, on the grounds that the low bidder’s notation on the bid form was a clerical error that gave it no unfair advantage.

The town’s bid form included a line requesting the proposed contract price “without alternates.” The low bidder’s form listed a price on that line and added the notation that its price included three alternates. However, the price of each alternate was listed separately, making the mistake easy to ascertain, and the awarding authority accepted it as the low bid.

The second lowest bidder filed a protest, claiming the notation was “an addition not called for” in violation of the public bidding statutes, mandating rejection. The Bid Unit disagreed, deeming this a “clerical error,” a well-established exception to the otherwise strict statutory bid requirements.

The Bid Unit further analyzed whether there was any way in which the low bidder gained an unfair advantage over other bidders by allowing this notation and decided it did not. Finding no prejudice to the other bidders is central to one of the statutory purposes of the bid laws; that is, putting all bidders on equal footing.

While the low bidder ultimately survived this protest, it should serve as a reminder to all bidders to use great caution when adding any words to a statutory bid form. You can read the full decision below.

http://www.bpd.ago.state.ma.us/

Construction Manager At-Risk Can Seek Indemnification For Design Errors

By on September 29, 2015

Earlier this month, the Massachusetts Supreme Judicial Court (“SJC”) held that a construction manager at-risk can seek indemnification for design errors.  The recent decision, Coghlin Electrical Contractors, Inc. v. Gilbane Building Company (SJC-11778), involved the construction of a facility for the Massachusetts Division of Capital Asset Management and Maintenance (“DCAM”).  DCAM, as the owner, contracted with Ellenzweig Associates to prepare the project designs.  When the project designs were partially completed, DCAM entered into a contract with Gilbane Building Company as the construction manager at-risk (“CMAR”).  Gilbane then entered into a subcontract with Coghlin Electrical Contractors. 

CMAR contracts have become very popular in Massachusetts, particularly in public construction projects.  Unlike traditional construction contracts where contractors submit bids based upon a set of design specifications, a CMAR contractor works as a sort of consultant to the construction and assumes the responsibility of cost overruns.  In the instant case, Coghlin submitted a request to Gilbane to cover Coghlin’s cost overruns, which allegedly resulted from faulty project designs.  When Gilbane failed to cover these cost overruns, Coghlin sued Gilbane and then Gilbane sued DCAM for a breach of warranty and to indemnify Gilbane for the cost overruns. 

The case ultimately made its way to the SJC, which ruled that Gilbane could proceed against DCAM for indemnification.  The Court held that when the legislature enacted G.L. 149A, which governs CMAR contracts in public construction, it did not intend to “abolish the owner’s implied warranty and to require the CMAR to bear the entirety of the risk arising from design defects…”  It further held that if “Gilbane is found liable for additional costs to Coghlin, Gilbane may be able to recover, but only to the extent that the additional costs were caused by Gilbane’s reasonable and good faith reliance on the defective plans and specifications…” 

The SJC’s opinion did not provide a blanket protection for CMARs against all design responsibilities.  After all, depending on the particular contract, a CMAR may be intimately involved in the design phase.  The Court clarified by stating:

The general contractor in a design-bid-build project may benefit from the implied warranty where it relied on the plans and specifications in good faith, but the CMAR may benefit from the implied warranty only where it has acted in good faith reliance on the design and acted reasonably in light of the CMAR’s own design responsibilities.  The CMAR’s level of participation in the design phase of the project and the extent to which the contract delegates design responsibility to the CMAR may affect a fact finder’s determination as to whether the CMAR’s reliance was reasonable.  The greater the CMAR’s design responsibilities in the contract, the greater the CMAR’s burden will be to show, when it seeks to establish the owner’s liability under the implied warranty, that its reliance on the defective design was both reasonable and in good faith.

This ruling will have a significant impact on construction contractors throughout Massachusetts.  Owners, contractors and subcontractors involved in CMAR contracts should contact their Massachusetts construction lawyer to discuss the implications of the SJC’s ruling. 

Bidding in the Wrong Place at the Right Time

By on September 22, 2015

The Massachusetts Attorney General Bid Unit recently held that an awarding authority should not re-bid a project where the original bid documents were confusing as to the address for submitting bids.

The Town of Weston solicited bids for an exterior duct work construction project. The Invitation to Bid listed one address, and the Instructions to Bidders listed a different address. In response to questions received on “addresses and dates” Weston issued Addendum 1, listing a third different address. Confusing things even more, it turns out that this third address in the Addendum was also a mistake. Two bidders submitted bids at the address listed in Addendum 1, while four others submitted bids at the address listed in the Instructions to Bidders.

The Attorney General decided that Addendum 1 overrode contrary bid documents, regardless of it actually being a mistake. The decision deemed the low bidder at the address listed in Addendum 1 as entitled to the contract, and ruled that the project should not be re-bid.

Bidders should use caution in reviewing addendums thoroughly and follow instructions accordingly. A full copy of the decision can be found here:  In Re: Town of Weston: Exterior Duct Repair, September 11, 2015, http://www.bpd.ago.state.ma.us/.

 

Perfecting Payment Bond Rights: Providing Adequate Notice Under Section 29

By on September 14, 2015

The Massachusetts Payment Bond Statute, Mass. Gen. Laws c. 149, § 29 (“Section 29”), provides subcontractors and material suppliers on public construction projects with the added security of filing claims against the general contractor’s surety when seeking damages. However, subcontractors and material suppliers must follow the strict requirements of Section 29 in order to recover on a payment bond. One requirement is that sub-subcontractors (i.e. a subcontractor’s subcontractor) must provide timely, written notice of their claim to the general contractor providing the bond.

Subcontractors who have direct contractual relationships with general contractors do not need to submit written notice of claims prior to filing suit. Direct subcontractors are covered under Section 29 for work performed, or materials supplied, once payment is 65 days overdue. Subcontractors and material suppliers that do not have direct contracts with general contractors must provide written notice to the general contractors within 65 days after last providing labor or material on projects.

Sounds simple enough, so what’s the catch?

The statute specifically requires written notice to be sent to the general contractor’s office and served through registered or certified mail or by a sheriff or constable. The written notice must also include the amount of the claim and the name of the subcontractor for whom the sub-subcontractor or material supplier performed work. Failure to provide such notice within 65 days bars that sub-subcontractor or material supplier from recovering damages on the payment bond.

Additionally, Massachusetts Courts will not recognize written notices sent before work is complete. In order for notice to be “timely” under Section 29, it must be given after the last date of work or delivery. Written notice sent before the last date on which labor or material are supplied are considered premature. Such notice will not meet the requirements of Section 29 and is fatal to any subsequent bond claim.

Section 29 is a very useful device for recovering overdue payment on public construction projects. However, sub-subcontractors and material suppliers must be careful to ensure that they closely follow all of the notice requirements of the statute. Seek the advice of a Massachusetts construction attorney for more detail.

By Jennifer Lynn

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Five for Fighting:  Subcontract Provisions Every Subcontractor Must Know to Get Paid

By on September 2, 2015

While there are any number of subcontract provisions that subcontractors must be aware of in order to negotiate subcontracts favorably, the following five provisions are critical to insuring that your business gets paid for the work it performs.

Lien Provisions

Did you know that it’s perfectly legal to relinquish your statutory right to a mechanic’s lien in New Hampshire?  If you did, give yourself a small pat on the back.  All too often, however, subcontractors – especially those new to working in New Hampshire – fail to appreciate that they can waive their right to assert or maintain a mechanic’s lien through their subcontract.  Worse still, it is often the case that subcontractors learn this valuable piece of information at the very worst time:  when they need to secure a mechanic’s lien for delinquent payment on a project.

In order to avoid this painful result, have your subcontracts reviewed carefully in-house or by your attorney, with a specific focus on any provision or language that relates to waiving or relinquishing the right to assert, maintain or perfect a lien or an attachment against the owner or its property.  If you see it, don’t accept it.  The mechanic’s lien is a very useful tool to make sure you get paid in New Hampshire, and you shouldn’t give it away before you start your project.   

Retainage Provisions 

Most every project contains a retainage provision, so how different could they be?  If you treat retainage provisions interchangeably, you may go a long time before you get paid that all important final five to fifteen percent of your contract balance.

Retainage provisions are like Skittles:  many flavors and some are better than others.  For example, if you’re a subcontractor that performs work early on in a project, it will be beneficial to negotiate retainage reductions based on acceptance of your scope of work by the project owner.  If you accept a common retainage provision that simply calls for the owner to withhold ten percent until the completion of the project, and you’re responsible for clearing the site and preparing for building or paving, it may be years before your final retainage payment becomes due, let alone gets paid.  Surely, that final ten percent looks better in your pocket than the owner’s.  As a result, it’s imperative that you closely monitor the retainage provision in each subcontract you execute.

Retainage isn’t intended to be an annuity that you receive years after you perform your work, but instead should provide the owner some security that you’ll finish your scope of work after you’ve been paid the majority of your contract balance.  If you focus on negotiating a retainage provision that fairly accounts for your scope of work and its timing in connection with the overall project, you shouldn’t need to wait extended periods of time to receive the final payment you’re owed. 

Change Order Provisions

There are virtually as many change order provisions as there are subcontracts.  It seems that every general contractor or construction manager that doesn’t utilize an AIA subcontract document creates its own change order provision.  With so many iterations of a provision meant to capture the same thing, more or less, what should your company be looking for? 

In short, to maximize your chances of getting paid for extra or change work, subcontractors should strive to negotiate change order provisions that come as close as possible to mirroring the reality of performing work on a project.  More often than not, that reality is a fast-paced project with a limited schedule where changed or extra work cannot wait weeks for signed change orders from executive level corporate representatives.  As a result, subcontractors are best served by negotiating change order provisions whose terms are not unduly burdensome, restrictive or otherwise difficult to satisfy. 

For instance, the author recently reviewed several subcontracts which directed that only the company president or another board level executive were authorized to approve a change in scope.  This is hardly practical for a subcontractor.  Ordinarily, a general contractor’s executives are not in the field regularly, and do not have the kind of “hands on” knowledge of a project that a project manager or superintendent possesses.  Worse still, executives are not readily available to subcontractors, as a general matter.  As a result, it’s not difficult to anticipate the difficulties that a subcontractor is likely to face when trying to balance the need to perform change order work, to maintain the project schedule and to secure the appropriate written authorization to perform the work.  These competing interests often lead to subcontractors performing work before they are authorized to do so according to the terms of their subcontracts, based on spoken assurances from onsite representatives of the general contractor.  This, in turn, exposes the subcontractor to the risk that the general contractor or the owner will reject the change order and that a fight will be necessary to get paid.

Because the competing interests in performing the work, meeting the schedule and securing appropriate authorization for changes in scope exist on so many projects, subcontractors are best served by negotiating change order provisions that mirror, as closely as possible, the anticipated conditions in field.  Doing so will go a long way toward insuring that you’ll be paid for your extras.  To the extent that you have any doubt regarding what steps are necessary to make sure you’re complying with the change order provision in your subcontract, you’re well advised to speak with your construction attorney.

Pay if Paid Provisions

Construction lawyers frequently discuss the concept of “risk allocation” with their clients.  So what is risk allocation?  At is core, risk allocation is concept used to describe how the parties to a contract divide or allot the various risks attendant to a particular contract. 

 A “pay if paid” provision is a tool used by general contractors and constructions managers to reallocate the risk of nonpayment, that for many years, was borne by the general contractor or construction manager.  A “pay if paid” provision operates exactly as it sounds.  That is, it’s a provision that conditions payment to a subcontractor for work it performs on the upstream contractor first receiving payment from the owner, or from the party upstream from it.  In other words, if the general contractor doesn’t get paid from the owner, the general contractor has no obligation to make payment to its subcontractor, regardless of whether the subcontractor fully and dutifully performed its work.

Does it make sense for a subcontractor to accept a “pay if paid” provision in its subcontract?  The answer is unequivocally no.  The vast majority of subcontractors have no ability to determine the financial solvency of the owner or the dependability of its construction financing.  Furthermore, a subcontractor has no direct contract with the owner, as the general contractor does, which thereby limits the subcontractor’s potential legal remedies if the owner elects not to pay for any number of reasons that have nothing to do with the subcontractor.  Because of these issues and others, subcontractors should be reticent to execute any contract that contains “pay if paid” language.  Because “pay if paid” language can be difficult to discern from other kinds of risk allocation devices, such as “pay when paid” and similar provisions, if you have any doubt about what your contract specifies seek the advice of your construction attorney.

Attorney’s Fees Provisions

Last, but certainly not least, subcontractors must understand what the attorney’s fees provisions mean in their subcontracts.  Like all of the foregoing types of provisions, there isn’t a one size fits all remedy.  What stands out about the importance of an attorney’s fee provision is that in some very important instances, the only way to enforce or determine your rights with respect to each of the kinds of provisions discussed above, is to employ the services of an attorney.  And that costs money.  So, if you don’t have an adequate provision of this kind, you’ll be forced to decide whether or not to pursue claims for payment (or other claims) based not upon whether you’re entitled to be paid, but rather by how much you’ll have to spend to get paid.

This isn’t lost on some less scrupulous general contractors.  In some instances, if a general contractor knows you’ll have to spend enough money to chase payments you’re owed that it becomes throwing good money after bad, they’ll simply pocket the money you should be paid and force you to bring suit against them.  This is no way to keep your projects profitable.

In order to make sure that you don’t fall victim to this scenario, insure that your contract has an attorney’s fees provision that calls for your fees to be paid in the event that you need the services of an attorney to enforce your rights under your subcontract.

So what do you do when the general contractor won’t agree to an attorney’s fee provision that runs in your favor?  In that instance, you negotiate what is known as a “prevailing party” provision.  A “prevailing party” provision calls for either party to a contract to receive their attorney’s fees and other costs from the other side in the event that a particular party prevails in an arbitration or lawsuit.  As is the case with each of the foregoing kinds of provisions, the devil is in the details of the provision.  Nevertheless, if you’re diligent about reviewing (or having someone else review) the language of any proposed attorney’s fee provision, you’ll be much less likely to learn that your subcontract only gives the general contractor the right to recover its attorney’s fees. 

If you master the foregoing five kinds of provisions, or engage your construction attorney to help you do so, you will negotiate better subcontracts before you get started and you’ll almost certainly forestall a variety of construction disputes before they have the opportunity to ripen.  Should you have questions regarding any of the information presented here, you’d be well advised to contact your New Hampshire or Massachusetts construction attorney.

Do You Have a Contract You Can Lien On?

By on July 21, 2015

To file a mechanic’s lien in Massachusetts, a contractor must have a written contract with the property owner (or owner’s authorized agent).  Subcontractors and material suppliers must show that written contracts exist for their labor and materials as well.  Although this may seem like a rather simple requirement, in some instances whether a written contract exists is not entirely clear.

In 1996, the legislature amended Mass. Gen. Laws c. 254 (the mechanic’s lien statute) to define “written contract” as “any written contract enforceable under the commonwealth.” This means courts can rely on standard contract law to determine whether a written contract is sufficient for a mechanic’s lien.  Taking into account the new amendment, the appellate court in Harris v. Moynihan Lumber of Beverly, Inc., concluded that a memorandum or writing sufficient to satisfy the Massachusetts statute of frauds should also meet the requirement of a written contract for purposes of the statute. The statute of frauds requires a writing “signed by the party to be charged,” in the event that a contract cannot be performed in less than one year’s time. The requirements of the statute of frauds are less stringent than the pre-1996 standard of “an entire and continuing arrangement in writing.”

On many occasions since 1996, Massachusetts courts addressed the question of what constitutes a written contract for purposes of establishing a valid mechanic’s lien.  While the cases have led to disparate results, several rules have emerged.  First, in order for a contract to be enforceable, the terms need not all appear on the same document.  Taken together, however, the series of writings must contain the essential terms of a contract, such as price, quantity, time of performance, and type of material or services.  Noreastco Door & Millwork, Inc. v. Vahradahatu of Massachusetts, Inc. (finding that a one-page cover sheet “original proposal” and a one-page reply memorandum did not constitute a contract for the purposes of the mechanic’s lien statute).  The purpose of this requirement is to ensure project owners have adequate notice of contract terms, so they may make informed choices to protect their interests.  Second, at least one of the documents being used as evidence of a contract must be signed by the party against whom the contract is being enforced (note that e-mail acceptance may be sufficient for a signature).  Third, the connection between the papers may be established by oral evidence, which, taken together with the content of the documents, shows the intent of the parties was to form a contract.  In Moynihan Lumber, Inc., the court found that a series of documents including a sales contract, credit application, and price quotations taken together constituted a contract for mechanic’s lien purposes.  In contrast, that same year the court in Nat’l Lumber Co. v. Fort Realty Corp., found no sufficient written contract because the documents lacked information on the price and quantity of the supplies, which is necessary information for owners to possess in order to protect their interests.  In Scituate Ray Precast Concrete Corp. v. Intoccia Const. Co. Inc., however, a series of signed delivery tickets and their corresponding invoices satisfied the statute of frauds and met the requirements of the mechanic’s lien statute, provided that the person signing for the deliveries was authorized to do so.

The best case scenario is for all parties to sign a single document with clear terms. The realities of the construction industry frequently do not allow that luxury.  When a fully signed contract with containing all the necessary terms hasn’t been executed, it is important to consult with a Massachusetts construction attorney to determine whether the documents you have are sufficient to support your mechanic’s lien.