Massachusetts courts have long held that in construction contract disputes, contractors cannot obtain payment via a lawsuit unless the agreement that they were bound by was followed exactly. The Massachusetts Supreme Judicial Court, however, has changed decades of caselaw on this issue in the G4S Technology LLC v. Massachusetts Technology Park Corp. ruling, in which it gave contractors a means for collecting payment for completed work even if the agreement in place was not adhered to. In fact, the court’s ruling allows collection even in cases of intentional violations of an agreement, provided that work was completed and a good faith effort was made to follow the rules.
In the G4S’case, the company was hired to build a 1,200-mile fiber-optic network connecting 123 communities in western and north-central Massachusetts to high-speed internet. The project was finished seven months late and MTPC refused to pay the last $4 million of the project due to the delays. During the course of the litigation, it turned out that G4s repeatedly made false promises about paying its subcontractors on time. Although the trial court ruled in favor of MTPC on summary judgment, the Supreme Judicial Court reversed, finding that G4S acted in good faith to complete the project on time, which should allow them to collect the remaining portion of the contract.
Many in the industry feel that the ruling will lead to significant attention paid during litigation regarding good faith acts of the company looking to enforce a contract for payment in the construction setting. It may also lead to significant hurdles at the summary judgment stage, as added levels of facts and details regarding actions allegedly in good faith may lead to questions of factual disputes that the courts will send to juries for trial.
Although the court took steps to clarify that it was not condoning G4S’ intentional actions, it nevertheless held that “In evaluating the contractor’s good faith and right to recover under quantum meruit, we must consider the parties’ actions, the different contractual breaches and the damages they caused, and most importantly the value of the project provided as compared to the amount paid for that work,” Massachusetts Justice Scott L. Kafker said in the court’s opinion. “We must, in the end, balance the equities and produce a just result.”
CMBG3 Law’s attorneys have years of combined experience handling construction defect cases in multiple jurisdictions relating to various sized projects, including commercial structures, massive residential subdivisions, condominiums, and single-family residences. Our attorneys have successfully defended issues involving hot/corrosive soils, proper pipe insulation, foundation cracks, subsoil grading, siding, windows, flashing, rough framing, waterproofing membranes, roofing, plumbing, and drywall. In addition, we have experience dealing with indemnification disputes, tenders of liability, local building codes, ASTM standards, AWWA standards, as well as other nuanced issues in construction litigation. If you have any questions or would like more information, please contact John Gardella (email him or 617-279-8200).