As we began to describe on March 18, the economic impacts of the ongoing coronavirus/COVID-19 pandemic on the construction industry are becoming more severe as the pandemic continues and spreads. Substantial uncertainty remains, however – as of the date of this post, the “peak” of the pandemic in New York, Connecticut, and Massachusetts is expected to occur (depending on which reports you read) in mid-April, late-April or May, respectively. It appears increasingly likely that proactive, protective measures in these states, along with their restrictive effects on the economy and construction activity, will continue through the end of April and into May.
Continue Reading Ongoing Impacts of the Coronavirus Pandemic on Construction Projects in Major Markets
Massachusetts
Harsh Consequences for Contractor’s False Payment Certifications in Massachusetts
On most construction projects, a project owner will require the contractor to certify that it has fully paid each of its subcontractors as a condition to the owner making payment to the contractor. The purpose of these certifications is to ensure timely payment to all subcontractors and to protect the owner from claims or liens by unpaid subcontractors. A recent Massachusetts decision highlights the importance of these certifications and the harsh consequences the contractor may expect if the contractor intentionally submits false payment certifications to the owner.
In G4S Tech., LLC v. Mass. Technology Park Corp., 2016 Mass. Super. LEXIS 36, 33 Mass. L. Rep. 301 (Mass. Super. March 30, 2016), the Contractor sought millions of dollars for alleged extra work and its contract balance for work performed on a state and federally funded project to design and construct a fiber optic network in western Massachusetts. The Owner disputed the extra work and contract balance claims because the Contractor intentionally breached the contract by submitting false payment certifications. The Contractor did not deny that it submitted false payment certifications but stated that because it eventually paid the subcontractors, and the late payments did not cause a delay on the completion of the project, any harm that arose was “de minimis”. Therefore, the Contractor argued that its submission of false payment certifications should not prevent it from collecting its contract balance and pursuing its multi-million dollar claim. In addition, the contractor argued that it should be entitled to recover the cost of the work performed under the equitable theory of quantum meruit, which entitles one who performed work to recover the cost of that work in the absence of a contract or agreement.Continue Reading Harsh Consequences for Contractor’s False Payment Certifications in Massachusetts
Bill Proposed in Massachusetts to Establish “Public Construction Surety Bond State Guarantee Fund” Requiring Chapter 149A Sureties to Specially Register and Pay a $10,000 Annual Fee
Sureties writing public construction bonds under Chapter 149A in the Commonwealth of Massachusetts should pay close attention to Mass. Bill No. 3889, which seeks to create a Public Construction Surety Bond State Guarantee Fund. The Fund would guarantee payment to claimants who have obtained judgment on their claims in a court of competent jurisdiction where…
The Massachusetts Retainage Act: A Game-Changer for the Construction Industry?
The private construction game has very recently changed in Massachusetts. Late last year, the new Massachusetts Retainage law took effect. The new law applies to certain private construction contracts executed after November 6, 2014, and impacts not just the amount of retainage that a construction stakeholder may withhold, but also mandates some very specific processes…