Divided Massachusetts Supreme Judicial Court Holds Statute of Repose Bars Alleged Unfair and Deceptive Acts Claims Against Contractor

The Supreme Judicial Court of Massachusetts in Bridgwood v. A.J. Wood Construction, Inc., 2018 WL 4100644 (Mass. 2018) held that statute of repose barred the homeowner's claims that the defendant contractor and subcontractor had committed unfair or deceptive acts (per Mass. Gen. Law c. 93A, s. 2) by failing to perform electrical work in compliance with statutory building and home improvement standards.

 

In 2001, the Newburyport, MA homeowner contracted for a renovation including the replacement of several ceiling light fixtures.  The defendants failed to obtain the proper permits to do so nor arranged for an inspection of the electrical wiring.  This electrical work was not performed to code, but the homeowner was unaware of the non-compliance until the concealed wiring caused a substantial fire in and damage in 2012.  The homeowner filed suit in 2016.

 

In Massachusetts, home improvement contractors are governed, in part, by Mass. Gen. Law c. 142A, s. 1 et seq.  Mass. Gen. Law c. 142A, s. 17 lists a number of prohibited acts including: "violation of the building laws of the commonwealth or of any political subdivision thereof."  Id. c. 142A, s. 17(10).  This law has some teeth because "[v]iolations of any of the provisions of this chapter shall constitute an unfair or deceptive act under the provisions of [Mass. Gen. Law c. 93A]," which carries penalties in addition to direct damages, including the potential for double and treble damages along with attorneys fees.  Here, the Bridgwood homeowner "claim[ed] that the defendants failed to perform the electrical work in compliance with those standards and, therefore, committed unfair or deceptive acts." Bridgwood, 2018 WL 4100644, at *2.

 

For their part defendants argued the homeowner's claim was barred by Massachusetts's 6-year statute of repose of tort claims set forth in Mass.  Gen. Law. c. 260, s. 2B.  The statute of repose is not tolled until the cause of action accrues.  Rather, in Massachusetts, the statutory trigger is substantial completion of the project or when the work is "open[] for use." Id.

 

The homeowner disputed the application of the statute of repose, instead arguing that only the 4-year statute of limitation under c. 93A, triggered "when the cause of action accrued," is the controlling timeline.  The homeowner emphasized that "because the relief available under G. L. c. 93A is 'sui generis,' neither wholly tortious nor wholly contractual in nature, the [tort-based] statute of repose does not apply." Bridgwood, 2018 WL 4100644, at *4. 

The Court disagreed explaining first that a "plaintiff to avoid the statute of repose by relabeling what is essentially a tort claim as a claim under [ ] c. 93A" and instead courts must look at the "gist of the action" to determine whether tort or contract based.  Bridgwood, 2018 WL 4100644, at *4.  Here because the homeowner's "claim is essentially that the defendants failed to perform the electrical work in compliance with the standards set forth in [a state statute and building code], [i]t is indistinguishable from a claim of negligence. Therefore, it sounds in tort and, having been commenced well beyond the six-year deadline, is barred by [the statute of repose]." Id.

The Chief Justice filed a dissent  joined by two other justices that rejected the majority's analyses of c. 93A caselaw and disputed that the legislature intended (or even contemplated) that the prior-enacted statute of repose would control the later-enacted consumer protection statutes.

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Katharine Kohm, Esq. is a committee member for The Dispute Resolver.  She practices construction law at Pierce Atwood, LLP in Providence, Rhode Island.


 

Contractors, be mindful of unit prices at bid time: Massachusetts court upholds rejection of REA for differing site conditions on $0.01/CY unit cost submitted in bid

On March 2, 2015, the Massachusetts Appeals Court affirmed a motion for summary judgment granted to the town of Avon in an action with Celco Construction.  The dispute resulted from a water main extension project and the rejection of a request for equitable adjustment for differing site conditions.



Celco was the successful bidder of a contract for the extension of a water main and the reconstruction of any disturbed roadways.  The bid documents required the submission of a series of unit prices for work activities that maybe encountered during construction.  The project bid documents further denoted an estimated quantity of 1,000 cubic yard of rock to be excavated.  A note on the bid documents gave the caveat that the 1,000 cubic yard quantity was for the purpose of bid comparison only. Celco submitted a unit price of $0.01/CY for the excavated rock in its winning bid.  Celco also listed $0.01 for unit prices of other work activities.



Celco commenced construction and found that the actual quantity of rock required for excavation far exceed the 1,000 cubic yard quantity in the bid documents.  Celco submitted a change request to increase the unit price of excavated rock from $0.01/CY to $220/CY.  A few months later, Celco submitted another change request for $190/CY of excavated rock, calling the increased quantity of excavated material a change from the bid plans and specifications.  The final total amount of rock excavated by Celco was 2,524 cubic yards. The town of Avon rejected these claims for equitable adjustment and Celco filed an action in Superior Court. The Superior Court granted the town of Avon’s motion for summary judgment.



The Appeals Court upheld the motion for summary judgment finding that Celco’s request for equitable adjustment failed to show that the type of rock encountered, and the means and methods required to excavate it, deviated in any manner from what could be anticipated in the bid documents.   The court stated that in a contract which contained multiple line items of unit prices “no equitable adjustment is warranted by reason of a variation in the estimated quantities, standing alone, as compared to a deviation in the condition or character of the physical condition”. Furthermore, the court stated that if Celco had submitted a true unit cost instead of a “wholly artificial and unrealistic value of one penny, it would be in no need of adjustment to the contract price.”



The ruling should give pause to companies who bid unit price contracts by burying or sprinkling costs in some unit prices, and ignoring other as a means of driving down overall unit costs for comparison and award purposes.  That strategy may win the project, but the risk of unforeseen quantities is one you own.

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This is the second case summary Brendan Carter, former Law School Liaison to the ABA Forum on Construction Law, wrote for The Dispute Resolver.  Thanks Brendan! He can be reached by email at bcarter@umassd.edu.