Joseph A. Fortin Const., Inc. v. Massachusetts Housing Finance Agency

• Decision Date: 11 July 1984
• Citation: 466 N.E.2d 514,392 Mass. 440
• Parties: JOSEPH A. FORTIN CONSTRUCTION, INC. et al. 1 v. MASSACHUSETTS HOUSING FINANCE AGENCY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 514

466 N.E.2d 514

392 Mass. 440

JOSEPH A. FORTIN CONSTRUCTION, INC. et al. ¹ v. MASSACHUSETTS HOUSING FINANCE AGENCY.

Supreme Judicial Court of Massachusetts Suffolk.

Argued April 2, 1984.

Decided July 11, 1984.

Barbara J. Rouse, Boston (Mark S. Swartz, Boston, with her), for defendant.

Peter J. Gagne, Boston, for plaintiffs.

Before HENNESSEY, C.J., and WILKINS, LIACOS, LYNCH and O'CONNOR, JJ.

HENNESSEY, Chief Justice.

A judge of the Superior Court allowed the defendant's motion for summary judgment against the plaintiffs, on the basis that the action was barred by the statute of limitations, G.L. c. 260, § 2A. The plaintiffs appealed and the Appeals Court reversed the judgment. Joseph A. Fortin Constr. Co. v. Massachusetts Hous. Fin. Agency, 17 Mass.App. 911, 455 N.E.2d 1004 (1983). The Massachusetts Housing Finance Agency (MHFA) filed a petition for further appellate review with this court and it was granted. We agree with the Appeals Court and conclude MHFA's motion for summary judgment based on the expiration of the statute of limitations applicable to the plaintiffs' claim was improperly allowed.

The facts were established by uncontroverted affidavits. The MHFA made a construction loan in August, 1974, to Beverly Homes, Inc. (Beverly), to develop a housing project. Beverly hired the plaintiffs as general contractors for the project. On November 22, 1976, before the project was completed, Beverly terminated the plaintiffs' contract for an alleged default. The resulting dispute was submitted to arbitration. The arbitrator found for the plaintiffs. The plaintiffs then sought enforcement of the arbitrator's award in the Superior Court and obtained a judgment against Beverly in 1980 for amounts due them under the contract. In May, 1980, the plaintiffs' writ of execution of the judgment was returned unsatisfied. The plaintiffs filed the present action against the MHFA in October, 1980, seeking to recover from the MHFA the value of the unsatisfied judgment they hold against Beverly. The plaintiffs' theory apparently is that the MHFA had a duty, under St.1966, c. 708, as amended through St.1971, c. 1030, to require Beverly to provide security from which the plaintiffs could have secured payment of their judgment, that MHFA negligently failed to perform its duty, and that this negligence caused injury to the plaintiffs. We suggest nothing concerning the merits of the plaintiffs' claims. Before us is a more narrow question: assuming such a cause of action exists, when does the statute of limitations begin to run? ² Both parties agree that the plaintiffs' action is in tort and that the relevant statute of limitations is G.L. c. 260, § 2A. What they disagree about is when the time period provided in the statute starts in the instant case.

General Laws c. 260, § 2A, provides that actions of tort shall be commenced "only within three years next after the cause of action accrues." While the point at which negligence actions accrue is not provided in the statute, it is a well-settled rule that causes of action in tort generally accrue under G.L. c. 260, § 2A, at the time the plaintiff is injured. Cannon v. Sears, Roebuck & Co., 374 Mass. 739, 741, 374 N.E.2d 582 (1978). Dinsky v. Framingham, 386 Mass. 801, 803, 438 N.E.2d 51 (1982). Accordingly, to determine when the statute of limitations began to run on the plaintiffs' asserted cause of action, we look to when the plaintiffs suffered injury caused by MHFA's allegedly negligent conduct.

The plaintiffs contend that they incurred injury when the writ of execution on their judgment was returned unsatisfied. Under this analysis, the statute began to run in May, 1980. The plaintiffs' action filed in October, 1980, would, therefore, be well within the three-year period allowed by G.L. c. 260, § 2A. In contrast, MHFA claims that, if the plaintiffs suffered any injury at all from MHFA's alleged failure to act, they did so at the time (November, 1976) that Beverly wrongfully terminated the plaintiffs' employment contract. Thus MHFA contends that the plaintiffs' proposed action accrued, if at all, in November, 1976. It then argues that the proposed action is barred by the limitation in G.L. c. 260, § 2A, because the plaintiffs filed their complaint against MHFA in October, 1980, more than three years after the accrual of the action. We agree with the plaintiffs.

Before an action based in negligence may be maintained, there is a requirement that both negligence and harm be shown, with a causal connection between the two elements. Cannon v. Sears, Roebuck & Co., supra. Looking to the negligence and injury alleged, and to the facts of this case, we conclude that the MHFA's purported negligence could not have caused the plaintiffs' injury until the plaintiffs received back unsatisfied the writ of execution on their judgment against Beverly.

The injury in question is the nonpayment of money owed the plaintiffs under their contract with Beverly. The record indicates that payments under the contract stopped because Beverly terminated the contract. It did not do so for lack of funds, but because of the plaintiffs' alleged default under the contract. Accordingly, when Beverly's wrongful termination of the contract occurred, it bore no causal relationship at all to the MHFA's failure to obtain a bond or escrow security agreement from Beverly, as part of the financing, "to assure payment out of the construction loan funds," St.1971, c. 1030, to the plaintiffs of amounts owed them under their contract...