Smith Ironworks, Inc. v. The Torrey Co. Inc.

• Decision Date: 10 June 2014
• Docket Number: MICV2013-01174-F
• Citation: Smith Ironworks, Inc. v. The Torrey Co. Inc., MICV2013-01174-F (Mass. Super. Jun 10, 2014)
• Parties: Smith Ironworks, Inc. v. The Torrey Company, Inc. et al
• Court: Massachusetts Superior Court

Smith Ironworks, Inc. v. The Torrey Company, Inc. et al

No. MICV2013-01174-F

Superior Court of Massachusetts, Middlesex

June 10, 2014

Filed Date June 11, 2014

MEMORANDUM OF DECISION AND ORDER ON THE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND THE PLAINTIFF'S CROSS MOTION FOR PARTIAL SUMMARY JUDGMENT

DENNIS J. CURRAN, Associate Justice.

Smith Ironworks, Inc. filed suit against The Torrey Company, Inc. and The Ohio Casualty Co. seeking payment of an unpaid subcontract balance and alleging that Torrey and Ohio engaged in unfair and deceptive trade practices in violation of G.L.c. 93A.Smith and Torrey submitted their dispute to arbitration.All issues between them have been resolved.This matter is now before the court on Ohio's motion for summary judgment and Smith's cross motion for summary judgment under Mass.R.Civ.P. 56(c).Ohio seeks to dismiss Counts IV (G.L.c. 93A), V (mechanic's lien), and VII (payment bond) of Smith's amended complaint.Smith opposes and cross moves for summary judgment, seeking a resolution in its favor on those claims.Smith also moves to compel discovery under Mass.R.Civ.P. 56(f) and seeks additional time to review the discovery responses and further address Ohio's motion.

For the following reasons, Ohio's motion is ALLOWED and Smith's cross motion is DENIED.

BACKGROUND

The following facts are taken from the summary judgment record and statement of undisputed material facts filed jointly by the parties under Superior Court Rule 9A(b)(5).

In March 2012, construction began on the 55 Boylston Street Project located in Chestnut Hill.Torrey was the project's general contractor.On March 2, 2012, Torrey hired Smith as a subcontractor to perform certain structural steel work.The companies entered into a subcontract which defined the scope of work that Smith was responsible for and identified a price that Torrey would pay Smith.During construction, the project owner made several design changes which increased the scope of Smith's work from what was originally identified in the subcontract.Smith and Torrey disagreed over how much each change would cost and therefore could not agree on an ultimate price.

Smith completed all of its work for the project by October 2012.On December 6, it sent Torrey its ninth application for payment.In the application, Smith requested $495, 892.60, an amount which Torrey had previously withheld as retainage due to the terms of the subcontract.Torrey acknowledged receipt of the application that same day.However, it did not approve or reject the application.Because the project's cost exceeded $3, 000, 000, all subcontracts governing the project's labor and materials, like the subcontract between Torrey and Smith, were subject to the Massachusetts Prompt Payment Act, G.L.c. 149, § 29E.Under this Act Smith's application was deemed approved on December 28 twenty-two days after Torrey acknowledged receiving it.The Act required Torrey to pay the amount listed in the application forty-five days after approval, by February 2 2013.Torrey failed to do so.

In February 2013, Smith filed a lien on the project in excess of $1, 500, 000 for what Smith believed was the remaining balance due under the subcontract.Torrey obtained and recorded lien, performance, and payment bonds to transfer Smith's and a sub-subcontractor's lien filings to such bonds.Ohio was the surety on these bonds.Under the lien bond, Ohio promised to pay a judgment arising out of the lien if Torrey failed to pay the amount adjudged.Under the payment bond, Ohio agreed to pay any undisputed amount that Torrey owed to individuals or companies furnishing labor and materials for the project if Torrey failed to do so.

On April 4, 2013, Smith filed this action against Torrey and Ohio seeking, among other things, to enforce the payment bond.^[1] This was the first claim for payment that Smith made on the bond.Smith also sought an injunction to prevent Chestnut Hill, the owner of the project, from paying Torrey $1, 284, 438.40.On April 8, upon agreement of Smith, Torrey, and Chestnut Hill, the Court issued a temporary restraining order which required Chestnut Hill to hold the requested amount in escrow until this dispute was resolved.

David Costa, Torrey's vice-president, submitted an affidavit in support of its opposition to Smith's motion for a temporary restraining order.In the affidavit, he outlined an accounting of what Torrey believed was the remaining balance owed to Smith under the subcontract.He then noted that although the accounting showed a balance of $132, 462.33 Chestnut Hill had not yet released the retainage on that balance.^[2] On November 12, 2013, Smith, through counsel, sent a letter to Ohio making a second claim on the payment bond.In the letter, Smith alleged that Mr Costa's accounting of the subcontract balance constituted an admission that Torrey owed Smith $132, 462.33.Ohio, through counsel, responded and alleged that Smith misconstrued Mr. Costa's affidavit and his statement actually denoted that there was a negative subcontract balance as of that date.

Smith and Torrey voluntarily submitted their disputes to arbitration on October 29, 2013.Ohio did not join in on the arbitration.The arbitrator issued his decision and award on January 3, 2014.^[3] This decision addressed and resolved all of the remaining disputes between Smith and Torrey.In his decision, the arbitrator ruled that Torrey violated the Prompt Payment Act by failing to respond properly to and pay Smith's application for payment number 9.He found that, under the Act, Torrey was required to pay Smith the requested amount of $495, 892.60 by February 11, 2013 and, when it failed to do so, interest began to accrue at $163.03 per day (statutory rate of 12% per year) up until January 4, the date of the award.Therefore, he found that Smith was entitled to the amount due under application number 9 as well as a total of $53, 147.78 in interest.^[4]

However, the arbitrator ruled that Torrey's conduct did not amount to a violation of c. 93A.He found that Torrey's violation of the Prompt Payment Act was not an unfair and deceptive trade practice and further found that Smith contributed to Torrey's failure to make timely payments by refusing to produce cost records and refusing to help Torrey develop change order packages suitable to submit to Chestnut Hill.He also took into consideration the fact that Chestnut Hill was withholding over $1, 200, 000 from Torrey at Smith's request.

The arbitrator made clear and detailed findings as to each disputed change, credit, charge, backcharge, and offset to the amount remaining under the subcontract and thoroughly addressed each of Smith's outstanding payment applications.Ultimately, he awarded Smith $781, 927.38.He emphasized in his decision that this amount represented the entire outstanding balance that Torrey still owed to Smith for the work it completed on the project.

On February 3, 2014, Chestnut Hill wired $789, 307.34 from the escrow account to Smith's counsel's IOLTA Account.Under the arbitration agreement, $276, 474.29 of that sum was immediately released to Smith while the remainder was held in a separate escrow account until a suit that was filed by a sub-subcontractor against Smith and Torrey and a sales tax issue could be resolved.

DISCUSSION^[5]

Summary judgment shall be granted where there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law.Mass.R.Civ.P. 56(c);Brigade Leveraged Capital Structures Fund Ltd. v. Pimco Income Strategy Fund , 466 Mass. 368, 373, 995 N.E.2d 64(2013)." In a case like this one where both parties have moved for summary judgment, the evidence is viewed in the light most favorable to the party against whom judgment is to enter."Albahari v. Zoning Bd. of Appeals of Brewster , 76 Mass.App.Ct. 245, 248 n.4, 921 N.E.2d 121(2010).

To meet its burden of proof, the moving party must support its motion with at least one of the materials listed in Rule 56(c).Kourouvacilis v. General Motors Corp.,410 Mass. 706, 714, 575 N.E.2d 734(1991), citingCelotex Corp. v. Catrett , 477 U.S. 317, 328, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986)(White, J., concurring)." [A]lthough that supporting material need not negate, that is, disprove, an essential element of the claim of the party on whom the burden of proof at trial will rest, it will demonstrate that proof of that element at trial is unlikely to be forthcoming."Id.

Once the moving party meets its burden, the non-moving party must provide specific facts to show that there is a genuine issue for trial.Id. at 716.Unsupported contradictions of factual allegations are insufficient to raise questions of material fact sufficient to defeat a summary judgment motion.Madsen v. Erwin , 395 Mass. 715, 719, 481 N.E.2d 1160(1985).

The court may consider pleadings, depositions, answers to interrogatories, admissions on file, and affidavits when making its decision.Cataldo Ambulance Serv. v. Chelsea , 426 Mass. 383, 388, 688 N.E.2d 959(1998).However, it does not weigh the evidence, determine witness credibility, or make its own findings of fact.Attorney Gen. v. Bailey , 386 Mass. 367, 370-71, 436 N.E.2d 139(1987).

The Payment Bond

Smith alleges that Torrey has failed to pay certain amounts that it believes Torrey owed for the work it performed on the project.Specifically, it claims that Torrey failed to pay application number 9 as well as $132, 462.33, an amount Mr Costa allegedly admitted owing to Smith, when each became due.The payment bond was set in place to secure Torrey's undisputed, outstanding debts to subcontractors performing labor or furnishing materials for the project.SeeReliance Ins. v. City of Boston , 71...