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DSU Wins Important Appeals Court Case Regarding Notice On Massachusetts Public Construction Bond Claims

DSU attorneys, Jack DiNicola and Mike Brangwynne, prevailed in the Massachusetts Appeals Court on behalf of Hartford Fire Insurance Company (and its principal, SPS New England, Inc.).  The case, N-Tek Construction Services, Inc. v. Hartford Fire Insurance Company, can be reviewed here:

This case involved a second tier subcontractor asserting a bond claim against a general contractor's payment bond surety on a public construction project.  DSU and Hartford prevailed at trial.  N-Tek appealed.

The primary issue on appeal, and the only one addressed by the Appeals Court, was whether N-Tek's e-mail to SPS was sufficient notice so as to comply with the requirements of Section 29 of M.G.L. c. 149 (the Massachusetts Public Construction Bond Statute).  While this case was fact sensitive, and many of the facts were not recited in the opinion, the Appeals Court held that N-Tek's notice, which was an e-mail to SPS, was not sufficient notice under the statute and the analogous Miller Act (applicable to federal construction projects).  The Appeal Court, in affirming the Superior Court, held that, "in light of all material surrounding circumstances ... [the e-mail] fails to state, explicitly or implicitly, that [N-Tek] was making a claim against SPS for services rendered on the project, and thus fails to satisfy [the statute.]"  The Appeals Court further held that the notice provision of the statute "was intended to relieve the general contractor of the need to engage in guesswork as to whether a claim was being made against it or the statutory bond." 

This case is important for several reasons.  First, it establishes parameters for proper notice under the statute.  Often, when public construction bond claim notice issues are analyzed, it is the timing of the notice, rather than the content, that becomes an issue in dispute.  This case will give general contractors and sureties some guidance on what is required of a lower tier subcontractor in terms of the quality and content of the notice.  Second, it establishes the importance to general contractors and sureties of the notice requirement in the statute.  The Appeals Court cited several policy issues from the viewpoint of the general contractor and surety to the notice requirements in the statute.  Third, the Appeals Court did not state that e-mail notice can never be compliant with the statute.  This issue remains open.   

If you have any questions or wish to discuss the issues raised in this decision, please contact Jack DiNicola.

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