(March 19, 2007. Boston, MA.) - John H. Perten, an attorney for the law firm, Sheehan Phinney, successfully defended a Massachusetts construction company and convinced a Massachusetts court to adopt his interpretation of a new statute.
The Plaintiff, a prequalified filed subcontractor on a public construction project in Massachusetts, sought reimbursement of the premium associated with the purchase of statutorily required performance and payment bonds. The Defendant general contractor refused to reimburse for the premium as under a new statute, Massachusetts General Laws c. 149, §44D¾, general contractors were no longer responsible for paying bond premiums incurred by prequalified filed subcontractors. Plaintiff filed suit seeking a declaratory judgment that the new statute did not change existing law as to a general contractor's responsibility for bond premiums or, alternatively, that the statute was ambiguous and should be construed in a manner that did not change existing law. Plaintiff further argued that the general contractor breached its contract by refusing to reimburse for the bond premiums. In an effort to recover legal fees, plaintiff named the general contractor's surety as a defendant based on that alleged breach. On a motion for summary judgment, Perten convinced the Court that his interpretation of the statute was correct, that is that general contractors were no longer responsible for payment of prequalified filed subcontractor bond premiums.
Though limited to "prequalified filed subcontractors" on public projects, this decision has a large significance for the construction industry. It appears to be the first case interpreting that statute, and provides some guidance as to who bears the burden, as between a general contractor and a prequalified filed subcontractor, of paying for statutorily required bonds. General contractors can take some comfort in the fact that they likely do not have to reimburse for those premiums, while prudent prequalified filed subcontractors will now have to take the cost of providing bonds into account when formulating their bids.
John has a complex business litigation and transactional practice. He provides representation to clients in a wide variety of settings including construction projects, business transactions, real estate ventures and environmental remediation projects. He works closely with clients to minimize risk and avoid litigation through effective contract negotiation and selection of appropriate business structures.
Sheehan Phinney is a regional business law firm with offices in Manchester, Concord and Lebanon, NH, and in Boston, MA. The firm provides a broad range of sophisticated legal services to businesses and institutions in traditional and emerging areas of the law. Its diverse client base includes local and regional organizations, as well as national and international businesses with interests in the Northeast.
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