PAYMENT BOND CLAIMS

Many private projects and virtually all public projects (both Massachusetts public and federal) have a payment bond posted by the general contractor to secure proper payment of material suppliers and subcontractors. (A 'payment bond' is akin to an insurance policy, which guarantees payment to material suppliers and subcontractors who have valid claims and who comply with the specific provisions of the payment bond and/or with the provisions of any statute under which the payment bond is authorized/required.)

Making claims against payment bonds offers a more secure collection effort, as very few sureties are ultimately found to be judgment-proof (incapable of paying a judgment), which does not, unfortunately, prove to be the case as to claims against private contractors. Indeed, the unusual and complicated mechanics of the principal-surety relationship often provide for more prompt payment of claims when claims are made on bonded jobs than occurs with unbonded claims. Moreover, some times these claims can be resolved without having to file suit, provided a claimant understands how to present its claim to the surety, how to document that claim and when suit is either required or desirable.

Sauer & Sauer has substantial experience in all matters pertaining to surety bonds, including payment bonds. Jonathan Sauer has experience representing at least two dozen sureties over the years with regard to issues pertaining to bid, payment, lien and performance bonds and indemnity agreements. This experience has involved handling hundreds of payment bond claims and working towards the completion of jobs under performance bonds in most of the New England states, New Jersey, Florida and Arkansas. Sally Sauer, prior to becoming an attorney, was an in-house claims representative for ten years working at several sureties in California and in Chicago. This combined experience - understanding the surety industry from the surety side, as well as from the claimant side - assists us in helping you conclude your surety bond claim or indemnity matter as quickly and inexpensively as possible.

MECHANICS' LIENS

Massachusetts, like most states, allows laborers, material suppliers, subcontractors and general contractors to file a mechanic's lien against the owner's equity interest as to the real property their work and materials benefit and go into. A mechanic's lien is a statutory creature governed by the extensive and fairly technical provisions of Chapter 254 of the General Laws, which laws were recently significantly re-written in 1996.

Since under various circumstances a lienor's rights come ahead of the rights of existing and filed mortgagees (banks) on the liened property and because the very existence of a mechanic's lien on real property for thirty days or more frequently constitutes a breach of most financing agreements for the owner/borrower - thus, accelerating the underlying note owed - mechanic's liens can sometimes accomplish very dynamic and relatively quick results. Also, the presence of a mechanic's lien can lead to the establishing of alternative forms of payment guaranty, such as escrow arrangements and lien bonds, which are often actually preferable to the complexity of proceeding with a mechanic's lien and which provide better security.

Sauer & Sauer has substantial experience in filing mechanic's liens under both the earlier and the 'new' mechanic's lien laws. In fact, Mr. Sauer worked with a trade association to attempt to enact a simpler modification to that statute prior to the enactment of the 1996 amendments, meeting with legislators to discuss the same. The Massachusetts Trial Court Law Libraries refer ‘surfers’ to this website to assist them in understanding this subject and for assistance with their mechanic lien problems.

BID PROTESTS

Massachusetts public owners such as the Commonwealth of Massachusetts (and its constituent agencies), as well as municipal corporations (towns and cities), request subcontractors and general contractors to submit bids responsive to public advertisements for improvements to public works (bid under Chapter 30, § 39M of the General Laws) and improvements to public buildings (bid under Chapter 149, § 44A-H of the General Laws).

Frequently, disputes arise out of irregularities in the procurement process and with regard to the responsiveness or competency of particular bidders.

Massachusetts offers two vehicles to protest these irregularities: court challenges and administrative protests before the Attorney General's Office. For many protests (and protesters) administrative protests before the Attorney General's Office offer a relatively quick and inexpensive way to challenge irregularities in bid procedures and with regard to the sufficiency of certain bids/bidders.

Sauer & Sauer has substantial experience in participating in bid protests - both as representing protesters and in opposing bid protests - in court and before the Attorney General's Office. We maintain files with several years of the administrative bid decisions, both from the Attorney General's Office and from its predecessor in hearing bid protests, the Department of Labor and Industries. We participate in several bid protests a year - both bringing protests and defending against others' protests - and are very familiar with bid protest mechanisms and procedures, having participated in more than one hundred bid protests in the last twenty-eight years.

CONTRACT DRAFTING, INTERPRETATION AND NEGOTIATION

Material suppliers and subcontractors should have good proposal forms, which could be used as your 'contract'.   Subcontractors are often handed proposed subcontract forms by general contractors which contain various language and concepts that they don't fully understand.   Similarly, general contractors are handed proposed general contract forms by owners which imperfectly state 'the deal'.

At Sauer & Sauer we can help you with these various contract issues, including advising as to various ancillary contract forms, such as lien waivers.  ('Should I sign it?')

CONTRACT DISPUTES

Keeping in mind that the root of the word 'contractor' is 'contract', many parties to contracts find, at different times, that they are in disagreement with their contracting parties as to essential parts of the construction contracts they are party to. These disputes may involve the amount or timing of payment, with the application of factors such as "pay-when-paid" clauses, “no damage for delay” clauses and “termination for convenience” clauses. There may be a question as to whether or not a backcharge is factually, legally or contractually proper. There may be a question as to whether or not there is a changed condition, entitling the party encountering the change to additional time to perform the changed work and/or to additional compensation on account of the changed condition. Or, there may be a question as to whether a party has been delayed or has had its performance accelerated and as to whether additional contract time and/or compensation is due on account of these factors.

Contract disputes are resolved in different forums. Increasingly, alternative dispute resolution mechanisms, such as mediation , are explored at some point during the dispute process. (Mediations are a relatively quick and inexpensive procedure where a neutral person - often a lawyer or former judge - helps the parties settle their dispute in a relatively non-adversarial procedure where the parties themselves actually fashion a conclusion to their dispute rather than having that remedy dictated to them by a judge or arbitrator.) Contracts frequently provide that disputes are to be settled through arbitration . (Arbitration is an adversarial process where the parties will resolve their dispute by trial before a body such as the American Arbitration Association, where there are very few pleadings required and little discovery allowed, having the advantage of getting the parties to the trial process much more quickly than court mechanisms usually provide for.) Of course, many disputes are involved through formal litigation before administrative bodies and court, both state and federal.

Sauer & Sauer has more than thirty-eight years experience working on the resolution of contract disputes through many of these forums. Our goal is always the quickest possible resolution of the underlying business issue. Recognizing that only about one percent of Massachusetts civil court cases actually go through a complete trial, our understanding of the litigation process combined with our concern for client service often assist us in earlier resolutions of issues with a maximum effort made to maintain and keep viable the business relationship between the parties, which is frequently damaged in the litigation process.