An Offer You Can’t Refuse

A federal judge, in acknowledging recent trends in Massachusetts case law and the Restatement of Restitution and Unjust Enrichment, allowed a supplier to recover against the general contractor under Quasi-Contractual theories of unjust enrichment and quantum meruit.   The judge ruled a supplier or second-tier subcontractor can recover damages from a general contractor, even in the absence of a direct contract between the two parties, if the supplier or second-tier sub was induced to continue working on the project by the general contractor and reasonably expected payment from the general contractor in the absence of payment from the subcontractor.

The case is Auburn Door & Hardware, LLC et al. v. Suffolk Construction Company, filed in United States District Court (D-Mass.), and the decision was issued in response to a motion for summary judgment by Suffolk, the general contractor on a renovation and restoration on Boston’s John W. McCormack Courthouse and Post Office.

The Court refused to dismiss Auburn Door’s claims that it was due from Suffolk the reasonable value of its work performed on the project.

The Court began its analysis by noting that under a long line of Massachusetts cases, parties in Auburn Door’s position typically would be limited to seeking recovery from the subcontractor without a contract between itself and the general contractor.    Nevertheless, Judge Woodlock cited an equally developed body of law that would compel compensation from Suffolk if either (1) Suffolk had made representations that it would pay Auburn Door for its services, and induced Auburn Door to continue working on the project based on such representations, or (2) Suffolk had contracted with Northeast Interior Supply for the services eventually provided by Auburn Door, and had failed to pay either Northeast or Auburn for those services, thus retaining a benefit “without paying anybody for it…”

The Court went on to rule that Auburn had alleged sufficient facts to satisfy both of the above claims for purposes of defeating Suffolk’s motion, specifically noting that Suffolk had made several joint payments to Auburn Door with Northeast; that Suffolk had submitted change orders to Northeast directly; and, perhaps most importantly, that the extent to which Suffolk had paid Northeast for Auburn Door’s services was in question.

If you are supplier or subcontractor and want to find out if someone has been unjustly enriched by your services or materials, or if you are a general contractor and want to avoid unknowingly making an offer that can’t be refused, please contact the attorneys at The Law Office of Peter M. Mirageas.