“Lien Rights” Not Synonymous with “Bond Rights” Under MA Prompt Pay Act

A federal judge in Massachusetts has ruled that a contractor’s rights under the Massachusetts Prompt Pay Act  are only applicable in the context of private construction projects, and not to state and federal construction projects where payment bonds are always required.

Metric Electric, Inc. was a subcontractor hired to install wiring throughout the renovated U.S. Customs and Border Control Office, located inside the Thomas P. O’Neill, Jr. Federal Building in Boston.   The United States filed suit on behalf of Metric in federal court against the project’s general contractor for just over $60,000 in unpaid invoices.

The U.S. District court complaint included a claim under the Massachusetts Prompt Pay Act. Specifically, the United States and Metric claimed that the general contractor did not timely reject Metric’s invoices in writing; did not explain the factual and contractual basis for rejecting invoices; and did not certify that any rejection was made in good faith, all required under the Prompt Pay Act.

Judge Zobel of the United States District Court  dismissed the Prompt Pay Act claim on defendants’ motion,   noting that the Act applies “only to construction contracts for which contractors and suppliers are entitled to file a lien on real estate and improvements” under the Massachusetts mechanic’s lien statute:   in other words, contracts for private construction.   Because mechanic’s liens are unavailable in the context of state and federally-funded projects — which require general contractors to provide a payment bond for the full contract amount — so too is protection under the Prompt Pay Act.   The Court found no merit in the plaintiff’s argument that lien and bond rights were “equivalent,” so as to allow the Prompt Pay Act claim to proceed.