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15-P-916 Appeals Court
AGGREGATE INDUSTRIES - NORTHEAST REGION, INC. vs. HUGO KEY AND
SONS, INC., & another.1
No. 15-P-916.
Essex. April 13, 2016. - September 1, 2016.
Present: Wolohojian, Kinder, & Neyman, JJ.
Contract, Construction contract, Offer and acceptance,
Performance and breach, Public works. Damages, Quantum
meruit, Public Works Contract. Bond, Public works. Public
Works, Payment bond. Consumer Protection Act,
Businessman's claim, Unfair or deceptive act. Practice,
Civil, Attorney's fees.
Civil action commenced in the Superior Court Department on
October 31, 2011.
The case was heard by Timothy Q. Feeley, J., and a motion
for a new trial was considered by him.
Cole M. Young for the plaintiffs.
William T. Harrington for the defendants.
WOLOHOJIAN, J. The plaintiff subcontractor, Aggregate
Industries - Northeast Region, Inc. (Aggregate), contracted with
1
Argonaut Insurance Company, which is not participating in
this appeal.
2
the defendant general contractor, Hugo Key and Sons, Inc. (Hugo
Key), for the supply of material and labor for a public works
construction project in Salem. A dispute arose about payment,
and Aggregate filed a complaint in the Superior Court asserting
contract and quantum meruit claims under G. L. c. 149, § 29, the
Commonwealth's bond statute for publicly funded construction
projects, and violations of G. L. c. 93A (c. 93A). Following a
jury-waived trial, judgment entered in favor of Hugo Key on all
counts of the complaint, with the exception of a discreet
quantum meruit award, not under the bond statute, in favor of
Aggregate. Judgment also entered in favor of Hugo Key on a
c. 93A counterclaim. Aggregate appeals, claiming the judge
erred in his application of contract principles and in his
analysis of the statutes at issue. We affirm in part, and
reverse in part.
Background. We summarize the facts as found by the judge,
supplemented by undisputed information from the record. In
2011, Hugo Key and Salem entered into a contract for the
construction of the Salem Wharf project. The contract was
secured by a payment bond in the amount of $1,336,925, furnished
by the defendant Argonaut Insurance Company (Argonaut). Hugo
Key, in turn, solicited bids from subcontractors for the portion
of the project that required bituminous concrete pavement work.
On or about January 14, 2011, Aggregate submitted an estimate
3
for the pavement work, which included two provisions relevant to
the present dispute. The first stated: "Grader Service:
$400.00/HR." The second was an escalation clause, which
provided for additional per ton charges for bituminous concrete
if the base price of liquid asphalt2 increased.3 Aggregate
submitted two revised estimates in May, 2011. Hugo Key did not
sign or accept any of the estimates, and its representative,
Sandy Key, informed the Aggregate salesman, Vincent Venturo,
"that Hugo Key would not deal with Aggregate if the agreement
included an escalation clause for liquid asphalt."
Having reached no agreement, Hugo Key sent Aggregate a
purchase order dated May 17, 2011, that included the revised
estimate, but was silent as to grader service and the escalation
clause. Venturo signed the purchase order and returned it by
fax with a handwritten notation attempting to incorporate the
escalation clause into the agreement.4 In response, Sandy Key
2
Bituminous concrete paving material is a mixture of
asphalt, crushed rock aggregate, and mineral filler.
3
The estimate provided: "Prices quoted are based on the
current FOB refinery prices on liquid asphalt. Such quoted
prices are not guaranteed by the major oil companies and are
subject to sudden adjustment during the term of the agreement.
The base price of liquid asphalt for this quote is [$]460.00.
Any change in the price of liquid asphalt will require an extra
charge of $0.06 per ton for every $1.00 per ton increase in the
price of liquid asphalt."
4
The notation stated: "As Per Estimate #14536-2011 Terms &
Conditions."
4
immediately rejected the term; the trial judge found that "Sandy
Key told Venturo, and Venturo knew, that if Aggregate insisted
on the escalation clause, Hugo Key would not give Aggregate the
pavement work." Sandy Key then prepared a new purchase order
dated May 23, 2011, removing Venturo's handwritten addition and
adding "Purchase order based on liquid asphalt price of $460.00
per ton" for the express purpose of excluding the escalation
clause. With the approval of his manager, Venturo signed and
accepted the purchase order and work commenced. During the
paving project, Hugo Key determined that it required grading
services from Aggregate, which Aggregate performed, and then
billed at the price, quoted on the original estimate, of $400
per hour.
After completion of the project, by invoice dated July 6,
2011, Aggregate billed Hugo Key $89,989.90. Of that sum,
$11,400 was for "grader rental" and $10,064.50 was for "liquid
asphalt escalation." Having received no payment, on October 31,
2011, Aggregate commenced the present action. The complaint
alleges claims for breach of contract and quantum meruit, with
payment under the bond statute, G. L. c. 149, § 29, and
violations of c. 93A for the wrongful withholding of the funds
due. Shortly after the complaint was filed, by check dated
November 8, 2011, Hugo Key paid Aggregate $68,525.40, the sum
not in dispute, and indicated a willingness to pay a reasonable
5
fee for the grader rental.5 Aggregate refused the offer of
payment, and Hugo Key filed a counterclaim alleging violations
of c. 93A.
Following a one-day bench trial, the judge issued his
written findings of fact and conclusions of law. He concluded
that the contract formed between Aggregate and Hugo Key did not
incorporate the escalation clause or the grader rental fee, but
that Aggregate was entitled to the fair and reasonable sum of
$7,125 on its quantum meruit claim for grader rental.
Nevertheless, the judge dismissed the portions of the complaint
seeking recovery under G. L. c. 149, § 29, reasoning that
"[f]airness would be the victim if this court permitted
Aggregate to recover under the bond, with its right to
attorneys' fees, on a quantum meruit claim that Hugo Key was
ready, willing, and able to resolve at the fair and reasonable
value of the services provided at or about the time this action
was commenced." As for the competing c. 93A claims, the judge
found in favor of Hugo Key, on the ground that Aggregate
commenced the present litigation as a form of extortion, by
means of the attorney's fee provision of G. L. c. 149, § 29, to
force Hugo Key to pay for the escalation clause that it knew was
not a part of the contract. Rather than awarding damages on the
5
Key testified that $220 per hour would be a reasonable
fee.
6
c. 93A judgment, however, the judge withheld the prejudgment and
postjudgment interest on Aggregate's $7,125 quantum meruit
award. Aggregate moved for a new trial, which the judge denied
without a hearing. On Hugo Key's motion for c. 93A attorney's
fees and costs, the judge awarded a total of $67,319.
Discussion. We review the trial judge's findings of fact,
including all reasonable inferences that are supported by the
evidence, for clear error. See Twin Fires Inv., LLC v. Morgan
Stanley Dean Witter & Co., 445 Mass. 411, 420 (2005);
Mass.R.Civ.P. 52(a), as amended, 423 Mass. 1402 (1996). The
judge's conclusions of law are reviewed de novo. Martin v.
Simmons Properties, LLC, 467 Mass. 1, 8 (2014).
1. Breach of contract. Based on the undisputed evidence
of Sandy Key and Venturo's ongoing verbal and written
negotiations, offers, and counter offers, the judge reasonably
concluded that no binding contract was formed until Venturo
accepted, on behalf of Aggregate, Sandy Key's final May 23,
2011, purchase order. Looking at the same evidence, the judge
also reasonably concluded that the escalation and grader rental
terms had been rejected and were not to be read into the final
agreement. In other words, the parties expressed no mutual
intention to bind themselves until the acceptance of the terms
7
limited to the May 23, 2011, purchase order.6 See Situation
Mgmt. Sys., Inc. v. Malouf, Inc., 430 Mass. 875, 878 (2000). As
Hugo Key paid the agreed upon amount due under the final terms
of the agreement, no breach of contract occurred. Count I of
the complaint, alleging nonpayment under the invoice, was
properly dismissed.
2. Application of G. L. c. 149, § 29. Aggregate claims
that once the judge determined that it was owed damages on its
quantum meruit claim for the grader rental, the provisions of
G. L. c. 149, § 29, including an award of attorney's fees, must
apply to the claim, as all of the requirements of the statute
had been satisfied. We agree.
The bond statute, G. L. c. 149, § 29, which is an outgrowth
of the mechanic's lien statutes, requires that general
contractors obtain "security in favor of those furnishing labor
and materials in the construction or repair of public structures
and other public works, . . . as there can be no lien upon
public buildings or other public works." Massachusetts Gas &
Elec. Light Supply Co. v. Rugo Constr. Co., 321 Mass. 20, 22
(1947) (citation omitted). Because the purpose of the statute
6
As the judge noted, the result is the same under the
Uniform Commercial Code, as Hugo Key had expressly rejected the
two estimates offered, and, thus, there was no "definite and
seasonable expression of acceptance" of a contract including the
disputed terms. G. L. c. 106, § 2-207, inserted by St. 1957,
c. 765, § 1. See generally Commerce & Indus. Ins. Co. v. Bayer
Corp., 433 Mass. 388, 392-393 (2001).
8
is remedial in nature, it is to be construed liberally in favor
of providing such security to subcontractors and materialmen.
City Rentals, LLC v. BBC Co., 79 Mass. App. Ct. 559, 564 (2011).
In furtherance of that purpose, successful claimants under the
statute are entitled to "reasonable legal fees based upon the
time spent and the results accomplished." G. L. c. 149, § 29,
inserted by St. 1972, c. 774, § 5. See City Rentals, LLC v. BBC
Co., supra at 566, quoting from Manganaro Drywall, Inc. v. White
Constr. Co., 372 Mass. 661, 664 (1977) ("The fee-shifting
provision of § 29 'places the expense of litigation on a
contractor and a surety who decline to pay a rightful claim
[and] tends to achieve the legislative goal of expeditious
payments to subcontractors'").
As relevant here, the requirements to be met and the
actions to be taken in commencing an action for payment under
G. L. c. 149, § 29, are straightforward. The statute provides,
in pertinent part:
"In order to obtain the benefit of such bond for any
amount claimed due and unpaid at any time, any
claimant having a contractual relationship with the
contractor principal furnishing the bond, who has not
been paid in full for any amount claimed due for the
labor, materials, equipment, appliances or
transportation included in the paragraph (1) coverage
within sixty-five days after the due date for same,
shall have the right to enforce any such claim (a) by
filing a petition in equity within one year after the
day on which such claimant last performed the labor or
furnished the labor, materials, equipment, appliances
or transportation included in the claim and (b) by
9
prosecuting the claim thereafter by trial in the
superior court to final adjudication and execution for
the sums justly due the claimant as provided in this
section."
G. L. c. 149, § 29, inserted by St. 1972, c. 774, § 5. If
successful, "[a] decree in favor of any claimant under this
section shall include reasonable legal fees based upon the time
spent and the results accomplished." Ibid.
Here, Aggregate plainly met the requirements of: (1)
filing a petition in equity in the Superior Court; (2) within
one year of the completion of the work; (3) alleging nonpayment
within sixty-five days of the invoice for labor and materials
provided; and (4) prosecuting the claim "to final adjudication
and execution for the sums justly due the claimant as provided
in this section." G. L. c. 149, § 29, inserted by St. 1972,
c. 774, § 5. It necessarily follows that, having achieved a
decree in its favor on its quantum meruit claim, Aggregate is
entitled to reasonable attorney's fees under the plain and
compulsory ("shall") language of the statute. The judge
accordingly erred in ordering dismissal of the portion of
Aggregate's complaint alleging recovery under G. L. c. 149,
§ 29, on its quantum meruit claim.7
7
The judge placed too much weight on the "petition in
equity" language of the statute to support his rejection of the
G. L. c. 149, § 29, claim on fairness grounds. The phrase
appears to be merely a vestige of the procedural landscape in
existence at the time the statute was enacted. The bond statute
10
3. Chapter 93A counterclaim. Aggregate claims that its
actions in refusing to negotiate with Hugo Key on the grader
rental fee and the escalation clause, and in later filing suit
to recover the disputed amount, did not constitute unfair or
deceptive acts or practices in the course of trade or commerce.
Again, we agree.
Chapter 93A, § 11, "bestows a right of action on '[a]ny
person who engages in the conduct of any trade or commerce and
who suffers any loss of money or property, real or personal,' as
a result of the unfair or deceptive act or practice, or unfair
method of competition, of another person who engaged in trade or
was enacted in 1904, see St. 1904, c. 349, well before the
adoption of the rules of civil procedure in Massachusetts in
1973, which merged the procedure for bringing suits in equity
and at law. See Nolan & Sartorio, Equitable Remedies § 4.15 (3d
ed. 2007). Prior to their adoption, separate and distinct
complaints at law and in equity were required depending on the
relief sought. See Reporter's Notes to Mass.R.Civ.P. 2, 46
Mass. Gen. Laws Ann. at 11 (West 2006). In sum, the phrase
"petition in equity" made sense within the procedural landscape
of the time, but, in the present day, is best understood simply
to refer to the commencement of an action under G. L. c. 149,
§ 29.
Our conclusion in this regard is consistent with the
history of the same phrase in the mechanic's lien statute, G. L.
c. 254, § 14, which predates the bond statute at issue here. In
the mechanic's lien statute, the language was replaced with the
phrase "civil action commenced" by legislation dated November
30, 1973, entitled "An Act improving the procedure in civil
trials and appeals." St. 1973, c. 1114, § 320. See NES Rentals
v. Maine Drilling & Blasting, Inc., 465 Mass. 856, 863 (2013).
"This act derived from 1973 House Doc. No. 7236, a bill intended
'to conform the General Laws of Massachusetts to the
Massachusetts rules of civil procedure and the Massachusetts
rules of appellate procedure.'" Ibid.
11
commerce." Auto Flat Car Crushers, Inc. v. Hanover Ins. Co.,
469 Mass. 813, 822 (2014), quoting from G. L. c. 93A, § 11.
Hugo Key's counterclaim alleges that Aggregate committed
unfair and deceptive acts by demanding payment under the
contract and filing suit and continuing to prosecute its claim
over the disputed amount. Ordinary contract disputes, or the
failure to negotiate a settlement in lieu of ligation, however,
typically fall outside of the reach of the statute. See
Duclersaint v. Federal Natl. Mort. Assn., 427 Mass. 809, 814
(1998) ("[A] good faith dispute as to whether money is owed, or
performance of some kind is due, is not the stuff of which a
c. 93A claim is made"); Morrison v. Toys "R" Us, Inc., Mass.,
441 Mass. 451, 457 (2004) (with the exception of insurance
providers, c. 93A "has never been read so broadly as to
establish an independent remedy for unfair or deceptive dealings
in the context of litigation"); Kobayashi v. Orion Ventures,
Inc., 42 Mass. App. Ct. 492, 505 (1997) (ordinary contract
disputes, "without conduct that was unethical, immoral, [or]
oppressive," are not actionable under c. 93A). This is so
because the unfair or deceptive conduct alleged must itself
arise from trade or commerce, and not tangentially from
litigation concerning that conduct. See First Enterprises, Ltd.
v. Cooper, 425 Mass. 344, 347 (1997).
12
Hugo Key's counterclaim falls squarely in the above
category. Even if Aggregate's claims were weak, it was free to
file suit and litigate them. To reach the opposite conclusion,
rather than furthering the purpose of c. 93A by "improv[ing] the
commercial relationship between consumers and business persons
and [] encourag[ing] more equitable behavior in the
marketplace[,] . . . would expose ordinary defendants (even
large corporations . . .) to the risk of liability for multiple
damages and attorney's fees for choosing to go to court rather
than settling a dispute, on the ground that its litigation
tactics are perceived, by the opposing side, to be unfair."
Morrison v. Toys "R" Us, Inc., Mass., supra at 457-458
(citations omitted). The counterclaim should have been
dismissed.
Conclusion. The judgment, dated March 10, 2015, is
affirmed as to counts I and III of Aggregate's complaint and as
to count II insofar as the judgment awards damages in the amount
of $7,125 on Aggregate's quantum meruit claim. The judgment is
reversed in all other respects. The case is remanded to the
Superior Court for entry of judgment in favor of Aggregate, and
against Hugo Key and Argonaut,8 on Aggregate's G. L. c. 149,
8
Under the payment bond contract, Hugo Key and Argonaut are
"jointly and severally" liable for any sums owed. See John W.
Egan Co. v. Major Constr. Mgmt. Corp., 46 Mass. App. Ct 643,
646-647 (1999).
13
§ 29, claim related to the quantum meruit award, including
prejudgment and postjudgment interest,9 and an award of
reasonable attorney's fees and costs. Judgment shall enter
dismissing Hugo Key's c. 93A counterclaim, and the judgment,
dated June 1, 2015, awarding attorney's fees and costs to Hugo
Key on its c. 93A counterclaim is vacated.
So ordered.
9
See G. L. c. 231, § 6C.