A recent decision of the Massachusetts Court of Appeals stands as a reminder and further impetus to encourage Massachusetts contractors and material suppliers to ensure that they have written agreements signed by their customers before they supply labor and/or materials to private projects in Massachusetts.

In Petrucelli Construction Co. v. Hirain Barrios, a general contractor – Petrucelli Construction Co., of Lynn – was hired by Barrios to renovate a property in Lynn that had been damaged by fire. Prior to beginning the work, the general contractor had submitted three different proposals totaling $68,000 to Barrios.

Petrucelli Construction failed to have Barrios sign any of the proposals. After Petrucelli received payment for a portion of the work, a dispute arose between Barrios and Petrucelli Construction, leaving the general contractor with a $12,000 receivable relating to work performed on the project.

Appeals Court Finding

Unable to reach an agreement Barrios as to payment, Petrucelli Construction initiated its mechanic’s lien with the recording of a Notice of Contract on the property. After a bench trial on the general contractor’s breach of contract and mechanic’s lien claims, the Lynn District Court granted judgment in favor of Petrucelli Construction Co. on its breach of contract claim.

The District Court, however, dissolved the general contractor’s mechanic’s lien claim, ruling that the unsigned proposals were insufficient to satisfy the written contract requirement of the Massachusetts Mechanic’s Lien Statute.

Petrucelli Construction appealed the District Court’s finding that it was not entitled to a mechanic’s lien due to the lack of a signed written agreement. On appeal, the Court of Appeals affirmed the District Court judgment, and held that in order to meet the written contract requirement of the Massachusetts Mechanic’s Lien Statute, the contract (or proposal) must be signed by the party accepting the labor and/or materials, in this case, the owner – Barrios.

Signed Agreements Critical

Despite having its mechanic’s lien dissolved, the general contractor in Petrucelli was fortunate that it still had a direct breach of contract claim against the owner of the property, and could therefore seek an attachment on the real property in an effort to satisfy its judgment.

Had Petrucelli Construction been a subcontractor on the project rather than a general contractor, its fate could have been much worse.

Without a signed proposal or agreement, it would have been left with nothing more than a straight breach of contract claim against its customer, and forced to attempt to satisfy its judgment solely through its customer’s assets (which may or may not include any real property).

As with the collection of any receivable, having security in the form of a mechanic’s lien or otherwise is always best, and is certainly worth double-checking for a signed written agreement prior to supplying a project.

Credit Agreements Suffice

The Petrucelli case does not appear to disturb a 1999 Massachusetts court of Appeals ruling, Harris v. Moynihan Lumber of Beverly, which held that a material supplier can satisfy its written contract requirement under the Massachusetts Mechanic’s Lien Statute by producing a signed credit agreement with its customer along with invoices and delivery tickets describing the materials supplied to the project.

Nonetheless, Petrucelli is a great reminder to material suppliers to double check that they have a signed credit agreement with all of their customers.

Ryan D. Sullivan is of counsel at Bodoff & Associates, Boston; his practice includes construction law. Email: rsullivan@bodofflaw.com