Court: APPEALS COURT OF MASSACHUSETTS
Citation: 37 Mass. App. Ct. 1102 (1994)
Parties: MONTLE PLUMBING & HEATING CO., v. SULLIVAN- FOSTER, INC. & another [1]; TOWN OF HARWICH, third -party defendant. [2]
Docket No.: 95-P-1026
Decision Date: NOVEMBER 4, 1996
Judges: PERRETTA, IRELAND & GREENBERG, JJ.

MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

Sullivan-Foster, Inc. (Sullivan), a general contractor, is a third-party plaintiff that sought to recover a balance of $32,521 alleged to be due to it from the town of Harwich (the town) on a $1,989,851 general contract which involved reconstruction of the town hall. The controversy involves the application of G. L. c. 30, s. 39K, and the provisions of the subcontract between Sullivan and its heating, ventilation and air conditioning (HVAC) subcontractor, Montle Plumbing and Heating Co., Inc. (Montle). This, in outline, is the convoluted procedural setting of the dispute.

On September 14, 1987, Sullivan and Montle signed a subcontract directing Montle to install heating, ventilation and air conditioning systems for the Harwich town hall. As work on the project neared completion in 1989, disputes arose among the town, Sullivan, and the architect. Of particular concern to the town was whether the HVAC system functioned properly.

On December 22, 1989, Sullivan submitted its final request for payment under G. L. c. 30, s. 39K; the town withheld $32,521, because it was not fully satisfied with Montle's performance. That retention of funds spawned the present appeal which arose after Montle prevailed in its contract action against Sullivan and its surety, Fidelity & Deposit Co. of Maryland, for the withheld payment. This is the second round of litigation involving Sullivan's third-party action against the town for indemnification.

In the first round of litigation, upon completion of discovery, Montle filed a motion for summary judgment against Sullivan and its surety. Although Sullivan's answer to Montle's complaint contained an allegation that it did not "accept" the HVAC work, it filed no affidavit or other materials contesting any fact necessary to Montle's recovery. Instead, Sullivan, as a third-party plaintiff, moved for summary judgment against the town. After a combined hearing on both motions, a Superior Court judge allowed Montle's motion and denied Sullivan's motion against the town. Separate and final judgment pursuant to Mass.R.Civ.P. 54, 365 Mass. 820 (1974), entered on behalf of Montle against Sullivan.

An appeal by Sullivan followed. In a memorandum and order pursuant to rule 1:28 we affirmed the judgment. See 37 Mass. App. Ct. 1102 (1994). The court did not pass on the merits of Montle's claim, but affirmed on the ground that the motion was essentially unopposed.(3) These reasons included: The record contains no dispute by Sullivan and Fidelity as to any fact necessary to Montle's recovery. Those defendants not only failed to oppose Montle's motion, but admitted every material fact and conceded Montle's right to payment. To the extent that the town of Harwich's opposition to Sullivan's motion for summary judgment in Sullivan's third-party action against the town could be construed as opposition to Montle's motion, it would not affect Montle's right to recovery, since the town presented no affidavits or other admissible evidence in opposition and relied,

See Aetna Cas. & Sur. Co. v. Continental Cas. Co., 413 Mass. 730 (1992) (a correct decision may be sustained on a ground different from the stated one), citing Greeley v. Zoning Bd. of Appeals of Framingham, 350 Mass. 549, 551 (1966), quoting from Weidman v. Weidman, 274 Mass. 118, 125 (1931), and cases cited. The court suggested that Sullivan should have appealed the denial of its Rule 56 motion against the town to the single justice "on the ground that this case presented a rare instance of a manifestly erroneous decision by the trial judge that justified an exception to our strong general policy of discouraging piecemeal appeals." The court also noted that "the [motion] judge may have erred in his rationale for denying Sullivan's motion for summary judgment against the town," but declined to rule on a matter that was not before it on appeal. A. 211. After entry of the rescript, instead of following the court's suggestion, Sullivan filed a second summary judgment motion against the town. A. 247. The town seemed to have read our memorandum of decision more deftly and this time filed an affidavit with accompanying materials, opposing Sullivan's motion on the ground that Sullivan and its architect were timely notified under G. L. c. 30, s. 39K, of problems involving the HVAC system.

Another Superior Court judge heard and denied the motion. Reasoning that "[t]he Appeals Court decision, on an unopposed motion for summary judgment, is NOT controlling" (emphasis in original), the judge again held that, as between Sullivan and the town, there existed a genuine issue of material fact precluding the entry of summary judgment. It was from this second denial of summary judgment that Sullivan appealed to the single justice. Acting pursuant to G. L. c. 231, s. 118, first par., the single justice granted Sullivan leave to appeal to a full panel. See Swift v. American Mut. Ins. Co., 399 Mass. 373, 375 n.5 (1987). We affirm.

First, Sullivan argues that Mass.R.Civ.P. 14, 365 Mass. 760 (1974), mandates a favorable disposition on its summary judgment motion, if for no other reason than to ensure that the result be consistent with the final judgment already entered in Montle's underlying claim against it. Sullivan cites a stream of Federal rule 14 decisions to support its argument. (Sullivan's brief at 6-8).

None of the cases relied on by Sullivan state, as Sullivan argues, that indemnification should be automatic. Although rule 14 aims at telescoping litigation, see Williams v. Skibs A/S Hilda Knudsen, 38 F.R.D. 398 (DC Pa. 1960); Thompson v. United Artists Theatre Circuit, Inc., 43 F.R.D. 197, 201 (S.D. NY 1967), it is not formulated to require the outcome of an indemnification action to replicate that of the underlying action.(4)

This is especially true where, as here, Montle's summary judgment motion was allowed only because it was unopposed. We need not revisit that decision.

Our review is limited to the summary judgment materials presented to the second motion judge. The question is whether on the record before him, there was a genuine issue of material fact at to Sullivan's is entitlement to payment by the town. General Laws c. 30, s. 39K, allows an awarding authority to retain payment for items not completed to the awarding authority's satisfaction.(5)

An architect's certificate of completion is conclusive, for purposes of G. L. c. 30, s. 39K, "'to the effect that' the contractor has completed the work." A. Bonfatti & Co. v. Rockport, 12 Mass. App. Ct. 797, 799 (1981). Unless the awarding authority submits, within sixty-five days ofissuance of the certificate,(6) a list of work that it deems unsatisfactorily completed, the certificate is also "conclusive of [the contractor's] entitlement to payment of the balance due." Ibid.; G. L. c. 30, ss. 39F and 39K.

Section 39K does not, as Sullivan argues, endow the architect with the authority to certify the work qualitatively. That interpretation would effectively impede the awarding authority's right to retain monies for unsatisfactory work. The architect certifies as to full or substantial completion. The statute explicitly contemplates retention of monies for unsatisfactorily completed work, even after full or substantial completion, so long as notice of dissatisfaction is given within sixty-five days. In the Bonfatti case, the awarding authority allowed sixty-five days to elapse without submitting "any list of unsatisfactory work," id. at 798, thus stripping it of any right of retention. No such lapse occurred here.(7)

The affidavit and accompanying materials provided by the town indicate that the architect executed the certificate on December 21, 1989, and sent it to the town on January 4, 1990. A. 227. The architect does, on the face of the certificate, purport to certify the quality of the work. However, as we have discussed, the statute does not render the architect's opinion as to quality binding on the town for the purposes of retention. Nor does the record provide us with the general conditions of the contract that would indicate whether the parties intended to be contractually bound by the architect's certificate as to quality. On February 7, 1990, within the sixty-five day window, the town sent a reply to the contractor indicating that it was withholding payment for certain items of unsatisfactorily completed work. A. 235. Accompanying the reply was a typed punch list, originally prepared by the architect for an earlier purpose, and bearing a date of May 10, 1989. A. 237. This punch list had been annotated at a public meeting of the town's board of selectmen, held on February 6, 1990, for the purpose of reviewing and discussing payment of the final requisition. A. 221, 235. In a letter dated February 14, 1990, Sullivan acknowledged receipt of the town's letter and the punch list, writing in a reply, "This punch list was annotated to show items for which monies are to be retained as well as items for which payment is approved by your Committee." A. 238.

A trier of fact could reasonably find that the town notified Sullivan of unsatisfactory work on February 7, 1990, within sixty-five days as required by G. L. c. 30, s. 39K. Such timely notice would indeed entitle the town to the retention of funds for unsatisfactory work in spite of the issuance of the certificate of completion. We are aware that our conclusion on this point is at odds with part of the first motion judge's ruling on Montle's motion for summary judgment against Sullivan.(8)

However, on this record, the town presented opposition materials which raised a genuine issue of material fact on the notice issue. Even so, the first motion judge seems to have relied on the similar, but distinguishable, facts in the Bonfatti case, 12 Mass. App. Ct. at 801-802 n.3. In Bonfatti, the only notice provided to the contractor of unsatisfactory work was a letter, sent by the town's engineer two years prior to the approval of the final requisition, stating that all work was "conditionally acceptable." Here, although the punch list bears a date that is seven months earlier than the issuance of the certificate of completion, the May 10 date is not necessarily dispositive on the issue of when the town gave its notice of the defects. The date on the punch list seems to appear only incidentally, simply because that sheet of paper happened to serve as a template to which town officials referred at the February 6 meeting. After the town meeting, the town forwarded its February 7 letter to the contractor with a list of the deficient items and an annotated punch list. That letter, which, according to the record, was not included in the materials before the first motion judge, leaves open a question of fact as to whether the town satisfied the prerequisites of G. L. c. 30, s. 39K for the retention of payment. The second motion judge reasonably could have opined that claims by the town against Sullivan pertaining to unsatisfactory HVAC work (properly asserted by the town within the sixty-five day requirement of G. L. c. 30, s. 39K can now be reasserted by permitting the town to defend, at trial, against Sullivan's claim for indemnification. There was no abuse of discretion.(9)

Judgment affirmed.

End of Decision

1. Fidelity & Deposit Company of Maryland.

2. The Town of Harwich, in turn, brought in Brown & Lindquist, Inc. as fourth-party defendants.

3. We affirmed that decision "substantially for the reasons set forth in Montle's appellee's brief."

4. In this case, for example, the plaintiff's proof that it had complied with all of the prerequisites of G. L. c. 149, s. 29, would not obviate the need for the defendant to show that it had equally complied with the prerequisites of G. L. c. 30, s. 39K vis-a-vis the town.

5. In pertinent part, that statute, as in effect prior to 1991, provided: "After the receipt of a periodic estimate requesting final payment and within sixty-five days after . . . the contractor fully completes the work . . . , the awarding authority shall pay the contractor the entire balance due on the contract less (1) a retention based on its estimate of the fair value of its claims against the contractor and of the cost of completing the incomplete and unsatisfactory items of work and less (2) a retention for direct payments to subcontractors based on demands for same . . . ."]

6. Whether or not substantial completion in this case may have occurred prior to the issuance of the certificate of completion presents a question for the trier of fact.

7. The Bonfatti case states, in dicta: "If the town desired its agent, the engineer, to withhold final payment by reason of asserted defects, it could have specified the defects and the estimated cost of removing them and directed the engineer to disapprove the requisition," supra at 800 (emphasis supplied). That opinion is not to be read as stating that an architect's certification of substantial completion forecloses the public authority's right to hold back money for the cost of fixing unsatisfactory work so long as the claim is made and the balance paid within sixty-five days of the certificate.

8. There, the motion judge held: "The monetized punch list which was generated seven months before the certificate of completion was executed does not fulfill the sixty-five day notice requirement. The certificate of completion supercedes the punch list." A. 162.

9. We conclude that neither party is entitled to attorney's fees requested in their briefs.