Court: APPEALS COURT OF MASSACHUSETTS
Citation:44 Mass. App. Ct. 1122 (1997)
Parties: VENUS DRYWALL, INC. V. KULLMAN INDUSTRIES, INC. & another [1]
Docket No.: 96-P-1531
Decision Date: JANUARY 28, 1998
Judges: KASS, SMITH, FLANNERY, JJ.

MEMORANDUM AND ORDER UNDER RULE 1:28

This is an appeal by Kullman Industries, Inc. (Kullman), the general contractor on a public construction project in 1992, and Kullman's surety, National Union Fire Insurance Company of Pittsburgh, Pennsylvania (National), from the judgment entered for the plaintiff, Venus Drywall, Inc. (Venus), pursuant to its claim for payment under G. L. c. 149, s. 29. We affirm.

By way of background, we refer to the Superior Court judge's detailed findings from the March 22, 1996, Findings of Fact, Rulings of Law and Order for Judgment, which we do not repeat here. A.321- 348. To summarize briefly, Venus, a sub-subcontractor, performed drywall taping work, totaling $84,335, for Quality Service System (Quality), a drywall subcontractor on the Middlesex Community College construction project in Bedford. In the course of performing the work, Venus encountered difficulty in receiving timely payments from Quality. Kullman became aware that Quality was having difficulty paying its sub-subcontractors. Apparently concerned that these parties would ultimately look t o Kullman for payment, Kullman directed Quality to obtain waivers of lien rights from its sub-subcontractors before Kullman would release further funds to Quality.

On June 5, 1992, a document drafted by Kullman entitled "Waiver of Lien to Date" (the waiver) was presented to Venus's president, Marcel Trepanier, for his signature, as a condition to receiving a $15,000 check towards the amount owed to Venus from Quality. The waiver provided, in relevant part:

Now, therefore, the undersigned, for and in consideration of (D) Fifteen Thousand ($15,000) Dollars paid by Kullman Industries and other good consideration, the receipt of whereof is hereby acknowledged, hereby waives and releases any and all lien of claim or right of lien under laws of the state wherein the above premises are located, relating to mechanics, materialmen's or similar liens on the above premises and improved whereon and on the monies or other considerations due to become due from Kullman Industries on account of labor or material, fixtures, or apparatus heretofore furnished by the undersigned for the above described premises . . . ." A.275.

Trepanier signed the waiver and received the $15,000 check, but shortly thereafter was informed by Quality that it had insufficient funds to cover the check. Trepanier was also informed that the waiver he had signed would have to be changed to reflect the total amount Venus had been paid on the sub-subcontract, which was $40,000.

On June 10, 1992, Trepanier visited Kullman's trailer at the construction site to receive a treasurer's check to replace the $15,000 check he had been given a few days earlier. At that point, he was presented with two waiver forms, a copy of the waiver he had previously signed, but with certain changes, and an altered waiver. Kullman's project manager instructed Trepanier to initial some of the changes on these documents as a condition to receiving the check. The waiver that Trepanier had signed previously had been altered by the addition of Quality's name next to Kullman's and the inclusion of the project identification number. Trepanier initialed the addition of Quality's name in two places, as directed. Another document was then presented to Trepanier with the same changes, as well as with the substitution of a figure representing the entire balance owing on the sub-subcontract, $44,335, for the amount of consideration. Trepanier again initialed the addition of Quality's name in two places, but voiced his objection when he noticed the figure of $44,335.

Trepanier received the $15,000 treasurer's check that day, but further payments were not forthcoming. When Quality failed to pay Venus the unpaid balance of $44,335 on the sub-subcontract, Venus filed this action to recover on Kullman's payment bond, pursuant to G. L. c. 149, s. 29. (2)

The central issue here is whether, by signing the waiver of lien, Venus waived its right to pursue payment under Kullman's payment bond. The waiver itself explicitly provided for the waiver of mechanics' and materialmen's liens. General Laws c. 254, s. 1, affords contractors and suppliers a mechanics' or materialmen's lien on the property where their goods or services were furnished. The statute, in s. 2, provides for the recording of a lien statement in the registry of deeds as a basis for preserving the claim for enforcement. See In re Ribeiro, 7 B.R. 359, 361 (Bankr. D. Mass. 1980). Since mechanics' liens are not permitted against a public building, G. L. c. 254, s. 6, the defendants argue that the reference in the waiver to a mechanics' or materialmen's lien, "or similar lien" against the property could only refer to the subcontractor's right to proceed against the bond as provided in s. 29.

We disagree. Section 29 makes no reference to a "lien," whether on property or on money owed to the contractor. It speaks only of the duty of the general contractor to obtain security by bond for the payment of subcontractors and suppliers, and of the procedure for notice and adjudication of claims. As the judge observed, s. 29 was enacted to provide protection to subcontractors "in lieu of lien rights on construction of public works." Warren Bros. Co. v. Peerless Ins. Co., 8 Mass. App. Ct. 719, 722 (1979). See also Massachusetts Gas & Elec. Light Supply Co. v. Rugo Constr. Co., 321 Mass. 20, 22-23 (1947) (statute requiring bond as security for subcontractors on public works projects is an "outgrowth" of the mechanics' lien statute). "[A]s there can be no lien upon public buildings or other public works, . . . the laborer or materialman, instead of having a lien upon the property, has the benefit of the security taken by bond or otherwise by the public contracting party." Id., at 23. Thus, the right to a mechanics' lien and the right to the statutory remedy under s. 29, while serving a similar purpose, are distinct remedies. Moreover, the protection afforded under s. 29 is significantly broader than that of a mechanics' lien, dictating not only the form of security but a procedure for expedited resolution and prompt payment. See International Heating & Air Conditioning Corp. v. Rich Constr. Co., 372 Mass. 134, 138 (1977) (payment bond statute should not be construed according to the same strict principles applied to the mechanics' lien statute, but "should be given a broad or liberal construction to accomplish its intended purpose" of protecting those who provide labor and materials on public works); Peters v. Hartford Acc. & Indem. Co., 377 Mass. 863, 869, 872 (1979) (section 29 serves the legislative aim of "expediting payments to general contractors and to subcontractors and improving the flow of funds" on public construction projects as well as the "unhampered completion of such projects"). Broad and liberal construction of s. 29 also furthers the underlying public purpose of encouraging competitive bidding on public works by subcontractors who might otherwise submit higher bids as a hedge against delays in payment. Manganaro Drywall, Inc. v. White Constr. Co., 372 Mass. 661, 664 (1977). C.C.&T. Constr. Co. v. Coleman Bros. Corp., 8 Mass. App. Ct. 133, 137 (1979).(3)

We will not insert by implication a waiver of the comprehensive statutory remedy afforded by s. 29 into the form of waiver of lien signed by the plaintiff here. The law is well-established that a waiver is a voluntary and intentional relinquishment of a known right. Minot v. Minot, 319 Mass. 253, 269 (1946). Gamache v. Mayor of North Adams, 17 Mass. App. Ct. 291, 293 (1983). Powell v. Fireman's Fund Ins. Cos., 26 Mass. App. Ct. 508, 511 (1988). "There can be no waiver of a right unless the right is known and it was intended to surrender it." Freetown v. Zoning Bd. of Appeals of Dartmouth, 33 Mass. App. Ct. 415, 420 (1992). Given the absence of any reference to s. 29 in the waiver of lien, and the evidence, which the judge credited, that Trepanier was not even aware of his s. 29 rights at the time he signed the waiver of lien, the judge was reasonable in finding that Venus had not waived its right to pursue payment under Kullman's bond.(4)

Nor did the judge's interpretation render the waiver a nullity, as the defendants contend. To begin with, it was not the judge's duty to contort the plain meaning of the waiver to achieve the defendants' desired effect. See, e.g., Erhard v. F. W. Woolworth Co., 374 Mass. 352, 355 (1978) (a provision with a well-settled meaning contained in a contract determines the obligations of the parties, without reference to their supposed intentions gleaned from other provisions). That the form of waiver drafted and utilized by Kullman was inappropriate for the objective it sought to achieve does not require that we imply the language that the defendants omitted into an otherwise unambiguous contract. See, e.g., Employers' Liab. Assur. Corp. v. Hoechst Celanese Corp., 43 Mass. App. Ct. 465, 480 (1997) (prohibition against insured's voluntary payments would not be inserted into an unambiguous cooperation and assistance provision of an insurance policy that made no reference to such payments). The defendants, asserting waiver as an affirmative defense, failed to satisfy their burden of proof in this regard. See, e.g., Sheehan v. Commercial Travelers Mut. Acc. Assoc. of America, 283 Mass. 543, 552- 553 (1933) (letter from insurer to its insured did not prove that insurer intended to waive the defense of noncompliance in the insured's claim on the policy). Even so, we think the judge succeeded in according the waiver a rational business purpose. As the judge observed, the waiver spoke not just to liens on premises, but also to liens on money to become due from Kullman. The judge noted that there is no express prohibition in G. L. c. 254, s. 6, against a lien on funds as opposed to a lien on public buildings or structures. A.340. It was reasonable for the judge to construe the waiver to mean that Venus was waiving its right to seek a lien should Venus proceed directly against Quality or pursue Kullman via trustee process for the funds it owed to Quality. See Dolben v. Duncan Constr. Co., 276 Mass. 242, 249-250 (1931) (waiver of lien rights on premises and moneys due or to become due in public construction subcontract was distinct from the subcontractor's rights under s. 29). Assuming, without deciding, that a lien on money to become due in connection with a public project is an appropriate avenue of redress, a reach and apply action to attach money owed by Kullman to Quality would appear to be distinct from the remedy available under s. 29 to proceed against Kullman's bond. See, e.g., Commercial Cas. Ins. Co. v. Murphy, 282 Mass. 100, 103-104 (1933) (subcontractor that failed to file a notice under s. 29 instead brought a trustee process action on funds held by town); Warren Bros. Co. v. Sentry Ins., 13 Mass. App. Ct. 431, 432-433 (1982); Mestek, Inc. v. United Pac. Ins. Co., 40 Mass. App. Ct. 729, 730 (1996) (action for quantum meruit and to reach and apply brought separately from action under s. 29 against the bond). Compare Martin Fireproofing Corp. v. Aetna Ins. Co., 346 Mass. 498, 500 (1963) (to pursue payment under the security bond, the subcontractor was required to comply with the procedure set out in the statute, and could not recover on the bond at common law). Accordingly, the judge's conclusion that the waiver of lien did not operate to preclude Venus from pursuing recovery under s. 29 did not deprive the waiver of significance.

Kullman additionally challenges the judge's ruling on Kullman's estoppel defense, but Kullman's brief on appeal fails to develop this point.(5)

There is some reference in Kullman's brief to an argument that Venus is precluded from recovering on the bond because Trepanier did not return the $15,000 check he received upon signing the waiver and initialing the altered waiver. According to Kullman, Trepanier knew at that point that Kullman interpreted the waiver to signify that Venus had been paid in full, and Venus's retention of the check was essentially a ratification of Kullman's position. The judge viewed the evidence differently. She found that Trepanier did not agree to the change in the amount of the consideration inserted in the altered waiver and, upon receiving the $15,000 treasurer's check, Trepanier made clear his position that Venus had not been paid in full. As a result, the judge concluded that Kullman could not have reasonably relied on Venus's retention of the treasurer's check as a representation that Venus was waiving its bond rights. Based on our review of the record, these findings were not erroneous. See C.C.&T. Constr. Co. v. Coleman Bros. Corp., 8 Mass. App. Ct. at 135. Given the plain meaning of the waiver, Venus's retention of the check had no bearing on its statutory rights under s. 29. Compare Crane Co. v. Park Constr. Co., 356 Mass. 13, 17 (1969) (supplier's agent knew that general contractor would rely on agent's certificate that subcontractor had paid supplier, so that supplier was estopped from asserting payment against general contractor's bond when the subcontractor's check was dishonored).

Accordingly, we conclude that the Superior Court judge correctly ruled against Kullman and its surety on their defenses of waiver and estoppel. The judgment for the plaintiff on its claim for payment pursuant to G. L. c. 149, s. 29, is affirmed.

Venus has requested appellate attorney's fees. In accordance with G. L. c. 149, s. 29, attorney's fees were awarded to Venus in the Superior Court. An award of attorney's fees to the claimant is also appropriate on appeal. Manganaro Drywall, Inc. v. White Constr. Co., 372 Mass. at 667. The request for attorney's fees shall be submitted in accordance with the procedure outlined in Yorke Mgmt. v. Castro, 406 Mass. 17, 20 (1989)

Judgment affirmed.

End of Decision

1. National Union Fire Insurance Company of Pittsburgh.

2. General Laws c. 149, s. 29 (1996 ed.), provides in pertinent part: "[o]fficers or agents contracting in behalf of the commonwealth . . . or other public instrumentality for the construction, reconstruction, alteration, remodeling, repair or demolition of public buildings or other public works . . . shall obtain security by bond in an amount not less than one half of the total contract price, for payment by the contractor and subcontractors for labor performed or furnished and materials used or employed therein . . . ." Section 29 further provides, in paragraph 3: "[a]ny claimant having a contractual relationship with a subcontractor performing labor or both performing labor and furnishing materials pursuant to a contract with the general contractor but no contractual relationship with the contractor principal furnishing the bond shall have the right to enforce any such claim as provided in subparagraphs (a) and (b) of paragraph (2) . . . ."

3. Because we agree with the judge that the waiver here should not be read as a waiver of the plaintiff's statutory right under s. 29, we do not reach the question whether we would even recognize a waiver of a statutory right which, if enforced, could conceivably undermine the public purpose of the statute. See Spence v. Reeder, 382 Mass. 398, 413 (1981); Canal Elec. Co. v. Westinghouse Elec. Corp., 406 Mass. 369, 378 (1990).

4. The defendants contend that the judge improperly relied on parol evidence to assist in her interpretation of the waiver. See, e.g., White Constr. Co. v. Commonwealth, 11 Mass. App. Ct. 640, 644 (1981), S.C., 385 Mass. 1005 (1982). Specifically, they point to the judge's finding that, in signing the waiver, Trepanier intended only to acknowledge receipt of the $15,000 check. A.327. However, the judge's observation of Trepanier's intent was significant in considering the defendants' argument that the waiver encompassed rights beyond those delineated in the text - - that the waiver included the plaintiff's right to the s. 29 bond as well as to mechanics' and similar liens explicitly identified therein. See, e.g., Ward v. Grant, 9 Mass. App. Ct. 364, 368 (1980) (in defending a fraudulent conveyance claim, evidence of the husband's motive in deeding property to his wife was for the purpose of proving that the deed was intended to do "what it purported to do on its face"; such evidence did not violate the parol evidence rule).

5. We limit ourselves to the arguments in Kullman's brief; we do not address arguments made to the Superior Court but not presented here. Mass.R.A.P. 16 (a)(4), 367 Mass. 921 (1975).