THIS DRAFT WAS NOT APPROVED, SIGNED OR SENT
[shc 05-13-05]
TO:
FROM:
DATE:
RE:
Lina Swan, Director of Fiscal Operations
Stephen H. Clark, Administrative Law Judge
May 13, 2005
Request for Direct Payment Under G.L. c.30, S.39F
Claimant:
Contractor:
Contract #
City/Town:
Amount:
Don Martin Corporation Co. (Don Martin)
Roads Corporation (Roads)
Contract #31285
Raynham
$47,734.99
1. Don Martin filed this direct payment demand (Demand) for $47,734.99 on April
12, 2005. I found the Demand colorable and requested that District 5 report on
the status of the subcontract work.
2. District 5 reported to Fiscal Operations on April 25, 2005 (received May 5, 2005)
that Don Martin was an approved subcontractor, that the subcontract work was
completed on August 27, 2003, and that the Department does not intend to make a
claim for defective or incomplete work.
3. Roads replied to the Demand by a statement made under pains and penalties of
perjury and copied by certified mail to Don Martin on April 20, 2005. Roads
provided a detailed breakdown of the balance due under the subcontract in its
sworn reply. Among other things, Roads’ reply purports to “exercise[] our right
to off-set payment” to Don Martin for subcontract work Don Martin performed
under MHD#32082. The amount of the “off-sets” claimed are $30,043.91.
4. Don Martin and Road agree that $384,438.99 is the value of the original
subcontract work performed; and they also agree that a Department-approved
change order for work of $2,181.30 should be added to that value, for a total of
approved subcontract work of $386,620.29 ($384,438.99 + $2,181.30). To this
amount I specifically refuse to add the sum of $4,340.00 that Don Martin claims
as “change order work” for “Premium Cost Pave Nights” in its Demand. The
District reported that it refused Roads’ request for extra work of $4,340.00 to the
general contract. Accordingly, the $4,340.00 in Don Martin’s Demand is rejected
on the grounds that it is not subject to Section 39F at all, as it is outside the
general contract. Accordingly, I find that the total value of all subcontract work
performed including approved extra work, before downward adjustments are
made for claimed backcharges, credits, retainage or “off-sets,” is $386,620.29.
5. A downward adjustment to the total subcontract value is required for two agreed
back charges. Roads and Don Martin agree that the sums of $69.60 (village street
point lines) and $3,353.65 (village street parking lot) totaling $3,423.25 should be
accounted for. Roads does so by subtracting $3,423.25 from the value of the
subcontract as back charges while Don Martin “credits” as value received the
same sum. In order to account for the agreed upon adjustment of $3,423.25
consistently, I treat the $3,423.25 as a backcharge to be subtracted from the
subcontract value, which I then find to be $383,197.04 ($386,620.29 - $3,423.25).
(I do not include $3,423.25 as a “credit” in calculating payments made to Don
Martin. See paragraph 9 below.)
6. A final backcharge adjustment to the value of the subcontract should be made.
Roads states under oath that a back charge of $2,625.13 (Raynham sidewalks)
should be taken. Don Martin does not include that sum as a “credit” (or
otherwise) in its accounting. Based on Roads’ sworn statement, I find that an
additional back charge of $2,625.13 should be taken. After subtracting that
backcharge the ultimate subcontract value of Department-approved work
performed is $380,571.91 ($383,197.04 - $2,625.13). The sum of $380,571.91
agrees with the “revised contract” value submitted by Roads in its sworn reply.
7. I reject Roads’ contention that the sum of $13,616.40 should be subtracted from
the total subcontract value because it is “retainage” held. Generally, retainage is
due the subcontractor sixty-five days after completion of the work unless a
dispute exists as the to quality of the work. See Bayer & Mingolla Indus. v.
Orlando Contracting Co., 6 Mass. App. Ct. 1, 3 (1978). G.L. c.30, s. 39F(1)(b)
requires that sixty-five days after the subcontractor has completed the work the
“entire balance due under the subcontract,” less certain amounts, is “due” to the
subcontractor.1 The amounts that may be subtracted from the “entire balance” are
the costs of completing incomplete and unsatisfactory subcontract work. Here,
there is no dispute concerning incomplete or unsatisfactory work. Accordingly,
the retainage withheld from Don Martin in the amount of $13,616.40 is due.2
8. I also reject Roads’ contention that the payment of a direct payment demand by
the awarding authority under Section 39F is subject to the mere assertion of
Roads that Don Martin owes Roads $30,043.91 in “off-sets” as a result of
1
The pertinent part of G.L. c.30, s.39F(1)(b) provides: “Not later than the sixty-fifth day after each
subcontractor substantially completes his work in accordance with the plans and specifications, the entire
balance due under the subcontract less amounts retained by the awarding authority as the estimated cost of
completing the incomplete and unsatisfactory items of work, shall be due the subcontractor; and the
awarding authority shall pay that amount to the general contractor.”
2
See also Sullivan & Sons, Inc., v. Kay-Lock, Inc., 17 Mass. App. Ct. 997, 998 (1984) and cases cited. A
contrary provision in the subcontract between Don Martin and Roads would not affect the outcome here.
In Massachusetts a subcontract provision purported to make the release of a subcontractor’s retainage
contingent upon prior final payment by the owner to the general contractor would be “contrary to G.L. c.30,
s.39F” and “therefore void” as contradicting the requirements of G.L. c.30, s. 39F(1)(b). Bayer & Mingolla
Indus., supra, 6 Mass. App. Ct. at 3.
purported damage suffered by Roads under MHD contract #32082. Section 39F
does not authorize such an “off-set” and Roads cites no authority in support. I
note that a set off may be permitted if a court bars direct payment. See Section
39F(1)(e)(ii).
9. Don Martin and Roads do not agree on the amount of payments Roads has made
to Don Martin exclusive of credits, backcharges and the like. Don Martin states
that it has received $339,802.05, while Roads states that it has paid Don Martin
$336,911.60. There is no evidence to suggest the source of the resulting
$2,890.45 discrepancy. For the sole purpose of deciding this Demand I find that
Roads has paid Don Martin $339,802.05 since I infer that Don Martin is unlikely
to have overstated the amount it received from Roads.
10. In sum, I conclude that Don Martin has proved that the Department should pay it
$40,769.86 as a direct payment ($380,571.91 - $339,802.05), summarized as
Total original subcontract work
Add MHD-approved extra work
$384,438.99
2,181.30
$386,620.29
Subtract agreed backcharges)
3,423.25
Subtract backcharge (Raynham sidewalks)
2,625.13
$380,571.91
Subtract total payments to Don Martin
$339,802.05
Amount of direct payment by MHD
40,769.86
11. Kindly pay $40,769.86 to the claimant out of the next periodic, semi-final or final
estimate on the project if funds are available and deduct from payments due to
Roads in accordance with G.L. c. 30, s. 39F(1)(h).
12. Take no action on the balance of Don Martin’s Demand.
cc:
Don Martin Corporation
475 School Street, Unit #6
Marshfield, MA 02050
The Roads Corporation
241 Treble Cove Road
North Billerica, MA 01852
District Highway Director, District 5
Deputy Chief Engineer, Construction