By: Matthew Madden

Payment bond claims play a vital role in guaranteeing that subcontractors and suppliers are paid for work completed on public construction projects. Therefore, knowing how to effectively file a bond claim is the essential first step in safeguarding your payment.

The Massachusetts Payment Bond Statute

The Massachusetts payment bond statute (G.L. c. 149, § 29) applies to all construction projects commissioned by the Commonwealth, as well as by counties, cities, towns, districts, or other public entities, where the total contract value is $25,000 or more. Under the statute, general contractors must provide the awarding authority with a payment bond to secure payment to subcontractors who furnish labor and supply materials. The statute includes this requirement to ensure that subcontractors and suppliers, who cannot record a mechanic’s lien on public property, receive payment for their work on public projects.

Notice Requirements

In contrast to payment bonds for federal construction projects, which are governed by the Miller Act (40 U.S.C. §§ 3131-3134) and only allow recovery for first and second-tier subcontractors, the Massachusetts payment bond statute permits subcontractors at any level to recover under a payment bond on a public construction project. However, the notice and timing requirements vary based on the tier of the aggrieved contractor within the project (e.g., first-tier subcontractor, second-tier subcontractor, etc.).

For example, a first-tier subcontractor who has a direct contract with the general contractor can file a suit in Superior Court to enforce the payment bond if the general contractor fails to pay within 65 days of the payment due date. Conversely a lower-tier subcontractor who does not have a direct contract with the general contractor must send a notice of their claim against the payment bond within 65 days of the last date they provided labor or materials to the project.

Furthermore, Unlike a first-tier subcontractor, a lower-tier subcontractor cannot file a suit in Superior Court to enforce the payment bond unless they have not been paid within 65 days after the payment was due, and their notice of claim was served on the surety within 65 days of their last day of work. However, any lawsuit, whether brought by a first, second, or third-tier subcontractor, must be filed within one year after the last date labor and/or materials were provided for the project.

Finally, although no specific form is required, the payment bond statute mandates that the notice of claim must at least include: (1) the amount claimed; (2) the identification of the subcontractor making the claim; and (3) the identification of the project participant who received the benefit of the labor or materials provided.

Recent Decision Highlights The Importance of Filing A Payment Bond Claim

Although it applied the Miller Act, a federal counterpart similar to the Massachusetts payment bond statute, a recent unpublished opinion by the U.S. Court of Appeals underscores the importance for unpaid subcontractors on public projects to file a timely and statutorily compliant payment bond claim. The case, United States of America, for the use and benefit of American Civil Construction, LLC v. Hirani Engineering & Land Surveying and Colonial Surety Company, 2025 WL 88664 (D.C. Cir. Jan. 14, 2025), involved a federal project to build a levee flood wall. Like others, the project encountered delays, unexpected changes, and technical issues. After the owner terminated the general contractor for cause, an unpaid subcontractor sued the general contractor and its surety for unpaid work.

The trial court limited the subcontractor’s claim against the contractor to $568,000 under state law. However, the subcontractor’s claim against the surety was not capped by the contract amount. Instead, the court awarded nearly $2.6 million under a quantum meruit theory for the full value of the subcontractor’s services. The Court of Appeals upheld this, stating that under the Miller Act, quantum meruit damages against the surety can exceed expectation damages against the contractor. This is because the Miller Act provides additional protection, allowing subcontractors to recover the full value of their services and materials, including those from unforeseen delays.

This case underscores the importance of not only identifying payment bonds for work on public projects but also exploring alternative legal theories to maximize potential recovery.

Conclusion

Understanding the intricacies of bond claims on public projects in Massachusetts is crucial for contractors, subcontractors, and suppliers. By adhering to the state’s regulations and timing requirements, project participants can ensure they are protected and receive the compensation to which they are entitled.

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This alert is for informational purposes only and may be considered advertising.  It does not constitute the rendering of legal, tax or professional advice or services.  You should seek specific detailed legal advice prior to taking any definitive actions.