The COVID-19 pandemic has caused many jurisdictions to take measures to suppress the spread of the virus. A fair amount of these measures included extending certain court deadlines to reduce personal proceedings. But with the uncertainty surrounding the pandemic came uncertainty about extending deadlines.
The importance of deadlines came as a difficult lesson for a Massachusetts contractor when he tried to file a mechanical franchise. Recently, the Massachusetts Supreme Court issued a ruling declaring that filing the late notice to the contractor was Not Covered by court deadline extension orders.
Orders of the Supreme Court of Justice MA
In response to the pandemic, the Massachusetts Supreme Judicial Court has issued a series of orders regarding “court operations under the urgent circumstances brought about by the COVID-19 (Coronavirus) pandemic.” These orders imposed (extended) any deadline “provided by statutes, court rules, standing orders, or guidelines.”
Massachusetts Mechanics Franchise: A 3-Step Process
Before we get too deep into the issue, let’s quickly summarize the Massachusetts Mechanics franchise process. There are three basic steps for direct/general contractors. The claimant must complete all steps within the timeline required to master and enforce a franchise claim in Massachusetts.
- Contract notice: Such notice must be filed with the County Register of Bond Office no later than 90 days from the last date of the plaintiff to furnish labor or materials to the project or a notice of termination is given, or 60 days from the date of the notice of significant completion provided, whichever is earlier.
- Account statementThis statement operates as the lien claim itself and must be filed at the same bond registry office no later than 120 days after the last date of the claim to furnish labor or materials to the project or notice of termination is given, or 90 days from the date on which the notice of material completion is given, whichever is earlier.
- enforcement actionsFinally, an executive action must be filed within 90 days of the statement submission date.
For a full breakdown of the process seeHow to Apply for a Massachusetts Mechanics Lien File | step by step guide
second, Any error in the process can be fatal to the claimant’s franchise.
Now, let’s get into the case. The issue before the MA Supreme Court was whether the aforementioned court orders also extended deadlines for submitting documents to the bond registry.
Graycor Construction vs Pacific Theaters
The case in question is Graycor Construction Co., Inc. v. Pacific Theaters Exhibition Corp. et al.
- owner: Platform Owner, LP & Podium Developer, LLC (collectively, the “Platform”)
- tenant: Pacific Theaters Exhibition Company (Pacific)
- general contractor: Graycor Construction Co., Inc. (Graycor)
In November 2018, Pacific Corporation hired Graycor to build a movie complex on land owned by Podium. The land was part of a mixed-use development consisting of multiple plots owned by separate entities.
One thing to note: the contract between the two parties recorded the wrong parcel owned by the owner of an unrelated entity office tower, LP (office tower).
The project ran until March 4, 2020, when Graycor ceased operations due to non-payment. Graycor claimed they owed more than $3.5 million for the labor, materials and equipment furnished on the project. In response, Graycor filed a Notice of Contract and Statement of Account in the Suffolk County Instruments Registry on April 27, 2020, both of which incorrectly identified ownership and named Office Tower as the owner.
About two months later, a modified notice of the contract and an account statement was filed, also with the incorrect eviction and the named property owner. The only modification appears to have been to include that the work contracted to Pacific was done “on behalf of or with the consent” of the owner.
Supreme Court declares contract notice deadline imposed by COVID orders
In July of 2020, Graycor filed a complaint with the Supreme Court to enforce their franchise claim; The complaint similarly did not mention the name of the platform.
A few months later (September 9), a revised second notice of contract and statement of account was served that correctly identified the parcel and platform as owners. Subsequently, an amended complaint was also filed to designate Podium as a defendant. The Podium platform responded by submitting a request to discharge the concession’s claim for not meeting the statutory deadline for filing a contract notice.
By Mass. Gen. Laws Chapter 254 § 2, the deadline for submitting contract notice is 90 days after the plaintiff has provided labor and/or materials for the project. Since Graycor ceased operations on March 4, the deadline for submitting the file will be June 2, 2020.
Greikor responded by saying that the deadline had been pushed back due to “the Supreme Judicial Court extending statutory deadlines due to the COVID-19 pandemic.” The court agreed with Graycor, and announced that the September 9th notice of the contract was served in a timely manner. The platform resumed.
Supreme Court setbacks: bond registry filings not included in court deadline extension
On appeal, the parties agreed that the original contract notice given in April 2020 was flawed to incorrectly identify ownership and owner. As they agreed if The court orders effectively extended the deadline for filing the Notice of Contract in the bond registry, so the filing would be in September in time.
So it was the final issue Whether deadline extension orders apply to recording deadlines in the bond registry.
Greykour’s argument was that the orders apply unambiguously to all legal deadlines. Their reasoning was that “the recording of acts is sufficiently intertwined with the judicial system under the oversight of this court.”
On the other hand, the Tribune argued that the orders apply only to courts of lower jurisdiction, and not to enforcement agencies such as bond registry.
However, the court noted that Greicour had read the phrase “all deadlines prescribed by law” in isolation, Contrasting context with the stated purpose of the commandswhich was in order to address how court operations are conducted safely while adhering to public health restrictions in response to the pandemic:
The subjects of the four court orders were narrow in scope. The orders required nearly all pleadings and other documents to be submitted electronically, required proceedings in virtually non-emergency matters, and severely restricted individuals who could enter the courts for the purposes of face-to-face emergency proceedings.”
They went on to say that “while an entity seeking to master a mechanical concession may eventually turn to the courts to enforce the franchise, mastering the franchise itself only requires filing a Notice of Contract in the Business Registry—an executive agency tasked with maintaining land records.”
Thus, the Court concluded that given the narrow focus of the orders, it was evident that each order imposed only statutory deadlines affecting the operations of the Court. The Supreme Court judge’s order to refuse Graycor’s discharge has been overturned.
This is clearly an unfortunate outcome for Graycor, who ended up losing his claim to a $3.5 million franchise.
Granted, their other claims for breach of contract, wrongful enrichment, and quantitative merit remain intact, but a security interest in the property itself through a lien claim is always the best case scenario.
So what should Massachusetts contractors take away from this case?
The first is fairly straightforward: the deadlines were extended Just Apply to court proceedings. Any deadlines for MA franchise filings have remained the same since the first order was issued.
Second, it is the topic of “modified notifications”. As you can see from the facts of the case, the file first The contract notice was served within the deadline. However, he is Third Notice of the amended contract that correctly identified all parties and property names. That’s why it is so important to make sure all your information is accurate before registering. The “modified” contract notice does not retain the date of filing of the previous notice, but sets a new date – which in this case was too late.
The laws of privilege mechanics are precise, and since they for you Money on the line, ensuring your project information is accurate and taking action early is the best way to ensure you get what you earned.
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