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– TIP OF THE MONTH –
For many Associations researching and discussing whether a condominium loan is right for the community, and looking closely at the closing costs for the loan is often a big factor in making a decision. One way to reduce closing costs is for the association’s attorney to represent both the lender and the association in the transaction. Dual representation is something that many attorneys undertake during residential real estate transactions and the same is also true for many condominium loans.
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FREE MEEB SEMINAR
THURSDAY, OCTOBER 26, 2017
9:30 AM – 11:30 AM
COLLECTING UNPAID CONDO FEES IN MASSACHUSETTS…EVERYTHING YOU NEED TO KNOW
Collections are an issue practically every condominium association will face at one point or another. Join attorneys Richard Brooks and Dean Lennon as they explain the nuts and bolts of the lien enforcement process in Massachusetts. Richard and Dean will take attendees through the statutory process for establishing a priority lien as well as discuss important tricks and tools for the more problematic cases which will be a must for even the most experienced managers and trustees. Topics will include: foreclosures, bankruptcy implications, non-priority liens and supplemental assessments.
This free seminar is being held on
Thursday, October 26, 2017
9:30 AM – 11:30 AM
(Registration at 9:00 AM)
at the offices of
Marcus, Errico, Emmer & Brooks, P.C.
45 Braintree Hill Office Park, Suite 107
Braintree, MA 02184
Refreshments will be served.
Space is limited.
To reserve your seat [click here].
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NO DAMAGES FOR DELAY CLAUSE IN CONSTRUCTION CONTRACT NOT ENFORCED BY COURT
A recent Appeals Court decision calls into question longstanding legal precedent in enforcement of the so-called “no-damages-for-delay” clauses typical in construction contracts in both the public and private sectors, and also creates new law in Massachusetts for the acceptance of the “total cost” method in calculating damages.
Central Ceilings, Inc. v. Suffolk Construction Company, Inc., et al. involved a public construction project for the Massachusetts State College Building Authority. The MSCBA hired Suffolk Construction Co. to build three dormitories at Westfield State University, and Suffolk in turn contracted with Central Ceilings to, among other things, install dry wall, exterior metal framing and metal door frames.
As in most construction projects, the subcontract between Suffolk and Central contained a no-damages-for-delay — or NDD — clause that precluded any recovery for “money damages or additional compensation for delay no matter how caused” and restricted Central’s remedy for delay to an extension of time.
That is a risk-shifting mechanism whereby the subcontractor can seek an extension of time for delays, hindrances or interferences with its work, but is otherwise precluded from seeking monetary damages arising from those delays. On public contracts, in particular, it is an important shifting of risk because it insulates the contractor, and ultimately the public owner, from liability for delay damages from downstream contractors and subcontractors.
Both the trial court, in its ruling issued after a jury-waived trial, and the Appeals Court recognized the unambiguous NDD clause in the subcontract. However, both courts refused to give effect to the NDD clause, finding that the clause did not apply to the types of damages being claimed by Central, and that Suffolk was foreclosed from relying on it because Suffolk had breached the subcontract (and denied Central its only remedy under that clause) by orally telling Central that no extensions of time would be given.
With respect to the first point, the trial court narrowly defined “delay damages” falling within the scope of the NDD clause to be limited to damages for idle workforce, to the exclusion of other types of “traditional” delay damages.
Not only was that a departure from past precedent from the Supreme Judicial Court, which has defined “delay damages” to include not just idle workforce, but prolongation costs, acceleration costs, and loss of productivity, but it ignored that the genesis for the claimed damages was, at its heart, delay.
Although the trial court found that “delays of various types” caused Central to incur added cost and productivity loss, it nonetheless chose to draw a distinction that heretofore has not previously existed under Massachusetts law.
Specifically, Central claimed that because of delays and hindrances to its work, it had to accelerate the work by adding labor to the job. This was a classic “constructive acceleration” claim whereby a contractor contends that it was delayed, that it was denied extensions of time, and that it therefore had to constructively accelerate the work in order to meet the completion date required by the contractor or owner for whom it was working.
Traditionally, in order to establish such a claim, the contractor would first have to establish delay to its work — in most cases a critical path delay. The contractor would then need to establish that it requested extensions of time or modifications to the project schedule but was denied any such extensions or modifications.
In this case, the trial court found that Central had been delayed by actions or inactions by Suffolk and the public owner. Oddly, it did not require Central to meet the remainder of its burden, however — namely, to show that Central had requested extensions of time or modifications to the contract schedule and that such requests were denied by Suffolk.
It appears that both the trial court and the Appeals Court after it were satisfied and accepted without question the testimony by Central’s project manager that Suffolk had orally told Central at some point in time that no time extensions would be granted.
The case highlights the need to be careful in negotiation construction contracts and to require all changes to the contract to be accompanied by written change orders.
Please contact Ed Allcock (eallcock@meeb.com) and John Shaffer (jshaffer@meeb.com) regarding litigation and negotiation of contract disputes.
For a copy of the Central Ceilings, Inc. v. Suffolk Construction Company, Inc., et al Decision [click here].
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LIABILITY FOR NEGLIGENT HIRING AND
RETENTION OF EMPLOYEES
On the evening of May 5, 2017, police discovered the bodies of Richard Field and Linda Bolanos, whom were two well-respected physicians, at their luxury South Boston condominium. Bampumium Teixera (“Teixera”), a former employee of Palladion Services, LLC (“Palladion”), the condominium’s former concierge and security company, presently stands accused of the murders of Dr. Field and Dr. Bolanos.
In August 2017, a wrongful death lawsuit was filed against Palladion, among others. The complaint alleges that “because of his training with Palladion, Teixera was fully familiar with the layout of the [b]uilding, and was also aware that there was virtually no meaningful security for its residents.” The complaint also alleges that at the time that he was hired by Palladion, Teixera had already robbed a downtown Boston bank in August 2014 and then again in 2016 (although Teixera apparently did not confess to the 2014 robbery until 2016, after he had been employed by Palladion). Thereafter, Teixera was sentenced to jail and released the Spring of 2017.
Palladion maintains that Teixera passed his initial background checks. However, the complaint alleges that Palladion never informed the condominium’s new security company, who took over security services at the condominium in early 2017, of Teixera’s criminal background.
In Garcia v. Duffy, the court distinguished between negligent hiring versus negligent retention. “The principal difference between negligent hiring and negligent retention as bases for employer liability is the time at which the employer is charged with knowledge of the employee’s unfitness. Negligent hiring occurs when, prior to the time the employee is actually hired, the employer knew or should have known of the employee’s unfitness, and the issue of liability primarily focuses upon the adequacy of the employer’s pre-employment investigation into the employee’s background… Negligent retention, on the other hand, occurs when, during the course of employment, the employer becomes aware or should have become aware of problems with an employee that indicated his unfitness, and the employer fails to take further action such as investigating, discharge, or reassignment.” Garcia v. Duffy, 492 So.2d. 435, 438–39 (Fla. Dist. Ct. App. 1986).
In other words, “an employer must use due care to avoid the selection or retention of an employee whom he knows or should know is a person unworthy by his habits, temperament, or nature to deal with the persons invited to the premises by the employer. The employer’s knowledge of past acts of impropriety, violence or disorder is generally considered sufficient to foreworn the employer who selects or retains such employee in his service that he may eventually commit an assault, although not every infirmity of character, such, for example, as dishonest or querulousness, will lead to such result.” Foster v. The Loft, Inc., et al., 26 Mass. App. Ct. 289 (1988)(quoting Annotation, Liability of Employer, Other Than Carrier for a Personal Assault Upon Customer, Patron or Other Invitee, 34 A.L.R. 2d. 372, 390 (1954).
In Foster v. The Loft, Inc., the defendant employer was held liable for failing to exercise reasonable care in retaining an employee whom had a criminal background after he had assaulted a bar patron, because the employer knew of the employee’s criminal record and the employer “did nothing to determine its nature or extent or to assure itself that [the employee’s] past criminal activities were not such, in the circumstances, as to present a danger to customer.” Foster v. The Loft, Inc., et al., 26 Mass. App. Ct. at 291.
Employers may be held liable for not only performing inadequate or insufficient background checks, but for ignoring information about an employee’s background that it learns of during the scope of during the employee’s employment. As successful negligent hiring and retention cases may result in high damage awards, employers should develop a thorough hiring program and implement hiring procedures which include an employment application and background and reference check. Further, employers should conduct regular performance reviews at least on an annual basis.
Employers should also have a clear and uniformly followed procedure for disciplining employees and to document complaints. Further, employers should promptly investigate all complaints which allege that an employee engaged in behavior which may be characterized as dangerous and/or harassing, and the employer should then maintain a written record of the investigation. If the employer determines that the employee is dangerous and/or otherwise poses a threat to third parties and/or to other employees, immediate responsive action should be taken, which may include termination of the employee and/or action to prevent the employee from returning to the workplace.
For any questions regarding this article please contact Jennifer Barnett at jbarnett@meeb.com.
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MEEBpc Blog 