Home The Massachusetts Prompt Payment Act Continues to Have Harsh Consequences for Transgressors, Unwitting or Otherwise

The Massachusetts Prompt Payment Act Continues to Have Harsh Consequences for Transgressors, Unwitting or Otherwise

By: Christopher K. Sweeney, Esq.

With the exception of those living under rocks, construction professionals are well aware of the recent spate of litigation about the Massachusetts Prompt Pay Act. In 2022, the Massachusetts Appeals Court interpreted the Act to require the immediate and complete funding of payment applications unless the payor: 1) timely rejects the application in writing, 2) states the factual and contractual bases for the rejection, and 3) certifies that the rejection was made in good faith.[1] Two years later, the Massachusetts Supreme Judicial Court added its two cents. It held that although a violation of the Act does not necessarily cause a waiver of the transgressor’s common-law payment defenses, those defenses cannot be raised until the wrongly withheld payments are disbursed. Otherwise, the defenses are waived for good.[2]

Applying the SJC’s reasoning, a Superior Court judge recently reached exactly that result. See J.C. Cannistraro, LLC v. Columbia Construction, Co., No. 2082-CV-00738 (Norfolk Super. Ct. Dec. 4, 2024). There, a subcontractor submitted two proposed change orders to the project’s general contractor. The general contractor purported to reject the proposed change orders, but the rejections were deficient under the Act because the general contractor failed to certify that they were made in good faith. The subcontractor later submitted pay applications that included the fees covered by the change orders. Again, the general contractor purported to reject those applications, but again, it failed to do so in compliance with the Act. The subcontractor sued the general contractor, and the general contractor filed an answer, which included various common-law defenses to the subcontractor’s claims. The court then stayed the case and ordered the parties to arbitrate their disputes.

After preliminary proceedings, the arbitrator found that the general contractor indeed had violated the Act and ordered it to make an interim payment of all amounts covered by the subcontractor’s change orders. But the arbitrator also permitted the general contractor to assert counterclaims raising substantive defenses to the subcontractor’s claims. Eventually, the arbitrator issued a final award allowing the general contractor to recoup part of its interim payment based on its defenses. The subcontractor then sought an order from the court vacating that part of the award.

The Superior Court agreed with the subcontractor. Because the general contractor paid the subcontractor only after it first raised its common-law defenses in its answer, those defenses were waived. Accordingly, the court vacated the part of the award that favored the general contractor.

As if we needed more reason to take the Prompt Payment Act seriously, the court’s decision in Cannistraro provides yet another reminder. The Act means what it says, and the consequences for noncompliance can be draconian. Thus, those receiving payment applications should take care to respond to them promptly and in accordance with the Act’s terms. Further, if despite the Act’s clear terms, the payor still errs in its response, it should mitigate its exposure by making the payment(s) before raising whatever defenses may apply.

Christopher Sweeney is a Construction attorney and partner at the Boston-based law firm Conn Kavanaugh Rosenthal Peisch & Ford, LLP.

He can be reached at csweeney@connkavanaugh.com


[1]           See Tocci Bldg. Corp. v. IRIV Partners, LLC, 101 Mass. App. Ct. 133 (2022).

[2]           See Bus. Interiors Floor Covering Bus. Trust v. Graycor Construction Co., 494 Mass. 216 (2024)

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