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Sub's Lien Wasn't Protected From Contractor's Default

Tuesday, June 05, 2012 02:59 am

 

Contract Termination -- Liens

Superior Mechanical Plumbing & Heating, Inc. v. Insurance Co. of the West, 2012 Mass. App. Lexis 171 (April 12, 2012)

A Massachusetts court has ruled that a condition precedent payment clause in a general contract with the owner essentially eliminates a subcontractor's lien rights

Superior Mechanical Plumbing and Heating, Inc. (Superior) was a subcontractor on a project to construct an L.A. Fitness International, LLC (LAFI) sports facility in Saugus, Massachusetts. Though Superior performed work valued at approximately $100,000, the general contractor, PinnCon LLC (PinnCon), never paid the sub. To recover the money owed, Superior filed a mechanic's lien on the project and a claim to enforce it. LAFI's surety, Insurance Company of the West (ICW), claimed LAFI didn't owe anything to PinnCon at the time it learned of the lien because LAFI had terminated PinnCon for default.

LAFI terminated its contract with PinnCon on March 28, 2008 after learning that the contractor had absconded with approximately $700,000, failed to pay any of its subs, and planned to close its business. LAFI received notice of Superior'[...]

 
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