Massachusetts High Court Bars Chapter 93A Claim as UntimelySeptember 5, 2018
The Massachusetts Supreme Judicial Court (“SJC”) closed out August with a decision concerning contractor exposure to Chapter 93A claims for unfair and deceptive trade practices. A divided court concluded that a Chapter 93A claim was subject to the 6-year “statute of repose.” Generally speaking, a statute of repose establishes an absolute time limit to bring claims regardless of when they are discovered; if the claim is time-barred under the statute of repose, the claim will fail even if the defendant was otherwise liable. In this case, the high court concluded that a contractor was insulated from Chapter 93A liability once 6 years expired after the contractor completed the project.
Chapter 93A is the Massachusetts Consumer Protection Statute. It can be a powerful tool for a plaintiff claiming that a defendant acted unfairly or deceptively in matters of commerce. Because Chapter 93A is intended to deter devious business practices, it incentivizes plaintiffs and punishes defendants; a win on a Chapter 93A claim can lead to an award of multiple damages as well as attorneys’ fees.
Lawyers will often assert Chapter 93A claims on behalf of their clients. In Massachusetts, these claims can have teeth. Although there is a high burden to prove a Chapter 93A violation in a business-to-business dispute, Massachusetts courts have found Chapter 93A violations for conduct that would not necessarily seem out of the ordinary to seasoned construction contractors. For example, in 2016, the Massachusetts Appeals Court upheld Chapter 93A liability against a contractor that had withheld less than $40,000 at the end of a $1.8 Million job to account for a down-the-line supplier claim and inadequate as-builts. The contractor was hit with an award of double damages as well as an award of costs and attorneys’ fees.
With this background in mind, contractors will like the SJC’s decision. The case arose out of a municipal housing rehabilitation project completed more than 15 years ago, in January of 2001. More than a decade after completion, a substantial fire broke out in one of the homes rehabilitated under the project. Apparently, the fire arose from defects in the electrical wiring work. As it turned out, the contractor did not pull a permit to replace ceiling fixtures and the work did not comply with applicable code requirements and was never inspected.
Having only learned of these facts after the fire, the homeowner sued the contractor in January of 2016, asserting a Chapter 93A claim for unfair and deceptive business conduct. Since more than 6 years had elapsed since completion of the project, the contractor moved to dismiss the claim as untimely under the statute of repose. The lower court granted the motion, prompting the homeowner to appeal.
The SJC took the case on appeal. Finding that the homeowner’s Chapter 93A claim was akin to a negligence claim, the high court applied the 6-year statutory time bar and upheld dismissal of the claim. The SJC reasoned that otherwise, “no contractor would ever be able to ‘put a project to rest.’” According to the court, the statute of repose “was enacted to shield contractors from the burden of liability throughout their careers and into retirement for work that had long since been completed.”
Notably, three SJC Justices (including the Chief Justice) disagreed with the opinion of the court, potentially opening the door for the SJC to revisit this issue. But at least for now, the decision stands. While different facts may have led to a different result, the bottom line is that a majority of the SJC applied the 6-year statute of repose period to bar a Chapter 93A claim. Thus, the statute of repose can be a viable defense for contractors facing belated Chapter 93A claims.Published in the September 2018 edition of UCANE's Construction Outlook