On June 26, 2026, the Massachusetts Supreme Judicial Court (“SJC”) issued a critical decision involving the Massachusetts Prompt Pay Act, G.L. Chapter 149, Section 29E (the “Act”). In J.C. Cannistraro, LLC v. Columbia Construction Co. et al.[1] , with Hinckley Allen representing Columbia Construction. The Court held that an arbitrator did not exceed his authority by allowing Columbia to pursue a counterclaim for recoupment after paying “deemed to be approved” invoices under the Act. The decision protects the enforceability of arbitration awards and provides additional certainty to an industry that regularly utilizes arbitration. It also provides the most recent appellate treatment of the Act and signals how courts might interpret the statute going forward.
Background
Columbia Construction Co. (“Columbia”) served as general contractor for the construction of an office and manufacturing facility in Walpole, Massachusetts. Columbia engaged J.C. Cannistraro LLC (“Cannistraro”) as its subcontractor for various scopes of work. Cannistraro submitted multiple invoices totaling $951,855.05 arising from disputed change orders. As required by the Act, Columbia timely rejected the invoices and provided the factual and contractual reasons for doing so. Its good faith certification, however, was issued late outside the Act’s required timeframes.
In the arbitration, Columbia disputed that its certifications violated the Act. The arbitrator disagreed and found that Columbia’s failure to timely certify resulted in “deemed to be approved” invoices immediately payable to Cannistraro pursuant to the Act. Columbia paid Cannistraro $951,855.05 plus interest and then asserted a counterclaim for recoupment on the underlying merits of the invoices. The arbitrator allowed the counterclaim to proceed and Cannistraro failed to justify 60% of its invoices. Accordingly, the arbitrator allowed Columbia to recover $576,855.05 plus interest on its recoupment claim.
Cannistraro asserted that the arbitrator’s decision violated both the Prompt Pay Act and the SJC’s follow-on decision in Business Interiors Floor Covering Business Trust v. Graycor Constr. Co. It requested that the Superior Court vacate the award – and the court allowed the motion. Columbia appealed.
Court’s Decision and Key Takeaways
The SJC held that the arbitrator did not exceed his authority because there was no violation of any express provision of the Act and no overarching public policy violation. It also suggested that requiring Columbia to pay the “deemed to be approved” invoices prior to asserting its counterclaim meets the central purpose of Graycor even though that case doesn’t expressly apply to counterclaims. The SJC’s decision reinforces the high standard of review for arbitration awards and confirms that courts remain strictly bound by an arbitrator’s findings and legal conclusions absent very narrow and unique grounds.
The decision also signals how appellate courts might interpret the statute going forward. Specifically:
- The Court suggested that meeting the letter and spirit of the Act’s requirements, even if technically violated, can still satisfy the statute’s public policy goals. This is particularly relevant when the parties dispute technical compliance with the Act.
- The Court also distinguished Cannistraro from Graycor on the facts. The Court pointed out that, unlike in Graycor, the parties disputed a violation of the Act as an initial matter. This is a critical distinction between the two cases and could serve to limit Graycor’s application in the future.
- The Court also refrained from extending Graycor’s waiver of common-law defenses to contract defenses and counterclaims. This also indicates that appellate courts may seek to limit Graycor in the future.
The Cannistraro decision marks an important moment for the construction industry. It protects the very high bar for overturning arbitration awards and provides additional clarity and certainty for all industry participants – including owners, contractors, and trade contractors alike. It also suggests a potential limitation of Graycor in the future. Be advised, however, that upstream parties must still meet the Act’s requirements for rejecting invoices or else face “deemed to be approved” invoices. They must also continue to pay such “deemed to be approved” invoices “prior to or contemporaneously with” asserting any defenses under Graycor to avoid waiving certain defenses.
[1] Slip Opinion, SJC-13819 (June 26, 2026).
This alert is for informational purposes only and does not constitute legal advice. The outcome of the pending litigation remains to be determined and is not guaranteed.
This information is provided for educational purposes only. It should not be construed or relied on as legal advice. It is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication or other legal counsel.
