A recent Superior Court decision puts teeth into the Massachusetts Prompt Payment Act’s requirement to promptly review and pay periodic payment applications submitted by contractors on construction projects within the scope of the Act. The Act, G.L. c. 149, §29E, sets forth a limited time period for approval or rejection of a periodic progress payment.
An application for a periodic progress payment which is neither approved nor rejected within the time period shall be deemed to be approved unless it is rejected before the date payment is due. G.L. c. 149, §29E(d). A rejection of an application for a periodic progress payment, whether in whole or in part, shall be made in writing and shall include an explanation of the factual and contractual basis for the rejection and shall be certified as made in good faith.
In Tocci Building Corp. v. IRIV Partners LLC et al., the plaintiff subcontractor entered into a written contract with defendant contractor to provide construction services and materials. Plaintiff submitted periodic payment applications and defendant had the opportunity to either approve or reject all of plaintiff’s payment applications. Defendant did not provide a timely written rejection of the certain payment applications that included an explanation of the factual and contractual basis for the rejection that was certified to have been made in good faith. The Massachusetts Superior Court, therefore, held that the payment applications must be treated as approved. Plaintiff was entitled to judgment on its contract claims for the payments demanded.
