Construction Law Update – First Quarter 2024

On February 27, 2024, the Supreme Judicial Court (“SJC”) of Massachusetts issued two opinions that collectively simplify the legal framework employed by courts adjudicating special motions to dismiss under the anti-SLAPP statute, codified at Mass. Gen. Laws c. 231, § 59H.

This decision comes less than a decade after the SJC attempted to augment this framework by adding a “second path” a non-moving party could traverse in order to defeat an anti-SLAPP motion, stating, “it has become clear that the second path presents numerous problems.” In doing so, the SJC now looks to revert to basics, relying almost entirely upon the plain language set forth in the anti-SLAPP statute as the basis for determining when to allow/deny these special motions to dismiss.

The Anti-SLAPP Statute and Massachusetts’ “Augmented” Framework

Passed in 1994, Massachusetts General Law c. 231, § 59H—the “Strategic Litigation Against Public Participation” statute—protects persons from being sued solely as a result of them exercising their First Amendment right to petition the government for a redress of grievances. Specifically, the statute provides that:

“In any case . . . in which a party asserts that the civil claims, counterclaims, or cross claims against said party are based on said party’s exercise of its right of petition under the constitution of the United States or of the commonwealth, said party may bring a special motion to dismiss. . . . The court shall grant such special motion, unless the party against whom such special motion is made shows that: (1) the moving party’s exercise of its right to petition was devoid of any reasonable factual support or any arguable basis in law and (2) the moving party’s acts caused actual injury to the responding party.”

The statute further provides that a party who prevails on his/her special motion to dismiss shall also be entitled to a recovery of all costs and reasonable attorneys’ fees incurred while pursing the motion.

Massachusetts recognizes an exceptionally broad definition of what actually amounts to “petitioning,” including:

• Any written or oral statement made or submitted to a legislative, executive, or judicial body, or any governmental proceeding;
• Any written or oral statement made in connection with an issue under review or consideration of a governmental body;
• Any statement reasonably likely to encourage consideration or review of an issue by a governmental body;
• Any statement reasonably likely to enlist public participation in an effort to effect such consideration by a governmental body; and/or
• Any other statement falling within the constitutional right to petition the government.

Said petitioning need not be solely for matters of public concern, either; Massachusetts courts will apply the anti-SLAPP statute to matters involving private issues as well. Kobrin v. Gastfriend, 443 Mass. 327, 331 (2005).

Given its broad scope and the ability to recover costs and fees on a successful motion, the anti-SLAPP statute has been oft-litigated since its passage, leading appellate courts to grapple with how best to employ it for its true purpose: to swiftly dispense with cases filed solely as a result of one’s exercise of their First Amendment rights. Through no fault of the courts, the resulting jurisprudence has become a tangled web of opinions that leave litigants questioning the likelihood of success, should they proceed with a special motion under the statute.

The SJC’s first opportunity to address the anti-SLAPP statute arose in Duracraft Corp. v. Holmes Products Corp., 427 Mass. 156 (1998), a case involving whether a former employee violated his non-disclosure agreement by testifying during a dispute between two companies, after he joined the second company as an employee. In its maiden opinion on the matter, the SJC held that a party filing a special motion must first make a threshold showing that the claims at issue are “based on” petitioning activities and have no substantial basis other than, or in addition to, said activities. Once the special movant meets this threshold, the burden shifts to the non-moving party to show that (1) the movant’s petitioning lacked any reasonable basis in fact or law; and (2) that the petitioning caused the non-moving party actual damages.

After two decades of litigants utilizing the anti-SLAPP statute to attack otherwise-meritorious lawsuits, the SJC again took up the issue in Blanchard v. Steward Carney Hospital, Inc., 477 Mass. 141 (2017) (“Blanchard I”), in an effort to tip the scales back in favor of non-moving parties with legitimate claims. In Blanchard I—a case involving statements made by a hospital executive in a newspaper article regarding the termination of a group of nurses—the SJC created an “augmented” framework for adjudicating anti-SLAPP motions. Specifically, the SJC created a second path for non-moving parties to defeat the shifting burden identified by the Duracraft Court: if a non-movant could prove that its claim was not brought primarily to chill the special movant’s exercise of its right to petition, the claim would survive a special motion to dismiss.

Two years later, the Blanchard case came up on appeal once again, allowing the SJC to further refine this augmented framework. 493 Mass. 200 (2019). In Blanchard II, the SJC further held that the trial judge faced with a special motion to dismiss may exercise his/her discretion in conducting a factual inquiry into whether a non-moving party’s claim is, in fact, colorable. Blanchard I and II thus allowed trial courts to parse through claims challenged under the anti-SLAPP statute in order to subjectively determine which claims possessed and lacked merit.

The SJC’s Recent Abrogation of Blanchard I and II’s Augmented Framework

Five years have passed since the SJC issued Blanchard II, and despite its best intentions, the augmented framework only furthered confusion under the anti-SLAPP statute. Blanchard II’s insertion of subjective fact-finding and judicial discretion in the adjudication of special motions to dismiss invited more inconsistent and contradictory results across the Commonwealth; an unavoidable result, given the aforementioned subjectivity that accompanied any opinion as to whether a claim fell within the purview of the anti-SLAPP statute or not.

Faced with this ever-growing judicial conundrum, the SJC recently chose to hear arguments and accept amici briefs in the matters of Bristol Asphalt Co., Inc. v. Rochester Bituminous Products, Inc. and Columbia Plaza Associates v. Northeastern University, in order to determine whether to reconsider the anti-SLAPP framework. The genesis of this reconsideration came from a dissenting opinion (Englander, J.) in the Bristol Asphalt case in the Appeals Court. Justice Englander’s opinion attacked anti-SLAPP jurisprudence from multiple fronts, arguing that courts should apply a de novo review to special motions rather than review for an abuse of discretion, and further attacking the augmented framework set forth in Blanchard I and II. Armed with this dissenting opinion, the defendants in Bristol Asphalt sought further appellate review at the SJC.

Bristol Asphalt involved a years-long dispute between two competing asphalt companies, in which the defendants allegedly sought, repeatedly, to challenge the plaintiffs’ attempts to obtain the permits and approvals necessary to construct a new asphalt plant in the same municipality where the defendants operated a plant of their own. The plaintiffs filed suit in 2020, alleging that each challenge posed by the defendants amounted to a conspiracy to restrain trade or commerce, and constituted unfair and deceptive business practices. The defendants filed a special motion to dismiss under the anti-SLAPP statute, arguing their challenges amounted to an exercise of the right to petition the government. Finding that the defendants’ petitioning lacked any reasonable basis in law or fact, though, the trial court denied the special motion; the Appeals Court affirmed this decision on appeal.

Columbia Plaza also involved a years-long dispute between a private development company and Northeastern University who, in conjunction with a Citywide effort to promote urban revitalization through developing parcels of land in less commercially attractive areas of Boston, agreed to partner with the plaintiff to construct certain buildings in Roxbury. After years of unsuccessful efforts, a foreclosure sale, and general unresponsiveness, Northeastern ultimately decided to pursue the Roxbury development project on its own, in order to build new dormitories. The plaintiff sued, asserting numerous claims; two of those claims tangentially addressed a letter Northeastern issued to the Boston Planning and Development Administration (“BPDA”), stating that the plaintiff possessed no right to develop the Roxbury parcel. Northeastern filed a special motion to dismiss, arguing that its letter to the BPDA amounted to petitioning of a governmental body. After parsing through the plaintiff’s allegations, fact-by-fact, the trial court dismissed two counts on the grounds that they were based upon Northeastern’s exercise of its right to petition; the Appeals Court affirmed this dismissal.

The SJC used these two cases as an opportunity to abrogate Blanchard I and II, bringing the framework for adjudicating anti-SLAPP motions back to the Duracraft days. Specifically, the SJC completely dismantled the second path to defeating an anti-SLAPP motion that Blanchard created; no longer may a non-party defeat an anti-SLAPP motion by demonstrating that its claim is colorable and not brought primarily to chill the special movant’s right to petition. The SJC found Blanchard’s augmented framework “to be a difficult and onerous task, and one that is not a traditional judicial function, as judges are not ordinarily expected to redraft parties’ pleadings[,]” to identify which claims fall within the anti-SLAPP statute. The SJC further stated that the second path in this augmented framework strayed from the statutory language in the anti-SLAPP statute; shifted the focus to the non-moving party’s motives for filing suit; and required consideration of an “open-ended list of factors, thereby inviting subjective, if not unpredictable, decision-making.”

Applying this return-to-basics framework to Columbia Plaza, the SJC held that the trial court improperly parsed through the plaintiff’s claims to identify which portions fell subject to the anti-SLAPP statute, and held that because a substantial basis of the plaintiff’s claims addressed actions beyond the letter Northeastern wrote to the BPDA, the special motion should have been denied on anti-SLAPP grounds (although the SJC later affirmed the dismissal on separate grounds). Meanwhile, in Bristol Asphalt, the SJC agreed with the trial court that the defendants’ challenges to the plaintiffs’ permitting efforts lacked a reasonable basis in law or fact, an inquiry that remained unchanged by the SJC’s abrogation of Blanchard I and Blanchard II.

In sum, the SJC declared in Bristol Asphalt that the framework upon which courts should rely should largely follow the statutory language set forth in Mass. Gen. Laws c. 231, § 59H. The SJC also provided a diagram within its opinion, to allow readers to understand the guideposts for adjudicating anti-SLAPP motions:

If yes then:

If yes then:

If yes then:

If yes then:

Deny the special motion.

In addition to reverting to Duracraft and the plain language of the anti-SLAPP statute, the SJC further held that no longer would appellate courts consider anti-SLAPP motions on an abuse of discretion standard. Instead, courts should employ a de novo standard of review because this new, simplified framework “require[s] resolution of legal questions based entirely on a documentary record, for which ‘no special deference’ is owed to a motion judge.” Without the second path’s factual inquiries and parsing of claims, no longer will a trial judge be able to exercise his/her discretion in reaching a decision on a special motion to dismiss.

The Impact of Bristol Asphalt Moving Forward

On its face, Bristol Asphalt will clarify and, ideally, streamline the adjudication of anti-SLAPP motions, which have disproportionately bogged down the appellate docket for decades. However, this ever-changing area of law may still provide differing results and continued grappling over the statutory language, even with the simplified framework.

For example, Bristol Asphalt keeps the broad definition of “petitioning” intact, thereby inviting continued challenges to what, precisely, amounts to “petitioning.” In 2005, the SJC held in Kobrin v. Gastfriend that a physician, hired by the Commonwealth to serve as an expert witness in a criminal investigation, could not assert the anti-SLAPP statute for statements made in an affidavit submitted as part of his expert assignment. 443 Mass. 327 (2005). The SJC found that because the expert was retained by the Commonwealth specifically for rendering an opinion, his statements did not amount to petitioning the government for a redress of grievances.

Since its publication, several cases have limited or called into question Kobrin’s holding, including Blanchard I. With Blanchard I’s abrogation, though, the SJC will likely continue facing appeals based on the definition of “petitioning” under Kobrin.

Additionally, the SJC’s change from an abuse of discretion standard of review to de novo may invite more appeals because litigants who receive an unfavorable result in the trial court will feel emboldened to pursue an appeal—under the de novo standard of review, litigants will receive a fresh set of eyes at the appellate level, rather than a bench that is largely deferential to the underlying trial court decision.

Finally, the SJC’s decision to no longer allow a trial court to parse through a claim in order to determine which portions of the claim are subject to the anti-SLAPP statute will certainly invite a new body of case law. Simply put, the SJC must still answer: “how much of a claim must be subject to the anti-SLAPP statute?” Creative plaintiffs may alter their pleadings to ensure that they include factual allegations challenging conduct other than the defendant’s act of petitioning, in order to avoid the anti-SLAPP statute’s ambit. The Columbia Plaza case suggests that a much larger portion of the non-movant’s claim must relate to petitioning in order to employ the anti-SLAPP statute, but it remains to be seen whether the entire claim must amount to petitioning—will one factual allegation remove the claim from anti-SLAPP consideration? Will the SJC determine that a “substantial” portion of the claim must relate to petitioning, and if so, how does one define “substantial”?

These questions will need to be addressed over time, surely welcoming new additions to the substantial body of case law that the anti-SLAPP statute has created since its passage. However, litigants should be aware, and take solace in the fact that their anti-SLAPP motions will now be subject to a clearer, more streamlined analysis, as opposed to the dizzying effects Blanchard I and Blanchard II had on anti-SLAPP jurisprudence.

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On the heels of recent decisions from the Supreme Court of Kentucky interpreting KRS¹ 413.245 to limit claims against professionals to only one-year after knowledge of the claim and attendant damages,² the Kentucky Court of Appeals reinforced the broad application of KRS 413.245 to claims against professional engineers arising from their services. See City of Richmond v. Integrated Engineering, No. 2023-CA-0522-MR (Ky. App. February 2, 2024). The Court of Appeals decision concluded the summary judgment entered by the Madison Circuit Court was appropriate because the text of KRS 413.245 plainly states that the one-year statute of limitations is “exclusive”³ for any claims alleging professional malpractice and that the one-year time bar applies whether the claim is “brought in tort or contract” or otherwise “aris[es]out of any act or omission in rendering, or failing to render professional services for others.ª

These recent decisions provide much-needed clarity and guidance for Kentucky attorneys, design professionals, design firms, and courts facing construction disputes—whether in direct liability actions or third-party practice. They also signal that the statutory language utilized by the General Assembly strikes a fine balance between promoting the interests of Kentucky’s construction industry while also encouraging litigant diligence. Whether the balance is sufficient to stave off the growing legislative trend to enact Affidavit-of-Merit statutes or other similar pre-litigation disclosure requirements in the design professional context remains to be seen, however.

¹ Kentucky Revised Statutes.
² See Wolfe v. Kimmel, 681 S.W.3d 7 (Ky. 2023); Seiller Waterman, LLC v. RLB Properties, Ltd., 610 S.W.3d 188, 203 (Ky. 2020).
³ See Abel v. Austin, 411 S.W.3d 728, 738 (Ky. 2013) (emphasis in Justice Venters’ original opinion).
ª Id.; KRS 413.245 the following:

Notwithstanding any other prescribed limitation of actions which might otherwise appear applicable, except those provided in KRS 413.140, a civil action, whether brought in tort or contract, arising out of any act or omission in rendering, or failing to render, professional services for others shall be brought within one (1) year from the date of the occurrence or from the date when the cause of action was, or reasonably should have been, discovered by the party injured. Time shall not commence against a party under legal disability until removal of the disability.

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New Hampshire has a unique mechanics lien statute that requires specific notice and a strict adherence to deadlines. Contractors and design professionals used to other states’ mechanics lien statutes should be particularly aware of these unique requirements, as they require that lienholder commence a lawsuit and obtain an attachment within 120 days of last furnishing labor or materials to the property.

Who Benefits?

NH RSA 447:2 et. seq. grants any person performing labor, providing professional design services, or furnishing materials (in the amount of $15 or more) a lien on the materials furnished or the structure. Under the statutory framework, professional design services are defined broadly to include “a licensed architect, licensed landscape architect, licensed engineer, permitted septic designer, certified wetland scientist, certified soil scientist, or licensed land surveyor.” NH RSA 447:2.

NH RSA 447:5 expands upon 447:2 and grants a mechanics lien to those same persons “by virtue of a contract with an agent, contractor or subcontractor of the owner….provided, that he or she gives notice in writing to the owner or to the person having charge of the property that he or she shall claim such lien before performing the labor or furnishing the material for which it is claimed.”

Best Practices for Notice

As a best practice, the construction or professional services contract should advise the owner (and contractor or subcontractor) in writing and at the inception of the project – before work begins – of an intent to assert a lien. If the services are contracted with a party other than the owner, the owner or “person having charge of the property” should also be provided a copy of the contract or correspondence providing the notice of lien rights. See NH RSA 447:5.

If this notice is not provided at the inception of the project, fear not – your rights are not waived. Provide such notice, preferably by certified letter, as soon as the error is discovered. The statute specifically provides that such notice may be given after the labor is performed or services or materials provided. However, that lien shall be valid only to the extent of the amount then due, or that thereafter may become due. See NH RSA 447:6. That is, earlier service can result in a larger lien.

After the notice is given, an accounting of amounts due on the project should be provided to the owner or “person having charge of the property” monthly, even if your contract is not with the owner. See NH RSA 447:8.

A Word of Warning on Waiver

Please note that under New Hampshire law the automatic right to a mechanics lien can be waived by contract. This is not set forth in the statute, but is articulated in state case law. Contracts should be carefully reviewed, ideally with legal counsel, to ensure that you are not unintentionally waiving your lien rights.

I Didn’t Get Paid – What Now?

Assuming you gave notice of intent to lien, and did not waive any right to lien by contract, the lien exists as a matter of right at the time the labor is performed, or services or materials are furnished. However, the lien exists only for 120 days after labor, services, or materials are last provided. Providing incidental labor, services, or materials does not extend the 120 day period.

If you are owed money for services or materials after completing work on a project, the time to act is now, not later. The lien ceases to exist after 120 days, unless the holder of the lien perfects it by filing a lawsuit and obtaining an attachment within that 120-day period. See NH RSA 447:10. Once the attachment is obtained, it must be recorded at the Registry of Deeds in the county where the property is located.

As a best practice, the notice of intent to lien, with an updated accounting, should be sent to the owner (and contractor/subcontract, if applicable), with a demand for payment. Unless payment is tendered promptly, commence a lawsuit in a court with appropriate jurisdiction and seek an ex parte attachment on the property securing the lien. Ideally, this process would be commenced no later than 60-90 days after work was last performed, to allow sufficient time to draft and file suit, draft and file an ex parte petition for attachment, obtain the attachment, and complete the recording. Acting sooner rather than later will also secure the priority of your lien in the event multiple parties have not been paid.

Remember:

Do: Give notice to the necessary parties as soon as possible, and provide monthly accountings.
Do: Give yourself sufficient time to commence a lawsuit and obtain and record an attachment in the event of non-payment.
Don’t: Waive your lien rights by contract.

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Partner Kimberly Blake and the GRSM Legal Matrix Attorneys have released the 2024 edition of the 50 State Legal Matrices. The 50 State Legal Matrices are in chart format to be used as an easy reference source for your matters.

This year we have two new matrices:

• Bad Faith Causes of Action
• Directly Assessed Punitive Damages

Below we have listed all the matrices included in the package:

• Anti-Indemnity Statues
• Architects/Engineers/Land Surveyors Claims and Settlement Reporting Requirements
• Bad Faith Cause of Action
• Contractors Licensing & Contract Requirements
• Directly Assessed Punitive Damages
• Employment Record Subpoena Responses
• Insurance Carriers’ Record Retention Requirements
• Licensing, Examination & Continuing Education Requirements for Independent Claims Adjusters
• Material Breach/First to Breach
• Offer of Judgment of Provisions
• Patient Record Subpoena Responses
• Right to Independent Counsel
• Right to Repair Laws
• Statutes of Limitations

You may view the full package here.

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Partners John Leary and Allen Estes prevailed on a bid protest to the California Dept. of Transportation (Caltrans) and secured the award of an $8 million contract for the client.

GRSM’s client was the apparent low bidder for the project but Caltrans issued a non-responsive determination on grounds that the Client allegedly failed to submit certain forms and paperwork concerning the project’s Small Business Enterprise requirements. GRSM’s Leary and Estes filed a bid protest showing that the Client’s deviation (if any) was immaterial and did not affect the bid price, afforded it now competitive advantage and did not impair the agency’s ability to compare bids. Caltrans agreed, and rescinded its earlier finding. Based thereon, GRSM’s client is expected to be awarded the contract by Caltrans.

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GRSM Boston Team Secures Complete Defense Victory for Architecture Firm in Arbitration of $1 Million Design Defect Claim

Gordon Rees Scully Mansukahni Boston Partner Jay S. Gregory and Associate Shaun D. Loughlin recently obtained a favorable decision from the American Arbitration Association on behalf of GRSM’s client, an architecture firm facing claims of design defects on a multi-family housing project in Boston. Following eight days of witness testimony and pre- and post-hearing briefing, the arbitration panel issued a decision awarding the claimants $0.00, dismissing all three causes of action brought against GRSM’s client.

To read a full, expanded version of this result, click here.

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Partner Christine Barker moderated a panel, "Getting it Done: Developing New Buildings in Light of Current Conditions" on March 14, 2024 at the Real Estate Women's Forum in San Diego.

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Partners Lisa Cappelluti and Meredith Thielbahr hosted “WIC Tuesday Talks: Can You Keep A Secret? – Construction Mediations: What is Confidential & Settlement Privileged" on January 23, 2024. This webinar discussed the rules and ethical duties applicable to California, Oregon, and Washington. You can view a recording of this webinar here.

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The GRSM Construction Law Blog continues to post new content addressing topical issues affecting the construction industry throughout the country. From analysis of new court decisions, discussions of timely legislation, and commentary on real-world, project-specific issues, GRSM’s Construction Law Blog provides insight on the issues that affect the construction industry now.

We invite you to visit the blog at www.grconstructionlawblog.com and see for yourself what we are up to. If you like what you see, do not hesitate to subscribe under the “Stay Connected” tab on the right side of the blog. There you can choose how you would like to be informed of new content (Twitter, LinkedIn, email, etc.). If you have any questions about the blog or would like to discuss further any of its content, please do not hesitate to contact us.

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GRSM's Construction Group consists of more than 220 lawyers in offices nationwide and is currely ranked No. 4 out of the Top 50 Construction Law Firms in the Nation, by Construction Executive.

GRSM's construction attorneys focus their practice on the comprehensive range of legal service required by all participants in the construction industry – architects, engineers, design professionals, design joint ventures, owners, developers, property managers, general contractors, subcontractors, material suppliers, product manufacturers, lenders, investors, state agencies, municipalities, and other affiliated consultants and service providers.

We serve clients who design, develop, or build all types of structures, including commercial buildings, single and multifamily residential projects, industrial facilities, universities, hospitals, museums, observatories, amusement parks, hotels, shopping centers, high-rise urban complexes, jails, airports, bridges, dams, and power plants. We also have been involved in projects for tunnels, freeways, light rail, railway stations, marinas, telecom systems, and earth-retention systems. Our experience includes private, public, and P3 construction projects.

If you have questions about this issue of the Construction Law Update or our nationwide construction practice, click here to visit our practice group page or contact partner Dan Evans.

Daniel E. Evans
Gordon Rees Scully Mansukhani
555 Seventeenth St.
Suite 3400
Denver, CO 80202
(303) 200-6863
deevans@grsm.com

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