Philip Alan, Inc. v. MSarcia Construction Services, Inc.

19 Mass. L. Rptr. 705
CourtMassachusetts Superior Court
DecidedAugust 22, 2005
DocketNo. 05437
StatusPublished

This text of 19 Mass. L. Rptr. 705 (Philip Alan, Inc. v. MSarcia Construction Services, Inc.) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Philip Alan, Inc. v. MSarcia Construction Services, Inc., 19 Mass. L. Rptr. 705 (Mass. Ct. App. 2005).

Opinion

Murphy, Ernest B., J.

The plaintiff, Philip Alan, Inc. (Philip Alan), moves, pursuant to G.L.c. 254, §15A, for dissolution of a lien in the amount of $171,427.85 recorded by defendant MSarcia Construction Services (MSarcia) against the property located at 104 Mt. Auburn Street, Cambridge, Massachusetts. The property at issue is owned by Eliot Square Enterprises, Inc., Trustee of Eliot Square Enterprises Trust (Eliot Square). For the reasons stated below, plaintiffs renewed application for dissolution is DENIED.

BACKGROUND

On or about September 27, 2004, Philip Alan accepted MSarcia’s bid to perform interior renovation at the Pyara Spa & Salon at 104 Mount Auburn Street, Cambridge, Massachusetts. At the time of contracting, MSarcia entered into the agreement as “MSarcia Construction Services, LLC,” although it was not a registered corporation. MSarcia would eventually incorporate as a limited liability corporation in Rhode Island on July 1, 2005.

Numerous problems arose at the beginning and during the actual refurnishing of the spa. The causes of these delays included (1) a requirement that union labor perform various subcontracting jobs before MS-arcia would be allowed back on the job, (2) the dismantling of floorboards already installed by MSarcia so that an electrical line could be run, (3) late changes in material selection inside the property, and (4) receipts of salon and spa equipment within the small work[706]*706space. MSarcia claims that these delays substantially increased its outlay costs for the project.

In or around Januaiy 2005, MSarcia made demand for past due payment on the project. On Januaiy 28, 2005, Philip Alan terminated its agreement with MS-arcia. The parties are in dispute as to the quality and extent of the work that was completed at the time of termination. Philip Alan has asserted a claim that MSarcia’s failure to complete the work in a timely manner has caused it extensive damages.

On April 7, 2005, MSarcia filed and recorded the lien at issue against the property at 104 Mt. Auburn Street, Cambridge, Massachusetts. Philip Alan now brings a renewed application to dissolve the lien.

DISCUSSION

G.L.c. 254, §15A grants this court the ability to dissolve a lien given certain circumstances, including situations where the recording party has “failed to comply with any provision of this chapter.’’ Philip Alan requests that this court discharge MSarcia’s lien because it has failed to comply with G.L.c. 254, §§2 and 11.

Phillip Alan argues first that because MSarcia existed as an unregistered corporation at the time of the contract, its attempt to enforce the lien at issue after being incorporated in Rhode Island following the agreement, fails under a strict interpretation of the Mechanic’s Lien Statute.1 Specifically, Philip Alan relies on G.L.c. 254, §2, which states in pertinent part:

A person entering into a written contract with the owner of any interest in real property . . . for . . . improvement to real property . . . shall have a lien upon such real property, land, building, structure or improvement owned by the party with whom or on behalf of whom the contract was entered into, as appears of record on the date when notice of said contract is filed or recorded in the registry of deeds for the county or district where such land lies, to secure the payment of all labor, including construction management and general contractor services, and material or rental equipment, appliances, or tools which shall be furnished by virtue of said contract.

The plaintiff, citing the decision of Abbott v. Hapgood, 150 Mass. 248 (1889), claims that MSareia has not entered into a “written contract” and therefore, under §2 of G.L.c. 254, cannot record a lien on its property. Abbott does indeed state that, “If a contract is made in the name and for the benefit of a projected corporation, the corporation after its organization cannot become a parly to the contract, even by adoption or ratification by it.” Id. at 252.

While never renounced, Abbotts holding has been “gradually eviscerated”2 and is the subject of criticism in Massachusetts and in other jurisdictions. In Holyoke Envelope Co. v. United States Envelope Co., Chief Justice Holmes, acknowledging the rule in Abbott, elucidated two theories upon which the new corporation could nonetheless be bound to the contract: (1) by treating the prior agreement as a continuing offer which the corporation accepts by receiving benefits from the agreement, or (2) by viewing the parties’ conduct following incorporation as an implied contract. 182 Mass. 171, 174-75 (1902). A decade later North Anson Lumber Co. v. Smith, while not citing the Holyoke Envelope decision, took advantage of Judge Holmes’ implied contract dicta and continued to narrow the scope of Abbottwhen it held that a corporation may be bound to a contract formed before its inception:

. . . this is a case where the defense is set up that the plaintiff corporation, after its organization, which was subsequent to the initial transaction, entered into such relations with the makers of the notes that a contract to assume the payment of their notes may be implied, and that other circumstances warrant the further inference that this implied contract has been executed.

209 Mass. 333, 337 (1911). See Also Framingham Savings Bank v. Szabo, 617 F.2d 897, 899 (1st Cir. 1980) (“Massachusetts appears willing to bind a corporation to the terms of a pre-incorporation contract, at least where the plaintiff obligee has already performed”); In re David’s & Unique Eatery, 82 B.R. 652, 655-56 (Bankr. D.Mass. 1987) (agreeing with Framing-ham Savings’s interpretation of Massachusetts Court’s preference for Holyoke Envelope's dicta over the rule in Abbott). Therefore, this court, following Holyoke Envelope, holds that the agreement survived under theories of both continuing offer and implied contract. 182 Mass. at 174-75.

Philip Alan attempts to stretch Abbotts holding even further, however, when it notes in its brief that MSarcia performed and it terminated the contract before MSarcia incorporated in Rhode Island. Therefore, MSarcia as a registered LLC can no longer be a party to the agreement.

The court has not been provided with case law suggesting that because MSarcia incorporated following its performance of the contract, Philip Alan is no longer bound under that original agreement. “It is well settled that a person or corporation may be known by different names, and contract accordingly, and that contracts so entered into will be valid and binding if unaffected by fraud.” General Motors Acceptance Corp. v. Haley, 329 Mass. 559, 566 (1952). The record does not reveal fraudulent actions on the part of MSarcia that would justify a ruling in Philip Alan’s favor on this issue.

In sum, the contract between MSarcia and Philip Alan satisfies the “written contract” requirement of G.L.c. 254, §2. This court therefore declines to use the power granted to it by G.L.c. 254, § 15A to dissolve the lien on this argument.

[707]

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Framingham Savings Bank v. Joseph Szabo, Trustee
617 F.2d 897 (First Circuit, 1980)
East Coast Steel Erectors, Inc. v. Ciolfi
632 N.E.2d 397 (Massachusetts Supreme Judicial Court, 1994)
Mullen Lumber Co. v. Lore
537 N.E.2d 123 (Massachusetts Supreme Judicial Court, 1989)
General Motors Acceptance Corp. v. Haley
109 N.E.2d 143 (Massachusetts Supreme Judicial Court, 1952)
Abbott v. Hapgood
5 L.R.A. 586 (Massachusetts Supreme Judicial Court, 1889)
Holyoke Envelope Co. v. United States Envelope Co.
65 N.E. 54 (Massachusetts Supreme Judicial Court, 1902)
North Anson Lumber Co. v. Smith
95 N.E. 838 (Massachusetts Supreme Judicial Court, 1911)
National Lumber Co. v. LeFrancois Construction Corp.
723 N.E.2d 10 (Massachusetts Supreme Judicial Court, 2000)
Ng Bros. Construction, Inc. v. Cranney
766 N.E.2d 864 (Massachusetts Supreme Judicial Court, 2002)
Golden v. General Builders Supply LLC
807 N.E.2d 822 (Massachusetts Supreme Judicial Court, 2004)

Cite This Page — Counsel Stack

Bluebook (online)
19 Mass. L. Rptr. 705, Counsel Stack Legal Research, https://law.counselstack.com/opinion/philip-alan-inc-v-msarcia-construction-services-inc-masssuperct-2005.