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Suffolk Construction Co., Inc. v. Benchmark Mechanical Systems, Inc.

Supreme Judicial Court of Massachusetts, Suffolk

August 12, 2016


          Heard Date: May 2, 2016.

         Civil action commenced in the Superior Court Department on April 22, 2013.

         A motion to dismiss was heard by Christine M. Roach, J.; a motion for judgment on the pleadings was heard by her; cross motions for summary judgment were heard by Janet L. Sanders, J.; and entry of separate and final judgment was ordered by Sanders, J.

         The Supreme Judicial Court granted an application for direct appellate review.

          R. Robert Popeo (Paul J. Ricotta with him) for the plaintiff.

          Mark W. Corner (Peter H. Sutton with him) for Benchmark Mechanical Systems, Inc.

          Eric P. Magnuson (Nelson G. Apjohn with him) for Reading Co-Operative Bank.

          Present: Gants, C.J., Spina, Botsford, Duffly, Lenk, & Hines, JJ. [2]

          SPINA, J.

         In Reading Co-Operative Bank v. Suffolk Constr. Co., 464 Mass. 543, 551 (2013) (Suffolk I), we held that "G. L. c. 106, §§ 9-405, 9-607, and 9-608, provide a comprehensive scheme" that allowed Reading Co-Operative Bank (bank) to require Suffolk Construction Company, Inc. (Suffolk), to fully perform its obligations under a collateral assignment of payments under a subcontract between Suffolk and Benchmark Mechanical Systems, Inc. (Benchmark), to secure a debt owed by Benchmark to the bank even if the value of the collateral exceeded the amount owed to the bank. After that decision, Suffolk commenced this action to recover the surplus that resulted after the bank applied that collateral to satisfy Benchmark's debt, plus costs of collection, pursuant to G. L. c. 106, § 9-608.[3] Suffolk's equitable claims for implied subrogation and implied indemnification were dismissed under Mass. R. Civ. P. 12 (b) (6) and 12 (c), 365 Mass. 754 (1974). Its common-law claims were dismissed as time-barred under Mass. R. Civ. P. 56, 365 Mass. 824 (1974). Suffolk appealed, and we granted its application for direct appellate review. We now hold that Suffolk's common-law claims are time barred, but it has stated equitable claims to prevent unjust enrichment and a windfall for which relief can be granted.

         1. Background.

         The following facts, taken mostly from Suffolk I, are undisputed. Benchmark assigned to the bank, as collateral for a loan it had with the bank, payments owed to Benchmark by Suffolk pursuant to a subcontract. Suffolk agreed to send the payments to the bank, but mistakenly sent them to Benchmark. Suffolk sent twelve checks totaling $3, 822, 500.49 to Benchmark between June 14, 2004, and December 30, 2004. Benchmark deposited the checks to its account and never forwarded the monies to the bank. The last deposit was made on January 3, 2005. Benchmark ceased operations in July, 2005, and turned over its assets to the bank for liquidation. Benchmark was dissolved as a corporation on May 31, 2007. At that time Benchmark was indebted to the bank on its loan in the amount of $1, 499, 149.42. As a result of the liquidation of Benchmark's assets, the bank applied $430, 402.38 to Benchmark's indebtedness. The bank then commenced an action against Suffolk under G. L. c. 106, § 9-405, for the full amount of the payments Suffolk should have sent to the bank pursuant to the payment assignment. On appeal, we held that § 9-405 displaced the common law, that the bank was entitled to recover the full value of the assigned collateral ($3, 822, 500.49) under § 9-405 rather than its actual damages, and that the common-law doctrine of mitigation did not apply. Id. at 546, 522, 555.

         Suffolk paid the judgment ordered by this court, which, with interest and costs, amounted to $7, 640, 907.45 (judgment payment). Suffolk then filed a multicount complaint, as amended, in the Superior Court against the bank and Benchmark, asserting common-law claims to establish itself as a judgment lien creditor of Benchmark under G. L. c. 106, § 9-608 (a.) (1) (C), or alternatively, as a "debtor" under § 9-608 (a.) (4), to recover any surplus remaining after the bank applied Suffolk's judgment payment to Benchmark's outstanding debt to the bank and the bank's collection costs.[4] [5] It also asserted equitable claims of implied subrogation and implied indemnification. By agreement of the parties, a preliminary injunction issued, enjoining the bank from transferring to Benchmark any portion of the surplus from Suffolk's judgment payment.

         A judge in the Superior Court (rule 12 judge) allowed in part the bank's motion to dismiss under rule 12 (b) (6), and Benchmark's motion for judgment on the pleadings under rule 12 (c) .[6] She dismissed the counts alleging theories of subrogation and indemnification on grounds that these claims sought to recover funds for which Suffolk had been primarily, rather than secondarily, responsible, such that Suffolk was not entitled to the equitable relief sought.

         Subsequently, on cross motions for summary judgment under rule 56, a different judge (rule 56 judge) allowed Benchmark's motion as to the counts of Suffolk's complaint alleging theories of restitution for unjust enrichment, reimbursement, money had and received, and restitution for money paid by mistake, on grounds that they were barred by the six-year statute of limitations applicable to contracts. See G. L. c. 260, § 2. She also dismissed the count seeking a ...

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