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Aggregate Industries - Northeast Region, Inc. v. Hugo Key And Sons, Inc.

Appeals Court of Massachusetts, Essex

September 1, 2016

HUGO KEY AND SONS, INC., & another.[1]

          Heard: April 13, 2016.

         Civil action commenced in the Superior Court Department on October 31, 2011.

         The case was heard by Timothy Q. Feeley, J., and a motion for a new trial was considered by him.

          William T. Harrington for the defendants.

          Cole M. Young for the plaintiffs.

          Present: Wolohojian, Kinder, & Neyman, JJ.

          WOLOHOJIAN, J.

         The plaintiff subcontractor, Aggregate Industries - Northeast Region, Inc. (Aggregate), contracted with the defendant general contractor, Hugo Key and Sons, Inc. (Hugo Key), for the supply of material and labor for a public works construction project in Salem. A dispute arose about payment, and Aggregate filed a complaint in the Superior Court asserting contract and quantum meruit claims under G. L. c. 149, § 29, the Commonwealth's bond statute for publicly funded construction projects, and violations of G. L. c. 93A (c. 93A). Following a jury-waived trial, judgment entered in favor of Hugo Key on all counts of the complaint, with the exception of a discreet quantum meruit award, not under the bond statute, in favor of Aggregate. Judgment also entered in favor of Hugo Key on a c. 93A counterclaim. Aggregate appeals, claiming the judge erred in his application of contract principles and in his analysis of the statutes at issue. We affirm in part, and reverse in part.


         We summarize the facts as found by the judge, supplemented by undisputed information from the record. In 2011, Hugo Key and Salem entered into a contract for the construction of the Salem Wharf project. The contract was secured by a payment bond in the amount of $1, 336, 925, furnished by the defendant Argonaut Insurance Company (Argonaut). Hugo Key, in turn, solicited bids from subcontractors for the portion of the project that required bituminous concrete pavement work. On or about January 14, 2011, Aggregate submitted an estimate for the pavement work, which included two provisions relevant to the present dispute. The first stated: "Grader Service: $400.00/HR." The second was an escalation clause, which provided for additional per ton charges for bituminous concrete if the base price of liquid asphalt[2] increased.[3] Aggregate submitted two revised estimates in May, 2011. Hugo Key did not sign or accept any of the estimates, and its representative, Sandy Key, informed the Aggregate salesman, Vincent Venturo, "that Hugo Key would not deal with Aggregate if the agreement included an escalation clause for liquid asphalt."

         Having reached no agreement, Hugo Key sent Aggregate a purchase order dated May 17, 2011, that included the revised estimate, but was silent as to grader service and the escalation clause. Venturo signed the purchase order and returned it by fax with a handwritten notation attempting to incorporate the escalation clause into the agreement.[4] In response, Sandy Key immediately rejected the term; the trial judge found that "Sandy Key told Venturo, and Venturo knew, that if Aggregate insisted on the escalation clause, Hugo Key would not give Aggregate the pavement work." Sandy Key then prepared a new purchase order dated May 23, 2011, removing Venturo's handwritten addition and adding "Purchase order based on liquid asphalt price of $460.00 per ton" for the express purpose of excluding the escalation clause. With the approval of his manager, Venturo signed and accepted the purchase order and work commenced. During the paving project, Hugo Key determined that it required grading services from Aggregate, which Aggregate performed, and then billed at the price, quoted on the original estimate, of $400 per hour.

         After completion of the project, by invoice dated July 6, 2011, Aggregate billed Hugo Key $89, 989.90. Of that sum, $11, 400 was for "grader rental" and $10, 064.50 was for "liquid asphalt escalation." Having received no payment, on October 31, 2011, Aggregate commenced the present action. The complaint alleges claims for breach of contract and quantum meruit, with payment under the bond statute, G. L. c. 149, § 29, and violations of c. 93A for the wrongful withholding of the funds due. Shortly after the complaint was filed, by check dated November 8, 2011, Hugo Key paid Aggregate $68, 525.40, the sum not in dispute, and indicated a willingness to pay a reasonable fee for the grader rental.[5] Aggregate refused the offer of payment, and Hugo Key filed a counterclaim alleging violations of c. 93A.

         Following a one-day bench trial, the judge issued his written findings of fact and conclusions of law. He concluded that the contract formed between Aggregate and Hugo Key did not incorporate the escalation clause or the grader rental fee, but that Aggregate was entitled to the fair and reasonable sum of $7, 125 on its quantum meruit claim for grader rental. Nevertheless, the judge dismissed the portions of the complaint seeking recovery under G. L. c. 149, § 29, reasoning that "[f]airness would be the victim if this court permitted Aggregate to recover under the bond, with its right to attorneys' fees, on a quantum meruit claim that Hugo Key was ready, willing, and able to resolve at the fair and reasonable value of the services provided at or about the time this action was commenced." As for the competing c. 93A claims, the judge found in favor of Hugo Key, on the ground that Aggregate commenced the present litigation as a form of extortion, by means of the attorney's fee provision of G. L. c. 149, § 29, to force Hugo Key to pay for the escalation clause that it knew was not a part of the contract. Rather than awarding damages on the c. 93A judgment, however, the judge withheld the prejudgment and postjudgment interest on Aggregate's $7, 125 quantum meruit award. Aggregate moved for a new trial, which the judge denied without a hearing. On Hugo Key's motion for c. 93A attorney's fees and costs, the judge awarded a total of $67, 319.


         We review the trial judge's findings of fact, including all reasonable inferences that are supported by the evidence, for clear error. See Twin Fires Inv., LLC v. Morgan Stanley Dean Witter & Co., 445 Mass. 411, 420 (2005); Mass.R.Civ.P. 52(a), as amended, 423 Mass. 1402 (1996). The judge's conclusions of ...

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