Massachusetts’ statutes explicitly render void and unenforceable contractual clauses where a party waives its right to file a mechanics lien. ALM GL ch. 254, § 32. The state’s courts, however, were never called upon to decide whether the same is true respecting contractual clauses waiving a party’s right to file a bond claim against a public work.
Are “No Lien Clauses” – as I like to call them – valid to prohibit Massachusetts contractors and suppliers from filing a bond claim on public work, or are these clauses void and against public policy?
The Massachusetts Supreme Judicial Court decided this issue on August 1, 2012, ruling that while the public construction bond statutes do not contain an explicit prohibitation of these waivers, the public policy considerations are the same as its mechanics lien relative – subcontractors can’t waive bond claim rights in a contract.
You Can’t Waive The Right To File A Bond Claim in Massachusetts
This issue arose in Costa v. Brait Builders Corp. The subcontractor agreed to furnish materials and labor to a public works project, and the contract between it and the general contractor contained the following provision at controversy:
In the event that the subcontractor does not provide performance and payment bonds on a form acceptable to the Contractor, then the subcontractor waives its right to claim against the Contractor’s performance and payment bonds as provided to the Awarding Authority.
In the mechanics lien world, this provision would have been invalid as a matter of law pursuant to ALM GL ch 254 § 32, which prohibits these types of clauses as against public policy. The statutes creating and regulating payment bond claims on state projects, however, did not contain such a specific provision.
The Supreme Court had to decide: Were the public policy considerations identical for public bond claims as private mechanics liens, or was the legislative intent clear since a statute specifically prohibited the waivers for lien claims but not bond claims? Their decision is really fascinating for those interested in law and legal theories, as they actually rely upon the §29 provision in the private mechanics lien statutes to dictate how the courts must consider the issue in the public bond claim context. While I agree with the court’s outcome because I believe waivers of lien claims at the time of contracting should be and is against public policy, I do think the court’s reasoning is a bit obscure:
Our study of the statutory scheme for public construction, and the mechanic’s lien statute…leads us to conclude that the strong public policy behind the § 29 bond requirement renders unenforceable a provision purporting to waive claims against such a bond. We have long held that § 29 should be construed liberally to achieve the remedial purpose of providing security to subcontractors and others who supply labor or materials for public construction projects…It is undisputed that § 29 is an outgrowth of the mechanic’s lien statute…Given our broad interpretation of § 29 and its remedial purpose, it would be anomalous to ascribe to the Legislature an intent to forbid waivers under G. L. c. 254, § 32, but to permit them under § 29.12..In addition, the presence of the bond requirement throughout the statutory scheme for public construction is evidence of its significant importance…We think the better view is that § 29 embraces a substantial public policy, precluding waiver. Accordingly, we conclude that article 7 of the subcontract is unenforceable, and we reverse the order granting the motion for a directed verdict.
Remember The “No Lien Clause” Rule Is Different In Every State Because “Public Policy” Is A Funny Thing
A few months ago I wrote an article about how frustrating law can be as an attorney or litigant since one state can rule on an issue in one way and another state can have a completely opposite approach. This is particularly frustrating when the states are ruling on “public policy.”
My father once asked me to explain and define “public policy,” because he has heard it so much from attorneys and judges and thinks its just a made-up idea that the judiciary can use to reach whatever ends it wants. He is almost right about this. After all, how can public policy on no lien clauses be for them in one state but completely against them just across the border? Doesn’t this render the “public policy” meritless on its face? Can states really have that different of interests?
There’s no good answer for this. Mechanics lien and bond claim claimants across the country must simply wade through the thick complications, remembering that the rules can change suddenly from state-to-state. Insofar as Massachusetts is concerned, no lien clauses are against public policy, and therefore, any contract provisions stating to the contrary will be ineffective as a whole.
Resources On Massachusetts “No Lien Clause” Ruling
This decision seems to have made some waves in Massachusetts such that there are a number of good resources out there if you’re interested in learning more about the ruling. Here are some we’ve relied upon in drafting this article: