NASDI, LLC v. City of Lawrence

179 N.E.3d 1134 (Table)

NASDI, LLC

v.CITY OF LAWRENCE.

20-P-734

Appeals Court of Massachusetts.

Entered: December 20, 2021

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

The plaintiff, NASDI, LLC (NASDI), appeals from a judgment entered by a Superior Court judge dismissing his claims against the city of Lawrence (city) for, inter alia, breach of contract.² NASDI also appeals from an order of the same judge denying NASDI's motion for relief from judgment. Concluding that failure to plead performance of a condition precedent under G. L. c. 30, § 39N, is not adequate ground for dismissal for failure to state a claim, we reverse the portion of the judgment dismissing NASDI's breach of contract claim.

1. Standard of review. "We review the allowance of a motion to dismiss de novo," Galiastro v. Mortgage Elec. Registration Sys., Inc., 467 Mass. 160, 164 (2014), "accepting as true all well-pleaded facts alleged in the complaint ... even if doubtful." Osborne-Trussell v. Children's Hosp. Corp., 488 Mass. 248, 253 (2021), quoting Sudbury v. Massachusetts Bay Transp. Auth., 485 Mass. 774, 779 (2020) ; Ryan v. Mary Ann Morse Healthcare Corp., 483 Mass. 612, 614 (2019). We "draw all reasonable inferences in the plaintiff's favor." Buffalo-Water 1, LLC v. Fidelity Real Estate Co., 481 Mass. 13, 17 (2018). To survive a motion to dismiss, the plaintiff must present, at the pleading stage, "factual ‘allegations plausibly suggesting (not merely consistent with)’ an entitlement to relief." United Oil Heat, Inc. v. M.J. Meehan Excavating, Inc., 95 Mass. App. Ct. 579, 581 (2019), quoting Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008).

2. Written request for equitable adjustment. General Laws c. 30, § 39N, allows a contractor to seek an equitable adjustment where he or she "encounters a material difference in the ‘actual subsurface or latent physical conditions ... at the site ... of such a nature as to cause an increase or decrease in the cost ... of the work." Celco Constr. Corp. v. Avon, 87 Mass. App. Ct. 132, 135 (2015), quoting G. L. c. 30, § 39N. Under § 39N, as a condition precedent to recovery, the plaintiff must make a timely, written request for an equitable adjustment from the contract price. G. L. c. 30, § 39N. See Sutton Corp. v. Metropolitan Dist. Comm'n, 423 Mass. 200, 208 (1996) ; Skopek Bros., Inc. v. Webster Hous. Auth., 11 Mass. App. Ct. 947, 947 (1981).

Here, NASDI did not allege in its amended complaint that it satisfied the condition precedent of written notice.³ At the hearing on the city's motion to dismiss, NASDI claimed for the first time to have notified the city, but it neither claimed to have done so in writing nor mentioned this statutory requirement.⁴ NASDI's counsel, however, repeatedly argued that the issue of how exactly notice was made and whether it was adequate were matters to be considered at a later stage, after discovery. Relying in part on NASDI's failure to allege (in the pleadings or at the hearing) written notice, the judge dismissed NASDI's breach of contract claim.

Where a cause of action involves a condition precedent, the plaintiff may plead compliance with the condition by "aver[ring] generally that all conditions precedent have been performed or have occurred." Mass. R. Civ. P. 9 (c), 365 Mass. 751 (1974). Accord Martin v. Commonwealth, 53 Mass. App. Ct. 526, 532 n.4 (2002). If the plaintiff pleads, generally or specifically, performance of a condition precedent, the defendant must deny such a claim "specifically and with particularity pursuant to rule 9 (c)," or the defective performance of the condition "is not an issue in the case." Theisz v. Massachusetts Bay Transp. Auth., 481 Mass. 1012, 1014 (2018), quoting Vasys v. Metropolitan Dist. Comm'n, 387 Mass. 51, 52 (1982). Accord Aronovitz v. Fafard, 78 Mass. App. Ct. 1, 8 (2010) (affirmative defenses are waived if not timely pleaded).

If, on the other hand, the plaintiff does not allege compliance with a condition precedent, the defendant is "under no obligation to deny the nonexistence averment ‘specifically and with particularity.’ " Burda v. Spencer, 28 Mass. App. Ct. 685, 686 n.3 (1990), quoting Vasys, 387 Mass. at 55. For this reason, the defendant retains the right to "raise the issue [of noncompliance] at any time before or during trial." Burda, supra, quoting Vasys, supra.

Where the plaintiff actually has satisfied all applicable conditions precedent, his or her failure to allege in the complaint "that all conditions precedent have been performed[ ] will have no effect on the outcome of the case." Vasys, 387 Mass. at 55. Although dismissal may be warranted when performance of a condition itself is lacking, see Drake v. Leicester, 484 Mass. 198, 199 (2020) (dismissal proper where presentment was untimely); Ferguson v. Maxim, 96 Mass. App. Ct. 385, 394-395 (2019) (dismissal proper where failure to perform condition precedent is undisputed), the mere failure to plead performance of the condition precedent, on its own, does not justify dismissal.

Here, NASDI asserts that it notified the city, through change order requests, of the alleged changed conditions shortly after discovering them, and that this was sufficient notice under the statute.⁵ Cf. A. Bonfatti & Co. v. Rockport, 12 Mass. App. Ct. 797, 800 (1981) (town unable to rely on punch list provision of G. L. c. 30, § 39K, where town failed to notify contractor "in the time and manner required by § 39K"); Skopek Bros., Inc., 11 Mass. App. Ct. at 947 ( § 39N claim dismissed on master's report for failure to provide written notice where plaintiff submitted letter sixteen months after encountering conditions). NASDI's failure to plead performance of the written notice requirement set forth in § 39N did not warrant dismissal of its breach of contract claim for failure to state a claim.

3. Lack of appropriation. Reaching the city's alternative argument in favor of dismissal, we conclude that the statutory prohibition against incurring liability in excess of the amount appropriated does not warrant dismissal of NASDI's breach of contract claim. See G. L. c. 44, § 31. It is well established that, notwithstanding the statutory provisions affecting municipal contracts, "some claims do fall outside the...