Central Ceilings, Inc. v. National Amusements, Inc.

873 N.E.2d 754 (2007)

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Nature of the Case

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Facts

National (D) is the owner of a cinema complex. D entered into a contract with Old Colony, the general contractor, with an anticipated completion date of June 28, 2000. Central (P) submitted a bid to Old Colony that was accepted. P was to do the drywall, acoustical, carpentry, and hardware installation work at the Project. It was discovered in late April that the groundwater table at the construction site was higher than originally thought. D was required to redesign structural and other aspects of the construction. Revised plans were in place by mid-June, and by early July, work on the Project was poised to move forward. D extended the completion date for the Project to September 3, 2000. D wanted to have the theater complex open for the Labor Day weekend. Old Colony was experiencing severe cash flow problems. It failed to timely bill D for work performed on the Project as well as on earlier projects. Old Colony owed substantial sums to P, over one million dollars for its work on prior projects, and checks were being returned for insufficient funds. After the groundwater problem, many subcontractors were refusing to return to the Project. P informed Old Colony's it would not go forward with its work unless it obtained 'assurances' of payment from D. D's representative at a meeting guaranteed future payments. This promise to P was not made conditional upon Old Colony's prior default in paying for the work. It was agreed that P would continue to work under the direction of Old Colony and that D would pay half the amount due P on the Monday after Labor Day and the balance ten days thereafter. P went back to work. P discovered that D's representative had collaborated with the president of Old Colony in a scheme to defraud D on a number of construction projects, by inflating Old Colony's contract price above what was necessary to accomplish the work and then splitting the overage. The president of D learned that Old Colony's subcontractors were not being paid for their work on the Project. Dl decided to issue checks to Old Colony and the subcontractors jointly to ensure that the subcontractors received payment for their work. In March 2001, P brought this action alleging breach of contract against Old Colony and seeking to establish a lien on D's property. A default judgment was entered against Old Colony in the amount of $593,237.25. P amended its complaint to add claims against D for breach of its agreement to pay P for its work at the Project. P obtained a judgment against D. Post-trial motions were filed.