WEBVTT
1
00:00:00.657 --> 00:00:03.259
SJC-13507,
2
00:00:03.259 --> 00:00:05.940
Business Interiors Floor Covering Business Trust
3
00:00:05.940 --> 00:00:08.103
v. Graycor Construction Company.
4
00:00:08.940 --> 00:00:11.020
Okay. Attorney Lysiak?
5
00:00:15.660 --> 00:00:17.820
Madam Chief Justice, and may it please the court.
6
00:00:17.820 --> 00:00:21.513
Matt Lysiak for Graycor Construction Company, Incorporated.
7
00:00:22.530 --> 00:00:25.140
Just a brief introduction in terms of this case.
8
00:00:25.140 --> 00:00:27.752
This involves a large construction project
9
00:00:27.752 --> 00:00:32.752
at what was called the Hub on Causeway,
10
00:00:32.790 --> 00:00:35.763
which is at the North Station.
11
00:00:37.993 --> 00:00:42.033
It's a large construction project at the North Station.
12
00:00:42.930 --> 00:00:45.750
This involved a construction project,
13
00:00:45.750 --> 00:00:48.978
which Graycor Construction was the general contractor
14
00:00:48.978 --> 00:00:53.978
and was tasked to build the theater at this facility
15
00:00:54.819 --> 00:00:57.989
for an original contract price of 18-
16
00:00:57.989 --> 00:00:59.520
[Justice Wendlandt] Counsel, I'm sorry to interrupt you.
17
00:00:59.520 --> 00:01:00.353
Yes.
18
00:01:00.353 --> 00:01:01.186
I know I'm familiar with the facts.
19
00:01:01.186 --> 00:01:03.630
I think my colleagues are as well.
20
00:01:03.630 --> 00:01:06.300
Can I ask you just to sort of dive into the argument
21
00:01:06.300 --> 00:01:09.813
and maybe start with your argument about the lien?
22
00:01:10.740 --> 00:01:12.210
Absolutely, Your Honor.
23
00:01:12.210 --> 00:01:16.890
So, well, the first argument being,
24
00:01:16.890 --> 00:01:19.590
and what we're essentially here for,
25
00:01:19.590 --> 00:01:22.083
is to talk about the impossibility defense
26
00:01:22.083 --> 00:01:24.783
that Graycor has put forward.
27
00:01:25.710 --> 00:01:28.290
When did Graycor put that forward?
28
00:01:28.290 --> 00:01:31.788
So Graycor essentially put that forward in the opposition
29
00:01:31.788 --> 00:01:35.610
to Business Interior's summary judgment motion,
30
00:01:35.610 --> 00:01:40.413
which was filed in June of 2022, and-
31
00:01:40.413 --> 00:01:42.750
When did the case get started?
32
00:01:42.750 --> 00:01:47.040
The case actually got started in 2020,
33
00:01:47.040 --> 00:01:48.780
in September of 2020.
34
00:01:48.780 --> 00:01:52.230
So the first time you mentioned it was two years later?
35
00:01:52.230 --> 00:01:54.780
Yes, Your Honor. In the opposition.
36
00:01:54.780 --> 00:01:56.910
So tell me why it's not waived.
37
00:01:56.910 --> 00:01:58.470
So there's a few reasons
38
00:01:58.470 --> 00:02:01.020
why we believe it's not waived, Your Honor.
39
00:02:01.020 --> 00:02:04.594
First off, although it wasn't mentioned
40
00:02:04.594 --> 00:02:07.080
in the affirmative defenses,
41
00:02:07.080 --> 00:02:10.233
and I do believe that that was a clerical error on our part,
42
00:02:11.160 --> 00:02:13.699
this motion, these cases-
43
00:02:13.699 --> 00:02:16.020
Is that a doctrine of-
Clerical error?
44
00:02:16.020 --> 00:02:19.050
Yeah, I mean, I guess what do you mean by clerical error
45
00:02:19.050 --> 00:02:22.890
and how does that fit within our jurisprudence of waiver?
46
00:02:22.890 --> 00:02:25.170
So, Your Honor, so it doesn't fit
47
00:02:25.170 --> 00:02:26.040
within your jurisprudence.
48
00:02:26.040 --> 00:02:28.560
I'm simply explaining how it occurred.
49
00:02:28.560 --> 00:02:32.657
So there are several cases that were consolidated
50
00:02:32.657 --> 00:02:35.700
in the trial court.
51
00:02:35.700 --> 00:02:37.920
Several of them, the majority of them,
52
00:02:37.920 --> 00:02:39.840
had frustration of purpose,
53
00:02:39.840 --> 00:02:42.930
affirmative defenses that were alleged.
54
00:02:42.930 --> 00:02:44.990
This matter was put forth
55
00:02:44.990 --> 00:02:47.610
at the end of those consolidated cases.
56
00:02:47.610 --> 00:02:49.950
I believe it was the fifth in line.
57
00:02:49.950 --> 00:02:53.520
And it simply did not contain an affirmative defense.
58
00:02:53.520 --> 00:02:56.970
However, there's a number of arguments
59
00:02:56.970 --> 00:02:57.840
that we'd like to make
60
00:02:57.840 --> 00:03:01.110
in terms of why we feel that it is not waived.
61
00:03:01.110 --> 00:03:05.730
First off, the cases in which the appellee cites
62
00:03:05.730 --> 00:03:09.000
regarding the affirmative defenses
63
00:03:09.000 --> 00:03:10.230
and whether those are waived,
64
00:03:10.230 --> 00:03:13.111
if they're not made at the time of an answer,
65
00:03:13.111 --> 00:03:16.560
those are generally not allowed
66
00:03:16.560 --> 00:03:18.840
because they are presented at the time of trial.
67
00:03:18.840 --> 00:03:21.042
Here there's that summary judgment.
68
00:03:21.042 --> 00:03:22.140
We are arguing
69
00:03:22.140 --> 00:03:25.290
that there's gonna be additional potential discovery
70
00:03:25.290 --> 00:03:28.078
that would need to be done if this is allowed to go forward
71
00:03:28.078 --> 00:03:29.730
at the trial court.
72
00:03:29.730 --> 00:03:34.730
And then Rule 15(a) allows for amendments to pleadings
73
00:03:35.280 --> 00:03:38.250
to be made freely with leave of court.
74
00:03:38.250 --> 00:03:42.303
So we would suggest that Business Interiors was also,
75
00:03:43.380 --> 00:03:46.560
did know about this particular affirmative defense,
76
00:03:46.560 --> 00:03:49.110
namely because there was other subcontractors
77
00:03:49.110 --> 00:03:51.840
that had filed cases in the consolidated actions.
78
00:03:51.840 --> 00:03:53.100
There were the affirmative defenses
79
00:03:53.100 --> 00:03:54.480
that were put forth there.
80
00:03:54.480 --> 00:03:56.490
There was additionally a summary judgment
81
00:03:56.490 --> 00:03:58.409
with one of the subcontractors in which-
82
00:03:58.409 --> 00:04:01.740
Any cases in which a related case
83
00:04:01.740 --> 00:04:04.440
preserves an affirmative defense
84
00:04:04.440 --> 00:04:06.780
that wasn't brought up in that case?
85
00:04:06.780 --> 00:04:09.960
Anything you could cite to where we have approved that
86
00:04:09.960 --> 00:04:12.510
or the appeals courts approve that?
87
00:04:12.510 --> 00:04:16.530
In which there was at the summary judgment level?
88
00:04:16.530 --> 00:04:19.320
Just any time in which you've failed
89
00:04:19.320 --> 00:04:20.730
to bring up an affirmative defense,
90
00:04:20.730 --> 00:04:24.240
but because there's a case involving another subcontractor,
91
00:04:24.240 --> 00:04:27.660
or another, you know, somewhat related case,
92
00:04:27.660 --> 00:04:29.700
that preserves the affirmative defense?
93
00:04:29.700 --> 00:04:30.930
No, Your Honor.
94
00:04:30.930 --> 00:04:33.660
There isn't anything on point regarding consolidated cases.
95
00:04:33.660 --> 00:04:35.130
Although, again, I would point out
96
00:04:35.130 --> 00:04:39.540
that the cases that are cited in the appellee's brief,
97
00:04:39.540 --> 00:04:42.720
again, are all cases of which the defense has made
98
00:04:42.720 --> 00:04:44.122
right at the time of trial.
99
00:04:44.122 --> 00:04:47.550
So with that, and additionally, Your Honor,
100
00:04:47.550 --> 00:04:49.953
in terms of the discovery that was presented,
101
00:04:51.210 --> 00:04:52.800
the defenses that were made
102
00:04:52.800 --> 00:04:55.110
are essentially impossibility defenses,
103
00:04:55.110 --> 00:04:58.290
effectively that the contract could not be completed.
104
00:04:58.290 --> 00:05:01.687
Also, although the words "frustration of purpose,"
105
00:05:01.687 --> 00:05:03.270
"impossibility," are not mentioned
106
00:05:03.270 --> 00:05:04.350
in the affirmative defense,
107
00:05:04.350 --> 00:05:07.470
our arguments are that the contract could not be completed
108
00:05:07.470 --> 00:05:09.840
as they were made.
109
00:05:09.840 --> 00:05:12.360
So, and this effectively goes back to-
110
00:05:12.360 --> 00:05:15.963
And did that argument include reference to the pandemic?
111
00:05:17.392 --> 00:05:19.650
It did not, Your Honor.
Did not. Okay.
112
00:05:19.650 --> 00:05:20.483
It did not.
113
00:05:20.483 --> 00:05:25.140
But again, the idea is that essentially there's an aspect
114
00:05:25.140 --> 00:05:28.950
of the contract that needed to be approved by an entity,
115
00:05:28.950 --> 00:05:30.690
this being Pacific Theatres,
116
00:05:30.690 --> 00:05:34.320
which was not able to approve these invoices and payments
117
00:05:34.320 --> 00:05:37.263
at that applications for payment,
118
00:05:37.263 --> 00:05:40.971
and the reason for that was because of the pandemic.
119
00:05:40.971 --> 00:05:42.453
Well, you could have raised that
120
00:05:42.453 --> 00:05:45.630
when the request for payments were made, right?
121
00:05:45.630 --> 00:05:47.831
So, Your Honor, so essentially at the time
122
00:05:47.831 --> 00:05:51.570
in which these payment applications were made,
123
00:05:51.570 --> 00:05:54.030
which was in March and May of 2000,
124
00:05:54.030 --> 00:05:56.910
excuse me, March and April of 2020,
125
00:05:56.910 --> 00:05:58.743
the pandemic had started.
Right.
126
00:06:00.210 --> 00:06:03.665
At that time, Pacific Theatres had stopped operating,
127
00:06:03.665 --> 00:06:06.690
so there was essentially no way that-
128
00:06:06.690 --> 00:06:08.730
Statute contemplates
129
00:06:08.730 --> 00:06:11.040
that if there's a request for payment,
130
00:06:11.040 --> 00:06:13.590
you'd explain why you're not making payment, right?
131
00:06:15.150 --> 00:06:15.983
Right.
132
00:06:15.983 --> 00:06:19.470
So the statute basically asked for an explanation
133
00:06:19.470 --> 00:06:21.540
based on the contract.
134
00:06:21.540 --> 00:06:23.580
Well, why that you can't make it.
135
00:06:23.580 --> 00:06:26.610
And you have to make that with a good faith certification,
136
00:06:26.610 --> 00:06:28.770
although that's not truly determined at this point
137
00:06:28.770 --> 00:06:30.120
in Massachusetts what that is.
138
00:06:30.120 --> 00:06:31.207
You could have said,
139
00:06:31.207 --> 00:06:33.397
"I'm not making payment because under the contract
140
00:06:33.397 --> 00:06:35.197
you don't get paid till I get paid."
141
00:06:36.240 --> 00:06:38.070
That could have been said, Your Honor.
142
00:06:38.070 --> 00:06:39.990
However, what I would suggest that
143
00:06:39.990 --> 00:06:42.630
is that ultimately to make that determination,
144
00:06:42.630 --> 00:06:44.619
we need contact from Pacific.
145
00:06:44.619 --> 00:06:46.920
They're the ones that make that determination.
146
00:06:46.920 --> 00:06:51.920
So the Prompt Pay Act really doesn't address this situation,
147
00:06:52.410 --> 00:06:54.360
where there are payments-
148
00:06:54.360 --> 00:06:56.327
I thought the Prompt Pay Act basically says
149
00:06:56.327 --> 00:07:00.543
anything to the contrary and the contract is void.
150
00:07:02.280 --> 00:07:04.590
Anything listed-
151
00:07:04.590 --> 00:07:05.820
You can't contract your way
152
00:07:05.820 --> 00:07:07.770
out of the Prompt Pay Act, essentially.
153
00:07:08.970 --> 00:07:10.290
That's correct, Your Honor.
154
00:07:10.290 --> 00:07:13.819
So you can't have pay if paid clauses essentially.
155
00:07:13.819 --> 00:07:16.470
And how is this not one of those clauses
156
00:07:16.470 --> 00:07:19.560
that's voided by the Prompt Payment Act?
157
00:07:19.560 --> 00:07:24.560
So the issue here is that it is not so much the payment
158
00:07:26.190 --> 00:07:30.000
that comes from the owner down to the general contractor.
159
00:07:30.000 --> 00:07:32.008
It is the approval of the work
160
00:07:32.008 --> 00:07:34.946
that was actually not performed.
161
00:07:34.946 --> 00:07:39.780
So here, in order to get any payment from the owner,
162
00:07:39.780 --> 00:07:42.150
this being the tenant, Pacific, down to Graycor,
163
00:07:42.150 --> 00:07:44.520
and then subsequently down to the subcontractors,
164
00:07:44.520 --> 00:07:46.920
Pacific needs to actually review the work,
165
00:07:46.920 --> 00:07:49.440
review the invoices submitted by the contractors,
166
00:07:49.440 --> 00:07:54.300
and then actually give payment, remit payment.
167
00:07:54.300 --> 00:07:57.510
Right, so it sounds like I have to get paid
168
00:07:57.510 --> 00:08:00.630
in order to pay you, which is exactly the kind of provision
169
00:08:00.630 --> 00:08:03.423
that the Prompt Payment Act was designed to void.
170
00:08:04.470 --> 00:08:05.850
What I would suggest, Your Honor,
171
00:08:05.850 --> 00:08:09.057
is that in this case,
172
00:08:09.057 --> 00:08:13.170
the Prompt Pay Act really doesn't address a situation
173
00:08:13.170 --> 00:08:15.750
where the general contractor
174
00:08:15.750 --> 00:08:18.570
can't actually approve of the work.
175
00:08:18.570 --> 00:08:20.610
So there is a distinct difference here.
176
00:08:20.610 --> 00:08:23.310
So, you know, as opposed to we'd say the Tachi case,
177
00:08:23.310 --> 00:08:27.570
in which you had an owner and the contractor,
178
00:08:27.570 --> 00:08:30.900
in which the owner would approve of the work
179
00:08:30.900 --> 00:08:32.550
and then actually would remit payment,
180
00:08:32.550 --> 00:08:34.290
here there's another level.
181
00:08:34.290 --> 00:08:36.540
So essentially the contract
182
00:08:36.540 --> 00:08:38.430
is between the subcontractor and the contractor.
183
00:08:38.430 --> 00:08:40.110
The contractor pays,
184
00:08:40.110 --> 00:08:42.570
but ultimately, in order for them to do that,
185
00:08:42.570 --> 00:08:44.280
they need to have the work approved.
186
00:08:44.280 --> 00:08:48.647
Isn't that very common in construction,
187
00:08:50.270 --> 00:08:54.090
and doesn't, I guess I don't understand your argument
188
00:08:54.090 --> 00:08:57.930
that the Prompt Payment Act doesn't address the issue
189
00:08:57.930 --> 00:09:01.533
when it specifically talks about tiers of contracts.
190
00:09:02.610 --> 00:09:04.890
So it-
Can you just explain that?
191
00:09:04.890 --> 00:09:05.723
Yeah, sure.
192
00:09:05.723 --> 00:09:10.723
So the Prompt Pay Act, it doesn't just exclude,
193
00:09:10.770 --> 00:09:12.480
or it doesn't just include contracts,
194
00:09:12.480 --> 00:09:14.160
it includes subcontractors as well.
195
00:09:14.160 --> 00:09:17.340
So obviously here a subcontractor can make a Prompt Pay Act
196
00:09:17.340 --> 00:09:19.530
against the contractor.
197
00:09:19.530 --> 00:09:22.320
But in terms of the level of approval,
198
00:09:22.320 --> 00:09:24.012
the Prompt Pay Act doesn't state
199
00:09:24.012 --> 00:09:29.012
that the approval needs to be done by another entity, right?
200
00:09:29.940 --> 00:09:32.070
So the Prompt Pay Act actually talks
201
00:09:32.070 --> 00:09:35.010
about the contracting party.
202
00:09:35.010 --> 00:09:37.260
Here it would be Graycor.
203
00:09:37.260 --> 00:09:39.240
So the Prompt Pay Act in and of itself
204
00:09:39.240 --> 00:09:42.960
is what I would describe as is somewhat flawed
205
00:09:42.960 --> 00:09:44.370
in that respect.
206
00:09:44.370 --> 00:09:47.160
It doesn't actually address these situations
207
00:09:47.160 --> 00:09:49.230
where you have these separate entities
208
00:09:49.230 --> 00:09:51.376
that are proving of work
209
00:09:51.376 --> 00:09:54.570
when they're not the actual contracting entity
210
00:09:54.570 --> 00:09:55.920
with the person that's bringing,
211
00:09:55.920 --> 00:09:58.500
or the entity that's bringing the Prompt Pay Act claim.
212
00:09:58.500 --> 00:09:59.910
So again, this is-
213
00:09:59.910 --> 00:10:00.930
So I just have a...
214
00:10:00.930 --> 00:10:03.789
There's just two issues that I have
215
00:10:03.789 --> 00:10:08.647
with the position that you're needing to take on appeal,
216
00:10:08.647 --> 00:10:10.800
and that's the following.
217
00:10:10.800 --> 00:10:14.780
The first is that you never told BI
218
00:10:16.441 --> 00:10:21.441
that this was your argument in rejecting.
219
00:10:22.620 --> 00:10:24.051
You just neither accepted
220
00:10:24.051 --> 00:10:27.420
nor rejected their application for payment.
221
00:10:27.420 --> 00:10:31.860
And under the Prompt Pay Act, it seems like that means
222
00:10:31.860 --> 00:10:36.860
that you need to flow the money to the subcontractor.
223
00:10:37.389 --> 00:10:39.172
And then the second is
224
00:10:39.172 --> 00:10:41.580
I think what you were currently addressing,
225
00:10:41.580 --> 00:10:45.870
which is that I don't understand how this is not an end run
226
00:10:45.870 --> 00:10:49.380
around the provision of the Prompt Pay Act
227
00:10:49.380 --> 00:10:54.380
that says, "I get paid and then you get paid."
228
00:10:54.480 --> 00:10:56.850
Those kind of provisions are void.
229
00:10:56.850 --> 00:11:01.260
So what I would say to that is that essentially,
230
00:11:01.260 --> 00:11:03.870
as you noted, that this does happen
231
00:11:03.870 --> 00:11:06.090
in construction contracts.
232
00:11:06.090 --> 00:11:08.850
The issue here is that it would cause chaos.
233
00:11:08.850 --> 00:11:11.275
So effectively you would have situations
234
00:11:11.275 --> 00:11:15.105
where Graycor would have to reject payment
235
00:11:15.105 --> 00:11:20.100
and tell Business Interiors that they had rejected payment
236
00:11:20.100 --> 00:11:24.000
with or without the actual consent or without any knowledge
237
00:11:24.000 --> 00:11:25.500
from, say, Pacific.
238
00:11:25.500 --> 00:11:28.547
Pacific has done nothing to actually approve of the work
239
00:11:28.547 --> 00:11:31.530
That's because of the pandemic, though, right?
240
00:11:31.530 --> 00:11:34.710
So in this case it's the result of pandemic. Yes.
241
00:11:34.710 --> 00:11:37.230
But just so I'm gonna ask you the question,
242
00:11:37.230 --> 00:11:39.750
I didn't know if you answered it or not,
243
00:11:39.750 --> 00:11:42.330
that every construction contract
244
00:11:42.330 --> 00:11:44.370
that requires approval of work,
245
00:11:44.370 --> 00:11:47.250
someone has to sign off on work.
246
00:11:47.250 --> 00:11:49.740
So how can the sign off be a way
247
00:11:49.740 --> 00:11:52.350
to get out from another Prompt Pay Act?
248
00:11:52.350 --> 00:11:55.080
Well, so, Your Honor, I think this, again,
249
00:11:55.080 --> 00:11:57.000
the Prompt Pay Act doesn't address necessarily
250
00:11:57.000 --> 00:11:58.500
what's going on here.
251
00:11:58.500 --> 00:12:03.500
There is $32,000 in this amount that is now due
252
00:12:04.710 --> 00:12:06.690
according to the trial court.
253
00:12:06.690 --> 00:12:10.470
That was actually asked for by the owner.
254
00:12:10.470 --> 00:12:12.570
So essentially what the trial court's saying
255
00:12:12.570 --> 00:12:14.700
is that that Graycor is on the hook
256
00:12:14.700 --> 00:12:18.840
for essentially a portion of this money owed
257
00:12:18.840 --> 00:12:23.040
that they had nothing to do with actually requesting.
258
00:12:23.040 --> 00:12:26.930
It was simply passed through Graycor, went to the owner. So-
259
00:12:26.930 --> 00:12:30.120
Do you have an indemnification provision with the owner?
260
00:12:30.120 --> 00:12:32.160
I mean, there's ways that a general contractor
261
00:12:32.160 --> 00:12:33.560
can cover themselves, right?
262
00:12:34.710 --> 00:12:37.020
There is, Your Honor, but not in this case.
263
00:12:37.020 --> 00:12:38.310
So in terms of-
264
00:12:38.310 --> 00:12:40.260
So there were ways to cover yourself
265
00:12:40.260 --> 00:12:41.940
for the eventuality of the owner
266
00:12:41.940 --> 00:12:43.348
going directly to the subcontractor,
267
00:12:43.348 --> 00:12:48.300
but Graycor chose not to employ any of those mechanisms.
268
00:12:48.300 --> 00:12:51.240
At the time in which this occurred,
269
00:12:51.240 --> 00:12:54.660
Pacific wasn't doing anything, so in-
270
00:12:54.660 --> 00:12:56.130
Don't you say...
271
00:12:56.130 --> 00:12:57.720
I'm a little confused.
272
00:12:57.720 --> 00:13:01.170
I thought the contract has a provision for this,
273
00:13:01.170 --> 00:13:05.490
that the owner requests a change order, right?
274
00:13:05.490 --> 00:13:08.190
Isn't that in the contract? I thought you were arguing...
275
00:13:08.190 --> 00:13:12.560
It is, Your Honor. It's in Section 5.4 of the con-
276
00:13:12.560 --> 00:13:15.390
So it was contemplated by the parties,
277
00:13:15.390 --> 00:13:19.320
that the owner would make a direct change order request,
278
00:13:19.320 --> 00:13:20.190
right?
279
00:13:20.190 --> 00:13:21.150
Yes, Your Honor.
280
00:13:21.150 --> 00:13:23.640
But the idea was is that if-
281
00:13:23.640 --> 00:13:25.267
And the contract didn't say,
282
00:13:25.267 --> 00:13:28.603
"And the owner will directly pay for this," right?
283
00:13:28.603 --> 00:13:32.400
No, it didn't. There's no provision within that.
284
00:13:32.400 --> 00:13:33.840
So essentially what would happen
285
00:13:33.840 --> 00:13:38.160
is that it would come from Pacific, the owner,
286
00:13:38.160 --> 00:13:39.120
down to Graycor.
287
00:13:39.120 --> 00:13:40.650
They would filter the information down
288
00:13:40.650 --> 00:13:43.290
to the particular subcontractor that was doing the work,
289
00:13:43.290 --> 00:13:44.370
and then-
290
00:13:44.370 --> 00:13:45.203
This is normal, right?
291
00:13:45.203 --> 00:13:48.150
I mean, that happens all the time in construction contracts.
292
00:13:48.150 --> 00:13:50.696
Doesn't the owner see something going on
293
00:13:50.696 --> 00:13:53.310
in a large construction project
294
00:13:53.310 --> 00:13:56.217
and ask for, you know, some kind of change,
295
00:13:56.217 --> 00:13:59.670
and it increases the value of the contract? (chuckles)
296
00:13:59.670 --> 00:14:01.012
Yes, of course, Your Honor.
297
00:14:01.012 --> 00:14:04.050
But again, in the terms of the Prompt Pay Act,
298
00:14:04.050 --> 00:14:06.600
in terms of approving that work, taking the invoice,
299
00:14:06.600 --> 00:14:09.005
looking at what the specific work that's being done,
300
00:14:09.005 --> 00:14:12.120
whether it's appropriately priced out,
301
00:14:12.120 --> 00:14:14.340
whether the work was complete,
302
00:14:14.340 --> 00:14:19.068
that, at least for $32,000 worth of that work,
303
00:14:19.068 --> 00:14:21.330
went directly to the owner.
304
00:14:21.330 --> 00:14:23.400
But the trial court is essentially saying
305
00:14:23.400 --> 00:14:25.770
that Graycor now is on the hook for that.
306
00:14:25.770 --> 00:14:27.727
And we believe, at least for that amount-
307
00:14:27.727 --> 00:14:31.753
I take it you directed the sub to do the work, right?
308
00:14:31.753 --> 00:14:35.956
Only to the extent that it was delivered information
309
00:14:35.956 --> 00:14:40.047
from Pacific to Graycor to the sub.
310
00:14:40.047 --> 00:14:42.780
But I guess pertinent to a claim
311
00:14:42.780 --> 00:14:45.090
that we're gonna ask other counsel about,
312
00:14:45.090 --> 00:14:49.710
you're on the hook that the PPA requires the payment to go.
313
00:14:49.710 --> 00:14:54.030
But as far as ultimately this just basically shows
314
00:14:54.030 --> 00:14:56.070
who is gonna bear the initial burden, right?
315
00:14:56.070 --> 00:14:59.193
Because you still have a lawsuit at the end of the day.
316
00:15:00.480 --> 00:15:02.190
Yes. I mean, yes, your Honor.
317
00:15:02.190 --> 00:15:03.023
So-
Right.
318
00:15:03.869 --> 00:15:06.480
The PPA is basically telling the subs
319
00:15:06.480 --> 00:15:08.999
that you're not gonna be starved out.
320
00:15:08.999 --> 00:15:12.033
The GC's gonna take the hit, and then we'll litigate.
321
00:15:13.860 --> 00:15:15.780
That is correct, Your Honor.
322
00:15:15.780 --> 00:15:18.300
But again, you know, in this situation,
323
00:15:18.300 --> 00:15:23.300
I think the PPA unfairly puts the onus on Graycor,
324
00:15:24.924 --> 00:15:25.757
the general contractor.
Go to the legislature,
325
00:15:25.757 --> 00:15:28.350
and tell them that, not us.
326
00:15:28.350 --> 00:15:29.250
Understood, Your Honor.
327
00:15:29.250 --> 00:15:31.980
Okay. Any other questions?
328
00:15:31.980 --> 00:15:33.210
No, thank you, Chief.
329
00:15:33.210 --> 00:15:35.430
Counsel, can you kindly please walk us through
330
00:15:35.430 --> 00:15:37.796
your understanding of what would've occurred
331
00:15:37.796 --> 00:15:42.796
if Graycor had, within the time period, lodged the objection
332
00:15:44.220 --> 00:15:47.038
and said, "We received your request for payment.
333
00:15:47.038 --> 00:15:50.160
Unfortunately, we can't do that right now
334
00:15:50.160 --> 00:15:52.050
because the work has not yet been approved,
335
00:15:52.050 --> 00:15:53.850
and our reading of the contract is
336
00:15:53.850 --> 00:15:56.520
that we cannot pay you until it's been approved by Pacific.
337
00:15:56.520 --> 00:15:58.110
We've been trying to reach out to them.
338
00:15:58.110 --> 00:15:59.395
They have not been responsive."
339
00:15:59.395 --> 00:16:01.500
Can you walk us through your understanding
340
00:16:01.500 --> 00:16:04.500
of under the contract, what would've then taken place?
341
00:16:04.500 --> 00:16:05.580
Nothing, Your Honor.
342
00:16:05.580 --> 00:16:07.290
We would be in the exact same place.
343
00:16:07.290 --> 00:16:09.420
Essentially they would've submitted,
344
00:16:09.420 --> 00:16:12.089
they would've submitted the objection.
345
00:16:12.089 --> 00:16:13.050
I'm sorry, Counsel, to interrupt,
346
00:16:13.050 --> 00:16:15.019
but isn't there a dispute resolution requirement
347
00:16:15.019 --> 00:16:16.743
under the PPA?
348
00:16:18.094 --> 00:16:19.920
A dispute resolution?
Right.
349
00:16:19.920 --> 00:16:23.520
Once there is an application and then you reject it,
350
00:16:23.520 --> 00:16:26.010
it must go to a dispute resolution.
351
00:16:26.010 --> 00:16:30.930
The whole point is to not allow the cash flow to stop,
352
00:16:30.930 --> 00:16:32.340
that there is timeframes
353
00:16:32.340 --> 00:16:34.740
during which the cash flow will stop.
354
00:16:34.740 --> 00:16:35.980
Yes, but that doesn't-
355
00:16:35.980 --> 00:16:36.960
So when you say nothing will happen
356
00:16:36.960 --> 00:16:39.270
in response to Justice Dewar's question,
357
00:16:39.270 --> 00:16:40.440
I don't understand that.
358
00:16:40.440 --> 00:16:43.710
So what I, and maybe that was unartfully framed,
359
00:16:43.710 --> 00:16:46.150
but what I'm saying is that essentially
360
00:16:46.150 --> 00:16:48.615
the subcontractor can bring
361
00:16:48.615 --> 00:16:50.610
another breach of contract claim,
362
00:16:50.610 --> 00:16:52.710
whether it's under the Prompt Pay Act or not.
363
00:16:52.710 --> 00:16:55.339
So if we reject the claim,
364
00:16:55.339 --> 00:16:57.480
and then at a certain point
365
00:16:57.480 --> 00:16:59.700
Business interiors brings it as breach of contract,
366
00:16:59.700 --> 00:17:01.500
we're still in violation of the contract.
367
00:17:01.500 --> 00:17:06.026
We still didn't pay, even though we gave a rejection.
368
00:17:06.026 --> 00:17:08.340
It's still in violation.
369
00:17:08.340 --> 00:17:12.330
They did the work. It was not paid for.
370
00:17:12.330 --> 00:17:16.620
We submitted an application,
371
00:17:16.620 --> 00:17:18.750
or excuse me, we submitted a rejection,
372
00:17:18.750 --> 00:17:23.160
but ultimately they could still bring a claim against us
373
00:17:23.160 --> 00:17:25.743
for breach of contract, regardless of the PPA.
374
00:17:28.050 --> 00:17:30.783
Okay. Thank you very much.
Thank you.
375
00:17:35.490 --> 00:17:38.073
Okay, Attorney Forgione.
376
00:17:47.400 --> 00:17:48.450
So, good morning, Your Honor.
377
00:17:48.450 --> 00:17:49.794
It's Andrew Dennington
378
00:17:49.794 --> 00:17:52.680
for the appellee Business Interior Floor Covering Trust.
379
00:17:52.680 --> 00:17:54.963
I'm sorry. (chuckling) Thanks.
380
00:17:57.090 --> 00:17:59.490
Making the switch.
Oh, it's my fault.
381
00:17:59.490 --> 00:18:01.230
So this court should affirm the judgment below
382
00:18:01.230 --> 00:18:03.832
because the motion judge correctly entered summary judgment
383
00:18:03.832 --> 00:18:06.600
in favor of Business Interiors.
384
00:18:06.600 --> 00:18:08.700
I first want to pick up on some of the points
385
00:18:08.700 --> 00:18:11.670
that the panel raised in the colloquy
386
00:18:11.670 --> 00:18:13.680
with the appellant's counsel.
387
00:18:13.680 --> 00:18:15.270
First, it is indeed the case
388
00:18:15.270 --> 00:18:16.950
that the affirmative defense
389
00:18:16.950 --> 00:18:21.750
of impossibility/impracticability was waived
390
00:18:21.750 --> 00:18:24.540
because it was not pled in the answer.
391
00:18:24.540 --> 00:18:26.220
And I think the court should consider
392
00:18:26.220 --> 00:18:28.950
what's the purpose of that rule in Rule 8,
393
00:18:28.950 --> 00:18:31.380
that affirmative defenses have to be pleaded.
394
00:18:31.380 --> 00:18:34.200
The purpose is to provide notice to the plaintiff
395
00:18:34.200 --> 00:18:35.130
so that the plaintiff can-
396
00:18:35.130 --> 00:18:36.750
Could they have amended their pleading?
397
00:18:36.750 --> 00:18:38.010
Yes, they could have.
Okay.
398
00:18:38.010 --> 00:18:39.287
And they didn't.
399
00:18:39.287 --> 00:18:41.100
And so when is the end date
400
00:18:41.100 --> 00:18:43.020
that they can amend their pleading?
401
00:18:43.020 --> 00:18:45.780
There is no prescribed end date, because-
402
00:18:45.780 --> 00:18:47.954
So why can't they do it now?
403
00:18:47.954 --> 00:18:50.730
Well, that would be, in my view, highly prejudicial to-
404
00:18:50.730 --> 00:18:51.563
So can you explain that?
405
00:18:51.563 --> 00:18:55.913
What is the legal test for when somebody can amend?
406
00:18:55.913 --> 00:18:57.660
The legal test.
407
00:18:57.660 --> 00:19:01.173
Leave shall be freely given under Rule 15,
408
00:19:03.300 --> 00:19:06.600
except if the trial court were to find
409
00:19:06.600 --> 00:19:10.110
that it would be unduly prejudicial to the plaintiff.
410
00:19:10.110 --> 00:19:12.810
And here it would have been,
411
00:19:12.810 --> 00:19:16.380
because during the discovery phase,
412
00:19:16.380 --> 00:19:18.120
if you look at the request for admission there
413
00:19:18.120 --> 00:19:20.646
at page 171 of the record,
414
00:19:20.646 --> 00:19:23.854
you'll see that Business Interior served written discovery
415
00:19:23.854 --> 00:19:27.927
to Graycor asking, "What was the basis? Why didn't you pay?"
416
00:19:27.927 --> 00:19:32.927
And the response were they cited to the pay if pay clause
417
00:19:33.450 --> 00:19:36.630
in the subcontract, which is overridden
418
00:19:36.630 --> 00:19:40.470
by Section C of the PPA, which-
419
00:19:40.470 --> 00:19:42.660
So they cited to 5.4?
420
00:19:42.660 --> 00:19:43.590
Correct.
421
00:19:43.590 --> 00:19:47.220
So we had no notice that they were relying
422
00:19:47.220 --> 00:19:50.185
on a COVID-based impossibility defense
423
00:19:50.185 --> 00:19:52.290
until after discovery had closed
424
00:19:52.290 --> 00:19:54.930
when we received their summary judgment opposition.
425
00:19:54.930 --> 00:19:55.920
That was prejudicial
426
00:19:55.920 --> 00:19:58.410
in that if we had received earlier notice,
427
00:19:58.410 --> 00:20:01.537
we could have, for example, fleshed out,
428
00:20:01.537 --> 00:20:04.680
"Well, what evidence do you have of your own
429
00:20:04.680 --> 00:20:07.290
that you, of your own financial condition..."
430
00:20:07.290 --> 00:20:11.040
At the end of the day, it's, I think, irrelevant,
431
00:20:11.040 --> 00:20:14.610
because, you know, even if there wasn't a PPA,
432
00:20:14.610 --> 00:20:16.470
this still would not have been a defense
433
00:20:16.470 --> 00:20:18.000
that generated a triable issue,
434
00:20:18.000 --> 00:20:21.090
because one of the essential elements of impossibility
435
00:20:21.090 --> 00:20:25.230
is that the defendant has to show that its own performance,
436
00:20:25.230 --> 00:20:30.230
in this case, inability to pay, that it was unable to pay.
437
00:20:30.930 --> 00:20:33.150
And there's nothing in the summary judgment record
438
00:20:33.150 --> 00:20:36.270
where Graycor demonstrate it was impossible for us
439
00:20:36.270 --> 00:20:39.750
to pay $127,000 to Business Interiors.
440
00:20:39.750 --> 00:20:41.370
Can you walk me through the argument
441
00:20:41.370 --> 00:20:45.150
that Section 5.4 is void under the PPA?
442
00:20:45.150 --> 00:20:45.983
Yes.
443
00:20:47.370 --> 00:20:51.033
So Section 5.4, it says:
444
00:20:52.447 --> 00:20:54.690
"The subcontractor understands and agrees
445
00:20:54.690 --> 00:20:57.180
that the contractor can only make payments
446
00:20:57.180 --> 00:21:00.690
to the subcontractor for monies paid to the contractor
447
00:21:00.690 --> 00:21:02.310
by the owner for the work.
448
00:21:02.310 --> 00:21:04.650
Consequently, but subject
449
00:21:04.650 --> 00:21:07.158
to any applicable statutory requirements
450
00:21:07.158 --> 00:21:12.158
relating to payment, the subcontractor also understands
451
00:21:12.450 --> 00:21:14.340
and agrees that the contractor's obligation
452
00:21:14.340 --> 00:21:16.670
to pay the subcontractor is totally dependent
453
00:21:16.670 --> 00:21:19.174
upon the contractor's receipt of such payment
454
00:21:19.174 --> 00:21:21.210
for the work from the owner."
455
00:21:21.210 --> 00:21:24.667
But then the PPA in Section 3 says,
456
00:21:24.667 --> 00:21:26.400
"Every contract for construction
457
00:21:26.400 --> 00:21:29.700
shall provide these conditions."
458
00:21:29.700 --> 00:21:34.700
And then Section E provides that a pay if pay clause
459
00:21:35.500 --> 00:21:39.480
is unenforceable unless a certain condition is satisfied."
460
00:21:39.480 --> 00:21:40.680
And I think that's significant.
461
00:21:40.680 --> 00:21:43.056
The legislature already contemplated a scenario
462
00:21:43.056 --> 00:21:45.870
where a general contractor
463
00:21:45.870 --> 00:21:49.601
would have difficulty making payment downstream
464
00:21:49.601 --> 00:21:53.460
based on the financial condition of the upstream payer,
465
00:21:53.460 --> 00:21:55.470
and the legislature decided
466
00:21:55.470 --> 00:21:57.180
that there would be several conditions
467
00:21:57.180 --> 00:21:58.230
that would need to be satisfied.
468
00:21:58.230 --> 00:22:00.720
The first of those is that the upstream payer
469
00:22:00.720 --> 00:22:03.150
had to be insolvent or become insolvent
470
00:22:03.150 --> 00:22:05.640
within 90 days of receipt of the submission
471
00:22:05.640 --> 00:22:06.900
of the application for payment,
472
00:22:06.900 --> 00:22:08.856
and that simply didn't happen here.
473
00:22:08.856 --> 00:22:12.630
Pacific ultimately did file for bankruptcy,
474
00:22:12.630 --> 00:22:14.982
but the reason why Graycor never attempted
475
00:22:14.982 --> 00:22:17.340
to, you know, prove up this exception
476
00:22:17.340 --> 00:22:22.340
was because it didn't file for bankruptcy until June 2021,
477
00:22:22.350 --> 00:22:25.850
so that's well past 90 days past the last
478
00:22:25.850 --> 00:22:28.950
of the three payment applications in question.
479
00:22:28.950 --> 00:22:31.020
So, you know, I think this illustrates
480
00:22:31.020 --> 00:22:34.890
that it's a situation where the legislature in 2010,
481
00:22:34.890 --> 00:22:39.638
after a very, you know, has a carefully crafted scheme,
482
00:22:39.638 --> 00:22:43.020
and there is a kind of escape valve
483
00:22:43.020 --> 00:22:45.816
to the reject or pay rule
484
00:22:45.816 --> 00:22:49.710
if you can meet certain conditions,
485
00:22:49.710 --> 00:22:52.530
and they just weren't satisfied here.
486
00:22:52.530 --> 00:22:54.150
Sorry, can you please answer the question
487
00:22:54.150 --> 00:22:56.100
that I posed to the other side,
488
00:22:56.100 --> 00:22:58.350
which is what is your understanding
489
00:22:58.350 --> 00:23:01.543
of what would've occurred if Graycor had-
490
00:23:01.543 --> 00:23:02.426
Yes.
491
00:23:02.426 --> 00:23:03.607
within the time promptly said,
492
00:23:03.607 --> 00:23:04.800
"Sorry, we can't pay you yet
493
00:23:04.800 --> 00:23:06.750
because the work has not been approved"
494
00:23:07.650 --> 00:23:08.490
What it would've done
495
00:23:08.490 --> 00:23:13.490
is it would've accelerated this case, all right.
496
00:23:13.500 --> 00:23:15.570
And one of the purposes of the PPA,
497
00:23:15.570 --> 00:23:18.060
it's not just to ensure a prompt payment of invoices,
498
00:23:18.060 --> 00:23:21.030
but also a prompt resolution of disputes, right?
499
00:23:21.030 --> 00:23:25.257
So if that was indeed the defense,
500
00:23:25.257 --> 00:23:28.917
"I'm gonna raise a COVID-based impossibility defense."
501
00:23:30.060 --> 00:23:31.590
You know, those types of arguments
502
00:23:31.590 --> 00:23:34.230
generally have not been very successful.
503
00:23:34.230 --> 00:23:35.403
I think it would've accelerated
504
00:23:35.403 --> 00:23:38.670
Business Interiors filing suit.
505
00:23:38.670 --> 00:23:42.000
Filing suit earlier would serve the purpose of the statute:
506
00:23:42.000 --> 00:23:46.800
let's resolve these disputes sooner rather than later.
507
00:23:46.800 --> 00:23:49.200
And the fact that Graycor has asserted
508
00:23:49.200 --> 00:23:51.510
this impossibility defense, you know,
509
00:23:51.510 --> 00:23:55.320
for the first time after the close of discovery,
510
00:23:55.320 --> 00:23:58.200
is running contrary to the purpose of the statute.
511
00:23:58.200 --> 00:24:00.720
Speaking of acceleration, can you,
512
00:24:00.720 --> 00:24:03.240
and I recognize that you note in a footnote in your brief
513
00:24:03.240 --> 00:24:05.400
that the other side has not raised this issue,
514
00:24:05.400 --> 00:24:07.560
but could you talk me through the propriety
515
00:24:07.560 --> 00:24:11.580
of the 54(b) and separate final partial judgment
516
00:24:11.580 --> 00:24:15.030
in this case where I think it's fair to say
517
00:24:15.030 --> 00:24:16.950
there is quite a bit of interrelationship
518
00:24:16.950 --> 00:24:20.850
between the remaining claims and this claim?
519
00:24:20.850 --> 00:24:21.683
Yes.
520
00:24:21.683 --> 00:24:24.780
So, you know, as the court is aware,
521
00:24:24.780 --> 00:24:27.420
the appeals court in Tachi held
522
00:24:27.420 --> 00:24:30.090
that to effectuate the purpose of the statute,
523
00:24:30.090 --> 00:24:34.042
there's no just reason for delay in entering judgment
524
00:24:34.042 --> 00:24:37.050
after there's been a violation due to the PPA.
525
00:24:37.050 --> 00:24:38.883
So that's so that the-
526
00:24:40.710 --> 00:24:43.380
I understand how it suits the statute's purposes,
527
00:24:43.380 --> 00:24:47.310
but the Tachi case does not discuss the 54(b) standard
528
00:24:47.310 --> 00:24:49.800
in any detail, so could you please address the standard
529
00:24:49.800 --> 00:24:53.346
that our court has generally taken a rather dim view
530
00:24:53.346 --> 00:24:54.810
of piecemeal appeals.
531
00:24:54.810 --> 00:24:57.597
So could you explain how this would work?
532
00:24:57.597 --> 00:25:00.385
Because now, of course, the case is gonna go back down
533
00:25:00.385 --> 00:25:03.453
potentially for further litigation, correct?
534
00:25:04.710 --> 00:25:06.740
Well, our...
535
00:25:08.010 --> 00:25:10.500
Okay, answering, so there's kind of two questions there.
536
00:25:10.500 --> 00:25:15.120
So if this judgment is affirmed, what our intention would be
537
00:25:15.120 --> 00:25:17.100
is we don't need the rest of the claims.
538
00:25:17.100 --> 00:25:19.650
We would stipulate to the dismissal of those claims,
539
00:25:19.650 --> 00:25:23.130
and then we would ask, we would bring a motion,
540
00:25:23.130 --> 00:25:25.050
a petition for award of our attorneys' fees
541
00:25:25.050 --> 00:25:29.010
pursuant to Article 10.2 of the contract,
542
00:25:29.010 --> 00:25:31.950
and then have one amended judgment after rescript
543
00:25:31.950 --> 00:25:34.913
that included this judgment plus all the attorneys' fees
544
00:25:34.913 --> 00:25:36.330
and then go off from there.
545
00:25:36.330 --> 00:25:38.250
We wouldn't need, you know, claims
546
00:25:38.250 --> 00:25:40.530
for a breach of implied contract.
547
00:25:40.530 --> 00:25:43.920
We wouldn't need unjust enrichment claims against the...
548
00:25:43.920 --> 00:25:47.013
Now then what would you do with the cross claims, right?
549
00:25:48.270 --> 00:25:53.250
That, I think, really illustrates why it was appropriate
550
00:25:53.250 --> 00:25:54.690
to enter separate and final judgment,
551
00:25:54.690 --> 00:25:58.070
because if it has been determined as a matter of law
552
00:25:58.070 --> 00:26:00.960
that Business Interiors is owed this money,
553
00:26:00.960 --> 00:26:04.470
why should Business Interiors's ability to get a judgment
554
00:26:04.470 --> 00:26:06.210
and execution and start to collect that money
555
00:26:06.210 --> 00:26:08.707
wait until Graycor says,
556
00:26:08.707 --> 00:26:10.920
"Wait, I wanna see if I can get the money back from..."
557
00:26:10.920 --> 00:26:12.090
But surely you understand,
558
00:26:12.090 --> 00:26:13.920
I'm not saying that it's this case,
559
00:26:13.920 --> 00:26:15.186
but surely there will be situations
560
00:26:15.186 --> 00:26:19.225
where someone requests payment under the statute,
561
00:26:19.225 --> 00:26:21.570
the other side rejects,
562
00:26:21.570 --> 00:26:24.689
or sorry, the other side untimely rejects, (chuckles)
563
00:26:24.689 --> 00:26:27.750
but has a really good defense to payment.
564
00:26:27.750 --> 00:26:31.170
And so in that situation, how is this all gonna unfold?
565
00:26:31.170 --> 00:26:33.930
In that situation is it appropriate for the lower court
566
00:26:33.930 --> 00:26:36.270
to enter a 54(b) judgment,
567
00:26:36.270 --> 00:26:37.710
to have an immediate appeal
568
00:26:37.710 --> 00:26:40.140
on the timeliness of the rejection
569
00:26:40.140 --> 00:26:43.380
while we still have pending below all the good reasons
570
00:26:43.380 --> 00:26:45.430
why actually they should not have to pay?
571
00:26:49.258 --> 00:26:52.110
You know, it's difficult to answer a hypothetical
572
00:26:52.110 --> 00:26:54.360
based on facts that we don't have in front of us,
573
00:26:54.360 --> 00:26:56.460
but if I can just compare it
574
00:26:56.460 --> 00:26:58.910
for example to the Tachi case, okay?
575
00:26:58.910 --> 00:27:03.910
In the Tachi case, the owner vigorously protested,
576
00:27:04.267 --> 00:27:06.030
"This is just unfair," right?
577
00:27:06.030 --> 00:27:09.108
That I have meritorious counterclaims
578
00:27:09.108 --> 00:27:12.330
back against the contractor.
579
00:27:12.330 --> 00:27:14.970
For example, they alleged you've overbilled me,
580
00:27:14.970 --> 00:27:18.346
you falsely submitted payment applications.
581
00:27:18.346 --> 00:27:23.346
And to effectuate the intent that you have to,
582
00:27:25.291 --> 00:27:27.000
as Justice Gaziano said,
583
00:27:27.000 --> 00:27:29.400
you have to let let the money flow, right,
584
00:27:29.400 --> 00:27:31.497
and then we'll fight about this later, right?
585
00:27:31.497 --> 00:27:33.031
But there are lots of statutes
586
00:27:33.031 --> 00:27:34.956
that have really important purposes
587
00:27:34.956 --> 00:27:37.350
where we wanna get people money,
588
00:27:37.350 --> 00:27:40.110
but Rule 54(b) still is a pretty stringent standard.
589
00:27:40.110 --> 00:27:41.190
For example, the Wage Act.
590
00:27:41.190 --> 00:27:43.560
Like everyone should be paid the money that they earn
591
00:27:43.560 --> 00:27:44.393
and so forth.
592
00:27:44.393 --> 00:27:45.857
So can you just,
593
00:27:45.857 --> 00:27:48.630
can you speak really practically to the question,
594
00:27:48.630 --> 00:27:51.270
which I think is the pertinent question under 54(b),
595
00:27:51.270 --> 00:27:55.560
is there a way to understand the Prompt Pay Act claim here
596
00:27:55.560 --> 00:27:58.173
as somehow not intertwined with the rest of it?
597
00:27:58.173 --> 00:28:00.870
Because it's just a simple question
598
00:28:00.870 --> 00:28:03.167
of did they meet the time standard or not.
599
00:28:03.167 --> 00:28:05.250
I think it's complicated,
600
00:28:05.250 --> 00:28:09.120
because it's essentially a breach of contract claim.
601
00:28:09.120 --> 00:28:10.091
Correct?
Yes.
602
00:28:10.091 --> 00:28:11.580
So it's complicated to say
603
00:28:11.580 --> 00:28:13.410
that there's a breach of contract claim
604
00:28:13.410 --> 00:28:14.540
that is not intertwined
605
00:28:14.540 --> 00:28:16.770
with the other breach of contract claims
606
00:28:16.770 --> 00:28:19.410
of the same contract that the other side has.
607
00:28:19.410 --> 00:28:20.243
Do you think
608
00:28:20.243 --> 00:28:22.560
that there they can be sort of severed from each other
609
00:28:22.560 --> 00:28:26.247
as not intertwined in an improper way vis-a-vis 54(b)?
610
00:28:27.150 --> 00:28:29.377
Well, I can understand your point, Your Honor.
611
00:28:29.377 --> 00:28:32.550
You know, there's, I think count one is breach of contract.
612
00:28:32.550 --> 00:28:34.560
Count two is breach of implied contract.
613
00:28:34.560 --> 00:28:36.870
All I can say is 'cause of practical matter
614
00:28:36.870 --> 00:28:39.841
is that count one is the flagship claim,
615
00:28:39.841 --> 00:28:42.359
and a lot of those other claims
616
00:28:42.359 --> 00:28:44.940
are kind of pled in the alternative.
617
00:28:44.940 --> 00:28:47.130
So for example, you know, it's common
618
00:28:47.130 --> 00:28:48.450
that if there hadn't been a PPA-
619
00:28:48.450 --> 00:28:53.450
I don't think that the issue really is about your claims.
620
00:28:53.959 --> 00:28:57.573
It's about the counterclaims.
621
00:28:58.740 --> 00:29:00.260
The cross claims.
Yes.
622
00:29:00.260 --> 00:29:01.740
Yes. So-
623
00:29:01.740 --> 00:29:05.910
Right, and so given that the two are intertwined
624
00:29:05.910 --> 00:29:08.853
with the contractual bases,
625
00:29:10.200 --> 00:29:14.610
normally under 54(b), we wouldn't allow a judge
626
00:29:14.610 --> 00:29:17.550
to enter separate and final judgment on one claim
627
00:29:17.550 --> 00:29:19.923
that is implicated by a cross claim.
628
00:29:22.470 --> 00:29:24.660
Normally you would not,
629
00:29:24.660 --> 00:29:29.580
but here I think there is benefit
630
00:29:29.580 --> 00:29:33.150
into having entry of separate and final judgment,
631
00:29:33.150 --> 00:29:37.860
so that, as I said, the entity that's owed the money
632
00:29:37.860 --> 00:29:39.360
can immediately collect the money
633
00:29:39.360 --> 00:29:41.340
as it's entitled to under the statute.
634
00:29:41.340 --> 00:29:45.417
And then what would be left of the cross claims
635
00:29:45.417 --> 00:29:50.417
is essentially the general contractor chasing the owner.
636
00:29:53.340 --> 00:29:55.960
So it's okay here in your case
637
00:29:57.120 --> 00:29:58.898
to have separate and final judgment.
638
00:29:58.898 --> 00:30:01.890
Yes, it is okay to have separate and final judgment.
639
00:30:01.890 --> 00:30:04.230
What about the other cases? I think that's the point.
640
00:30:04.230 --> 00:30:07.700
I mean, what's the rule you're asking us to...
641
00:30:09.270 --> 00:30:10.560
What do you want us to say here?
642
00:30:10.560 --> 00:30:12.150
That sometimes you can do it
643
00:30:12.150 --> 00:30:15.780
because it looks like the cross claims aren't gonna work?
644
00:30:15.780 --> 00:30:18.180
Well, you know, if I can use the question about,
645
00:30:18.180 --> 00:30:22.530
for example, the Wage Act, you know,
646
00:30:22.530 --> 00:30:24.513
as a reference point there,
647
00:30:28.530 --> 00:30:32.853
you know, I think that this statute really emphasizes,
648
00:30:34.740 --> 00:30:36.240
it has certain provisions
649
00:30:36.240 --> 00:30:39.540
where you have to accept or reject within 22 days,
650
00:30:39.540 --> 00:30:44.310
and then you have to pay within 45 days under approval.
651
00:30:44.310 --> 00:30:46.200
It's a very, very detailed regimen.
652
00:30:46.200 --> 00:30:48.714
And without having the Wage Act right in front of me,
653
00:30:48.714 --> 00:30:50.179
I don't think there's-
654
00:30:50.179 --> 00:30:51.012
Isn't the purpose of the PPA
655
00:30:51.012 --> 00:30:55.140
to basically level the floor on the power disparity
656
00:30:55.140 --> 00:30:57.240
between the GC and the sub?
Yes.
657
00:30:57.240 --> 00:30:59.599
So that there are subcontractors who become bankrupt
658
00:30:59.599 --> 00:31:02.850
in projects when if they don't get paid,
659
00:31:02.850 --> 00:31:06.150
they can't wait for the final litigation.
660
00:31:06.150 --> 00:31:08.280
Absolutely, and I think,
661
00:31:08.280 --> 00:31:10.159
now, fortunately that has not happened here,
662
00:31:10.159 --> 00:31:13.860
but this really, the fact pattern we have before here
663
00:31:13.860 --> 00:31:17.700
is really exactly what the statute was designed to prevent,
664
00:31:17.700 --> 00:31:22.440
which is a subcontractor performs work,
665
00:31:22.440 --> 00:31:24.420
sends the invoice to the general contractor,
666
00:31:24.420 --> 00:31:26.859
and the general contractor just ignores it,
667
00:31:26.859 --> 00:31:31.530
and then forces the sub to chase the general.
668
00:31:31.530 --> 00:31:33.016
In the intervening time period,
669
00:31:33.016 --> 00:31:38.016
the sub has to, you know, maybe out money for its suppliers,
670
00:31:38.220 --> 00:31:42.037
it has to pay an attorney to chase the-
671
00:31:44.640 --> 00:31:46.020
Can I ask a technical question?
672
00:31:46.020 --> 00:31:47.010
Yes.
We're gonna lose you,
673
00:31:47.010 --> 00:31:51.313
and the definition of contract for construction.
674
00:31:51.313 --> 00:31:53.880
A contract for which a lien may be established
675
00:31:53.880 --> 00:31:57.213
under Sections 2 or 4 of Chapter 254,
676
00:31:58.050 --> 00:32:00.420
that you couldn't get a lien here, right?
677
00:32:00.420 --> 00:32:03.120
So I'm just, how do we make sense of that?
678
00:32:03.120 --> 00:32:05.910
Is that just bad drafting by the legislature?
679
00:32:05.910 --> 00:32:07.860
Well, I would say this.
680
00:32:07.860 --> 00:32:10.020
I agree with the ASM brief
681
00:32:10.020 --> 00:32:11.730
that what's intended there is it's intended
682
00:32:11.730 --> 00:32:14.460
as a shorthand reference to the types of contracts
683
00:32:14.460 --> 00:32:16.500
that are subject to the PPA, so-
684
00:32:16.500 --> 00:32:19.154
It's a sort of a strange shorthand, isn't it?
685
00:32:19.154 --> 00:32:21.960
I can understand the point Your Honor is making,
686
00:32:21.960 --> 00:32:24.960
however, how I interpret it is
687
00:32:24.960 --> 00:32:29.790
in the lien law there is this kind of verbose language
688
00:32:29.790 --> 00:32:31.680
which defines what is construction.
689
00:32:31.680 --> 00:32:35.430
It's for the alteration, repair, or something
690
00:32:35.430 --> 00:32:38.340
of improvements to real property, et cetera.
691
00:32:38.340 --> 00:32:42.040
So the legislature, instead of just copying and pasting
692
00:32:42.040 --> 00:32:44.400
that, you know, language
693
00:32:44.400 --> 00:32:46.890
and then having a longer definition
694
00:32:46.890 --> 00:32:49.560
of contractor for construction,
695
00:32:49.560 --> 00:32:52.230
it just imported the definition from the lien law,
696
00:32:52.230 --> 00:32:57.230
and I guess it also, so that's my answer to your question.
697
00:32:57.454 --> 00:32:59.973
They could have just written it, you know,
698
00:33:00.930 --> 00:33:03.990
contract for construction sort of self-explanatory
699
00:33:03.990 --> 00:33:04.980
in many ways.
700
00:33:04.980 --> 00:33:07.646
Yes. This is indeed a contract for construction.
701
00:33:07.646 --> 00:33:11.880
No, it's a contract for construction, certainly,
702
00:33:11.880 --> 00:33:14.966
but it's not a contract for which a lien may be established
703
00:33:14.966 --> 00:33:19.110
against the contractor, I mean against the GC, right?
704
00:33:19.110 --> 00:33:21.600
'Cause they don't own the property.
705
00:33:21.600 --> 00:33:25.170
So then, if I could, I see that I'm, I think, over time,
706
00:33:25.170 --> 00:33:28.200
but just one last comment which relates to this argument.
707
00:33:28.200 --> 00:33:30.630
This is another argument that was not properly preserved
708
00:33:30.630 --> 00:33:32.987
because the fact which anchors this argument
709
00:33:32.987 --> 00:33:35.126
is the lease termination.
710
00:33:35.126 --> 00:33:37.467
The lease termination on the record at 433
711
00:33:37.467 --> 00:33:40.770
was not part of the summary judgment record.
712
00:33:40.770 --> 00:33:42.690
So the trial court could not have erred
713
00:33:42.690 --> 00:33:44.370
in failing to consider this argument
714
00:33:44.370 --> 00:33:45.360
that was based on a fact
715
00:33:45.360 --> 00:33:47.700
which wasn't in the summary judgment record,
716
00:33:47.700 --> 00:33:49.680
was just slipped into the back of the appendix
717
00:33:49.680 --> 00:33:50.520
for the first time,
718
00:33:50.520 --> 00:33:52.740
and is the subject of our unopposed motion to strike.
719
00:33:52.740 --> 00:33:54.100
Argument is not something
720
00:33:54.941 --> 00:33:55.774
that was made at summary judgment?
721
00:33:55.774 --> 00:33:58.304
It was made for the first time in oral argument
722
00:33:58.304 --> 00:34:00.420
on the summary judgment motion.
723
00:34:00.420 --> 00:34:03.188
But there is nothing in the summary judgment record
724
00:34:03.188 --> 00:34:05.910
about the lease termination.
725
00:34:05.910 --> 00:34:06.750
Gotcha. Okay.
726
00:34:06.750 --> 00:34:08.980
But, I'm sorry, Chief.
727
00:34:08.980 --> 00:34:11.757
Is there, I'm sorry.
728
00:34:11.757 --> 00:34:15.420
I thought that under Section 4 of the Lien Act,
729
00:34:15.420 --> 00:34:18.990
you could, at the time you entered into the subcontract,
730
00:34:18.990 --> 00:34:20.760
your client entered into the subcontract,
731
00:34:20.760 --> 00:34:24.240
there could have been the lien established on the leasehold.
732
00:34:24.240 --> 00:34:26.249
Is that incorrect? That's how I read it.
733
00:34:26.249 --> 00:34:28.340
Well, what they could have filed,
734
00:34:28.340 --> 00:34:30.240
they could have filed a notice of contract.
735
00:34:30.240 --> 00:34:31.590
There's a series of steps:
736
00:34:31.590 --> 00:34:33.600
notice of contract, statement of account,
737
00:34:33.600 --> 00:34:38.280
and then ultimately you file an action to preserve the lien,
738
00:34:38.280 --> 00:34:40.770
and that provides, you know, security
739
00:34:40.770 --> 00:34:42.840
for a claim like this one.
740
00:34:42.840 --> 00:34:43.980
So I also think that the-
741
00:34:43.980 --> 00:34:47.624
But I guess given the fact that I think it was Pacific
742
00:34:47.624 --> 00:34:51.063
was leasing the property, right?
743
00:34:53.264 --> 00:34:58.264
Was a lien available to BI under Section 4?
744
00:35:00.630 --> 00:35:03.060
I believe a lien was available to BI,
745
00:35:03.060 --> 00:35:04.193
but they just didn't-
746
00:35:04.193 --> 00:35:05.700
All it has to be is a contract
747
00:35:05.700 --> 00:35:07.170
for which a lien may be established.
748
00:35:07.170 --> 00:35:10.351
Correct. Correct.
Okay.
749
00:35:10.351 --> 00:35:12.997
And I see that I'm out of time, but thank Your Honors.