Appeals Court of Massachusetts

Case no.: 25-P74
Date filed: June 10, 2026

A Massachusetts appellate court has ruled that for purposes of public works payment bond protection, a labor union had a “contractual relationship” with the prime contractor. The union could pursue the bond for a subcontractor’s unpaid benefit plan contributions.

CTA Construction Co. Inc. was the prime contractor for public building projects in Randolph and Dedham, Massachusetts. CTA Construction obtained payment bonds, required by the state public works statute, from Arch Insurance Company.

CTA awarded subcontracts to Mass Construction and Management Inc. (Mass). Both companies were signatories to a collective bargaining agreement with the New England Regional Council of Carpenters (the union). The agreement required CTA, as general contractor, to assist the union in collecting benefit contributions from subcontractors. This included issuing two-party checks to subcontractors that were delinquent in their contributions.

Under the payment bond statute (Massachusetts G. L., chapter 149, section 29), parties with a “contractual relationship” with the prime contractor have payment rights against the bond without any notice to the contractor or its surety. Parties without a contractual relationship must give the contractor written notice of a claim within 65 days after the last day of furnishing labor or materials to the project.

Several days prior to the completion of the Randolph and Dedham projects, the union—through its in-house collection agency—gave CTA written notice of a payment bond claim for benefit contributions that Mass allegedly failed to pay. Arch Insurance refused to pay because the notice was premature, and no timely notice was provided within 65 days of completion. The union, through its in-house collection agency, sued Arch Insurance.

The Norfolk County Superior Court ruled the union had no contractual relationship with the contractor, CTA Construction, and failed to provide timely written notice of the claim. The court granted summary judgment in favor of Arch Insurance, and the union appealed.

The Appeals Court of Massachusetts acknowledged that, on a construction project, a contractual relationship typically involves subcontractors and suppliers dealing directly with the prime contractor. The payment bond statute does not use terms such as “direct contract” or “privity of contract” and instead uses the broader term “contractual relationship.”

The court said the collective bargaining agreement conferred contractual rights on the union. CTA was required to assist the union in collecting benefit contributions from CTA subcontractors. In addition, CTA was required to issue two-party checks to its subs upon proper request by the union. This constituted a “contractual relationship.” The in-house collection agency, acting on behalf of the trustees of the union benefit plans, was an intended beneficiary under this contractual relationship. Consequently, no statutory written notice of claim was required, and the deficiencies in the union’s notice were of no concern.

“Where the plaintiffs and CTA had a contractual relationship arising out of the collective bargaining agreement of which the plaintiffs were intended third-party beneficiaries, no written notice of their claims was required under section 29. Accordingly, we vacate the entry of summary judgment and remand for further proceedings consistent with this opinion.”

The collective bargaining agreement included a procedure for the union to make a written demand to the prime contractor to issue two-party checks to any subcontractor delinquent in collecting benefit contributions. This process was distinct from the statutory requirement for a written notice of claim against the payment bond.

The union’s premature notice of claim was presumably intended to inform the prime contractor before final payment was released to the subcontractor. It would have been prudent for the union to demand a two-party check in accordance with the collective bargaining agreement and later file a timely notice of claim against the payment bond.

Participants:
For New England Carpenters: Luke Liacos
For Arch Insurance: Mansooruddin Ahmed
Before: Judges Massing, Sacks, and Allen
Opinion by: Judge Allen
Outcome: Summary judgment reversed; matter remanded

Source: Attach the complete opinion or decision PDF here.