BRT Management LLC v. Malden Storage LLC et al

Filing 206

Chief Judge F. Dennis Saylor, IV: ORDER entered. FINDINGS OF FACT, CONCLUSIONS OF LAW, AND MEMORANDUM AND ORDER ON MOTION TO STRIKE AND CROSS-MOTIONS FOR DIRECTED VERDICT (Halley, Taylor)

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 1 of 72

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
_____________________________________

)
BRT MANAGEMENT LLC,
)
)
Plaintiff/
)
Counterclaim Defendant,
)
)
v.
)
)
MALDEN STORAGE, LLC and PLAIN )
AVENUE STORAGE, LLC,
)
)
Defendants/
)
Counterclaim Plaintiffs/
)
Third-Party Plaintiffs,
)
)
and
)
)
BRIAN WALLACE,
)
)
Third-Party Defendant.
)
_____________________________________ )

Civil Action No.
17-10005-FDS

FINDINGS OF FACT, CONCLUSIONS OF LAW, AND
MEMORANDUM AND ORDER ON MOTION TO STRIKE
AND CROSS-MOTIONS FOR DIRECTED VERDICT
SAYLOR, C.J.
I.

Introduction
This is a dispute between an owner and a contractor over the construction of two self-

storage facilities, one in New Rochelle, New York, and one in Malden, Massachusetts. Plaintiff
and counterclaim defendant BRT Management LLC is the contractor, and third-party defendant
Brian Wallace is the principal of BRT. Defendants, counterclaim plaintiffs, and third-party
plaintiffs Plain Avenue Storage, LLC and Malden Storage, LLC are entities created by the
effective owner, a company doing business as Banner Real Estate Group. Jurisdiction is based

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 2 of 72

on diversity of citizenship.
The matter was tried to the Court without a jury between April 26 and May 6, 2021. The
Court’s findings of fact and conclusions of law are set forth below.
II.

Findings of Fact
A.

Parties

1.

BRT Management LLC is a limited liability company based in Massachusetts.

(Tr. 1:31). It is owned by Brian Wallace, who is a resident of Massachusetts. (Id.; Tr. 1:27).
2.

Malden Storage LLC and Plain Avenue Storage LLC (collectively, “Banner”) are

limited liability companies organized under Delaware law that are based in Illinois. (Answer ¶¶
2-3). They are affiliated with Banner Storage Group, LLC.
B.

The Lynn Project

3.

In 2014, Lynn Storage, LLC, which is also affiliated with Banner, contracted with

BRT to remodel a storage facility in Lynn, Massachusetts. (Tr. 1:34; Tr. 6:90-91; Tr. 8:6-8).
That contract was the first contract between BRT and an affiliate of Banner. (Id.).
4.

The Lynn project was nearly complete by the beginning of 2015. (Tr. 6:95-96).

Around that time, BRT submitted a series of change-order requests that totaled $478,171. (Ex.
1558, at 1; Ex. 1021, at 16-24).
5.

Bill Henry, President of Banner, and Jim Merkey, Vice President of Construction

for Banner, reviewed those requests. (Tr. 6:97; Tr. 7:99). Upon their initial review, they
believed that most of the requests were associated with the design-build components of the
contract, for which they thought BRT was responsible. (Ex. 1348; Tr. 7:101). They, along with
Gary Delaney, who at that time was President of Banner, planned a visit to the Lynn site to meet
with Wallace to discuss the change orders. (Tr. 6:100; Tr. 7:106).
6.

On February 10, 2015—the day before the site visit in Lynn—Henry, Merkey,
2

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 3 of 72

and Delaney met in Boston and agreed that $300,000 was a fair settlement amount for the change
orders. (Tr. 7:110).
7.

The following day, Henry, Merkey, and Delaney met with Wallace at the Lynn

site. (Tr. 6:100; Tr. 7:107). 1 At the end of that meeting, they offered Wallace $300,000 to settle
the change-order dispute. (Id.). They believed that the remaining $178,171 was contract work
for which BRT was responsible. (Tr. 6:102; Tr. 7:107-08).
8.

Wallace was not happy with the offer but nonetheless accepted it. (Tr. 6:102; Tr.

7:108-09).
9.

Because Wallace was not happy with the settlement, Henry informed Wallace that

Banner would give him the opportunity to work on a future project, which Banner would not put
out for bid. (Tr. 6:109). Banner subsequently offered the New Rochelle and Malden projects to
BRT without putting them out for bid. (Id.).
10.

To execute the settlement, Banner agreed to approve the change orders totaling

$478,171, and Wallace agreed to submit a deductive change order in the amount of $178,171.
(Tr. 6:102; Ex. 1001). Wallace submitted that change order on March 16, 2015. (Tr. 3:105; Ex.
1021, at 25).
11.

On June 10, 2015, Wallace executed the “Subcontractor Final Payment

Certification, Release and Final Lien Waiver” before a notary public. (Ex. 1004). In doing so,
Wallace certified, among other things, that BRT had “received in full for all labor, materials, and
other items furnished in connection with improvements to real property or any other work
performed” for the Lynn project for work performed through June 10, 2015. (Id.). That

1
Henry testified that Frank Quigley, who was hired by Banner as the construction manager on the Lynn
project, was at the site visit. (Tr. 6:10). Merkey testified that the project architect was at the site visit. (Tr. 7:107).

3

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 4 of 72

document states that the “Total Amount of Final Check” is $0. (Id.).
12.

On June 19, 2015, Wallace confirmed by letter that Pay Application #10 was the

“final” pay application on the Lynn project, which would result in $241,701.76 to be paid to
BRT. (Ex. 1006, at 1). That letter included as an attachment an executed “Certification, Waiver
of Lien, and Release of Claims,” which Wallace described as a “full and final lien waiver,” and
wiring instructions. (Id. at 1-4).
13.

That same day, Wallace executed an “Estoppel Certificate” with Sovran

Acquisition Limited Partnership, which had purchased the facility from Lynn Storage. (Ex.
1007). Wallace certified, among other things, that “[a]ll obligations of the parties” under the
construction contract between BRT and Lynn Storage “have been complied with.” (Id. at 1). He
further certified that “[a]ll payments, charges and other costs owed” under that contract “have
been paid in full and are current.” (Id.).
14.

As a condition of purchase, a Sovran subsidiary, Uncle Bob’s Storage, requested

that certain work beyond the original contract between BRT and Lynn Storage be completed at
the Lynn facility. (Ex. 1008, at 6-7). On July 13, 2015, BRT and Lynn Storage executed a
“punch-list” contract for completion of that work. (Id. at 2-5). That contract provided that Lynn
Storage would pay $291,818.69 to BRT for the punch-list work. (Id. at 2). 2
15.

BRT completed the punch-list work and was paid $291,818.79. (Tr. 4:9-10; Ex.

1012; Ex. 1013; Ex. 1017).
16.

In addition to the punch-list work, BRT completed further “extra” work beyond

the original contract. (Ex. 1010, at 1). That work was memorialized in a “Summary” document

2
The punch-list contract included fixed-cost components, totaling $176,118.69, and components that were
to be billed on a time-and-materials basis, which were not to exceed $115,700. (Ex. 1008, at 2).

4

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 5 of 72

initialed by Lynn Storage and BRT representatives on June 26, 2015. (Id.). That document
indicates that the cost of that “extra” work totaled $48,988.09. (Id.).
17.

BRT completed the “extra” work and was paid $48,988.09. (Ex. 1009).

C.

The New Rochelle and Malden Contracts

18.

In early 2016, after completion of the Lynn project, Banner, through its affiliates

Plain Avenue Storage and Malden Storage, executed two contracts with BRT for construction of
storage facilities. (Tr. 6:125; Ex. 1026; Ex. 1182).
19.

The contract between Plain Avenue Storage and BRT called for construction of a

storage facility in New Rochelle, New York. (Ex. 1026, at 2). It was executed on January 8,
2016, effective “as of” October 27, 2015. (Id.). It was amended in writing on April 19, 2016, to
modify the insurance requirements imposed on BRT and its subcontractors. (Ex. 1026.1).
20.

The Guaranteed Maximum Price (“GMP”) for the New Rochelle contract was

$7,838,882. (Ex. 1026, at 6). 3 BRT was to earn a lump sum of $383,500 and up to 4% of the
cost of work for overhead and up to 6% of the cost of work for profit. (Id.).
21.

The New Rochelle contract required that BRT achieve substantial completion of

the work within 365 days from the date of commencement of the contract. (Id. at 5). The date of
commencement was “upon receipt of all necessary permits, and full execution” of the contract,
“whichever occurs last.” (Id. at 4).
22.

The contract between Malden Storage and BRT called for construction of a

storage facility in Malden, Massachusetts. (Ex. 1182, at 2). It was executed on February 2,
2016, effective “as of” October 27, 2015. (Id.).
The Guaranteed Maximum Price represents the maximum amount BRT would charge Plain Avenue
Storage “if [there were] no changes . . . for unperceived conditions.” (Tr. 1:48; see also Tr. 8:84 (“[T]he designbuilder in this instance is guaranteeing that the price will not be above that maximum price.”)). It includes the cost
of the work plus BRT’s fee. (Ex. 1026, at 6).
3

5

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 6 of 72

23.

The Guaranteed Maximum Price for the Malden contract was $7,219,173. (Id. at

6). BRT was to earn a lump sum of $350,010 and up to 4% of the cost of work for overhead and
up to 6% of the cost of work for profit. (Id.).
24.

The Malden contract required that BRT achieve substantial completion of the

work within 335 days from the date of commencement of the contract. (Id. at 5). Like the New
Rochelle contract, the date of commencement was “upon receipt of all necessary permits, and
full execution” of the contract, “whichever occurs last.” (Id. at 4).
25.

The New Rochelle and Malden contracts included integration clauses: “The

Design-Build Contract represents the entire and integrated agreement between the parties hereto
and supersedes prior negotiations, representations or agreements, either written or oral.” (Ex.
1026, at 3; Ex. 1182, at 3). The contracts also stated that the parties agree that BRT had
“performed certain design work” before the execution of the contracts and that that work would
be “included and governed” by the contracts. (Ex. 1026, at 4; Ex. 1182, at 4).
26.

The New Rochelle and Malden contracts provided that the “[t]ime limits stated in

the Design-Build Documents are of the essence of the Design-Build Contract.” (Ex. 1026, at 40;
Ex. 1182, at 34). They further provided that “[b]y executing the Design-Build Contract, the
Design-Builder confirms that the Contract Time is a reasonable period for performing the Work”
and that “[t]he Design-Builder shall proceed expeditiously with adequate forces and shall
achieve Substantial Completion within the Contract Time, subject to the terms and conditions
herein.” (Id.).
27.

The New Rochelle and Malden contracts provided that progress payments would

be based on the percentage of completion for each portion of work: “Applications for Payment
where the Contract Sum is based upon the Cost of Work Plus a Fee with a Guaranteed Maximum

6

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 7 of 72

Price shall show the percentage of completion of each portion of the Work as of the end of the
period covered by the Application for Payment.” (Ex. 1026, at 10; Ex. 1182, at 10). They
detailed how the percentage of completion and the amount of each progress payment were to be
calculated. (Ex. 1026, at 10-11; Ex. 1182, at 10-11).
28.

The New Rochelle and Malden contracts identified four ways by which they

could be modified: “(1) a written amendment to the Design-Build Contract signed by both
parties, (2) a Change Order, (3) a Construction Change Directive or (4) a written order for a
minor change in the Work issued by the Owner.” (Ex. 1026, at 3; Ex. 1182, at 3).
29.

The New Rochelle and Malden contracts provided a procedure by which disputes

concerning claims for concealed or unknown conditions would be resolved:
If conditions are encountered at the site which are (1) subsurface or otherwise
concealed physical conditions which differ materially from those indicated in the
Design-Build Documents or (2) unknown physical conditions of an unusual
nature which differ materially from those ordinarily found to exist and generally
recognized as inherent in construction activities of the character provided for in
the Design-Build Documents, then the observing party shall give notice to the
other party promptly before conditions are disturbed and in no event later than 21
days after first observance of the conditions.
The Owner shall promptly investigate such conditions and, if they differ
materially and cause an increase or decrease in, the Design­Builder’s cost of, or
time required for, performance of any part of the Work, shall negotiate with the
Design-Builder an equitable adjustment in the Contract Sum or Contract Time, or
both. If the Owner determines that the conditions at the site are not materially
different from those indicated in the Design-Build Documents and that no change
in the terms of the Design-Build Contract is justified, the Owner shall so notify
the Design-Builder in writing, stating the reasons.
Claims by the Design-Builder in opposition to such determination must be made
within 21 days after the Owner has given written notice of the decision. If the
conditions encountered are materially different, the Contract Sum and Contract
Time shall be equitably adjusted, but if the Owner and Design-Builder cannot
agree on an adjustment in the Contract Sum or Contract Time, the adjustment
shall proceed pursuant to Section A.4.2.
(Ex. 1026, at 35; Ex. 1182, at 29).
7

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 8 of 72

30.

The New Rochelle and Malden contracts included a document titled “Outline

Specifications” as Exhibit E. (Ex. 1026, at 79; Ex. 1182, at 77). That document stated that BRT
would provide “complete design/build services from furnishing of the design, coordinating the
permits and entitlements, completing the construction, and turning over the building.” (Ex.
1026, at 82; Ex. 1182, at 80). It further stated that BRT would “apply for, coordinate and obtain
all required trade permits.” (Ex. 1026, at 84; Ex. 1182, at 81). 4
31.

Exhibit E further provided that items not included in BRT’s scope of work unless

required by applicable codes include “[u]nforeseen conditions”; “[p]oor soils remediation
including installation of deep foundations, surcharge loading, soil stabilization, moisture control
of soil, sink hole remediation, undercutting and replacement of structurally unsound soils, etc,
except as explicitly noted in the provided outline specification”; and “[r]emoval and/or disposal
of underground or hidden obstructions, i.e. trash, toxics, rock, rubble, underground storage
tanks., etc.” (Ex. 1026, at 102; Ex. 1182, at 99).
32.

Claims arising out of the New Rochelle and Malden contracts were “subject to

mediation as a condition precedent to arbitration or the institution of legal or equitable or other
binding dispute resolution proceedings by either party.” (Ex. 1026, at 37; Ex. 1182, at 30). 5 If
the parties did not resolve their dispute through mediation, “the method of binding dispute
resolution [was] . . . [l]itigation in a court of competent jurisdiction.” (Ex. 1026, at 11-12; Ex.
Exhibit E also stated that “[o]perating permits including, but not limited to business licenses, hazardous
material permits, or environmental permits,” would be provided by Banner. (Ex. 1026, at 101; Ex. 1182, at 98).
Although the contract does not expressly refer to building or construction permits, the parties operated as if BRT
were responsible for obtaining such permits. (See, e.g., Ex. 211.1 (proposed change order from BRT for, among
other things, “fil[ing] for a special permit to allow asphalt, brick, Concrete, and soil recycling use of property”)).
4

The contracts defined a “claim” as “a demand or assertion by one of the parties seeking, as a matter of
right, adjustment or interpretation of Design-Build Contract terms, payment of money, extension of time or other
relief with respect to the terms of the Design-Build Contract.” (Ex. 1026, at 35; Ex. 1182, at 28). It also included
“other disputes and matters in question between the Owner and Design-Builder arising out of or relating to the
Design-Build Contract.” (Id.).
5

8

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 9 of 72

1182, at 12).
33.

The New Rochelle and Malden contracts provided that Plain Avenue Storage or

Malden Storage could terminate the contracts for cause if BRT:
1. persistently or repeatedly refuses or fails to supply enough properly skilled
workers or proper materials;
2. fails to make payment to Contractors for services, materials or labor in
accordance with the respective agreements between the Design-Builder and the
Architect and Contractors;
3. persistently disregards laws, ordinances or rules, regulations or orders of a
public authority having jurisdiction; or
4. otherwise is guilty of substantial breach of a provision of the Design-Build
Documents.
(Ex. 1026, at 52; Ex. 1182, at 46).
34.

The New Rochelle or Malden contracts provided that if a claim arising out of the

contract is decided by, among other things, litigation, the prevailing party in that dispute is
entitled to receive “all of its reasonable costs and expenses incurred in connection with such
litigation, . . . including reasonable attorneys’ fees, filing fees, expert witness fees, discovery
expenses, and any other reasonable costs incurred in prosecuting or defending” the action. (Ex.
1026, at 37; Ex. 1182, at 31).
D.

The New Rochelle Project
1.

35.

Progress of Work

Before the execution of the New Rochelle contract, BRT entered into oral

contracts with KOH Architecture PLLC, JAG Engineering LLC, and Whitestone Geotechnical
Associates to perform certain architectural, engineering, and geotechnical services for the
project. (Tr. 1:56-57). They performed that work and were paid in full. (Id.). BRT invoiced
Plain Avenue Storage for that work. (Tr. 1:104-105).

9

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 10 of 72

36.

Banner closed on the purchase of the site for the New Rochelle project on January

23, 2016. (Tr. 7:25).
37.

Asbestos abatement, a process through which asbestos is removed from an

existing structure, was scheduled to start on January 25. (Ex. 1026, at 107; Tr. 7:26-27). It was
delayed, however, because BRT failed to provide a certificate of worker’s compensation
insurance, which was required by the City of New Rochelle before it would issue a building
permit. (Tr. 7:25-27). BRT did not apply for that certificate until January 21. (Tr. 7:25). It
obtained the certificate in early March. (Tr. 7:25).
38.

The Notice to Proceed was issued on March 14. (Ex. 1027, at 2).

39.

Asbestos abatement was scheduled to take ten days. (Ex. 1026, at 107). It took

approximately 24 to 26 days. (Tr. 7:27).
40.

Demolition was scheduled to start on February 8, to be completed by February 29.

(Ex. 1026, at 107). BRT failed to timely apply for the demolition permit. (Tr. 7:27-28). The
permit was issued on May 9, only after Plain Avenue Storage contacted New Rochelle officials,
who informed Plain Avenue Storage that BRT was required to apply for the permit in person.
(Id.). Demolition took more than two months to complete. (Id.). It finished on July 18. (Id.).
41.

BRT was scheduled to excavate test pits in May 2016. (Ex. 1026, at 108).

Whereas other soil-exploration techniques, such as borings, provide limited information
concerning underground conditions, test pits allow for a more complete analysis of such
conditions. (Tr. 5:26). They are intended to reveal the condition of the soil, including “organic
layers and various fill,” and the condition of the existing foundation. (Id.).
42.

BRT did not start the test pits until June 30. (Tr. 7:28). They were completed on

July 6, but the results were not provided to Plain Avenue Storage until five weeks later, on

10

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 11 of 72

August 12. (Id.).
43.

Even by that date, approximately seven months after work was scheduled to

begin, the New Rochelle site lacked several basic components of typical construction sites. For
example, it did not have a trailer, which would allow the site superintendent to manage the work
and provide an on-site bathroom for workers to use. (Tr. 7:30-32). Henry visited the New
Rochelle site on five occasions; on four of those occasions, no site supervisor was present. (Tr.
7:31).
44.

By mid-August, the New Rochelle project was approximately 80 days behind

schedule. (Tr. 7:29).
2.
45.

Change Orders #3 and #4

Plain Avenue Storage contracted with Whitestone to produce geotechnical reports

for the New Rochelle site. (Tr. 7:34-35). The geotechnical reports presented “the results of
Whitestone’s soils exploration efforts and . . . recommendations for design of the proposed
structural foundations, pavements, and related earthwork associated with the proposed site
redevelopment.” (Ex. 1341, at 2). Whitestone produced three reports: two before the execution
of the contract between Plain Avenue Storage and BRT and one after the execution of that
contract. (Ex. 1341 (February 2015 report); Ex. 1342 (September 2015 report); Ex. 1343
(August 2016 report)).
46.

The findings and recommendations of the first two reports were “essentially” the

same. (Tr. 5:21). 6 According to Ryan Roy, one of BRT’s expert witnesses and a principal at
Whitestone, there was “no reason to believe” based on the first two reports “that the existing

6

(Tr. 5:21).

The second report was based on “a handful of additional exploration borings” compared to the first report.

11

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 12 of 72

foundations would not be reused.” (Tr. 5:25). 7
47.

JAG Engineering and KOH Architecture used the second Whitestone report to

prepare their designs for the New Rochelle project. (Tr. 1:41). Their designs were approved by
the City of New Rochelle in March 2016, when the city issued the building permit. (Tr. 1:4142). That permit describes the work as an “[a]ddition to existing foundation to include four story
building . . . .” (Ex. 106.2, at 2).
48.

According to Wallace, the original plan for the New Rochelle project included (1)

installing interior pier columns throughout the structure; (2) installing rigid inclusions in the
center and eastern portions of the structure; and (3) reusing the existing perimeter foundation.
(Tr. 1:90-93; Ex. 110.1, at 3). BRT’s final budget for the New Rochelle project included
$242,715 for ground-improvement work. (Tr. 7:36-38; Ex. 1432, at 2-4).
49.

During demolition, BRT discovered, among other things, that some of the soil on

site was unsuitable and that portions of the existing structure were supported by grade beams
instead of foundation walls. (Tr. 1:82-83; Tr. 2:7-8; Tr. 5:26). Grade beams extend up to two
feet below grade whereas foundation walls extend below the frost line. (Tr. 1:83). The New
Rochelle building code did not allow for the structure to be built upon grade beams. (Id.).
50.

After those discoveries, Whitestone was hired to complete the third geotechnical

assessment. (Tr. 1:84). As part of that assessment, Whitestone excavated supplemental test pits.
(Tr. 1:84; Tr. 5:26). The supplemental test pits included several along the structure’s south side,
where Whitestone had previously been unable to perform exploratory subsurface investigation
because the existing building had not been demolished. (Tr. 5:36-37; Ex. 1343, at 9).

Roy did not participate in preparing the Whitestone reports for New Rochelle. (Tr. 5:31). Another
Whitestone principal, Larry Keller, authored the reports, and Roy discussed them with him during the drafting
process. (Tr. 5:30-31).
7

12

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 13 of 72

51.

Whitestone provided the results of the third geotechnical assessment on August

12, 2016. (Ex. 1343). According to Roy, that assessment found, among other things, that “the
existing foundations were not real foundations” and “were not compliant with current standards”
and that soil stabilization was necessary for a larger area than originally anticipated. (Tr. 5:2627).
52.

BRT raised the issues concerning the subsurface conditions with Plain Avenue

Storage. (Ex. 110.3, at 1). On August 9, 2016, Plain Avenue Storage responded that “[a]fter
reviewing the Geotechnical reports of February 2, 2015 and September 3, 2015, it appears that
Whitestone Associates, Inc. has not changed their geotechnical recommendations.” (Id.). It
further responded that “[a]bsent additional information indicating Whitestone’s
recommendations have changed or there is a significant change in the quantity of soils needing
improvement, [Plain Avenue Storage would] not be able to approve [BRT’s] proposed change
order.” (Id.).
53.

A few days later, BRT again raised the issues concerning the subsurface

conditions. (Ex. 110.5, at 1). Plain Avenue Storage requested that BRT submit a proposed
change order that included (1) “[t]he original basis and design of [BRT’s] GMP of foundations
and associated sitework based on the geotechnical report recommendations from Whitestone”
and (2) “[t]he revised basis and design for [BRT’s] GMP of foundations and associated sitework
based on the supplemental geotechnical report recommendations from Whitestone.” (Id.). Plain
Avenue Storage instructed BRT to “[h]ighlight in the report what recommendations have
changed that have caused [its] scope of work to change that were not in the original report.”
(Id.).
54.

On August 15, 2016, BRT submitted Change Order #3 for “[a]dditional ground

13

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 14 of 72

improvements not originally carried in base contract.” (Ex. 1124, at 3).
55.

The next day, Plain Avenue Storage rejected that change order. It stated that “the

original geotechnical report contains the same recommendations as the supplemental
geotechnical report in regards to the ground improvements below foundations and floor slabs”
and “both report recommendations included RAPs, CMCs, or overexcavation and recompaction
and/or replacement of unsuitable existing fill and organic materials.” (Ex. 110.7, at 1). 8 It
concluded that the proposed work was “contract work” and that it was “BRT’s
responsibility . . . to provide a design that meets geotechnical requirements and design intent in
the GMP contract.” (Id.).
56.

During the second half of August 2016, BRT and Plain Avenue Storage went

back and forth concerning potential change orders related to the subsurface conditions. (See,
e.g., Tr. 7:40-55; Exs. 110.8, 110.9, 110.10, 110.13. 110.14, 110.16, 110.22, 110.23, 110.24,
110.26). Several Plain Avenue Storage representatives, including Bill Henry, Rick Henry, Joe
Zekian, and Jim Merkey, repeatedly reviewed the proposed change orders and supporting
documentation, such as the contract documents and geotechnical reports. (Tr. 7:40-55). They
visited the site multiple times to review the ground conditions. (Tr. 7:41-42). They requested
that BRT submit specific supporting documentation in support of the potential change orders.
(Ex. 1133).
57.

Around that time, Bill Henry met with Kent McCreedy, Banner’s CEO, and Milt

Pinsky, Banner’s Chairman. (Tr. 7:55). They discussed Banner’s “displeasure with everything

Rammed aggregate piers (“RAPs”) and controlled modulus columns (“CMCs”) are ground-improvement
techniques. (Tr. 5:21-24). RAPs are columns of compacted, crushed stone that are installed to stabilize the soil and
support the foundation of a building. (Tr. 5:21-23). CMC is a trade name for rigid inclusions. (Tr. 5:23). Rigid
inclusions are columns that include grout or cement, which prevents them from “bulb[ing] out,” particularly in soft
soils. (Tr. 5:23-24).
8

14

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 15 of 72

that was going on [with] the project and that it was getting more and more difficult to talk with
[its] equity partners on the progress of the project . . . and . . . to get through the day-to-day with
[Wallace].” (Id.). Banner decided to make a conditional offer to BRT in order to “try to get the
project moving forward.” (Id.). As noted, by mid-August, the New Rochelle project was
approximately 80 days behind schedule. (Tr. 7:29).
58.

On September 1, 2016, Plain Avenue Storage sent a conditional offer concerning

the proposed change orders to BRT. (Ex. 110.14, at 2). It stated that Plain Avenue Storage
“deem[ed] 90% of the Rigid Inclusion work [to be] contract work and . . . BRT’s responsibility”
but that it “realize[ed] the project need[ed] to move forward and the budget hit may not be
something BRT [could] absorb.” (Id.). It further stated that, as a result, Plain Avenue Storage
would accept Change Order #3 and the rigid-inclusion work in Change Order #4 if BRT would
agree to the following conditions:
1. This letter becomes a part of Change Order #3 and Change Order #4.
2. If BRT would like to include all of the Rigid Inclusions in Change Order #3
that will be acceptable to Banner.
3. There will be zero additional days added to the schedule and no general
conditions for any Rigid Inclusion work in Change Order #3 or Change
Order#4 [sic]. Banner will allow overhead and profit per the terms of our
contract.
4. BRT will provide Banner a detailed overall schedule 7 days after execution of
Change Order #3.
5. BRT will provide a 3 week look ahead within 48 hours after execution of
Change Order #3 that is in a format acceptable to Banner. . . .
6. BRT maintains its billing on general conditions, overhead and profit until the
construction work in place catches up with the 25% completion as currently
billed on the pay applications that BRT has been paid for. . . .

15

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 16 of 72

7. A meeting will be set up between Banner, the structural engineer and[] the
geotechnical engineer within the next 7 business days in order to resolve the
remaining issues on Change Order #4.
(Id.). The letter concluded that “[i]f BRT chooses not to accept these terms Banner may need to
move forward to terminate the contract.” (Id.).
59.

Plain Avenue Storage’s conditional offer was approximately $240,000, including

approximately $24,000 of overhead and profit for BRT. (Tr. 7:49; Tr. 7:55).
60.

On September 6, 2016, BRT twice submitted revised versions of Change Order

#3. (Ex. 110.16, at 1; Ex. 110.18, at 1). The revised change orders included several errors, such
as incorrect total amounts and failing to include the letter from Plain Avenue Storage concerning
the conditions on which the change order would be accepted. (Ex. 110.17, at 1; Ex. 110.18, at
1). Plain Avenue Storage requested that BRT resubmit the change order. (Id.).
61.

On September 8, 2016, BRT submitted a further revised change order and

responded to Plain Avenue Storage’s letter that conditionally accepted Change Order #3. (Exs.
1106, 1107). The response is unclear. It appears that BRT accepted some of the proposed
conditions, but it stated that it did not agree to “attaching [Plain Avenue Storage’s] letter to the
change order.” (Ex. 1106). It further stated that “[t]he fee & OH are in accordance with the
contract documents” and that BRT “agreed . . . to a one time General conditions credit to help
move the project along.” (Id.). BRT also rejected Plain Avenue Storage’s proposed condition
concerning billing general conditions because, according to BRT, the parties “agreed at the
beginning and invoiced on the first two req’s that BRT would invoice 12 equal payments & bank
inspector also agreed.” (Ex. 1107, at 3). It stated that “BRT offered to waive [its] General
Conditions for CO #3R being a good partner” but would not accept waiving general conditions
in the future. (Id. at 2).

16

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 17 of 72

62.

Plain Avenue Storage understood BRT’s response to be a rejection of its proposal.

(Tr. 7:57).
63.

On September 9, 2016, Henry emailed Wallace stating that Plain Avenue Storage

was “still reviewing [his] response to Change Order #3” and that Henry had not completed his
analysis of Change Order #4. (Ex. 110.23).
64.

That same day, Wallace provided Plain Avenue Storage with a plan from JAG

Engineering for a new foundation wall on the south side of the project in further support of
Change Order #4. (Ex. 110.24). A few days later, Wallace followed up with a further revised
Change Order #4, including supporting documentation purportedly indicating that the original
plan was to reuse the existing foundation for the south side of the project and that that plan was
no longer feasible because the existing foundation did not satisfy the applicable building code.
(Ex. 110.26).
3.
65.

Pay Applications

Article 5 and Exhibit D of the New Rochelle contract governed payments under

the contract. (Ex. 1026, at 7-11, 64-77). Plain Avenue Storage was required to make progress
payments based on applications for payment submitted by BRT. (Id. at 7).
66.

Section 5.1.8 detailed the documents that must be submitted with each pay

application. (Id. at 8). Those documents included (1) various lien waivers for BRT and its
subcontractors; (2) a sworn statement identifying, among other things, parties performing work,
materials or services performed by those parties, and the amounts paid and/or due to parties
providing materials or services; (3) any other forms reasonably required by Plain Avenue
Storage or the title insurer “in order to insure an effective conditional waiver of mechanic and
materialmen lien law”; and (4) the documentation identified in Exhibit D to the contract. (Id.).
67.

Exhibit D detailed Plain Avenue Storage’s “Pay Application Policies and
17

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 18 of 72

Procedures.” (Id. at 65). It outlined the process that pay applications must follow and identified
several documents that must be submitted with pay applications. (Id. at 65-66). Those
documents included (1) a certified and notarized certificate and application for payment, (2) lien
waivers, (3) a sworn statement, (4) copies of the subcontractor invoices that substantiate the
requested payment, and (5) a “Direct Check Log.” (Id.). Attached to Exhibit D were templates
of several documents that were required to be submitted. (Id. at 68-77).
68.

Exhibit D required that change orders that are included on pay applications be

preapproved: “If a change order is on a pay application that has not been pre-approved, it will
not be paid.” (Id. at 66).
69.

Exhibit D stated that if there were a discrepancy between the contractual policies

concerning pay applications and those of the lender, the lender’s policies control. (Id. at 65).
70.

BRT repeatedly failed to comply with the contractual requirements for submitting

pay applications for the New Rochelle project. Among other errors, BRT did not timely submit
pay applications; did not timely correct erroneous pay applications; submitted sworn statements
with accounting errors; failed to break out expenses properly; included change orders that had
not yet been approved; omitted supporting documentation, such as lien waivers; and overbilled
certain line items. (Exs. 1562-1564 (summaries of New Rochelle pay-application process)).
71.

Lori Radcliff served as Banner’s Project Coordinator for the New Rochelle and

Malden projects. (Tr. 5:69-70). In that role, she was responsible for ensuring that BRT’s pay
applications complied with the contractual requirements. (Id.). When BRT’s pay applications
failed to do so, she worked with Wallace or Audrey Dreyfus, BRT’s comptroller, to try to
resolve the outstanding issues. (Tr. 5:87-88). She described that process as “very difficult.” (Tr.
5:69). According to Radcliff, when Banner requested corrected pay applications, there was

18

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 19 of 72

“always pushback, sometimes yelling,” and refusals to comply by BRT. (Tr. 5:129). 9
72.

When BRT provided complete, accurate, and substantiated pay applications,

Banner in turn provided them to the relevant lender within one or two days. (Tr. 5:80).
73.

BRT’s repeated failures to comply with the pay-application requirements under

the contract caused significant delays in the New Rochelle project. (Exs. 1562-1564).
4.
74.

Dispute as to Timing of Payments

As noted, the New Rochelle contract provided that progress payments would be

based on the percentage of completion for each portion of work, including general conditions,
overhead, and profit. (Ex. 1026, at 10).
75.

Wallace and BRT nonetheless took the position that BRT was entitled to be paid

in equal one-twelfth increments for general conditions, overhead, and profit. (Tr. 2:66-67).
They contended that Wallace and Henry orally agreed to modify the contract to pay BRT in
equal increments. (Id.; Tr. 2:70). Henry denied that any such agreement occurred. (Tr. 6:132).
76.

Plain Avenue Storage paid BRT in one-twelfth increments for its general

conditions, overhead, and profit on the first two pay applications. (Tr. 6:77). Henry and Radcliff
testified that these incremental payments were an “oversight.” (Id.; Tr. 7:7).
5.
77.

Subcontractor-Execution Requirement

As noted, Exhibit D stated that if there were a discrepancy between the

contractual policies concerning pay applications and those of the lender, the lender’s policies
controlled. (Ex. 1026, at 65).
78.

The lender on the New Rochelle project, Fifth Third Bank, required that 60% of

At trial, the Court heard credible, detailed testimony—backed by documentary evidence—from Radcliff
and Banner’s expert, Dr. Terence Rodgers, concerning BRT’s repeated non-trivial errors when submitting pay
applications for the New Rochelle and Malden projects. (Tr. 5:86-142; Tr. 6:47-56; Tr. 8:79-88; Ex. 1539).
Dreyfus, who served as BRT’s point of contact on the pay applications, did not testify at trial.
9

19

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 20 of 72

the subcontracts on each project be executed before funding the project. (Ex. 1035; Ex. 1407;
Tr. 6:132). According to Banner, that requirement minimizes the risks of unforeseen costs for
the design-builder and the lender. (Tr. 8:84-85). Fifth Third Bank was also the lender on the
Lynn project and imposed the same requirement during that project. (Ex. 1019; Tr. 7:9-10).
79.

Plain Avenue Storage informed BRT that funding for the New Rochelle project

was subject to the same requirement. (Tr. 7:9; Ex. 1035, at 1; Ex. 1036, at 3; Ex. 1037, at 1).
Throughout the projects, Radcliff repeatedly updated BRT on its progress towards satisfying the
60% requirement for the project. (Tr. 5:84-85; Ex. 1063).
80.

Plain Avenue Storage could not submit pay applications to Fifth Third Bank until

the 60% requirement was met. (Tr. 5:86).
81.

BRT did not satisfy the 60% requirement for the New Rochelle project until July

8, 2016. (Ex. 1078).
6.
82.

Storage Structure Payments

Storage Structures, Inc. is a Georgia-based metal-building subcontractor. (Tr.

7:72). It designs, supplies, and builds metal structures for self-storage buildings. (Tr. 7:73).
BRT used Storage Structures for design services and steel fabrication for the New Rochelle and
Malden projects. (Tr. 7:72).
a.
83.

Payment #1

On April 22, 2015, Storage Structures sent BRT an invoice for $9,900 for

“Progress Payment/Deposit/Structural Drawings.” (Ex. 1158, at 1).
84.

On May 20, 2015, BRT sent Banner an invoice that requested, among other

things, $9,900 for Storage Structures materials, including “light gauge metal.” (Ex. 1160, at 1).
The entire invoice totaled $19,900. (Id.).
85.

On June 9, 2015, Banner issued a check to BRT for $19,900, which included
20

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 21 of 72

$9,900 for Storage Structures. (Id. at 2).
86.

On June 29, 2015, BRT paid Storage Structures $9,900. (Ex. 1161, at 1; Ex.

1412; Tr. 7:75).
b.
87.

Payment #2

On July 14, 2015, Storage Structures sent BRT an invoice for $185,000 for design

work and materials. (Ex. 1162, at 1).
88.

On July 22, 2015, Heath Mulkey, an owner of Storage Structures, executed a

certification, waiver of lien, and release of claims for the $185,000 payment. (Ex. 1528, at 1).
That waiver indicated that $9,900 had been previously paid to Storage Structures. (Id.).
89.

On July 23, 2015, BRT sent Banner an invoice that requested, among other

things, $185,000 for a “steel deposit” made to Storage Structures. (Ex. 1163, at 1). That invoice
totaled $189,987.11. (Id.).
90.

On July 27, 2015, Wallace executed a certification, waiver of lien, and release of

claims for payment in the amount of $189,987.11, which included $185,000 for Storage
Structures. (Ex. 1529, at 2).
91.

On August 5, 2015, Banner issued a check to BRT for $189,987.11, which

included $185,000 for Storage Structures. (Ex. 1164, at 1).
92.

On August 7, 2015, a check for $189,987.11 was deposited into BRT’s bank

account. (Ex. 1165, at 1).
93.

Storage Structures was not paid any portion of the $185,000 invoice. (Tr. 7:75-

77; Tr. 7:85). Wallace admitted at trial that BRT did not pay Storage Structures the $185,000.
(Tr. 3:9). It also did not return $185,000 to Banner or credit Banner that amount, but instead
kept the money for its own use. (Tr. 6:64). Storage Structures ultimately cancelled that invoice
and did not pursue action to collect it. (Ex. 1412, at 1).
21

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 22 of 72

94.

Wallace contends that BRT was entitled to the $185,000 as compensation for the

$178,171 deductive change order that was executed as part of the settlement for the Lynn
project. (Tr. 4:14; Ex. 1495, at 2). 10
c.
95.

Payment #3

On October 9, 2015, Storage Structures sent BRT an invoice for $30,000 for a

deposit. (Ex. 1166, at 1).
96.

On October 19, 2015, Chris Pearson, an owner of Storage Structures, executed a

certification, waiver of lien, and release of claims for $30,000. (Ex. 1530). That waiver
indicated that $194,900 had been previously paid to Storage Structures. (Id.). That statement
was false.
97.

On December 7, 2015, BRT sent Banner an invoice that requested, among other

things, $30,000 for a “metal siding deposit.” (Ex. 1167, at 1). That invoice totaled $99,603.
(Id.).
98.

On January 6, 2016, BRT paid $30,000 to Storage Structures. (Ex. 1169, at 1; Tr.

7:82; Ex. 1412).
99.

On January 26, 2016, Banner issued a check to BRT for $99,603, which included

$30,000 for the metal siding deposit. (Ex. 1168, at 1).
100.

On July 18, 2016, Mulkey executed a waiver of lien, which acknowledged receipt

of $224,900 and released any claims against the New Rochelle property. (Ex. 1170, at 1). 11

10
In an interrogatory response, which was admitted into evidence at trial, Wallace stated that part of the
$185,000 was paid to two subcontractors that were still owed money following the Lynn project. (Ex. 1495, at 2-3).

Mulkey testified at trial that he understood the waiver as “just part of the paper process that [Storage
Structures] had to do to submit to get payment. . . . It was just part of the paperwork that the title company had
where they were back and forth with paperwork to submit the invoice and get pay to [Storage Structures].” (Tr.
7:77-78). He further testified that he signed that waiver at Wallace’s request. (Tr. 7:78).
11

22

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 23 of 72

101.

BRT and Wallace knowingly submitted sworn statements, pay applications, and

invoices to Plain Avenue Storage that indicated that BRT paid $224,900 to Storage Structures.
(Tr. 5:96; Ex. 107.9; Tr. 5:114-15; Ex. 1094; Tr. 7:66-67; Exs. 1111; 107.17, 107.18; Exs. 1160,
1163, 1167). In fact, BRT paid only $39,900 to Storage Structures. (Ex. 1161, at 1; Ex. 1412;
Tr. 7:75; Tr. 7:82).
102.

Those sworn statements were false and were made by Wallace for the purpose of

obtaining additional funds from Plain Avenue Storage to which BRT was not contractually
entitled.
7.
103.

Contract Termination

On September 13, 2016, Henry informed Wallace by phone that Plain Avenue

Storage was terminating BRT as general contractor for the New Rochelle project. (Tr. 7:57-58;
Ex. 1113). He further informed him that BRT would remain the general contractor for the
Malden project because he believed that Wallace could perform when focused on a single project
to which he was more closely located geographically. (Id.).
104.

On September 15, 2016, BRT send a demand for mediation concerning claims

arising out of the New Rochelle contract. (Ex. 112, at 2). That mediation was ultimately held in
December 2016. (Tr. 4:111-12).
105.

On September 21, 2016, Plain Avenue Storage sent Wallace a letter stating that it

was terminating the New Rochelle contract for cause. (Ex. 1108). That letter further stated that
BRT had “repeatedly failed to supply enough properly skilled workers and proper materials to
advance [the New Rochelle project].” (Id. at 1). It further stated that BRT was “in breach of
several provisions” of the New Rochelle contract, including:
1. Design-Builder has failed to keep the Project on schedule. The Project is now
more than 80 days behind schedule.
23

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 24 of 72

2. Design-Builder failed to have a superintendent on site overseeing the project
on several occasions, specifically four out of five times when Bill Henry
visited the site unannounced.
3. Pay applications have been incorrect in material respects during the entirety of
the Project. Specifically, Design Builder has overbilled on general conditions,
overhead and profit and continues to request payment on these items after
being told not to.
4. The Construction Schedule has not been updated in months after repeated
requests for the same from the Project Manager, Rick Henry.
(Id.). It stated that termination was effective as of September 29, 2016. (Id. at 2).
106.

On September 26, 2016, Wallace responded to the Plain Avenue Storage

termination letter on behalf of BRT. (Ex. 1109). He stated that he was “shocked and bewildered
at the termination for cause, because during [the parties’] call on September 13, 2016 with Bill
Henry[,] Bill informed [BRT] that the termination was for convenience.” (Id. at 1). He further
stated that Plain Avenue Storage was “in breach of several provisions of the contract” and that
the project has had “many Owner related delays starting with the Construction Start date, closing
dates, Payments from December to July, IDA paperwork, Concealed & unknown conditions
uncovered during demolition, Owner CO’s delays, and unsuitable soil conditions.” (Id.). The
letter also specifically responded to, and denied, Plain Avenue Storage’s statements concerning
the site superintendent, pay-application process, and construction schedule. (Id. at 1-2). It
concluded that BRT “disputes that [it] has been in material breach of the agreement” but that “if
there [were] any steps [it could] take to cure any such alleged breaches[,] [it] would be happy to
do so.” (Id. at 2).
107.

After terminating BRT, Plain Avenue Storage hired ARCO Murray to complete

the New Rochelle project. (Ex. 1575).

24

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 25 of 72

E.

The Malden Project
1.

108.

Progress of Work

As with the New Rochelle project, before the execution of the contract, BRT

entered into oral contracts with KOH Architecture, JAG Engineering, and other subcontractors to
perform certain design services for the Malden project. (Tr. 1:56-57). They performed that work
and were paid in full. (Tr. 2:29-30). BRT invoiced Malden Storage for that work. (Tr. 2:29).
109.

The Notice to Proceed was issued on June 6, 2016. (Ex. 1183, at 3).

110.

As part of the plan for the Malden project, BRT proposed crushing and recycling

the existing materials on site, rather than removing debris and bringing in fill, as a cost-saving
mechanism. (Tr. 7:121). The geotechnical consultant agreed with that recommendation. (Id.).
BRT informed Banner that “this will result in a savings of potential change orders from $7080,000 if [it were] able to use the crushed masonry products from the demolition of [the]
building.” (Ex. 1398, at 2).
111.

To perform the on-site crushing, BRT was required to obtain a permit from the

City of Malden. (Ex. 1398, at 2). It failed to do so in a timely manner. BRT did not request that
Malden Storage draft a letter, presumably to Malden city officials, stating that BRT has Malden
Storage’s permission to request such a permit until June 23, 2016. (Id. at 1-2). 12 Banner
provided that letter on June 27. (Id. at 1).
112.

The crushing process, including the failure to timely obtain the necessary permit,

delayed the project approximately 45 days. (Ex. 1523). Banner estimates that crushing
increased project costs by approximately $57,000. (Ex. 1523, at 1).

Wallace stated that the relevant city ordinance was not in place at the time of the contract or not “easy to
find,” but Banner was able to find the ordinance the same afternoon it became aware of the requirement. (Tr. 7:12021).
12

25

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 26 of 72

2.
113.

Change Order #2

On October 7, 2016, after BRT obtained the permit, it submitted Change Order #2

to Malden Storage for reimbursement of related costs. (Ex. 211.1, at 1). The costs included,
among other things, the permit cost, attorneys’ fees, and the cost for a fire watch for the twoweek period when the site was shut down because BRT did not have the permit. (Id. at 2). In
total, the change order requested that the Guaranteed Maximum Price of the contract be
increased by $56,342.76 and that the contract time be increased by 21 days. (Id. at 2).
114.

Over the next three months, BRT and Malden Storage went back and forth

concerning Change Order #2. BRT would regularly ask for status updates, and Malden Storage
would either provide updates or request that BRT submit further supporting documentation.
(See, e.g., Ex. 211.2 (November 10, 2016 e-mail from BRT); Ex. 211.3 (November 10, 2016 email from Rick Henry); Ex. 211.4 (November 11, 2016 e-mail from BRT); Ex. 213 (November
16, 2016 e-mail from Rick Henry); Ex. 217.1 (November 18, 2016 e-mail from Rick Henry); Ex.
217.2 (November 30, 2016 e-mail from BRT with additional documentation); Ex. 218
(December 2, 2016 e-mail from BRT requesting update); Ex. 219.1 (December 2, 2016 e-mail
from Rick Henry)).
115.

On December 20, 2016, Malden Storage approved all of Change Order #2 except

for one week of the fire watch. (Ex. 222). It stated that that portion of the fire watch occurred
during the demolition phase of the project, which was BRT’s responsibility. (Ex. 211.3).
3.
116.

Pay Applications

The Malden contract included the same provisions and exhibits as the New

Rochelle contract concerning progress payments by Malden Storage and applications for

26

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 27 of 72

payment by BRT. (Ex. 1182, at 7-11, 55-68). 13
117.

As with the New Rochelle contract, BRT repeatedly failed to comply with the

contractual requirements for submitting pay applications for the Malden project. Among other
errors, BRT did not timely submit pay applications; did not timely correct erroneous pay
applications; submitted sworn statements with accounting errors; failed to properly breakout
expenses; included change orders that were not yet approved; omitted supporting documentation,
such as lien waivers; overbilled certain line items; and improperly filed a false lien against the
property. (Exs. 1565-69 (summaries of Malden pay-application process)).
118.

BRT’s repeated failures to comply with the pay-application requirements under

the contract caused significant delays in the Malden project. (Id.).
4.
119.

Dispute as to Timing of Payments

As noted, the Malden contract provided that progress payments would be based

on the percentage of completion for each portion of work, including general conditions,
overhead, and profit. (Ex. 1182, at 10).
120.

Wallace and BRT nonetheless took the position that BRT was entitled to be paid

in equal one-eleventh increments for general conditions, overhead, and profit. (Tr. 2:66-67).
They contended that Wallace and Henry orally agreed to modify the contract to pay BRT in
equal increments. (Id.; Tr. 2:70). Henry denied that any such agreement occurred. (Tr. 6:132).
5.
121.

Subcontractor-Execution Requirement

The lender on the Malden project, Fifth Third Bank, was the same as that on the

New Rochelle project. (Ex. 1035; Ex. 1407; Tr. 6:132). As with the New Rochelle project, it

Exhibit D to the New Rochelle contract was updated on October 21, 2015. (Ex. 1026, at 65). Exhibit D
to the Malden contract was updated on January 18, 2016. (Ex. 1182, at 56). They are the same for all purposes
material to the present dispute.
13

27

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 28 of 72

required that 60% of the subcontracts on each project be executed before funding the projects.
(Id.). Malden Storage could not submit pay applications to Fifth Third Bank until the 60%
requirement was met. (Tr. 5:86).
122.

BRT did not satisfy the 60% requirement for the Malden project until July 6,

2016. (Ex. 1228).
6.
123.

Storage Structure Payments

On October 8, 2015, Storage Structures sent BRT an invoice for $165,000 for

“Progress Payment/Deposit/Structural Drawings.” (Ex. 1410, at 1).
124.

The next day, BRT sent Banner an invoice that requested, among other things,

$165,000 to be paid to Storage Structures. (Ex. 1193, at 1). That invoice totaled $212,000.
(Id.).
125.

On October 14, 2015, Chris Pearson of Storage Structures executed a

certification, waiver of lien, and release of claims for $165,000. (Ex. 1203, at 1).
126.

On October 21, 2015, Banner issued a check to BRT for $212,000, which

included $165,000 for Storage Structures. (Ex. 1194, at 1).
127.

On October 26, 2015, BRT deposited that check into its bank account. (Tr. 3:19-

20; Ex. 1195, at 1).
128.

The following month, on November 24, 2015, Mulkey of Storage Structures e-

mailed Wallace concerning the payments that BRT owed Storage Structures for the New
Rochelle and Malden projects. (Ex. 1196, at 1). After receiving no response, Mulkey followed
up on November 30. (Id.).
129.

Nearly seven months later, on June 14, 2016, BRT issued a check to Storage

Structures for $22,718. (Ex. 1198, at 1). That check bounced due to insufficient funds. (Ex.
1202; Ex. 1197; Tr. 7:83).
28

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 29 of 72

130.

On July 21, 2016, Mulkey informed Wallace that the check bounced. (Ex. 1197,

at 1). Wallace replied, apologizing to Mulkey and stating that he had not been paid since
December 2015. (Ex. 1199). That same day, BRT issued another check to Storage Structures
for $22,718 and a check for $30 to cover the insufficient funds bank charge. (Exs. 1200-01).
131.

BRT did not pay Storage Structures the remaining $142,282 of the $165,000

invoice. (Tr. 3:19; Tr. 7:82). It did not return the $142,282 to Banner or credit Banner that
amount, but instead kept the money for its own use. (Tr. 6:67).
132.

Wallace contends that BRT was entitled to $142,000 as compensation for the

punch-list work that BRT completed on the Lynn project. (Ex. 1495, at 3).
133.

BRT and Wallace repeatedly submitted knowingly submitted sworn statements,

pay applications, and an invoice to Malden Storage that represented that BRT had paid $165,000
to Storage Structures for preconstruction expenses for the Malden project. (Exs. 207.1; 208.1;
209.1; 1193). In fact, it paid only $22,718 to Storage Structures. (Ex. 1200).
134.

Those sworn statements were false and were made by Wallace for the purpose of

obtaining additional funds from Malden Storage to which BRT was not contractually entitled.
7.
135.

Contract Termination

On January 3, 2017, BRT sent a letter to Malden Storage stating that it was

“exercising it’s [sic] rights under the executed contract” and providing “notice that BRT [would]
suspend work in accordance with the contract provisions for failure of the Owner to make
payments monthly and with holding [sic] in excess of $250,000.00.” (Ex. 232, at 2). It
requested that Malden Storage “remit all funds in requisition 5 by January 9, 2017 5 PM EST.”
(Id.). If the funds were not received by that date, “[w]ork on-site would be suspended in seven
days on January 10, 2017.” (Id.).
136.

That same day, BRT filed the present lawsuit. (Compl. at 1). The parties did not
29

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 30 of 72

mediate claims arising out of the Malden project at any time before BRT sued Malden Storage.
(Tr. 4:111-12). 14
137.

The following day, Malden Storage informed BRT that it would “adjust the

requisitions and submit them to the bank for payment.” (Ex. 233, at 1).
138.

On January 6, 2017, Malden Storage provided a formal response to BRT’s

suspension letter. (Ex. 234.1). It detailed the timeline associated with Pay Application #5,
including the fact that Malden Storage had “not received a signed final [Pay Application #5]
revised per Rick Henry’s email dated December 2, 2016 . . . .” (Id. at 2). It stated that it would
“submit the signed Pencil Draw (with [Malden Storage’s] reductions as set forth in Exhibit A
attached hereto) . . . to Fifth Third Bank for payment.” (Id.). 15 It further stated that moving
forward, BRT nonetheless had to comply with the contractual provisions governing pay
applications. (Id.).
139.

On January 23, 2017, four months after Plain Avenue Storage terminated the New

Rochelle contract, Malden Storage sent BRT a letter stating that it was terminating the Malden
contract for cause. (Ex. 1317). That letter further stated that BRT was “in breach of several
provisions of the Design-Build Documents,” including:
1. Design-Builder has failed to submit Applications for Payment in accordance
with Section A.5.1.3 of the Contract.
2. Design-Builder has filed liens against the property for non-payment, even
though he has failed to follow the procedures for Applications for Payment set

Wallace initially testified that the parties “discussed,” “talked about,” and “spoke about” Malden at the
December 2016 mediation. (Tr. 2:22-23; Tr. 4:111-12). He later conceded, however, that “it was a mediation about
New Rochelle, not Malden.” (Tr. 4:112; see also id. (“[I]t was for New Rochelle . . . . I believe the notice was for
just New Rochelle . . . .”)).
14

A “pencil draw” is “a quick representation of the pay [application] that’s reviewed between the project
manager, the general contractor and the inspecting architect.” (Tr. 5:70). A pencil draw “can be sometimes just two
pages long,” where a pay application “can be hundreds of pages.” (Id.).
15

30

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 31 of 72

forth in Section A.5.1.3 of the Contract.
3. Design-Builder has suspended work without the right to do so, which such
stoppage will materially damage the project.
4. Pay applications have been incorrect in material respects during the entirety of
the Project. Specifically, Design-Builder has overbilled on stored materials,
general conditions, overhead and profit and continues to request payment on
these items after being told not to.
5. Design Builder has breached Section A.4.3.1 of the Contract which required
that all claims arising under the Contract be submitted to “mediation as a
condition precedent to arbitration or the institution of legal or equitable or
other binding dispute resolution proceedings by either party.”
(Id. at 1-2).
140.

The next day, BRT responded. (Ex. 236). It stated that “the purported

termination is wrongful and that all of the grounds for same as alleged in [Malden Storage’s]
letter are false and are categorically denied.” (Id. at 2). It further stated that it would amend the
complaint in this action to include a count for wrongful termination of the Malden contract.
(Id.).
141.

Between January 27 and February 6, 2017, BRT and Malden Storage negotiated

transition of the Malden project. (See, e.g., Ex. 237; Ex. 239; Ex. 240). Eventually, Malden
Storage hired ARCO Murray to complete the project. (Ex. 1576).
142.

On February 1, 2017, Newbanks, a construction consulting firm, completed a

monthly site observation report for Fifth Third Bank. (Ex. 238). It concluded that the Malden
project was “approximately 55% complete including offsite stored structural steel materials.”
(Id.).
F.

Post-Termination Cooperation of BRT Subcontractors

143.

The New Rochelle and Malden contracts provided that BRT’s design

professionals were obligated to convey a non-exclusive license to their drawings, specifications,
31

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 32 of 72

and related documents if the contracts were terminated under certain circumstances:
If this Agreement is terminated for any reason other than the default of the
Owner, or termination for convenience . . . , each of the Design-Builder’s design
professionals, including the Architect, shall be contractually required to convey to
the Owner a non-exclusive license to use that design professional’s Instruments of
Service for the completion, use and maintenance of the Project, conditioned upon
the Owner’s written notice to that design professional . . . and payment to that
design professional of all amounts due to that design professional and its
consultants.
(Ex. 1026, at 26; Ex. 1182, at 20). The contracts further provided that BRT was required to
incorporate that requirement in all agreements with its design professionals. (Id.).
144.

As noted, the design professionals used by BRT for the New Rochelle and

Malden projects include KOH Architecture and JAG Engineering. (Tr. 8:41).
145.

BRT did not include a provision concerning the non-exclusive license in any

contract with its subcontractors. (Id.).
146.

After termination of the New Rochelle contract, Wallace sent letters to several

subcontractors, including KOH Architecture, notifying them of Plain Avenue Storage’s
termination of the contract. (Ex. 1542). The letters stated, among other things, “[p]lease do not
talk with the owner or its representatives at this time until this is resolved.” (Id. at 2). 16
147.

Banner provided written notice to KOH Architecture and JAG Engineering that it

was assuming BRT’s contractual duties and obligations after it terminated the New Rochelle and
Malden projects. (Tr. 8:41; Tr: 8:44). KOH Architecture and JAG Engineering, however,
refused to communicate with Banner or provide it with any materials that they had created thus

Exhibit 1542 includes letters that are identical in substance and sent to eleven subcontractors, including
one to KOH Architecture. (Ex. 1542, at 2). The letters appear to concern the termination of the New Rochelle
contract, in light of the September 29, 2016 effective date referred to in the letters. (Id.). It is unclear whether
similar letters were sent following the termination of the Malden contract. Furthermore, Exhibit 1542 does not
include a letter to JAG Engineering, but Henry testified that it was sent a similar letter. (Tr. 8:43-44).
16

32

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 33 of 72

far for the projects. (Tr. 8:40-44). 17
148.

As a result of the subcontractors’ refusal to work with Banner after the

termination of the contracts, Banner was required to hire new design professionals, including an
architect and multiple engineering firms. (Tr. 8:42-44; Ex. 1033 (New Rochelle project damages
summary); Ex. 1189 (Malden project damages summary)).
III.

Procedural Background
149.

On January 3, 2017, BRT filed this action against Malden Storage, Plain Avenue

Storage, and Banner Drive Storage. The complaint asserts eight claims. Counts 1 through 6
allege parallel common-law claims for breach of contract, quantum meruit and unjust
enrichment, and breach of the implied covenant of good faith and fair dealing, respectively,
against Plain Avenue Storage (Counts 1, 2, and 3) and Malden Storage (Counts 4, 5, and 6).
Counts 7 and 8 are claims only against Malden Storage for violations of Mass. Gen. Laws ch.
149, § 29E, concerning construction contracts (Count 7), and for unfair and deceptive trade
practices under Mass. Gen. Laws ch. 93A, § 11 (Count 8). 18
150.

On March 7, 2017, Plain Avenue Storage and Malden Storage counterclaimed

against BRT and filed a third-party complaint against Wallace. On March 24, they jointly filed
an amended counterclaim against BRT and an amended third-party complaint against Wallace.
151.

The amended counterclaim asserts claims for breach of contract, breach of the

implied covenant of good faith and fair dealing, conversion, tortious interference with
advantageous relations, and fraud by Plain Avenue Storage (Counts 1 through 5) and by Malden

Henry testified that KOH Architecture provided Banner architectural drawings. (Tr. 8:42-43). They
were provided, however, in PDF format, which are not able to be manipulated, rather than in CAD format, as
Banner requested. (Id.).
17

18

Count 8 was also asserted against Banner.

33

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 34 of 72

Storage (Counts 7 through 11). The amended counterclaim also asserts state-law statutory
claims against BRT for deceptive business acts and practices under N.Y. Gen. Bus. Law § 349
(Count 6), and for unfair and deceptive trade practices under Mass. Gen. Laws ch. 93A, § 11
(Count 12). 19
152.

The amended third-party complaint alleges claims against Wallace for

conversion, tortious interference with advantageous relations, and fraud, respectively, by Plain
Avenue Storage (Counts 3, 4, and 5) and by Malden Storage (Counts 9, 10, and 11).
153.

On August 7, 2017, the Court granted an assented-to motion to dismiss Banner

from the litigation.
154.

The matter was tried to the Court without a jury between April 26 and May 6,

2021.
IV.

Conclusions of Law
A.

Breach of Contract
1.

155.

New York – Count 1 (BRT v. Plain Avenue Storage) and
Counterclaim 1 (Plain Avenue Storage v. BRT)

Under New York law, to prove a claim for breach of contract, a plaintiff must

show (1) the formation of a contract, (2) performance under that contract by plaintiff, (3) breach
of that contract by defendant, and (4) resulting damage. See McCormick v. Favreau, 919
N.Y.S.2d 572, 577 (2011).
156.

A material breach is “one which would justify the other party to suspend his own

performance, or a breach which is so substantial as to defeat the purpose of the entire
transaction.” Lipsky v. Commonwealth United Corp., 551 F.2d 887, 895 (2d Cir. 1976) (citations

19
The parties do not appear to dispute that Massachusetts law applies to the claims arising out of the
Malden project, and that New York law applies to the claims arising out of the New Rochelle project.

34

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 35 of 72

omitted). Whether a breach qualifies as material “turns on several factors, such as the absolute
and relative magnitude of default, its effect on the contract’s purpose, willfulness, and the degree
to which the injured party has benefitted under the contract.” Process Am., Inc. v. Cynergy
Holdings, LLC, 839 F.3d 125, 136 (2d Cir. 2016).
157.

“[A] party’s performance under a contract is excused where the other party has

substantially failed to perform its side of the bargain or, synonymously, where that party has
committed a material breach.” Id. However, “[i]f the party in default has substantially
performed, the other party’s performance is not excused.” Hadden v. Consol. Edison Co. of New
York, 34 N.Y.2d 88, 96 (1974).
158.

“A partial breach may entitle the non-breaching party to damages for the breach,

but does not entitle the party to simply treat the contract as at an end. A partial breach by one
party does not justify the other party’s subsequent failure to perform; both parties may be guilty
of breaches, each having a right to damages.” Process Am., 839 F.3d at 136 (citing Lovink v.
Guilford Mills, Inc., 878 F.2d 584, 586 (2d Cir. 1989)) (internal citation, quotations marks, and
alteration omitted).
159.

Failure to make construction progress payments as they become due constitutes a

material breach of a construction contract. See U.W. Marx, Inc. v. Koko Contr., Inc., 2 N.Y.S.3d
276, 278 (2015) (concluding that plaintiff “had materially breached the contract by failing to
make three successive progress payments that [the defendant] was entitled to receive”); Serena
Const. Corp. v. Valley Drywall Serv., Inc., 357 N.Y.S.2d 214, 215 (1974) (“The failure of
plaintiff to make a progress payment when due constituted a breach of the agreement between
the parties . . . .”).

35

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 36 of 72

2.
160.

Massachusetts – Count 4 (BRT v. Malden Storage) and Counterclaim
7 (Malden Storage v. BRT)

To prove a breach of contract under Massachusetts law, a plaintiff must show that

“there was a valid contract, that the defendant breached its duties under the contractual
agreement, and that the breach caused the plaintiff damage.” Guckenberger v. Boston Univ., 957
F. Supp. 306, 316 (D. Mass. 1997); accord Michelson v. Digital Fin. Servs., 167 F.3d 715, 720
(1st Cir. 1999).
161.

The elements of a valid contract include an offer, an acceptance, and an exchange

of consideration. See Harbi v. Massachusetts Inst. of Tech., 2017 WL 3841483, at *7 (D. Mass.
Sept. 1, 2017) (citing Vadnais v. NSK Steering Sys. Am., Inc., 675 F. Supp. 2d 205, 207 (D.
Mass. 2009)).
162.

“A material breach by one party excuses the other party from further performance

under the contract.” Verderber v. Perry, 1999 WL 525953, at *3 (1st Cir. Mar. 8, 1999)
(quoting Ward v. American Mut. Liab. Ins. Co., 15 Mass. App. Ct. 98, 100 (1983)). Such a
breach occurs when it concerns “an essential and inducing feature of the contract.” G4S Tech.
LLC v. Massachusetts Tech. Park Corp., 479 Mass. 721, 733-34 (2018). “[E]ssential and
inducing” features include those “provisions that are so serious and so intimately connected with
the substance of the contract that a failure to uphold the provision would justify the other party
walking away from the contract and no longer being bound by it.” Id. (internal quotation marks,
citation, and alteration omitted).
163.

“Once relieved from performance, the injured party is not liable for further

damages incurred by the party in material breach.” See Lease-It v. Massachusetts Port
Authority, 33 Mass. App. Ct. 391, 396-97 (1992).

36

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 37 of 72

3.
164.

Conclusion

The New Rochelle contract was a valid and enforceable contract between Plain

Avenue Storage and BRT.
165.

Plain Avenue Storage substantially performed under that contract. Among other

things, it timely processed pay applications when such applications were complete and accurate,
and reviewed, negotiated, and—when appropriate—approved change orders in accordance with
the terms of the contract.
166.

Plain Avenue Storage did not breach the New Rochelle contract when it failed to

approve Change Orders #3 and #4. Even assuming that the condition of the soil and the
foundation were materially different from what was identified in the original design-build
documents, and even assuming that BRT satisfied its obligation under the contract to timely raise
the issues with Plain Avenue Storage, Plain Avenue Storage “investigate[d]” the purportedly
unknown conditions and “negotiate[d]” with BRT an equitable adjustment. (See Ex. 1026, at
35).
167.

For example, during the second half of August 2016, BRT and Plain Avenue

Storage went back and forth concerning potential change orders related to the subsurface
conditions. (See, e.g., Tr. 7:40-55; Exs. 110.8, 110.9, 110.10, 110.13. 110.14, 110.16, 110.22,
110.23, 110.24, 110.26). Plain Avenue Storage repeatedly reviewed the proposed change orders
and supporting documentation, such as the contract documents and geotechnical reports and
visited the site multiple times to review the ground conditions. (Tr. 7:41-42). It requested that
BRT submit specific supporting documentation in support of the potential change orders. (Ex.
1133). And it ultimately offered to conditionally accept Change Order #3 and the rigid-inclusion
work in Change Order #4, even though it “deem[ed] 90% of the Rigid Inclusion work [to be]
contract work and . . . BRT’s responsibility.” (Ex. 110.14, at 2). By investigating and
37

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 38 of 72

negotiating in good faith, Plain Avenue Storage fulfilled its obligation under the contract. 20
168.

Furthermore, the New Rochelle contract was not orally modified by Wallace and

Henry to provide that general conditions on the New Rochelle project would be paid in monthly
increments. The contract does not allow for oral modifications. (Ex. 1026, at 2). Henry and
Radcliff credibly testified that no such agreement was made and that Plain Avenue Storage’s
initial monthly payments were an “oversight.” (Tr. 6:132; Tr. 6:77; Tr. 7:7).
169.

BRT materially breached the New Rochelle contract by, among other things,

failing to timely complete work, including delays resulting from failing to timely obtain permits
and failing to staff and equip the New Rochelle site; failing to timely and accurately complete
pay applications; failing to comply with requirements of the lender that were integrated into the
New Rochelle contract; failing to pay Storage Structures when it received funds from Plain
Avenue Storage for work completed by Storage Structures; and failing to require its design
subcontractors to convey a non-exclusive license to Plain Avenue Storage to use their drawings
and related documents.
170.

Plain Avenue Storage was damaged, among other ways, in the form of increased

costs for completion of the New Rochelle project, as further described below, because of BRT’s
breach of contract.
171.

Accordingly, as to the New Rochelle contract, BRT is liable for breach of

contract, and Plain Avenue Storage is not liable for breach of contract.

In fact, it is likely that Plain Avenue Storage was not even under an obligation to negotiate an equitable
adjustment to the contract with BRT, in light of its initial conclusion that the third Whitestone report did not reveal
previously unknown conditions related to the soil or foundation. (Ex. 110.3, at 1). The New Rochelle contract
provides that “[i]f the Owner determines that the conditions at the site are not materially different from those
indicated in the Design-Build Documents and that no change in the terms of the Design-Build Contract is justified,
the Owner shall so notify the Design-Builder in writing, stating the reasons.” (Ex. 1026, at 35). In any event, Plain
Avenue Storage ultimately negotiated in good faith with BRT.
20

38

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 39 of 72

172.

Likewise, the Malden contract was a valid and enforceable contract between

Malden Storage and BRT.
173.

Malden Storage substantially performed under that contract. Among other things,

it timely processed pay applications when such applications were complete and accurate;
reviewed, negotiated, and—when appropriate—approved change orders in accordance with the
terms of the contract; and complied with Mass. Gen. Laws ch. 149, § 29E.
174.

Like the New Rochelle contract, the Malden contract was not orally modified by

Wallace and Henry to provide that general conditions on the Malden project would be paid in
monthly increments.
175.

BRT materially breached that contract by, among other things, failing to timely

complete work, including delays resulting from failing to timely obtain the necessary permits;
failing to timely and accurately complete pay applications; failing to comply with requirements
of the lender that were integrated into the Malden contract; failing to pay Storage Structures
when it received funds from Malden Storage for work completed by Storage Structures; failing
to require its design subcontractors to convey a non-exclusive license to Malden Storage to use
their drawings and related documents; and failing to mediate disputes arising from the contract
before filing the present lawsuit.
176.

Malden Storage was damaged, among other ways, in the form of increased costs

for completion of the Malden project, as further described below, because of BRT’s breach of
contract.
177.

Accordingly, as to the Malden contract, BRT is liable for breach of contract, and

Malden Storage is not liable for breach of contract.

39

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 40 of 72

B.

Quantum Meruit and Unjust Enrichment
1.

178.

New York – Count 2 (BRT v. Plain Avenue Storage)

Under New York law, quantum meruit and unjust enrichment are analyzed

“together as a single quasi contract claim.” Mid-Hudson Catskill Rural Migrant Ministry, Inc. v.
Fine Host Corp., 418 F.3d 168, 175 (2d Cir. 2005).
179.

For a plaintiff to recover under a theory of quantum meruit or unjust enrichment,

he must show “(1) the performance of services in good faith, (2) the acceptance of the services
by the person to whom they are rendered, (3) an expectation of compensation therefor, and (4)
the reasonable value of the services.” Id. (quoting Revson v. Cinque & Cinque, P.C., 221 F.3d
59, 69 (2d Cir. 2000)).
180.

A plaintiff cannot recover on a theory of quantum meruit or unjust enrichment “if

the parties have a valid, enforceable contract that governs the same subject matter.” Id. (citing
Clark-Fitzpatrick, Inc. v. Long Island Rail Road Co., 70 N.Y.2d 382, 388 (1987); Ellis v. Abbey
& Ellis, 742 N.Y.S.2d 225, 228 (1st Dep’t 2002); Mariacher Contracting Co., Inc. v. Kirst
Constr., Inc., 590 N.Y.S.2d 613, 615 (4th Dep’t 1992)).
2.
181.

Massachusetts – Count 5 (BRT v. Malden Storage)

Under Massachusetts law, claims for quantum meruit and unjust enrichment are

treated similarly and have the same elements. See Scarpaci v. Lowe’s Home Ctr., LLC, 212 F.
Supp. 3d 246, 253 n.8 (D. Mass. 2016) (quoting SAR Grp. Ltd. v. E.A. Dion, Inc., 79 Mass. App.
Ct. 1123 (2011)).
182.

For a plaintiff to recover on a theory of quantum meruit or unjust enrichment, he

must show “(1) a benefit conferred upon the defendant by the plaintiff; (2) an appreciation or
knowledge by the defendant of the benefit; and (3) acceptance or retention by the defendant of
the benefit under the circumstances [that] would be inequitable without payment for its value.”
40

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 41 of 72

Massachusetts Eye & Ear Infirmary v. QLT Phototherapeutics, Inc., 552 F.3d 47, 57 (1st Cir.
2009); see also Finard & Co. v. Sitt Asset Mgmt., 79 Mass. App. Ct. 226, 229 (2011).
183.

A plaintiff cannot recover on a theory of quantum meruit or unjust enrichment

“where there is a valid contract that defines the obligations of the parties.” Boston Med. Ctr.
Corp. v. Secretary of Exec. Off. of Health & Human Servs., 463 Mass. 447, 467 (2012) (citing
York v. Zurich Scudder Invs., Inc., 66 Mass. App. Ct. 610, 620 (2006)); see also Platten v. HG
Bermuda Exempted Ltd., 437 F.3d 118, 130 (1st Cir. 2006) (“Massachusetts law does not allow
litigants to override an express contract by arguing unjust enrichment.”).
3.
184.

Conclusion

As noted, the New Rochelle contract was an enforceable contract that defined the

obligations of BRT and Plain Avenue Storage as to the New Rochelle project, and the Malden
contract was likewise an enforceable contract that defined the obligations of BRT and Malden
Storage as to the Malden project.
185.

Accordingly, BRT may not recover on a theory of quantum meruit or unjust

enrichment for any benefit purportedly conferred on Plain Avenue Storage during the New
Rochelle project or on Malden Storage during the Malden project.
C.

Breach of the Implied Covenant of Good Faith and Fair Dealing
1.

186.

New York – Count 3 (BRT v. Plain Avenue Storage) and
Counterclaim 2 (Plain Avenue Storage v. BRT)

Under New York law, “all contracts imply a covenant of good faith and fair

dealing in the course of performance.” 511 West 232nd Owners Corp. v. Jennifer Realty Co., 98
N.Y.2d 144, 153 (2002) (collecting cases).
187.

That covenant “embraces a pledge that neither party shall do anything which will

have the effect of destroying or injuring the right of the other party to receive the fruits of
41

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 42 of 72

the contract,” id. (internal quotation marks omitted), and “[e]ncompass[es] . . . ‘any promises
which a reasonable person in the position of the promise would be justified in understanding
were included.’” Dalton v. Educational Testing Serv., 87 N.Y.2d 384, 389 (1995) (quoting Rowe
v. Great Atl. & Pac. Tea Co., 46 N.Y.2d 62, 69 (1978)). It does not extend, however, to
obligations that are “inconsistent with other terms of the contractual relationship.” Id. (quoting
Murphy v. American Home Products Corp., 58 N.Y.2d 293, 304 (1983)).
188.

Under New York law, the elements of a claim for breach of the implied duty of

good faith and fair dealing are “(1) defendant must owe plaintiff a duty to act in good faith and
conduct fair dealing; (2) defendant must breach that duty; and (3) the breach of duty must
proximately cause plaintiff’s damages.” Washington v. Kellwood Co., 2009 WL 855652, at *6
(S.D.N.Y. Mar. 24, 2009) (quoting Boyd v. University of Illinois, 2001 WL 246402, at *10
(S.D.N.Y. Mar. 13, 2001)).
189.

“New York law does not recognize a separate cause of action for breach of the

implied covenant of good faith and fair dealing when it is based on the same facts as the breach
of contract claim.” Goldblatt v. Englander Comms., LLC, 2007 WL 148699, at *5 (S.D.N.Y.
Jan. 22, 2007) (citing Harris v. Provident Life & Accident Ins. Co., 310 F.3d 73, 81 (2d Cir.
2002); Ari & Co. v. Regent Int’l Corp., 273 F. Supp. 2d 518, 522 (S.D.N.Y. 2003)). 21 For such a
claim to be viable, plaintiff must establish “a legal duty separate and apart from contractual
duties.” Washington, 2009 WL 855652, at *6 (citing Goldblatt, 2007 WL 148699, at *5).

New York law similarly does not recognize a separate cause of action for breach of the implied covenant
when “the relief sought in claiming a breach of the implied covenant of good faith is intrinsically tied to the
damages allegedly resulting from the breach of contract.” Goldblatt, 2007 WL 148699, at *5 (citing Alter v.
Bogorician, 1997 WL 691332, at *8 (S.D.N.Y. Nov. 6, 1997)).
21

42

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 43 of 72

2.
190.

Massachusetts – Count 6 (BRT v. Malden Storage) and Counterclaim
8 (Malden Storage v. BRT)

Under Massachusetts law, a covenant of good faith and fair dealing is implied in

every contract. See UNO Rests., Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376, 385
(2004). That covenant “concerns the manner of performance” of the contract. Id. (citing
Hawthorne’s, Inc. v. Warrenton Realty, Inc., 414 Mass. 200, 211 (1993)). It provides that
“neither party shall do anything that will have the effect of destroying or injuring the rights of the
other party to receive the fruits of the contract.” Anthony’s Pier Four, Inc. v. HBC Assocs., 411
Mass. 451, 471-72 (1991) (quoting Drucker v. Roland Wm. Jutras Assocs., 370 Mass. 383, 385
(1976)).
191.

By contracting, parties implicitly agree “to deal honestly and in good faith in both

the performance and enforcement of the terms of their contract.” Hawthorne’s, 414 Mass. at
211. The scope of the covenant is only as broad as the contract between the parties, and the
implied covenant does “not create rights or duties beyond those the parties agreed to when they
entered into the contract.” Curtis v. Herb Chambers I-95, Inc., 458 Mass. 674, 680 (2011); see
also Ayash v. Dana-Farber Cancer Inst., 443 Mass. 367, 385 (2005).
192.

To establish a breach of the implied covenant, “a plaintiff must prove that there

existed an enforceable contract between the two parties and that the defendant did something that
had the effect of destroying or injuring the right of [the plaintiff] to receive the fruits of the
contract.” FabriClear, LLC v. Harvest Direct, LLC, 481 F. Supp. 3d 27, 35 (D. Mass. 2020)
(quoting Blake v. Professional Coin Grading Serv., 898 F. Supp. 2d 365, 388 (D. Mass. 2012)).
193.

Typically, “a breach of the implied covenant involves ‘bad faith’ conduct

implicating a dishonest purpose, consciousness of wrong, or ill will in the nature of the fraud.”
Targus Group Int’l, Inc. v. Sherman, 76 Mass. App. Ct. 421, 435 (2010) (internal quotation
43

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 44 of 72

marks omitted).
D.

Conclusion

194.

In connection with the New Rochelle and the Malden contracts, the parties owed

one another a duty to act in good faith and fair dealing during the performance of those contracts.
195.

Plain Avenue Storage and Malden Storage did not identify the factual basis for

their counterclaims for breach of the implied covenant in their initial pleadings or in their posttrial briefing. At trial, counsel indicated that the counterclaims are “very closely connected
to . . . the fraudulent behavior and also the conversion.” (Tr. 9:18-19). But counsel did not
explain how those facts support a distinct claim for breach of the implied covenant. Nor is it
readily apparent to the Court. Under the circumstances, the Court finds that Plain Avenue
Storage and Malden Storage have not proved their counterclaims for breach of the implied
covenant of good faith and fair dealing.
196.

Neither Plain Avenue Storage nor Malden Storage breached the implied covenant

of good faith and fair dealing as to their respective contracts. The parties operated in good faith
by, among other things, offering to pay for change orders even when they determined that the
work was BRT’s responsibility (see, e.g., Ex. 110.14, at 2) and assisting BRT in its payapplication submissions. (See, e.g., Ex. 1565-69 (summaries of pay applications for Malden
project)).
197.

Accordingly, neither BRT, Plain Avenue Storage, nor Malden Storage is liable for

breach of the implied covenant of good faith and fair dealing.
E.

Conversion
1.

198.

New York – Counterclaim 3 (Plain Avenue Storage v. Wallace and
BRT)

Under New York law, “[c]onversion occurs when a defendant exercises
44

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 45 of 72

unauthorized dominion over personal property in interference with a plaintiff’s legal title or
superior right of possession.” LoPresti v. Terwilliger, 126 F.3d 34, 41 (2d Cir. 1997) (quoting
Rolls-Royce Motor Cars, Inc. v. Schudroff, 929 F. Supp. 117, 124 (S.D.N.Y. 1996)).
199.

“[I]t is well-settled that an action will lie under New York law for conversion of

money when there is an obligation to return or otherwise treat in a particular manner the specific
money in question.” Id. (quoting Vanderbilt Univ. v. Dipsters Corp., 1986 WL 10471, at *3
(S.D.N.Y. Sept. 17, 1986)).
200.

“The tort of conversion does not require defendant’s knowledge that he is acting

wrongfully, but merely an intent to exercise dominion or control over property in a manner
inconsistent with the rights of another.” Fashions Outlet of America, Inc. v. Maharaj, 1991 WL
143421, at *2 (S.D.N.Y. July 22, 1991) (internal quotation marks and citations omitted).
201.

Under New York law, “corporate officers may be held personally liable for their

tortious acts . . . even if they are made on behalf of the corporate entity.” Aguirre v. Best Care
Agency, Inc., 961 F. Supp. 2d 427, 461 (E.D.N.Y. 2013); see also Cohen v. Koenig, 25 F.3d
1168, 1173 (2d Cir. 1994) (“Though such individuals are not generally liable for their
corporation’s debts or its breach of a contract . . . officers and directors of a corporation may be
held liable for fraud if they participate in it or have actual knowledge of it.” (citations and
internal quotation marks omitted)).
2.
202.

Massachusetts – Counterclaim 9 (Malden Storage v. Wallace and
BRT)

Under Massachusetts law, a defendant is liable for conversion if he “intentionally

or wrongfully exercise[s] acts of ownership, control or dominion over personal property to which
he has no right of possession at the time.” In re Brauer, 452 Mass. 56, 67 (2008) (internal

45

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 46 of 72

quotation marks, alteration, and citations omitted). 22
203.

To prove conversion, a plaintiff must further demonstrate that “the defendant

either did some positive wrongful act with the intention to appropriate the property to himself or
to deprive the rightful owner of it, or destroyed the property.” Kelley v. LaForce, 288 F.3d 1, 1112 (1st Cir. 2002).
204.

“It is no defense to conversion for defendant to claim that he acted in good faith,

reasonably believing that he had a legal right to possession of the goods.” Id. at 12. To be liable,
a defendant does not need intent “to deprive the owner permanently of the property. Rather, one
only need intent to exercise dominion or control over the property of another and can be held
liable for conversion even if the property over which he exercised control was believed to be his
own.” In re Zak, 573 B.R. 13, 42 (Bankr. D. Mass. 2017) (quoting In re Sloane, 2002 WL
1000956, at *6 (Bankr. D. N.H. Mar. 25, 2002)) (internal alteration omitted).
205.

“Under Massachusetts law, corporate officers are personally liable for any

tortious activity in which they personally participate.” Chesterton Capital, LLC v. Holley, 2017
WL 6209189, at *13 (D. Mass. Dec. 8, 2017) (quoting Frontier Mgmt. Co. v. Balboa Ins. Co.,
658 F. Supp. 987, 991 (D. Mass. 1986)).

The First Circuit has articulated the elements of the tort somewhat differently, holding that a plaintiff
alleging conversion under Massachusetts law must show that:
22

(1) the defendant intentionally and wrongfully exercised control or dominion over the
personal property; (2) the plaintiff had an ownership or possessory interest in the property at
the time of the alleged conversion; (3) the plaintiff was damaged by the defendant’s conduct;
and (4) if the defendant legitimately acquired possession of the property under a good-faith
claim of right, the plaintiff’s demand for its return was refused.
Evergreen Marine Corp. v. Six Consignments of Frozen Scallops, 4 F.3d 90, 95 (1st Cir. 1993); see also Neelon v.
Krueger, 2015 WL 4647931, at *2 n.3 (D. Mass. Aug. 5, 2015) (“In cases where a defendant had legitimate
possession of property, for example, a bailee holding goods for a bailor, Massachusetts law recognizes a further
element that requires the plaintiff to have requested the property’s return and been denied.”).

46

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 47 of 72

3.
206.

Conclusion

BRT exercised unauthorized possession of funds of Plain Avenue Storage when it

received $185,000 from Banner intended for the second payment for Storage Structures on the
New Rochelle project and did not make that payment to Storage Structures. See LoPresti, 126
F.3d at 41 (“[I]t is well-settled that an action will lie under New York law for conversion of
money where there is an obligation to return or otherwise treat in a particular manner the specific
money in question.”).
207.

Wallace admitted at trial that BRT did not pay Storage Structures the $185,000.

(Tr. 3:9). BRT also did not return $185,000 to Banner or credit Banner that amount. (Tr. 6:64).
208.

Wallace claims that there was a secret deal between him, Henry, and Delaney that

BRT would be paid the full disputed amount for its work on the Lynn project by invoices
submitted through the New Rochelle and Malden projects, presumably through the creation of
false paperwork. Specifically, he claims that BRT was entitled to the $185,000 as compensation
for the $178,171 deductive change order that was executed as part of the settlement for the Lynn
project. (Tr. 4:14; Ex. 1495, at 2).
209.

The Court does not find Wallace’s testimony as to the claimed secret deal to be

credible, and it is not supported by the documentary evidence. 23

23
Wallace’s testimony, which spanned more than four days at trial, was often unsupported by the record, if
not wholly contradicted by it. He was argumentative and evasive, and at times refused to answer questions. The
following exchange provides one example:

Q. So why [is Storage Structures] invoicing you? Why is Storage Structures invoicing you for
$165,000 if not for the steel proposal that they sent you and the steel that was going to be put into
the Malden project?
A. I disagree.
Q. No, that’s not an answer to the question.
A. Then you’ll have to repeat the question.

47

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 48 of 72

210.

BRT was not entitled to retain the $185,000, by agreement or otherwise. At the

conclusion of the Lynn project, Lynn Storage and BRT agreed that Lynn Storage would pay
$300,000 to BRT for its final proposed change orders. (Ex. 1001; Tr. 6:102). BRT certified that
it was paid in full for its work on the Lynn project. (See, e.g., Exs. 1004, 1006, 1007).
211.

Furthermore, the New Rochelle contract included an integration clause that stated

that it represented “the entire and integrated agreement between the parties hereto and
supersede[d] prior negotiations, representations or agreements, either written or oral.” (Ex.
1026, at 3). Even if there had been a secret oral side agreement, it was superseded by that
contract.
212.

Heath Mulkey credibly testified that the $185,000 was for work that Storage

Structures performed for BRT on the New Rochelle project and that Storage Structures expected
to be paid for that work after it issued the invoice for $185,000. (Tr. 7:74-76).
213.

Wallace had knowledge of, and in fact personally participated in, the conversion

of funds from Plain Avenue Storage.
214.

Accordingly, BRT and Wallace are liable to Plain Avenue Storage for conversion

of $185,000.
215.

BRT likewise exercised unauthorized possession of funds of Malden Storage

when it received $142,282 from Banner for the payment intended for Storage Structures on the
Malden project and did not make that payment to Storage Structures.
216.

BRT did not pay Storage Structures $142,282 of the $165,000 invoice that it

Q. Why is Storage Structures billing you $165,000 when the money that you claim in that sum you
say was due to you from Banner from the Lynn project?
A. That’s what I said, yes.
(Tr. 3:16-17).

48

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 49 of 72

submitted for work on the Malden project. (Tr. 7:82). Nor did it return the $142,282 to Banner
or credit Banner that amount. (Tr. 6:67).
217.

Wallace claims that there was a secret side agreement that BRT would be paid

$142,000 as compensation for the punch-list work that BRT completed on the Lynn project. (Ex.
1495, at 3).
218.

The Court does not find Wallace’s testimony as to the claimed secret deal to be

credible, and it is not supported by the documentary evidence.
219.

Again, BRT was not entitled to that money, by agreement or otherwise. The

punch-list contract provided that Lynn Storage would pay $291,818.69 to BRT for the punch-list
work. (Ex. 1008, at 2). BRT was in fact paid that amount for that work. (See, e.g., Tr. 4:9-10;
Exs. 1012, 1013, 1017).
220.

Furthermore, the Malden contract included an integration clause that stated that it

represented “the entire and integrated agreement between the parties hereto and supersede[d]
prior negotiations, representations or agreements, either written or oral.” (Ex. 1182, at 3).
Again, even if there had been a secret oral side agreement, it was superseded by that contract.
221.

Heath Mulkey credibly testified that the $165,000 was for work that Storage

Structures performed for BRT on the Malden project and that Storage Structures expected to be
paid for that work after it issued the invoice for $165,000. (Tr. 7:80-85).
222.

Wallace had knowledge of, and in fact personally participated in, the conversion

of funds from Malden Storage.
223.

Accordingly, BRT and Wallace are liable to Malden Storage for conversion of

$142,282.

49

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 50 of 72

F.

Fraud
1.

224.

New York – Counterclaim 5 (Plain Avenue Storage v. Wallace and
BRT)

To prove a claim for fraud under New York law, “a plaintiff must show, by clear

and convincing evidence, that the defendant made a material misrepresentation of fact,” or an
omission of a material fact coupled with a duty of disclosure, “knowing of its falsity and with the
intent to induce reliance, and that the plaintiff justifiably relied on that misrepresentation to her
detriment.” Crawford v. Franklin Credit Mgmt. Corp., 758 F.3d 473, 491 (2d Cir. 2014) (citing
Gaidon v. Guardian Life Ins. Co. of America, 94 N.Y.2d 330, 349-50 (1999); Eurycleia
Partners, LP v. Seward & Kissel, LLP, 12 N.Y.3d 553, 559 (2009)).
2.
225.

Massachusetts – Counterclaim 11 (Malden Storage v. Wallace and
BRT)

To prove a claim for fraud under Massachusetts law, a plaintiff must show that a

defendant “(1) made a false representation of material fact; (2) with knowledge of its falsity; (3)
for the purpose of inducing the plaintiff[] to act on this representation; (4) that the plaintiff[]
reasonably relied on the representation as true; and (5) that [the plaintiff] acted upon it to their
damage.” AcBel Polytech, Inc. v. Fairchild Semiconductor Int’l, Inc., 928 F.3d 110, 122 (1st
Cir. 2019) (internal quotation marks omitted).
226.

“Proof of intent to deceive is not required, so long as there is proof of a false

representation of fact susceptible of the speaker’s knowledge.” Cummings v. HPG Int’l, Inc.,
244 F.3d 16, 22 (1st Cir. 2001). The claimant must also “set[] forth specific facts that make it
reasonable to believe that defendant knew that a statement was materially false or misleading.”
Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 358 (1st Cir. 2013) (quoting North Am.
Catholic Educ. Programming Found., Inc. v. Cardinale, 567 F.3d 8, 13 (1st Cir. 2009)).

50

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 51 of 72

3.
227.

Conclusion

On behalf of BRT, Wallace knowingly submitted sworn statements, pay

applications, and invoices to Plain Avenue Storage that indicated that BRT had paid $224,900 to
Storage Structures. (Tr. 5:96; Ex. 107.9; Tr. 5:114-15; Ex. 1094; Tr. 7:66-67; Exs. 1111; 107.17,
107.18; Exs. 1160, 1163, 1167). These statements were false at the time they were made and
were made for the purpose of inducing Plain Avenue Storage to pay the money to BRT. Plain
Avenue Storage justifiably relied on those false sworn statements and pay applications when it
paid $224,900 to BRT. (Exs. 1160, 1164, 1168).
228.

In fact, BRT paid only $39,900 of that money to Storage Structures. (Ex. 1161, at

1; Ex. 1412; Tr. 7:75; Tr. 7:82).
229.

Wallace had knowledge of, and in fact personally participated in, the fraud

committed against Plain Avenue Storage related to the Storage Structure payments.
230.

Accordingly, BRT and Wallace are liable for fraud under New York law.

231.

On behalf of BRT, Wallace knowingly submitted sworn statements, pay

applications, and an invoice to Malden Storage that indicated that BRT had paid $165,000 to
Storage Structures. (Exs. 207.1; 208.1; 209.1; 1193). These statements were false at the time
they were made and were made for the purpose of inducing Malden Storage to pay the money to
BRT. Malden Storage justifiably relied on those false sworn statements and pay applications
when it paid $165,000 to BRT. (Ex. 1194, at 1).
232.

In fact, BRT paid only $22,718 of that money to Storage Structures. (Ex. 1200).

233.

Wallace had knowledge of, and in fact personally participated in, the fraud

committed against Malden Storage related to the Storage Structure payments.
234.

Accordingly, BRT and Wallace are liable for fraud under Massachusetts law.

51

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 52 of 72

G.

Failure to Make Prompt Payment
1.

235.

Massachusetts – Count 7 (BRT v. Malden Storage)

The Massachusetts Prompt Payment Act, Mass. Gen. Laws ch. 149, § 29E,

“imposes mandatory requirements that have the net effect of ensuring prompt review and
payment of periodic payment requisitions submitted by contractors on construction projects
within the scope of the Act, and requiring written statements of reasons for any rejection or
reduction of requisitions.” Tocci Building Corp. v. IRIV Partners, LLC, 2020 WL 8182898, at
*1 (Nov. 20, 2020) (citing Mass. Gen. Laws ch. 149, § 29E(c)).
236.

It applies to private projects with prime contracts, entered into on or after

November 8, 2010, which have original values of $3 million or more, subject to several
exceptions. See Mass. Gen. Laws ch. 149, § 29E(a). It also applies to “any party who would be
entitled to a Massachusetts mechanic’s lien, which includes prime contractors and first and
second tier subcontractors.” Tocci Building, 2020 WL 8182898, at *1 (citing Mass. Gen. Laws
ch. 149, § 29E(a)).
237.

Subsection (c) governs contractual provisions concerning pay applications and

approval or rejection of pay applications. It provides that “[e]very contract for construction shall
provide reasonable time periods within which: (i) a person seeking payment under the contract
shall submit written applications for periodic progress payments; (ii) the person receiving the
application shall approve or reject the application, whether in whole or in part; and (iii) the
person approving the application shall pay the amount approved.” Mass. Gen. Laws ch. 149, §
29E(c). It further provides that those time periods shall not exceed:
(i) for submission, 30 days, beginning with the end of the first calendar month
occurring at least 14 days after the person seeking payment has commenced
performance;
(ii) for approval or rejection, 15 days after submission; provided, however, that
52

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 53 of 72

the time period, as applicable to approval or rejection by the person at each tier of
contract below the owner of the project, may be extended by 7 days more than the
time period applicable to the person at the tier of contract above the person; and
(iii) for payment, 45 days after approval, unless the payment is subject to the
condition of receipt of payment by a third person but only to the extent
enforceable under subsection (e).
Id.
238.

Any full or partial rejection of a pay application must be made in writing, must

explain the factual and contractual basis for the rejection, and must certify that the rejection is
made in good faith. See id. 24 If the pay application is not rejected within the 15-day period, the
application is “deemed to be approved.” Id. Payment must be made within 45 days after
approval. See id. A “deemed approval” can be reversed if a rejection is properly issued before
the end of that 45-day period. See id.
239.

In effect, “a recipient of a payment requisition—typically a project owner or

manager—has a total of 60 days after submission of a payment requisition to object to it, and any
rejection must comply with three requirements under the Act: it must (1) be in writing; (2)
include an explanation of the factual and contractual basis for the rejection; and (3) be certified
to have been made in good faith.” Tocci Building, 2020 WL 8182898, at *2.
240.

Subsection (d) governs contractual provisions concerning change orders and

approval or rejection of change orders. It provides that “[e]very contract for construction shall
provide a reasonable time period within which a written request submitted by a person seeking
an increase in the contract price shall be approved or rejected, whether in whole or in part.”
Mass. Gen. Laws ch. 149, § 29E(d). It further provides that that time period “shall not exceed 30

24
The Prompt Payment Act provides that “[a] communication required in this section to be in writing may
be submitted in electronic form and by electronic means.” Mass. Gen. Laws ch. 149, § 29E.

53

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 54 of 72

days after the later of commencement of the performance of the work on which the request is
based or submission of the written request . . . .” Id.
241.

Like rejections of pay applications, rejections of change-order requests, “whether

in whole or in part, shall be made in writing, shall include an explanation of the factual and
contractual basis for the rejection and shall be certified as made in good faith.” Id. Changeorder requests that are neither approved nor rejected within a 30-day period are “deemed to be
approved and may be submitted for payment within the next application for a periodic progress
payment, unless it is rejected before the date payment is due.” Id.
242.

If a pay application or a change-order request is rejected, the party who submitted

the application or request may commence the contractual dispute-resolution procedures. See
Mass. Gen. Laws ch. 149, § 29E(c), (d). Contractual provisions that “require[] a party to delay
commencement of [such procedures] until a date later than 60 days after the rejection [are] void
and unenforceable.” Id.
243.

Subsection (e) governs “pay-if-paid” clauses:

A provision in a contract for construction which makes payment to a person
performing the construction conditioned upon receipt of payment from a third
person that is not a party to the contract shall be void and unenforceable,
except . . . to the extent of amounts not received from the third person because the
person performing the construction failed to perform under its contract and failed
to cure the non-performance within the time required by the contract after receipt
of written notice as provided in the contract or, in the case of contract lacking a
cure and notice provision, failed to cure the non-performance within 14 days after
receipt of written notice of the failure to perform.
Id. § 29E(e). That exception “shall be expressly stated in any conditional payment provision and
the person seeking to enforce the payment condition shall have the burden of proof as to each
element.” Id.
244.

Contractual provisions that require a contractor to continue performance beyond

30 days of nonpayment are unenforceable, except in cases where (i) the nonpayment arises from
54

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 55 of 72

a dispute “regarding the quality or quantity of the construction” or (ii) there is “a default by the
person under the contract for construction after approval of the payment,” provided “that the
person has received . . . prior written notice of such dispute or default certified as made in good
faith and . . . all sums due less any amounts attributable to the dispute or default.” Id. § 29E(f).
245.

Subsection (g) provides that “[a] provision in a contract for construction which

purports to waive or limit any provisions of this section shall be void and unenforceable.” Id. §
29E(g).
246.

Mass. Gen. Laws ch. 149, § 29E does not include a private cause of action.

Furthermore, no court to date has found such a right of action by implication. Therefore, BRT
may not bring an action based on any purported violation of that statute by Malden Storage.
247.

One decision by the Massachusetts Superior Court concluded that the statute

“supplement[s]” the terms of the contract and “trump[s] any contrary provisions within it,” and
that failure to adhere to the provisions of Mass. Gen. Laws ch. 149, § 29E can underlie a claim
for breach of contract. See Tocci Building, 2020 WL 8182898, at *6.
248.

Even assuming Malden Storage violated Mass. Gen. Laws ch. 149, § 29E,

however, any such violation would not constitute a breach of contract here. BRT’s repeated,
material failures to comply with the processes to submit pay applications and change-order
requests vitiate any obligation Malden Storage had under Mass. Gen. Laws ch. 149, § 29E. See
Verderber, 1999 WL 525953, at *3 (“A material breach by one party excuses the other party
from further performance under the contract.” (quoting Ward, 15 Mass. App. Ct. at 100)). See,
e.g., Ex. 1569 (summary of pay applications #5 and #6 for Malden project).

55

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 56 of 72

H.

Tortious Interference with Advantageous Relations
1.

249.

New York – Counterclaim 4 (Plain Avenue Storage v. Wallace and
BRT)

Under New York law, to prove tortious interference with prospective economic

relations, a plaintiff must show that “(1) the plaintiff had business relations with a third party; (2)
the defendant interfered with those business relations; (3) the defendant acted for a wrongful
purpose or used dishonest, unfair, or improper means; and (4) the defendant’s acts injured the
relationship.” Brown Media Corp. v. K & L Gates, LLP, 586 B.R. 508, 529 (E.D.N.Y. 2018)
(quoting Catskill Dev., LLC v. Park Place Entm’t Corp., 547 F.3d 115, 132 (2d Cir. 2008)).
250.

Even though inducing breach of contract and interfering with a nonbinding

“economic relation” are both cognizable torts under New York law, they require proof of
different degrees of culpability on the part of a defendant:
[T]he degree of protection available to a plaintiff for a competitor’s tortious
interference with contract is defined by the nature of the plaintiff's enforceable
legal rights. Thus, where there is an existing, enforceable contract and a
defendant’s deliberate interference results in a breach of that contract, a plaintiff
may recover damages for tortious interference with contractual relations even if
the defendant was engaged in lawful behavior. Where there has been no breach
of an existing contract, but only interference with prospective contract rights,
however, plaintiff must show more culpable conduct on the part of the defendant.
Carvel Corp. v. Noonan, 3 N.Y.3d 182, 189-90 (2004) (quoting NBT Bancorp Inc. v.
Fleet/Norstar Fin. Group, Inc., 87 N.Y.2d 614, 621 (1996)).
251.

Thus, “a defendant who induced the breach of a binding contract could be liable

even if the defendant was engaged in lawful behavior,” but the same is not true “where the
plaintiff complained only of interference with prospective contract rights.” Id. at 190 (internal
quotation marks omitted). In that case, “where a suit is based on interference with a nonbinding
relationship, the plaintiff must show that defendant’s conduct was not ‘lawful’ but ‘more
culpable.’” Id. Therefore, “as a general rule, the defendant’s conduct must amount to a crime or
56

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 57 of 72

an independent tort . . . to create liability for interference with prospective contracts or other
nonbinding economic relations.” Id. 25
252.

One exception to that general rule is when “a defendant engages in conduct for

the sole purpose of inflicting intentional harm on plaintiffs.” Id. (internal quotation marks
omitted).
2.
253.

Massachusetts – Counterclaim 10 (Malden Storage v. Wallace and
BRT)

Under Massachusetts law, “[t]he tort of intentional interference with

advantageous relations protects a plaintiff’s present and future economic interests from wrongful
interference.” See Blackstone v. Cashman, 448 Mass. 255, 259 (2007).
254.

Under Massachusetts law, to prove tortious interference with advantageous

relations, a plaintiff must show that
(1) he had an advantageous relationship with a third party (e.g., a present or
prospective contract or employment relationship); (2) the defendant knowingly
induced a breaking of the relationship; (3) the defendant’s interference with the
relationship, in addition to being intentional, was improper in motive or means;
and (4) the plaintiff was harmed by the defendant’s actions.
Id. at 260; see also Rando v. Leonard, 826 F.3d 553, 556 (1st Cir. 2016). 26
255.

“[T]he plaintiff need not prove the loss or diminution of a fully formed contract,”

but “she must, at a bare minimum, prove harm to a ‘probable future business relationship from
which there is a reasonable expectancy of financial benefit . . . .’” Sindi v. El-Moslimany, 896

The Carvel court also indicated that the “wrongful means” identified in the Restatement (Second) of
Torts—“physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of
economic pressure”—would constitute “more culpable” conduct that would expose a defendant to liability for
interference with prospective economic relations. Carvel Corp., 3 N.Y.3d at 191. But “persuasion alone” even if
“knowingly directed at interference with the contract” would not constitute a “wrongful means.” Id.
25

When interference with an actual contract is alleged, courts sometimes refer to the tort as “intentional
interference with contractual relations.” See, e.g., Thomas v. Town of Salisbury, 134 F. Supp. 3d 633, 652-53 (D.
Mass. 2015).
26

57

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 58 of 72

F.3d 1, 25 (1st Cir. 2018) (quoting Owen v. Williams, 322 Mass. 356, 362 (1948)). “Mere
speculation regarding potential future business opportunities is insufficient to prove this
element.” Id. (citing Singh v. Blue Cross/Blue Shield of Mass., Inc., 308 F.3d 25, 48 (1st Cir.
2002)). Instead, “there must be competent evidence of a specific business relationship, the
consummation of which was reasonably likely.” Id.
256.

To demonstrate improper means, “a plaintiff must prove improper conduct

beyond the fact of the interference itself.” Bartle v. Berry, 80 Mass. App. Ct. 372, 380 (2011)
(citing United Truck Leasing Corp. v. Geltman, 406 Mass. 811, 816-17 (1990); Cavicchi v.
Koski, 67 Mass. App. Ct. 654, 657 (2006)).
3.
257.

Conclusion

Wallace and BRT instructed subcontractors to not interact with Plain Avenue

Storage. However, Plain Avenue Storage did not have existing, enforceable contracts with those
subcontractors. Accordingly, even if Plain Avenue Storage had prospective “business relations”
with such subcontractors based on the possibility of a future contract, Wallace and BRT’s
conduct—sending letters to subcontractors stating “[p]lease do not talk with the owner or its
representatives at this time until this is resolved” (Ex. 1542, at 2)—did not “amount to a crime or
an independent tort,” which is necessary for a party to be liable for interference with prospective
economic relations under New York law. See Carvel Corp., 3 N.Y.3d at 190-91.
258.

Malden Storage had prospective contractual relationships with BRT’s

subcontractors, including KOH Architecture and JAG Engineering.
259.

BRT knowingly interfered with those relationships by instructing its

subcontractors, including KOH and JAG Engineering, not to talk with Malden Storage until its

58

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 59 of 72

dispute with Malden Storage was resolved. 27
260.

BRT’s interference was improper in motive or means because it was done to gain

leverage over Malden Storage in their dispute arising out of the Malden contract.
261.

Malden Storage was harmed by BRT’s actions in the form of extra costs

associated with completing the Malden project after termination of BRT. Malden Storage
presented evidence showing that it had to pay $39,500 to a new architect because KOH did not
work with it following termination of the Malden contract. (Ex. 1189, at 1). It presented further
evidence that it had to pay $12,046.25 to a new engineer because JAG did not work with it
following termination of the Malden contract. (Id.).
262.

Wallace had knowledge of, and in fact personally participated in, the interference

with advantageous relations by BRT.
263.

Accordingly, BRT and Wallace are liable for tortious interference with

advantageous relations under Massachusetts law.
I.

Unfair or Deceptive Acts or Practices
1.

264.

New York – Counterclaim 6 (Plain Avenue Storage v. BRT)

N.Y. Gen. Bus. Law § 349(a) makes unlawful “[d]eceptive acts or practices in the

conduct of any business trade or commerce or in the furnishing of any service” in New York.
N.Y. Gen. Bus. Law § 349(a).
265.

It provides a private cause of action to consumers seeking to recover damages

caused by deceptive acts or practices:
[A]ny person who has been injured by reason of any violation of this section may
Even though the letters that Wallace sent to the subcontractors that were entered into evidence appear to
concern the termination of the New Rochelle contract, and Henry’s testimony concerning the interference is not
entirely clear, BRT and Wallace’s interference extended to the Malden project. According to Henry, Malden
Storage attempted to engage at least KOH Architecture and JAG Engineering after the termination of the Malden
contract, and they refused. (Tr. 8:41-44).
27

59

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 60 of 72

bring an action in his own name to enjoin such unlawful act or practice, an action
to recover his actual damages or fifty dollars, whichever is greater, or both such
actions.
See id. § 349(h).
266.

To prevail on a cause of action under § 349, a plaintiff must prove three elements:

(1) the defendant’s act or practice was consumer oriented; (2) the act or practice was misleading
in a material respect; and (3) the plaintiff was injured as a result. Spagnola v. Chubb Corp., 574
F.3d 64, 74 (2d Cir. 2009) (citing Maurizio v. Goldsmith, 230 F.3d 518, 521 (2d Cir. 2000)).
267.

Section 349 “is directed at wrongs against the consuming public,” and therefore a

plaintiff bringing a claim under § 349 must show “conduct of the defendant that is consumeroriented.” Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A., 85
N.Y.2d 20, 24-25 (1995). A plaintiff need not show that a defendant engaged in recurring acts to
have a cognizable claim, “but instead must demonstrate that the acts or practices have a broader
impact on consumers at large.” Id. at 25.
268.

Private contract disputes, such as those that are based on “a single shot

transaction,” typically do not amount to consumer-oriented conduct that is actionable under §
349. See Plavin v. Group Health Incorporated, 35 N.Y.3d 1, 10 (2020). Courts have
recognized, however, an exception where a plaintiff can show, despite the existence of a private
contract, that a defendant’s conduct affected consumers at large. See, e.g., Carroll v. U.S.
Equities Corp., 2019 WL 4643786, at *13 (N.D.N.Y. 2019).
2.
269.

Massachusetts – Count 8 (BRT v. Malden Storage) and Counterclaim
12 (Malden Storage v. BRT)

Chapter 93A prohibits those engaged in trade or commerce from employing

“[u]nfair methods of competition and unfair or deceptive acts or practices.” Mass. Gen. Laws
ch. 93A, § 2.
60

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 61 of 72

270.

Section 11 provides that “[a]ny person who engages in the conduct of any trade or

commerce and who suffers any loss of money or property . . . as a result of the use or
employment by another person who engages in any trade or commerce of an unfair method of
competition or an unfair or deceptive act or practice” may bring an action against that person.
Id. § 11.
271.

To determine whether a business practice is unfair under Chapter 93A, courts

must consider “(1) whether the practice . . . is within at least the penumbra of some commonlaw, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical,
oppressive, or unscrupulous; [and] (3) whether it causes substantial injury to consumers (or
competitors or other businessmen).” PMP Assocs., Inc. v. Globe Newspaper Co., 366 Mass. 593,
596 (1975) (internal quotation marks and citation omitted).
272.

Run-of-the-mill breaches of contract do not meet that standard. See Commercial

Union Ins. Co. v. Seven Provinces Ins. Co., 217 F.3d 33, 40 (1st Cir. 2000) (“A mere breach of
contract does not constitute an unfair or deceptive trade practice under 93A.” (citing Ahern v.
Scholz, 85 F.3d 774, 798 (1st Cir. 1996))). Neither does “withholding payment based on a
genuine dispute about what a contract requires.” Jasty v. Wright Med. Tech., Inc., 528 F.3d 28,
38 (1st Cir. 2008) (citing Duclersaint v. Federal Nat’l Mortgage Ass’n, 427 Mass. 809, 814
(1998)); Arthur D. Little, Inc. v. Dooyang Corp., 147 F.3d 47, 56 (1st Cir. 1998) (“Where there is
a good faith dispute over whether payment is actually owed, and that dispute is clearly
articulated, it also appears that there is no Chapter 93A liability.”).
273.

A party may nonetheless be liable under Chapter 93A if it uses a breach of

contract “as a lever to obtain [an] advantage.” Atkinson v. Rosenthal, 33 Mass. App. Ct. 219,
226 (1992); Commercial Union Ins. Co., 217 F.3d at 40 (explaining that a breach of contract

61

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 62 of 72

must “rise[] to the level of commercial extortion or a similar degree of culpable conduct” to
violate Chapter 93A (internal quotation marks omitted)). A party may also be liable under
Chapter 93A if it attempts to “extract a favorable settlement . . . for less than the amount . . .
owed by repeatedly promising to pay, not doing so, stringing out the process, and forcing [the
other party] to sue.” Arthur D. Little, Inc., 147 F.3d at 55-56.
3.
274.

Conclusion

Even if BRT’s conduct during the New Rochelle project constituted a deceptive

act or practice under § 349, it was not consumer-oriented. It related to a private contract between
two parties and had no effect on consumers at large.
275.

Accordingly, BRT is not liable under N.Y. Gen. Bus. Law § 349.

276.

Likewise, BRT is not liable under Mass. Gen. Laws ch. 93A. As noted, it

committed fraud and converted funds of Malden Storage. To the extent that such conduct could
constitute an “unfair or deceptive” act or practice under Chapter 93A, BRT did not use that
conduct “as a lever to obtain [an] advantage” over Malden Storage. See Atkinson, 33 Mass. App.
Ct. at 226. Its conduct therefore did not “rise[] to the level of commercial extortion or a similar
degree of culpable conduct” that is necessary for Chapter 93A liability. See Commercial Union
Ins. Co., 217 F.3d at 40.
277.

Furthermore, although BRT’s intentional inference with subcontractors may

constitute an “unfair or deceptive” act or practice that it used “as a lever to obtain [an]
advantage” during the parties’ dispute arising from the Malden contract, Malden Storage did not
argue at trial or in its post-trial briefing that its Chapter 93A claim was premised on BRT’s
interference with its subcontractors. It has therefore waived any claim under Chapter 93A to the
extent that it is based on that conduct.
278.

Malden Storage is not liable under Mass. Gen. Laws ch. 93A. Its conduct
62

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 63 of 72

indicates that it operated in good faith. For example, Radcliff repeatedly outlined specific errors
in pay applications to assist BRT in its revisions, which in turn BRT would fail to timely correct.
(See, e.g., Ex. 1565-69 (summaries of pay applications for Malden project)). Similarly, Malden
Storage representatives timely responded to and negotiated change-order requests, either
approving them, providing updates, or requesting additional necessary documentation. (See, e.g.,
Exs. 211.2, 211.3, 211.4, 213, 217.1, 217.2, 218, 219.1). To the extent that Malden Storage’s
responses “strung out the process,” as BRT alleges, they were far short of unfair or deceptive
conduct within the meaning of Chapter 93A.
V.

Termination-for-Cause Damages
279.

BRT’s material breaches of contract entitled Plain Avenue Storage and Malden

Storage to terminate their respective contracts for cause. (Ex. 1026, at 52; Ex. 1182, at 46). At
trial, Plain Avenue Storage and Malden Storage presented evidence of the cost impact of
terminating the contracts for cause. That evidence primarily consisted of testimony from Bill
Henry and Terence Rodgers, Banner’s expert witness; summary exhibits, supported by
underlying documentation, compiling the costs of the New Rochelle and Malden projects; and
Rodgers’s expert report. (Tr. 8:31-36; Tr. 8:91-97; Ex. 1033; Ex. 1189; Ex. 1539). 28
280.

A termination-for-cause impact analysis consists of examining the costs, “over

and above what was paid to the previous contractor,” that is paid to a subsequent contractor who
is brought in “to complete the work.” (Tr. 8:82).
281.

Schedule A of Rodgers’s report summarizes the cost impacts of the terminations

for cause of the New Rochelle and Malden contracts. (Ex. 1539.2, at 1). 29 Rodgers testified that
Expert reports are hearsay and thus typically inadmissible at trial. Here, however, the parties agreed to
enter their respective experts’ reports into evidence without objection. (Tr. 8:28-29).
28

29

Schedule A also appears as part of Rodgers’s report. (See Ex. 1539, at 54).

63

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 64 of 72

the formula used in Schedule A is “based on the termination for cause portions of the contract”
and “put[s] the owner back in the place they should have been in but for the . . . design-builder’s
actions or omissions that caused them to be terminated.” (Tr. 8:91).
282.

For each project, the formula first determines “the cost of completing [the project]

according to the BRT scope.” (Tr. 8:96). It then subtracts from that cost (1) the Guaranteed
Maximum Price of the relevant contract with BRT and (2) the total costs of the approved change
orders completed by BRT. (Id.). In doing so, it calculates the amount that Banner paid to
complete the project according to the BRT scope over and above what it was to pay BRT for that
work. (Id.).
283.

Henry testified concerning the various costs used in Schedule A and the

underlying source information used to determine those costs. (Tr. 8:31-37). He further testified
that Banner provided Rodgers that source information to prepare Schedule A. (Tr. 8:26-27,
8:30-31). 30
284.

Based on the evidence as to damages on the Malden contract, which the Court

accepts with one exception, the cost impact of the termination for cause of the Malden contract
was $3,326,704.51. (Ex. 1539.2, at 1). 31
285.

Based on the evidence as to damages on the New Rochelle contract, which the

Court accepts, the cost impact of the termination for cause of the New Rochelle contract was

30

Schedule A cross-references spreadsheets that summarize the source information. (Ex. 1539.2, at 3-16).

Exhibit 1573 summarizes Malden Storage’s direct payments to subcontractors after termination of BRT
and includes documents that purportedly represent evidence of those direct payments. For the reasons discussed
below, Exhibit 1573 will be struck from the record.
31

As a result, there is no admissible evidence supporting the “Direct to Sub” line of Schedule A as to the
Malden contract and thus Malden Storage cannot recover for the costs included in that line. Accordingly, when
determining the damages to which Malden Storage is entitled, the cost impact of the termination for cause of the
Malden contract will be reduced by the amount of the “Direct to Sub” line.

64

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 65 of 72

$3,847,715.14. (Id.).
286.

A termination-for-cause impact analysis also includes examining the schedule

impacts of a termination for cause.
287.

Schedule B of Rodgers’s report summarizes the schedule impacts of the

terminations for cause of the New Rochelle and Malden contracts. (Ex. 1539.2, at 2). 32 Rodgers
testified that the formula “is based on the liquidated damages clause[s]” in the contracts and it
“establish[es] what was the contractual standard completion at the time of the . . . termination
with BRT, and then just follow[s] all the way down to show what the contractual substantial
completion date was for ARCO.” (Tr. 8:97-98).
288.

Henry testified concerning the formula and underlying source materials used in

Schedule B. (Tr. 8:37-39).
289.

The substantial completion date for the Malden contract between Malden Storage

and BRT was May 7, 2017. (Ex. 1539.2, at 2). The substantial completion date for the contract
between Malden Storage and ARCO was December 28, 2017. (Id.).
290.

The liquidated-damages provision of the Malden contract provided for a 15-day

grace period during which liquidated damages do not accrue. (Ex. 1182, at 4). As a result, as to
the Malden contract, 220 days are subject to liquidated damages.
291.

The Malden contract provides that Malden Storage is entitled to $1,000 of

liquidated damages each day after the grace period ends following the substantial completion
date. (Id.). Malden Storage is therefore entitled to $220,000 in liquidated damages.
292.

The substantial completion date for the New Rochelle contract between Plain

Avenue Storage and BRT was March 19, 2017. (Ex. 1539.2, at 2). The substantial completion

32

Schedule B also appears as part of Rodgers’s report. (See Ex. 1539, at 55).

65

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 66 of 72

date for the contract between Plain Avenue Storage and ARCO was July 31, 2017. (Id.).
293.

The liquidated-damages provision of the New Rochelle contract provided for a

15-day grace period during which liquidated damages do not accrue. (Ex. 1026, at 4). As a
result, as to the New Rochelle contract, 119 days are subject to liquidated damages.
294.

The New Rochelle contract provides that Plain Avenue Storage is entitled to

$1,000 of liquidated damages each day after the grace period ends following the substantial
completion date. (Id.) Plain Avenue Storage is therefore entitled to $119,000 in liquidated
damages.
295.

Plain Avenue Storage and Malden Storage, as the prevailing parties in the present

dispute, are further entitled to receive “all of its reasonable costs and expenses incurred in
connection with [this] litigation, . . . including reasonable attorneys’ fees, filing fees, expert
witness fees, discovery expenses, and any other reasonable costs incurred in prosecuting or
defending” the present action. (Ex. 1026, at 37; Ex. 1182, at 31). Those costs and expenses will
be determined at a future date in a separate proceeding.
VI.

Motion to Strike
296.

BRT and Wallace have moved to strike Exhibit 1573 and the first page of Exhibit

1574. As noted, Exhibit 1573 purportedly evidences payments made by Malden Storage to
subcontractors for the Malden project after the termination of BRT. It consists of a cover page
that summarizes the alleged payments and the underlying documentation of the payments, such
as checks and confirmations of electronic money transfers. Exhibit 1574 is an analogous exhibit
for the New Rochelle project.
297.

BRT and Wallace initially contended that both exhibits should be struck in their

66

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 67 of 72

entirety because the underlying documentation was not disclosed to them before trial. 33 In fact,
the underlying documentation for Exhibit 1574 had been disclosed by Banner as part of its initial
disclosures. BRT and Wallace therefore now only contend that the cover page of Exhibit 1574,
which summarizes the underlying documentation, should be struck.
298.

Under Fed. R. Evid. 1006, a proponent “may use a summary, chart, or calculation

to prove the content of voluminous writings, recordings, or photographs that cannot be
conveniently examined in court.” Fed. R. Evid. 1006. To use a summary, a proponent “must
make the originals or duplicates available for examination or copying, or both, by other parties at
a reasonable time and place.” Id.
299.

Here, the cover page of Exhibit 1574 is a summary offered by Banner of the

checks and electronic transfers made to certain subcontractors. Radcliff testified that she created
the cover page based on the underlying checks and electronic transfers. (Tr. 6:53-54). Banner
made duplicates of those checks and electronic transfers available to the other parties, before and
during trial, and to the Court. The Court finds that the document is admissible under Fed. R.
Evid. 1006.
300.

The fact that Banner did not produce any supporting documentation concerning

what the checks and transfers were for, such as copies of invoices or pay applications, arguably
affects the probative value of the summary and the underlying documentation. But it does not
affect whether the cover page is an admissible summary of the checks and transfers identified in
the supporting documentation. Likewise, as a summary document produced exclusively for trial,
the fact that it was not produced as part of discovery does not affect whether it is admissible.

On January 29, 2021, the Court granted BRT and Wallace’s motion in limine to exclude any documents
responsive to their discovery requests that were not previously produced by Malden Storage and Plain Avenue
Storage. (Dkt. No. 163).
33

67

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 68 of 72

Indeed, according to Banner’s counsel, BRT produced a damages summary exhibit for the first
time at trial pursuant to an agreement between the parties to allow the admission of such exhibits
at trial.
301.

Accordingly, the Court will deny BRT and Wallace’s motion to strike to the

extent that it seeks to strike the cover page of Exhibit 1574.
302.

BRT and Wallace seek to strike Exhibit 1573 in its entirety. Unlike the

underlying documentation for Exhibit 1574, the parties are unsure whether the underlying
documentation for Exhibit 1573 was produced before trial. BRT and Wallace contend that it was
not; Banner states that it “believe[s] that the checks in Exhibit 1573 were [] included in its
production to BRT,” but that it “has been unable to locate the checks in Exhibit 1573 in its
production.” (Banner Opp. at 4).
303.

Banner contends that Exhibit 1573 is nevertheless admissible because the

information concerning Malden Storage’s payments to subcontractors is included in a
spreadsheet supporting Schedule A in its expert report. (See Ex. 1539.2, at 4 (“General
Contractor Payment Spreadsheet_MA_BRT Sum Tab”)).
304.

Neither that spreadsheet nor the expert report includes the underlying

documentation. That documentation should have been made available to BRT and Wallace as
part of Malden Storage’s initial disclosures, or at the latest when that information reasonably
became available to it. See Fed. R. Civ. P. 26(a)(1)(A)(iii) (“[A] party must, without awaiting a
discovery request, provide to the other parties . . . a computation of each category of damages
claimed by the disclosing party—who must also make available for inspection and copying as
under Rule 34 the documents or other evidentiary material, unless privileged or protected from
disclosure, on which each computation is based, including materials bearing on the nature and

68

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 69 of 72

extent of injuries suffered.”).
305.

Furthermore, Schedule A and the supporting spreadsheet in fact cast some doubt

on the reliability of Exhibit 1573. Exhibit 1573 indicates that Malden Storage paid
subcontractors $635,997.23 after termination of BRT (Ex. 1573, at 1), whereas Schedule A
indicates that Malden Storage paid subcontractors $633,178.88. (Ex. 1539.2, at 1). The fact that
the figures do not match provides further support for excluding the exhibit. 34
306.

As a result, particularly in light of the Court’s previous ruling barring the

admission of late-disclosed documents, the underlying documents and the summary cover page
will be struck.
307.

Accordingly, the Court will grant BRT and Wallace’s motion to strike to the

extent that it seeks to strike Exhibit 1573. 35
VII.

Cross-Motions for Directed Verdict
308.

The parties have cross-moved for directed verdicts. BRT and Wallace moved for

directed verdict at the close of the presentation of their evidence and again at the close of all
evidence. Plain Avenue Storage and Malden Storage moved for directed verdict at the close of
all evidence. The Court provisionally denied the motions, without prejudice, on the record.
309.

A motion for a directed verdict in a bench trial is treated as a motion for judgment

on partial findings under Fed. R. Civ. P. 52(c). See Northeast Drilling, Inc. v. Inner Space

By contrast, the total in Exhibit 1574 matches the amount indicated on Schedule A that Plain Avenue
Storage paid to subcontractors following BRT’s termination on the New Rochelle contract. (Compare Exhibit 1574,
at 1, with Exhibit 1539.2, at 1).
34

At trial, Malden Storage argued that Exhibit 1573 should be admissible at least as a defense to any claim
that BRT makes for damages for money that it either paid to or owes subcontractors, even if it were not admissible
for Malden Storage’s affirmative case for damages. It reasoned that BRT disclosed at trial, for the first time, that it
was seeking such damages and thus Malden Storage’s late production of the underlying documentation was justified
to rebut that claim. Because the Court has concluded that Malden Storage is not liable to BRT and thus BRT is not
entitled to damages, it need not decide whether Exhibit 1573 would be admissible for rebuttal purposes.
35

69

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 70 of 72

Servs., Inc., 243 F.3d 25, 37 (1st Cir. 2001). “If a party has been fully heard on an issue during a
nonjury trial and the court finds against the party on that issue,” Rule 52(c) allows the court to
“enter judgment against the party on a claim or defense that, under the controlling law, can be
maintained or defeated only with a favorable finding on that issue.” Fed. R. Civ. P. 52(c). A
court should enter a judgment under Rule 52(c) only “[w]hen a party has finished presenting
evidence and that evidence is deemed . . . insufficient to sustain the party’s position.” Morales
Feliciano v. Rullan, 378 F.3d 42, 59 (1st Cir. 2004).
310.

In light of the foregoing, the Court will deny the parties’ cross-motions for

directed verdict.
VIII. Conclusion
A.

Motions

311.

BRT and Wallace’s motion to strike is GRANTED to the extent that it seeks to

strike Exhibit 1573, and otherwise DENIED; and
312.

The parties’ cross-motions for directed verdicts are DENIED.

B.

Findings of Liability

313.

Plain Avenue Storage, LLC is not liable to BRT Management LLC for breach of

contract, quantum meruit or unjust enrichment, or breach of the implied covenant of good faith
and fair dealing.
314.

Malden Storage, LLC is not liable to BRT Management LLC for breach of

contract, quantum meruit or unjust enrichment, or breach of the implied covenant of good faith
and fair dealing; for a violation of Mass. Gen. Laws ch. 149, § 29E; or for a violation of Mass.
Gen. Laws ch. 93A, § 11.
315.

BRT Management LLC is liable to Plain Avenue Storage, LLC for breach of

contract.
70

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 71 of 72

316.

BRT Management LLC is not liable to Plain Avenue Storage, LLC for breach of

the implied covenant of good faith and fair dealing or a violation of N.Y. Gen. Bus Law § 349.
317.

BRT Management LLC and Brian Wallace are liable to Plain Avenue Storage,

LLC for conversion and fraud.
318.

BRT Management LLC and Brian Wallace are not liable to Plain Avenue Storage,

LLC for tortious interference with advantageous relations.
319.

BRT Management LLC is liable to Malden Storage, LLC for breach of contract.

320.

BRT Management LLC is not liable to Malden Storage, LLC for breach of the

implied covenant of good faith and fair dealing or a violation of Mass. Gen. Laws ch. 93A, § 11.
321.

BRT Management LLC and Brian Wallace are liable to Malden Storage, LLC for

conversion, fraud, and tortious interference with advantageous relations.
C.

Relief

322.

Plain Avenue Storage, LLC is hereby awarded damages from BRT Management

LLC in the amount of $3,966,715.14 for breach of contract.
323.

Plain Avenue Storage, LLC is hereby awarded damages from BRT Management

LLC and Brian Wallace jointly and severally in the amount of $185,000 for conversion and
fraud.
324.

Malden Storage, LLC is hereby awarded damages from BRT Management LLC

in the amount of $2,913,525.63 for breach of contract.
325.

Malden Storage, LLC is hereby awarded damages from BRT Management LLC

and Brian Wallace jointly and severally in the amount of $142,282 for conversion and fraud.
326.

Malden Storage, LLC is hereby awarded damages from BRT Management LLC

and Brian Wallace jointly and severally in the amount of $51,546.25 for tortious interference
with advantageous relations.
71

Case 1:17-cv-10005-FDS Document 206 Filed 09/10/21 Page 72 of 72

327.

Because the damage awards to Malden Storage, LLC for breach of contract and

tortious interference with advantageous relations are overlapping, Malden Storage LLC may not
recover damages totaling more than $2,913,525.63 as to those claims.
328.

Plain Avenue Storage, LLC and Malden Storage, LLC are hereby awarded all

reasonable costs and expenses, including reasonable attorneys’ fees, associated with this action.
Plain Avenue Storage, LLC and Malden Storage, LLC shall file an application for such costs and
expenses within 21 days of this order.
So Ordered.

Dated: September 10, 2021

/s/ F. Dennis Saylor IV
F. Dennis Saylor IV
Chief Judge, United States District Court

72