Opinion
Civil Action No. 01-10561-DPW
August 5, 2002
MEMORANDUM AND ORDER
Plaintiff United States Steel Corporation ("USS") is a secured creditor of Cyclone, Inc. ("Cyclone") and is authorized by a Chapter 11 bankruptcy order to collect all accounts receivable due Cyclone. In this capacity, USS brings this action to recover monies allegedly owed Cyclone by defendants Modern Continental Construction Company and Modern/Obayashi (collectively "Modern") for work completed providing fencing under ten separate construction subcontracts. USS asserts claims on the contract and on quantum meruit for each of the subcontracts.
USS Corporation is the successor to USX Corporation.
Modern contends that Cyclone failed to substantially perform nine of the ten subcontracts and is therefore barred, as is USS as its secured creditor, from recovering either on the contract or on a quantum meruit. Modern moves for summary judgment with respect to the claims related to these nine subcontracts. USS opposes summary judgment and requests additional discovery under Rule 56(f). Alternatively, USS requests certification of two questions related to quantum meruit to the Massachusetts Supreme Judicial Court. I begin with a brief review of the factual background, and then take up the two bases for recovery, considering the issues of additional discovery and certification as they become relevant.
The instant summary judgment motion involves the claims relating to the following nine subcontracts with the corresponding dates of execution: (1) C19E1 — July 24, 1998, (2) C19B1 — January 21, 1998, (3) C19E7 — October 16, 1997, (4) C17A1 — March 28, 1997, (5) C09B1 — January 21, 1998, (6) C09C1 — March 12, 1997, (7) S8CN02 — October 12, 1995, (8) C17A2 — June 23, 1995, (9) C17A9 — May 1, 1996. The tenth subcontract at issue in this action but not the subject of the summary judgment motion is C09B3 — unspecified date before June 26, 1996.
I. Background
The following facts are undisputed. Between June 1995 and July 1998, Modern, a general contractor, entered into ten separate subcontracts with Cyclone for the supply and installation of fencing in connection with construction contracts it held with the Massachusetts Highway Department (MHD) and the Massachusetts Bay Transportation Authority (MBTA). Cyclone began performance of each subcontract, submitted invoices for work performed under the subcontracts, and received partial payment during the life of the contract. In early October 1999, Cyclone ceased performing work on all ten subcontracts. USS contends that as of early October 1999, Modern owed Cyclone sums in excess of $175,000 for work that had already been performed on the subcontracts.
On October 14 and 15, 1999, Modern notified Cyclone in writing that it was terminating eight of the subcontracts at issue in the summary judgment motion pursuant to Paragraph 6.4 of the subcontract. Paragraph 6.4 provides that any suspension of work for a period of more than 48 hours, without prior permission by Modern, constitutes abandonment of performance and is grounds for termination by Modern subject to twenty-four hour notice. Modern did not officially notify Cyclone that the ninth subcontract, C17A9, was being terminated, however USS states in its Complaint that Cyclone ceased performance on or around October 8, 1999.
On December 3, 1999, Cyclone filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. On December 17, 1999, the United States Bankruptcy Court for the District of Maryland, Greenbelt Division, issued an order acknowledging that USS was Cyclone's secured creditor and thereby entitled to collect all accounts receivable due Cyclone. In re Cyclone, Inc., (Bankr. Ct., D. Md., Case No. 99-23999). In April 2001, USS filed this action to recover all outstanding amounts owed to Cyclone under the ten Modern subcontracts.
II. Standard of Review
Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). All facts are to be viewed, and all inferences drawn, in the light most favorable to the nonmoving party. Reich v. John Alden Life Ins. Co., 126 F.3d 1, 6 (1st Cir. 1997).
Under Massachusetts law, construction of a contract is normally a matter of law for the court. Bank v. International Business Machines, Inc., 145 F.3d 420, 424 (1st Cir. 1998). If the contract language is unambiguous, the court must construe it according to its plain meaning. If that plain meaning clearly favors one party, and there is no material factual dispute, summary judgment is appropriate. Id. However, if the language of the contract is ambiguous, its meaning normally becomes a matter for the factfinder to decide. Id.
III. Analysis
Modern contends that summary judgment is appropriate because USS concedes in its Complaint that Cyclone failed to substantially complete its performance under the subcontracts. Therefore, Modern argues, Massachusetts law bars recovery both on the contract and on quantum meruit. USS disputes Modern's interpretation of both the contract language and the law of quantum meruit. In addition, USS maintains that there exist genuine issues of material fact as to whether Cyclone had substantially completed its performance of the subcontracts and is therefore entitled to recovery under Modern's theory of quantum meruit. I begin with a discussion of plaintiff's contract claims.
A. Contract 1. Construction
Under Massachusetts law, a contractor cannot recover on the contract if he has breached. "[I]n relation to building contracts, . . . a contractor cannot recover on the contract itself without showing complete and strict performance of all its terms, but that, failing in such complete performance of the contract, he may recover on a quantum meruit, if he can prove both substantial performance of the contract and an endeavor on his part in good faith to perform fully. . . ." Andre v. MaGuire, 305 Mass. 515, 516 (1940). USS apparently concedes that Cyclone did not render complete and strict performance of at least some of the subcontracts, but argues that the parties contracted around the harsh common law rule. USS maintains that even in the event of a breach, the contract entitles the subcontractor to recover payment for services already rendered subject to an offset for the cost of completing the contract and any damages caused by the breach.
The common law rule barring recovery on the contract absent complete and strict performance stands as the baseline rule. Parties to a contract, however, are free to modify or repeal most common law rules in drafting their particular contract. HRPT Advisors Inc. v. MacDonald, Levine, Jenkins Co., P.C., 43 Mass. App. Ct. 613, 624 n. 15 (1997). The rule barring recovery on the contract absent strict and complete performance of all terms is no exception; the parties can contract to provide for the right of a party to recover partial payment on the contract notwithstanding its failure to strictly and completely perform all the terms of the contract. Walsh v. Atl. Research Assoc., 321 Mass. 57, 62-63 (1947).
In order to determine whether the parties intended to contract around the common law rule, I must construe the language of the subcontracts. I begin with several general rules of contract construction. "So far as reasonably practicable [a contract] should be given a construction which will make it a rational business instrument and will effectuate what appears to have been the intention of the parties.' Bray v. Hickman, 263 Mass. 409, 412 (1928)." Haverhill v. George Brox, Inc., 47 Mass. App. Ct. 717, 720 (1999). "A contract is to be construed to give reasonable effect to each of its provisions. [E]very phrase and clause must be presumed to have been designedly employed, and must be given meaning and effect, whenever practicable, when construed with all the other phraseology contained in the instrument, which must be considered as a workable and harmonious means for carrying out and effectuating the intent of the parties." J.A. Sullivan Corp. v. Comm., 397 Mass. 789, 795 (1986) (internal citations and quotations omitted).
The subcontracts at issue here mandate payment by the General Contractor to the Subcontractor for work performed during the period of the contract as payments are received from the Owner.
If and when the General Contractor receives payment from the Owner on account of the Subcontractor's work, it shall pay said sum to the Subcontractor less an amount of five percent (5%) or greater amount as may be withheld by Owner which shall be held as retainage. It is expressly acknowledged that receipt of payment by the General Contractor from the Owner on account of the work performed by the Subcontractor shall be a condition precedent to any obligation by Contractor to make any payment to the Subcontractor.
Subcontract, Art. 9.1 (emphasis added). Thus, Modern was required to make payments to Cyclone for work already performed as it received payments from the Owner.
The subcontracts also include specific remedies for the General Contractor in the event of a breach. Article 16 of the Subcontract, entitled "Remedies of the General Contractor," provides in pertinent part:
16.1 The Subcontractor stipulates and agrees that each of the agreements and covenants contained herein, and by it made, constitutes a material condition of the Subcontract. In the event of any breach by the Subcontractor of any condition of this Agreement or of the General Contract Documents herein incorporated by reference, then and in that event, the Contractor may:
1. Deduct from any payment otherwise due or becoming due all sums chargeable to Subcontractor and damages due from said breach; and
2. Terminate the Subcontract for default in the following manner:
The General Contractor shall give to the Subcontractor written notice of the breach or breaches, and, unless said breach or breaches are cured by Subcontractor within four (4) days from the date of the notice, the Subcontract shall be deemed terminated for default except for cessation of work in which case termination shall be upon twenty-four (24) hours notice as provided in Article 6.
16.2 Upon such termination for default, the General Contractor may take immediate possession of all equipment, materials, tools, and appliances at the site or sites of the Subcontract work and may complete said work either with its own forces or by the employment of any other person, firm, or corporation. No further payment shall be or become due the Subcontractor following such termination for default. When the work is wholly completed, the Subcontractor shall pay General Contractor all costs of completing the work and all damages of every kind or nature caused by said termination less the amount of any balances due the Subcontractor.
Subcontract, Art. 16.1, 16.2.
In the event of a breach of contract, Article 16.1(A) allows the General Contractor to deduct from its payment to the Subcontractor the costs of damage incurred as a result of the breach prior to termination of the contract. The continuing obligation to pay the Subcontractor pursuant to Article 9.1, subject to an immediate offset for damages incurred for work already performed prior to the breach, is implicit in the description of the Contractor's remedies. Once the Contractor has made payment of its outstanding obligations, it can then terminate the contract as provided in Article 16.1(B), and is henceforth relieved from its obligation to make "further payments" under the contract.
My duty to give meaning to Article 16.1(A) requires that I interpret it as modifying the common law rule. If no payment could be collected by the breaching Subcontractor on the contract, then the Contractor would be under no obligation to make payment at the time of a breach. Deducting the cost of the breach from amounts due would be a meaningless exercise because no rational Contractor would complete payment before terminating the contract when the common law rule barring recovery by the breaching party would take hold. Thus, Article 16.1(A) creates an obligation by the Contractor to settle accounts with the Subcontractor upon a material breach when terminating the contract.
Modern contends that the common law rule barring recovery on the contract absent complete satisfaction of the contract terms remains intact notwithstanding Articles 9 and 16.1(A) of the subcontracts. While the language of 16.1(A) does not expressly repeal the common law rule, that rule is plainly inconsistent with the obligation of the Contractor to make payments on work completed under Article 9.1, including payments due or becoming due at the time of the breach. See Subcontract, Article 16.1(A). Where the contract provides for specific remedies in the case of termination of the contract for breach, those remedies supplant the common law rule. Walsh, 321 Mass. at 63.
Moreover, enforcement of the common law rule would effectively negate Article 16.1(A) by allowing the Contractor to delay making payments already due until after it has terminated the contract, and then seeking refuge in the common law rule. To do so would permit the Contractor to evade easily and completely its obligation to render payment under Article 16.1(A). Because I am obligated to read the contract so as to give reasonable meaning to all of its parts, I find that the parties have adopted a rule allowing for recovery of payments owed the Subcontractor notwithstanding its breach. See J.A. Sullivan Corp., 397 Mass. at 795.
Modern also argues that any obligation it had to make payments for work performed prior to the breach was extinguished upon termination by Article 16.2 which provides that "[n]o further payment shall be or become due the Subcontractor following such termination for default." This argument fails, however, because the adjective "further" plainly limits the provision's application to payments other than that described in 16.1. Moreover, to construe it otherwise would render 16.1 meaningless as described above, a result that cannot be tolerated where an alternative interpretation is readily available. Id.
I acknowledge that my interpretation of the contract is at odds with that contained in the decision adopted by Judge Gertner, on the report and recommendation of Magistrate Judge Dein, in a case involving the same plaintiff and the same relevant contract language. USX Corp. v. M. DeMatteo Construction Co., Civ. No. 01-10562-NG (D.Mass. Report and Recommendation of Nov. 5, 2001 adopted Nov. 28, 2001), RR slip. op. at 9-10, appeal pending 1st Cir. No. 02-1040. In addition to the arguments already addressed, Judge Dein based her decision on three other considerations. First, she posited that Article 16.1(A) does not overrule the common law rule because they can be read to be consistent with each other. Second, she concluded that the language in Article 16.1 does not provide a right for the Subcontractor because it is found in Article 16 which describes the rights of the Contractor. Finally, she reasoned that the use of "may" in 16.1 grants the Contractor discretion in choosing its remedy, and therefore does not overrule the common law rule. I address each of these arguments in turn in order to explain my disagreement.
First, Judge Dein interpreted the phrase "otherwise due or becoming due" as referring to amounts that could be recovered under a quantum meruit theory if there was substantial performance or if the breach was excused. Under this interpretation, Article 16.1(A) is compatible with the common law rule because the Contractor would deduct damages from the amount due only if the Subcontractor is entitled under the common law to recover despite his breach. However, the contract itself clearly conditions periodic payment on the amount of work performed and the receipt of payment from the Owner for that work. Article 9.1. Thus the plain meaning of "otherwise due" in Article 16.1(A) refers to payments due under the contract pursuant to Article 9.1 for work already performed, not the amount that the subcontractor is entitled to recover under the common law were it to bring suit.
The second argument wrongly assumes that a section describing the rights of the party cannot, or is less likely to, include limitations on those rights or obligations that run concurrent with the exercise of those rights. It appears, however, that the parties considered this the most convenient place for drafting purposes to locate a provision establishing conditions on the voluntary termination of the contract by the Contractor due to a breach by the Subcontractor. As discussed above, the parties are free to negotiate a set of contractual rights and remedies that are different from the common law. One cannot properly infer from the location of the provision here that such negotiated rights are more favorable to the Contractor than the common law. The parties have agreed to allow the Contractor to terminate the subcontract in the event of a breach subject to certain conditions, one of which is the satisfaction of outstanding payments owed to the Subcontractor.
The final argument misconstrues the use of "may" in Article 16.1. It is true that "may" gives the Contractor the discretion to choose whether to elect the remedy in 16.1. The Contractor may alternatively ignore the breach and continue to perform under the contract, in which case none of Article 16.1 is applicable. However, if the Contractor opts for termination, it is required to do so in accordance with both parts (A) and (B) of 16.1. They are phrased in the conjunctive and work together in that fashion. Thus, a Contractor electing to terminate the subcontract under 16.1 must first satisfy 16.1(A), and then 16.1(B).
Therefore, I find that the subcontract provides for recovery by the Subcontractor of payments owed it at the time of the breach subject to a deduction for "all sums chargeable to Subcontractor and damages due from said breach." Subcontract, Art. 16.1(A). Accordingly, summary judgment is inappropriate.
2. Prior Breach
USS argues in the alternative that Modern breached the contract by failing to make timely payments, thereby excusing Cyclone's subsequent breach. "It is well-settled that an uncured, material breach by one party excuses the other party from further performance under the contract." O'Connell Management Co., Inc. v. Carlyle-XIII Managers, Inc., 765 F. Supp. 779, 783 (D.Mass. 1991). Where both parties have materially breached the contract, each is entitled to collect damages from the other. Minot v. Minot, 319 Mass. 253, 270 (1946).
"A material breach of an agreement occurs when there is a breach of an essential and inducing feature of the contract.'" Lease-It, Inc. v. Massachusetts Port Auth., 33 Mass. App. Ct. 391, 396 (1992) (quoting Bucholz v. Green Bros. Co., 272 Mass. 49, 52 (1930)). Whether timely payment during the life of the contract constitutes a material element of the contract is an issue of fact. O'Connell Management, 765 F. Supp. at 783 (quoting Restatement (Second) of Contracts § 241 for factors to be considered in determining materiality of breach).
Various courts have found that the failure to make timely payments under a construction contract goes "to the root of the contract" and therefore constitutes a material breach. Aerostatic Eng'g Corp. v. Szczawinski, 1 Mass. App. Ct. 141, 415 (1973); Petrangelo v. Pollard, 356 Mass. 696, 701 (1970). As the Supreme Court noted,
in a building or construction contract . . . calling for the performing of labor and furnishing of materials covering a long period of time and involving large expenditures, a stipulation for payments on account to be made from time to time during the progress of the work must be deemed so material that a substantial failure to pay would justify the contractor in declining to proceed.
Guerini Stone Co. v. P. J. Carlin Const. Co., 248 U.S. 334, 344 (1919). The Massachusetts Supreme Judicial Court has found a material breach based on "the failure of the plaintiff to pay so large a part of the total sum payable and due," where the party had failed to pay approximately 30% of the contract price at the time set by contract. Hughes v. Rendle Corp., 271 Mass. 208 (1930). In Petrangelo, the SJC upheld a jury verdict finding a material breach by an owner who was regularly delinquent in making payment to its general contractor under a contract that required semimonthly payments for work completed and who had compensated the contractor less than half of the amount owed him for work already performed. 356 Mass. at 700.
The Subcontract's payment provision requires the Contractor to pay the amount it receives from the Owner on account of the Subcontractor's work less a five percent retainage. Subcontract, Art. 9.1. Receipt of payment from the Owner is a condition precedent of any obligation by the Contractor to make payment to the Subcontractor. Id. Therefore, in order to establish the existence of a breach, USS must prove that Modern had received payment for work performed, but had not made timely payment.
USS offers the affidavit of David Karr, an employee of USS who has worked on claims and collection matters concerning Cyclone. Based on records with respect to five contracts, he concludes that Modern owed amounts ranging from $7,000 to $41,000 and that payments were overdue anywhere from one to ten months. Furthermore, Karr asserts that Modern was "often delinquent in its payments" and that "there was an unusually long lag time between when Cyclone billed and when Modern Continental made even partial payments against the invoiced amounts." However, Karr's submission appears to be lacking in at least two respects.
The five contracts include four that are part of the summary judgment motion: C19E7 (approximately $41,000 owed, payments 9-10 months in arrears); S8CN02 ($10,000 owed, payment two months overdue); C17A2 ($7,000 owed, last payment September 1999); C17A9 ($35,000 owed, three months in arrears).
First, a portion of the amounts Karr describes as outstanding is the 5% retention to which Cyclone was not entitled until the various conditions set out in 9.2 were satisfied. Because there is no evidence that those conditions had been satisfied at the time of Cyclone's breach, Modern cannot be held to have breached based on its nonpayment of the 5% retention. Second, Karr's testimony does not appear to take into account the condition that Modern have received payment from either MHD or MBTA before it is obligated to make payment to Cyclone. If Cyclone's invoices were unpaid because Modern had not yet received payment, Modern cannot be found to be in breach.
Article 9.2 of the Subcontract provides:
The amounts to be retained by the General Contractor shall become due and payable upon determination by the Owner's Engineer of the final quantities hereunder and receipt of payment of the retainage by the General Contractor from the Owner; and, as a further condition precedent to payment of any retainage, Subcontractor must furnish a general release along with evidence that the Subcontract work has been fully performed and all charges and claims satisfied and all bills paid in full for labor, materials, equipment and supplies. All required documentation and certificates of compliance must be submitted and approved by the Owner prior to the release of any retainage. It is expressly acknowledged that receipt of payment by the General Contractor from the owner on account of the work performed by the Subcontractor shall be a condition precedent to any obligation by Contractor to make any payment to the Subcontractor.
For example, it appears from Karr's spreadsheet that the only outstanding payments owed at the time of breach on subcontract S8CN02 was the 5% retention. However, Karr states that there were six invoices between July 1999 and October 2001 that had not been paid. Also, with respect to contract C17A2, the balance of $7,108 due is less than the $7,392 retention. Absent evidence that the retention was due or that amounts other than the retainage were owed, there can be no breach for either of these contracts.
Karr, nevertheless, raises a genuine issue of material fact as to whether Modern was in material breach of at least two of the relevant contracts (C17A9 and C19E7) at the time of its own breach, and therefore whether it is entitled to recover those amounts due. Modern does not assert, nor could I find, that Cyclone or USS waived its rights with respect to any breach for failure to make timely payments. See Minot, 319 Mass. at 270.
3. Rule 56(f)
Karr also states that he does not have sufficient information regarding the other five contracts, and that Modern possesses but has failed to produce in discovery the relevant information. Therefore, USS moves under Rule 56(f) for additional discovery. In order for a party to prevail on a Rule 56(f) motion for further discovery, it must make a sufficient proffer that 1) is "authoritative," 2) is "advanced in a timely manner," 3) "show[s] good cause for the failure to have discovered the facts sooner," 4) "set[s] forth a plausible basis for believing that specified facts, susceptible of collection within a reasonable time frame, probably exist," and 5) "indicate[s] how the emergent facts, if adduced will influence the outcome of the pending summary judgment motion." Resolution Trust Corp. v. Trust Bridge Assoc., Inc., 22 F.3d 1198, 1203 (1st Cir. 1994). These five requirements, however, are not inflexible, and one or more may be relaxed in the court's discretion. Id. "When all five requirements are satisfied . . . a strong presumption arises in favor of relief." Id.
Fed.R.Civ.P. Rule 56(f) provides:
Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.
USS satisfies each of the five requirements with respect to discovery on the issue of prior breach. The relevant affidavit comes from David Karr who is responsible for USS's claims and collection matters with respect to Cyclone. He has personal knowledge of the state of the billing records for the subcontracts between Modern and Cyclone and has testified as to the meaning of certain records he does possess. His affidavit is sufficiently authoritative for purposes of Rule 56(f).
USS filed its Rule 56(f) motion at the time it filed its memo in opposition to summary judgment, less than two months after Modern filed for summary judgment, an appropriate time that is certainly "within a reasonable period" as required by Resolution Trust. Id. at 1204.
With respect to the third requirement, there is good cause for plaintiff's inability to discover these records. As a secured creditor, USS has been able to obtain limited business records from Cyclone relating to these contracts. However, as Karr asserts, Modern likely possesses the relevant information regarding the remaining contracts. USS has made discovery requests with respect to this documentation and has noticed a Rule 30(b)(6) motion, but these discovery efforts were deferred by the parties pending the outcome of the instant summary judgment motion. USS's willingness to stay discovery cannot be said to waive its rights with respect to Rule 56(f), and the lack of production constitutes good cause for the failure to discover evidence.
There is good reason to believe that further discovery will produce facts relating to the timeliness of payments, the amount of work performed, and the amount of money due under the five subcontracts about which USS does not have sufficient information. USS already possesses at least some of this information with respect to the other four subcontracts, such that it was able to raise a material issue of fact as to the issue of prior breach. It is almost inconceivable that Modern does not possess billing records including invoices, record of payments from the MBTA and MHD, and other information that would establish relevant facts necessary for deciding these issues on summary judgment and alternatively at trial.
Finally, the alleged facts to be discovered are clearly material. As discussed above, evidence that Modern was in breach of its contractual obligation to make timely payments on the contract would excuse Cyclone's subsequent breach and enable USS to recover outstanding contractual obligations owed to Cyclone. That USS has been able to raise a genuine issue of material fact with respect to the subcontracts about which it has information strengthens the argument for the materiality of the information it currently lacks. Thus, USS easily clears the threshold of materiality established by Rule 56(f). Id. at 1207.
Modern does not contest plaintiff's showing with respect to the five elements of Rule 56(f). Rather, Modern restates its argument against recovery under any factual situation, a position that I have rejected above. Modern also wrongly asserts that USS conceded the facts as presented in defendant's Local Rule 56.1 statement of undisputed material facts. I find USS did respond to Modern's 56.1 statement in its own opposition to summary judgment. Because USS lacks sufficient information as a result of inadequate discovery, it could only suggest that additional information with respect to these factual issues will be adduced rather than definitively state those facts. Rather than justifying denial of the USS Rule 56(f) motion, the USS Rule 56.1 response further demonstrates the need for additional discovery.
B. Quantum Meruit
USS alternatively seeks recovery on the equitable theory of quantum meruit. In Massachusetts, a party can recover on a quantum meruit "if he can prove both substantial performance of the contract and an endeavor on his part in good faith to perform fully." Andre, 305 Mass. at 516. "This theory of recovery is particularly applicable in actions involving building contracts in order to avoid the harsh result of the long established rule that there can be no recovery on a building contract in the absence of complete performance." P.D.M. Mech. Contractors, Inc. v. Suffolk Constr. Co., Inc., 35 Mass. App. Ct. 228, 232 (1993).
Modern contends that Cyclone concedes in its Complaint that it failed to substantially perform the contract, and therefore cannot recover under quantum meruit. Although the Complaint does not specifically allege substantial completion of any contract, USS has presented evidence in the form of Karr's affidavit raising an issue of fact as to the substantial completion of at least four contracts. Moreover, plaintiff seeks additional discovery to provide evidence of substantial completion with respect to the remaining five contracts.
However, I need not consider the issue of substantial performance because USS fails adequately to demonstrate that Cyclone made a good faith endeavor to complete performance. The party seeking to establish a quantum meruit bears the burden of proof with respect to both substantial completion and good faith endeavor to perform. Andre, 305 Mass. at 516. "Generally, an intentional departure from the precise requirements of the contract is not consistent with good faith in the endeavor fully to perform it." Peabody N.E., Inc. v. Marshfield, 426 Mass. 436, 442 (1998) (internal quotation omitted). I can find no case law supporting the theory that a party's filing of bankruptcy constitutes a good faith justification for failure to fully complete a contract. It is undisputed that Cyclone ceased operations on or about October 8, 1999, and was, therefore assertedly "unable to continue performance of work under the written subcontract . . . and did not complete the work under the written subcontract." Accordingly, plaintiff cannot recover on a quantum meruit, and therefore I deny plaintiff's Rule 56(f) request for further discovery with respect to the claims for quantum meruit.
Plaintiff urges me to adopt an alternate, apparently majority, rule developed in other jurisdictions which allows for restitution under quantum meruit without showing substantial performance and a good faith endeavor to complete performance, see Lancellotti v. Thomas, 341 Pa. Super. 1, 4-6 (1985), or alternatively to certify the question to the SJC pursuant to Rule 1:03. I decline to undertake either option, as neither is remotely appropriate.
USS argues that Massachusetts law disfavors rules that create a windfall for a non-breaching party, and therefore that barring recovery by plaintiff is inconsistent with that rule. USS's argument fails, however, because the very cases it cites recognize that Massachusetts law bars recovery absent substantial performance and a good faith endeavor to complete the contract. See Green Manor Constr. Co., Inc. v. Highland Painting Service, Inc., 345 F.2d 657, 660 (1st Cir. 1965) (barring recovery by the breaching party under quantum meruit for failure to substantially perform, while allowing for an offset for the value of services in determining damages accruing to non-breaching party); Ficara v. Belleau, 331 Mass. 80, 81-2 (1954) (enforcing the "stringent rule of Sipley v. Stickney, 190 Mass. 43," that "any wilful default in the performance of a contract bars recovery, while establishing a rule for calculating damages based on the cost of completing the work so as to make the plaintiff whole and "no more").
I do not find that these cases, and the principle of not allowing a windfall that they embody, can be read to bar application of the time tested Massachusetts rule found in Andre v. Maguire. Rather, the Massachusetts courts have expressly decided that the method of determining damages by offsetting the value of services performed is the best means of tempering the harshness of the Andre rule. Ficara, 331 Mass. at 81. As a federal court sitting in diversity, I am obligated to give voice to the unambiguous determination by the Massachusetts Supreme Judicial Court on this question.
Similarly, I decline to certify the proposed question because Massachusetts law on this point is unambiguous. Rule 1:03 only applies when "it appears to the certifying court there is no controlling precedent in the decisions of [the Supreme Judicial Court]." SJC Rule 1:03, § 1. As plaintiff concedes, the purpose of certification "is not to permit a party to seek to persuade the state court to change what appears to be present law." Cantwell v. Univ. of Massachusetts, 551 F.2d 879, 880 (1st Cir. 1977).
I am satisfied the SJC has clearly staked out its position on the issue of quantum meruit on the side of the common law. As recently as 1998, the SJC stated that "[a] contractor may recover in quantum meruit, if he can prove both substantial performance of the contract and an endeavor on his part in good faith to perform fully." Peabody, 426 Mass. at 442 (quoting J.A. Sullivan, 397 Mass. at 796) (internal quotations omitted). As Judge Dein concluded with respect to this issue, "the law is not so old or unsettled that certification would be appropriate." USX Corp. v. M. DeMatteo, slip. op. at 6-7. Therefore, I deny plaintiff's motion for certification of questions to the SJC.
CONCLUSION
For the reasons set forth more fully above, I hereby GRANT plaintiff's Rule 56(f) motion for additional discovery and DENY defendants' motion for summary judgment with respect to the claims for breach of contract (Counts 1, 3, 5, 7, 9, 11, 13, 15, 19);
GRANT defendants' motion for summary judgment with respect to the claims for quantum meruit (Counts 2, 4, 6, 8, 10, 12, 14, 16, 20), and in doing so expressly DENY plaintiff's Rule 56(f) motion for additional discovery with respect to these counts and DENY plaintiff's motion for certification of questions to the SJC.