Owner Potentially Liable for Fraud and Consumer Protection Act Violations Based on False Promises of Payment

Atlantis Int’l Constr. Servs., Inc. v. Sluggo, LLC, 71 Mass. App. Ct. 1106 (2008) (Unpublished)

In this unpublished decision, the Massachusetts Appeals Court held that an owner could be held liable for fraud, breach of contract and violation of the Massachusetts Consumer Protection Act (M.G.L. c. 93A) for inducing a general contractor continue work based on the promise that the general contractor’s numerous disputed change order requests would be paid in full.  After completion of the project the owner refused to pay many of the general contractor’s change orders.

The Appeals Court held that there was sufficient evidence to support the jury’s determination that the owner’s authorized representatives made false promises to the general contractor concerning payment, and that these assurances of payment were a substantial contributing factor in the general contractor’s decision to continue work despite disputes over required change orders.  The court further held inapplicable the owner’s argument that the doctrine of unclean hands should prevent recovery on several claims.  This argument failed because the doctrine of unclean hands applies only to prevent equitable remedies, not money damages.  Finally, the court held that the trial court properly awarded attorney’s fees under M.G.L. c. 93A despite the trial court’s findings that the owner’s breach of the Consumer Protection Act was not knowing and willful.  The trial court’s finding that the owner did not knowingly and willfully violate M.G.L. c 93A prevented an award of multiple damages under the statute, but not the award of attorney’s fees.