Episode 79: Massachusetts Prompt Pay Ruling: What Contractors Must Know

The Massachusetts Supreme Judicial Court's June 26 ruling in Columbia Construction v. J.C. Cannistraro is a case study in how prompt payment compliance failures can turn a legitimate payment dispute into an expensive, multi-stage legal fight — even when the contractor ultimately recovers money. For developers, GCs, and subcontractors operating across multiple states, the ruling is a reminder that prompt payment statutes are effectively part of every construction contract, whether or not they're referenced in the documents. Key Takeaways: Late payments cost the U.S. construction industry $208 billion in 2022, underscoring the systemic scale of the problem these laws are designed to address. Columbia Construction failed to include the good-faith certification required under Massachusetts' Prompt Pay Act when rejecting $925,000 in disputed invoices — causing those invoices to be deemed approved by default. The arbitrator found that $577,000 of those payments were not fair and reasonable and awarded Columbia partial recoupment; the Supreme Judicial Court upheld that award on June 26. The court explicitly affirmed that Columbia's win in arbitration does not excuse its initial non-compliance with the prompt payment statute — the process failure stands regardless of outcome. Prompt payment laws exist in nearly every U.S. state for public projects and in most states for private work, but state-specific nuances vary materially — e.g., New Jersey mandates attorney's fee awards to prevailing contractors; New York does not. Attorneys advise a "pay first, fight later" default posture: withholding payment while disputing the merits does not automatically shield a contractor from liability for non-compliance. Submitting inflated payment requisitions to exploit a counterparty's slow paperwork processing is characterized by legal experts as borderline fraud — the law protects legitimate claims, not strategic overbilling. For contractors and subcontractors operating across jurisdictions, this ruling is a prompt to audit compliance procedures state by state. The statutory framework — timing requirements, good-faith certifications, dispute notice procedures — functions as part of every contract whether or not it's explicitly cited. Teams moving between Massachusetts, New York, New Jersey, and other states without jurisdiction-specific compliance protocols are carrying legal exposure that a single disputed invoice can activate. Counsel familiar with local prompt payment law is not optional; it's the cost of operating across state lines. Subscribe to Built Different for daily updates on Modular construction reality.