A new senior living facility in Keene faces mounting lawsuits from a contractor that claims it’s due $5.7 million and several subcontractors who say they haven’t been fully paid for their work.
Requesting a jury trial, MacMillin Co. LLC of Keene filed suit Aug. 29 against The Prospect-Woodward Home, which operates Hillside Village Keene. Most of the facilities at Hillside Village, a massive retirement community on Wyman Road, opened over the summer.
Prospect-Woodward has asked the judge to delay action, invoking a clause in the construction contract that calls for arbitration to resolve such disagreements. While the judge hasn’t ruled on that motion, MacMillin President Don Wells said Friday that the first step in the arbitration process is mediation. (Arbitration is a formal, binding process that typically involves a panel of arbitrators, while mediation is a nonbinding, informal way to facilitate a resolution.)
Wells said both parties are close to agreeing on a mediator, and the goal is to schedule something for the second week in November. He reiterated, however, an argument his company made in court documents: Arbitration doesn’t trump MacMillin’s right to attach a lien for alleged nonpayment, he said.
Prospect-Woodward entered into a construction management contract for more than $56 million with MacMillin in April 2017, according to court records.
MacMillin submitted requests for payment in late June and early August of this year, but Prospect-Woodward didn’t comply, the complaint says. The contractor alleges about $5.7 million is due, and it filed for a mechanic’s lien against the Hillside Village property in that amount.
Mechanic’s liens are used as a remedy for contractors, subcontractors and suppliers to pursue unpaid compensation. Because the lien is placed against the property, if approved by a judge, it typically offers the complainant more leverage than suing for breach of contract.
Seth Pasakarnis, one of the attorneys for Prospect-Woodward, argued in an objection to MacMillin’s request for a mechanic’s lien, however, that the organization doesn’t owe the contractor any money.
“Toward the conclusion of construction in the spring of 2019 (which was already more than 6 months delayed), significant incomplete and defective work items were identified and logged by the Project Architect,” the document says.
A footnote on another page explains that Prospect-Woodward hasn’t provided “an exhaustive description of MacMillin’s failures” since this is expected to be resolved in arbitration.
Payments for construction projects are typically made after the work is verified by someone, in this case the project architect, who then issues certification of payments. The objection states that the architect has “substantial discretion” to withhold that certification. The architect notified Prospect-Woodward in early July that it was “entitled under the terms of the Contract to withhold payment of $4,284,542 for incomplete and defective work,” the document says.
Prospect-Woodward also cited a September letter from the architect in asserting that no further payment was due.
As an alternative, Prospect-Woodward requested a lowered lien amount if the judge is inclined to grant it: $412,196.31, which Pasakarnis asserts is the contract balance of $4,696,738.31 minus the architect’s amount to withhold.
In an August interview, Wells said there are minor issues that need to be resolved, but he disputed allegations of defective and incomplete work voiding the contract balance.
Meanwhile, six subcontractors have sued MacMillin and Prospect-Woodward for a total of nearly $3 million in mechanic’s liens, since they haven’t been paid by MacMillin in this process, according to their complaints. All but one filed in Cheshire County Superior Court.
Wayne J. Griffin Electric Inc. of Holliston, Mass., sued first on July 19, alleging it’s owed $687,414.12. Danbury-based Wallace Building Products Corp. followed, on July 20, for $342,000, plus interest and legal fees.
In Hillsborough County Superior Court, Metro Walls Inc. of Manchester sued Aug. 22 for $679,568.36.
Another Manchester company, Denron Plumbing & HVAC LLC, sued Sept. 6 and alleged it’s owed $693,535.44. Attorneys for J.NR. Gutters Inc. of Haverhill, Mass., wrote in a Sept. 10 complaint that the business is due $287,654.
And most recently, Peterborough-based Pro Stock Kitchens filed Sept. 24 for a mechanic’s lien of $130,000.
In each case, Prospect-Woodward has objected to the mechanic’s liens, pointing to a bond that its attorney says should cover their complaints instead.
Common in the construction industry, payment bonds are three-way contracts between the property owner, the contractor and the surety (the company authorized to write the bond). The contractor, in this case MacMillin, promises to execute the contract according to specific terms, and the surety agrees to pay damages to all demanding parties if the contractor cannot make its payments.
Typically, a payment bond covers subcontractors, laborers and material suppliers.
Included in court documents is a payment bond executed between MacMillin, Prospect-Woodward, and Fidelity and Deposit Co. of Maryland on June 16, 2017, for $56,488,241, the same amount as the construction contract.
The retirement community’s attorney says this is more than enough to secure payment to the subcontractors.
The judge held a hearing in Cheshire County Sept. 25 on four of the mechanic’s liens — Wallace Building Products, Denron Plumbing, J.NR. Gutters and MacMillin — but no ruling had been issued as of Wednesday afternoon.
Prospect-Woodward’s executive director, Jolynn Whitten, declined to comment and referred a reporter to Pasakarnis, who did not return messages left Friday and Wednesday.
None of the subcontractors involved commented for this story.