Suffolk Construction was allowed to press its claims to get back some of the money kept by a bank whose borrower, a Suffolk subcontractor, went out of business.  In the second case by Massachusetts’ top court over the same facts, Suffolk a large construction manager, made claims against money held by a bank – beyond funds owed by the defunct subcontractor borrower.

Suffolk’s subcontractor got a bank loan and pledged its receivable from Suffolk as collateral.  The bank took a security interest in all of the subcontractor’s assets.  Suffolk was supposed to pay the bank but instead paid the subcontractor who then went out of business.  Suffolk was forced to pay the bank the subcontract funds in the first court case about this situation.

The current decision Suffolk Construction Company v Benchmark Mechanical centered on the bank’s right to subcontract payments – beyond the amounts owed by the borrower.  Suffolk wanted those back.  While some types of contract claims to recover these funds were brought too late, the court found some survived due to “basic fairness”.

To prevent unjust retention of these funds beyond the amounts the borrower owed, and to prevent a windfall for the bank, Suffolk was allowed to advance claims under equitable theories of implied indemnity and implied subrogation.  Those claims ripened only when it became clear that the bank held surplus funds (beyond the amounts owed by its borrower).