The dispute centered on Columbia's rejection of Cannistraro invoices under the Massachusetts Prompt Pay Act (G.L. Chapter 149, Section 29E). Although Columbia timely rejected the invoices, it failed to include the required good-faith certification. An arbitrator deemed the invoices approved under the Act and ordered Columbia to pay $951,855.05. The arbitrator then allowed Columbia to recoup $576,000 of payments it had already made to its own subcontractor—a remedy the SJC affirmed. The full scope of the arbitrator's reasoning and the specific mechanics of the recoupment calculation remain unclear from the available record.
The decision narrows the practical impact of the Prompt Pay Act's enforcement mechanisms. While the 2024 Business Interiors ruling held that entities waiving rejection rights must pay before asserting defenses, this decision clarifies that procedural violations—here, the missing good-faith certification—do not automatically strip a contractor of common-law recoupment rights. For construction counsel, the ruling signals that Prompt Pay Act violations carry consequences but may not be fatal to downstream payment disputes. Contractors should expect arbitrators to distinguish between statutory compliance failures and substantive payment defenses, and should document recoupment claims carefully when invoices are deemed approved.