The Massachusetts Prompt Pay Act After Cannistraro: Takeaways From The SJC Decision
Every lawyer who argues a case reads the opinion more than once when it comes down. The first time, you skip to the end to see how the court ruled. The second time, you go back to see which arguments landed and why the others did not. When the opinion comes from the Supreme Judicial Court, that second reading takes longer, because the decision will govern cases you have not seen yet.
On June 26, 2026, the SJC decided J.C. Cannistraro, LLC v. Columbia Construction Co., 497 Mass. 732 (2026). We represented the subcontractor, J.C. Cannistraro, at every stage: in arbitration, in the Superior Court, and at oral argument before the SJC in February 2026. We did not win. We believed strongly in our client’s position, and we still do. But having lived with the case from the start, we want to offer a measured look at what the court decided, what it left open, and what contractors and subcontractors should take from it.
What is the Massachusetts Prompt Pay Act?
The Prompt Pay Act, G.L. c. 149, Section 29E, governs payment on most private construction projects of $3 million or more in Massachusetts, other than projects with one to four dwelling units. Its core rule sounds simple enough. When a contractor or subcontractor submits a payment application or a change order request, the party receiving it must approve or reject it on time and in the right form. A rejection has to be in writing, explain the factual and contractual reasons for the rejection, and be certified as made in good faith. If the rejection is late or defective, the application or change order is deemed approved and becomes due.
The point of the Act is cash flow. Prompt cash flow, to be precise. Otherwise, subcontractors end up financing the work. Before the Act, a general contractor or owner could sit on a payment application, raise objections months later, and leave the subcontractor carrying the cost of the dispute. The Act puts the burden on the party that wants to withhold payment to say why, promptly and in good faith. It decides when money moves. It does not decide the merits of the underlying dispute.
How did the courts get here? Tocci and Graycor
Two earlier decisions set the stage for Cannistraro. In Tocci Building Corp. v. IRIV Partners, LLC, 101 Mass. App. Ct. 133 (2022), the Appeals Court held that an application rejected without meeting the Act’s requirements is deemed approved and must be paid, even where the failure was simply excluding a certification that it was made in good faith. Then, in Business Interiors Floor Covering Business Trust v. Graycor Construction Co., 494 Mass. 216 (2024), the SJC held that a contractor whose rejection fails under the Act can still contest the pay application later, but only if it pays before, or at the same time, it raises its defenses. The court tied that rule to the Act’s purpose: deemed approval has to carry real consequences. It followed that a contractor could not withhold a deemed-approved payment while also litigating whether it owed the money.
These were the two binding precedents leading up to Cannistraro. The question the industry wanted answered was how strictly they would be enforced.
What happened in Cannistraro?
Columbia Construction was the general contractor for an office and manufacturing facility in Walpole, and our client, J.C. Cannistraro, was its subcontractor. In 2020, Cannistraro submitted change order requests and then payment applications for the change order work. Columbia rejected them on time and gave its reasons, but it did not include the good faith certification the Act requires. It only certified months later, after the statutory deadline.
Cannistraro sued in the Superior Court. Columbia answered and asserted defenses to payment, without issuing contemporaneous or prior payment, then moved the case into arbitration under the subcontracts’ AAA clause. After Tocci came down, the arbitrator ruled the applications deemed approved and ordered Columbia to pay $951,855.05. Columbia then paid after it was ordered to do so. The arbitrator next allowed Columbia to add a recoupment counterclaim, held a hearing on whether the invoices were fair and reasonable, and awarded Columbia $576,855.05, on its recoupment counterclaim, plus interest.
On behalf of our client, we argued that this sequence was the reverse of what Graycor requires: payment first or contemporaneous with defenses, then litigation. Instead, Columbia asserted its defenses first, paid years later under an order, then asserted its recoupment counterclaims. The Superior Court agreed with our position and vacated the recoupment award. Columbia appealed; it saw the timeline differently. The SJC did not resolve that disagreement. The SJC, however, unanimously reversed and ordered the award confirmed.
What did the SJC actually decide?
In many ways, the SJC raised more questions than it answered. The SJC did not decide whether Columbia complied with Graycor. It assumed, without deciding, that Columbia’s sequence did not satisfy the payment-first rule, and then held that the answer did not change the result because of the standard that governs a court’s review of an arbitration award.
The Court re-emphasized under Cannistraro that the standard is very deferential. Under G.L. c. 251, a court may vacate an award when the arbitrator exceeds his authority, which includes awarding relief that is prohibited by law. But an arbitrator who gets the law wrong has not, for that reason alone, exceeded his authority. Relief is prohibited by law when it runs against an express statute or violates public policy. The Prompt Pay Act does expressly say what happens when a rejection is defective: the application is deemed approved. It does not, however, expressly say what remedies remain after a deemed-approved invoice is paid. With the statute silent, and with the AAA Construction Rules giving the arbitrator broad remedial power, including allowing amendments to arbitration pleadings and relief sought, the court held the recoupment award was not relief the law expressly forbids, whether the arbitrator applied Graycor correctly.
We also argued that the award violated public policy, because it permitted recovery by a party that had not followed the payment-first sequence the Act and Graycor contemplate. The court disagreed. It noted that the arbitrator required Columbia to pay the full amount before he considered its recoupment claim, and it viewed that as consistent with the Act’s purpose. We respectfully see a meaningful difference between a contractor that pays a deemed-approved invoice on its own initiative and then seeks to recover part of it, and a contractor that contests payment and pays only when ordered to. The court did not need to address that distinction to resolve the case, and it did not.
We recognize the institutional reasons for the court’s approach. Parties who choose arbitration accept limited judicial review, along with the rules and procedures tied to the particular arbitration forum, and the court applied that principle consistently. It is fair to observe, though, that the one judge who considered this sequence through the lens of Graycor, Judge Goldenberg in the Superior Court, reached the opposite result, and that a court deciding the recoupment question on the merits outside of the arbitration context, might well have done the same.
Our takeaways from counsel table
The forum shaped the outcome. We argued that the Act’s purpose and Graycor‘s payment-first rule foreclosed recoupment on these facts. The court resolved the case on a different question: whether an arbitration award could be set aside. Once the dispute was in arbitration under rules giving the arbitrator broad authority, the standard of review did much of the work. If you are a subcontractor with a Prompt Pay claim, read the dispute resolution clause before you sign the subcontract and again before you file. Where the dispute is heard may matter as much as what the statute says.
The payment-first rule is less certain in arbitration. Because the SJC assumed rather than decided the Graycor question, it remains open whether a contractor that raises its defenses before paying loses them for good or only has them put on hold. Arbitrators with broad AAA authority may read Cannistraro as leaving room for recoupment after compelled payment, even when the contractor did not follow Graycor‘s sequence. It is important to note that an arbitrator now would have the benefit of Graycor, unlike the arbitrator in Cannistraro, meaning even this result could be justifiably different.
The Act still moved the money. Columbia had to pay $951,855.05 because of a missing certification, and it carried that amount until it proved its counterclaim at a hearing. Cannistraro kept $375,000 of it. The statute did what it was designed to do: it shifted the cost of the dispute onto the party that did not comply. What the case confirms is that the Act governs timing, not the final answer on the merits.
Compliance is still far cheaper than litigation. A late good faith certification led to years of arbitration, a Superior Court proceeding, and an appeal to the SJC. Reject on time, in writing, with reasons, and with the certification. Every time.
The industry still needs answers. The core question remains open: exactly when must a contractor pay a deemed-approved application to preserve its defenses and counterclaims? Until a court answers it outside the arbitration setting, or the Legislature does, contractors and subcontractors are working without a clear rule.
Bradley Croft of Ruberto, Israel & Weiner, who was lead counsel in Tocci, published a thoughtful analysis of Cannistraro shortly after the decision. We share his reading of the case and recommend his article to anyone working through these issues.
What should subcontractors and general contractors do now?
If you are a subcontractor, submit your payment applications and change order requests in a way that clearly invokes the Act, calendar the response deadlines, and check every rejection for timeliness, reasons, and the good faith certification. If an application is deemed approved and the contractor contests payment anyway, raise the Graycor argument early and in writing. Prepare to prove your pricing when submitting applications. Keep the backup that shows your work was authorized and fairly priced.
If you are a general contractor or owner, treat the Act’s requirements as mandatory, not technical. Build the rejection process into your project controls so the certification is never missed. If a deemed approval happens anyway, the conservative course is the right one: pay the deemed-approved amount at or before the time you raise any defense or counterclaim, rather than relying on an arbitrator or a court to excuse the sequence.
If you are drafting contracts, think carefully about arbitration and the rules you adopt. The breadth of the arbitrator’s authority, and how limited court review will be, may shape your Prompt Pay dispute as much as the statute itself. Consider not only the forum, but the particular forum’s rules and procedures and available remedies, such as recoupment.
A closing thought
Cases like this one are why we do this work. We spent years on it, and while we did not get the result we argued for, we are grateful for the opportunity to have presented these questions to the Supreme Judicial Court. Counsel for Columbia at Hinckley Allen presented their client’s position ably, and the court gave the issues careful attention. The questions Cannistraro left open will be answered in future cases, and we look forward to seeing how the law develops.
Talk to Cole Law Partners
We represent subcontractors, general contractors, and owners in Prompt Pay Act disputes in court and in arbitration. If you have a payment application or change order request that was rejected, ignored, or paid late, or if you need help building a compliant rejection process, you can reach Nate Cole directly at jncole@colelp.com.
Written by J. Nathan Cole and Herling Romero, Cole Law Partners, P.C., 100 Cambridge Street, 14th Floor, Boston, Massachusetts. The authors represented J.C. Cannistraro, LLC in the matter discussed. This article is general information about Massachusetts law as of October 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Every case turns on its own contract language and facts.
