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SJC-12020

SUFFOLK CONSTRUCTION COMPANY, INC. vs. BENCHMARK 

MECHANICAL SYSTEMS, INC., & another.1

Suffolk. May 2, 2016. - August 12, 2016.

Present: Gants, C.J., Spina, Botsford, Duffly, Lenk, 

& Hines, JJ.2

Uniform Commercial Code, Secured creditor. Practice, Civil, 

Motion to dismiss, Summary judgment, Statute of 

limitations. Subrogation. Indemnity. Unjust 

Enrichment. Restitution. Limitations, Statute of.

Civil action commenced in the Superior Court Department on 

April 22, 2013. 

A motion to dismiss was heard by Christine M. Roach, J.; a 

motion for judgment on the pleadings was heard by her; cross 

motions for summary judgment were heard by Janet L. Sanders, J.; 

and entry of separate and final judgment was ordered 

by Sanders, J.

The Supreme Judicial Court granted an application for 

direct appellate review. 

1 Reading Co-Operative Bank.

2 Justice Duffly participated in the deliberation on this 

case prior to her retirement.

 
2

R. Robert Popeo (Paul J. Ricotta with him) for the 

plaintiff.

Mark W. Corner (Peter H. Sutton with him) for Benchmark 

Mechanical Systems, Inc.

Eric P. Magnuson (Nelson G. Apjohn with him) for Reading 

Co-Operative Bank.

SPINA, J. In Reading Co-Operative Bank v. Suffolk Constr.

Co., 464 Mass. 543, 551 (2013) (Suffolk I), we held that "G. L. 

c. 106, §§ 9-405, 9-607, and 9-608, provide a comprehensive 

scheme" that allowed Reading Co-Operative Bank (bank) to require 

Suffolk Construction Company, Inc. (Suffolk), to fully perform 

its obligations under a collateral assignment of payments under 

a subcontract between Suffolk and Benchmark Mechanical Systems, 

Inc. (Benchmark), to secure a debt owed by Benchmark to the bank 

even if the value of the collateral exceeded the amount owed to 

the bank. After that decision, Suffolk commenced this action to 

recover the surplus that resulted after the bank applied that 

collateral to satisfy Benchmark's debt, plus costs of 

collection, pursuant to G. L. c. 106, § 9-608.3 Suffolk's 

3 General Laws c. 106, § 9-608 (a) (1), (4), states: 

"(a) Application of proceeds, surplus, and deficiency

if obligation secured. If a security interest . . . 

secures payment . . . of an obligation, the following rules 

apply: 

"(1) A secured party shall apply or pay over for 

application the cash proceeds of collection . . . in 

the following order to: 

 
3

equitable claims for implied subrogation and implied 

indemnification were dismissed under Mass. R. Civ. P. 12 (b) (6) 

and 12 (c), 365 Mass. 754 (1974). Its common-law claims were 

dismissed as time-barred under Mass. R. Civ. P. 56, 365 Mass. 

824 (1974). Suffolk appealed, and we granted its application 

for direct appellate review. We now hold that Suffolk's commonlaw claims are time barred, but it has stated equitable claims 

to prevent unjust enrichment and a windfall for which relief can 

be granted. 

1. Background. The following facts, taken mostly 

from Suffolk I, are undisputed. Benchmark assigned to the bank, 

as collateral for a loan it had with the bank, payments owed to 

Benchmark by Suffolk pursuant to a subcontract. Suffolk agreed 

"(A) the reasonable expenses of collection 

. . . and, to the extent provided for by

agreement and not prohibited by law, reasonable 

attorney's fees and legal expenses incurred by 

the secured party; 

"(B) the satisfaction of obligations secured 

by the security interest . . . under which the 

collection . . . is made; and 

"(C) the satisfaction of obligations secured 

by any subordinate security interest in or other 

lien on the collateral subject to the security 

interest . . . 

". . .

"(4) A secured party shall account to and pay a 

debtor for any surplus, and the obligor is liable for 

any deficiency." 

 
4

to send the payments to the bank, but mistakenly sent them to 

Benchmark. Suffolk sent twelve checks totaling $3,822,500.49 to 

Benchmark between June 14, 2004, and December 30, 2004. 

Benchmark deposited the checks to its account and never 

forwarded the monies to the bank. The last deposit was made on 

January 3, 2005. Benchmark ceased operations in July, 2005, and 

turned over its assets to the bank for liquidation. Benchmark 

was dissolved as a corporation on May 31, 2007. At that time 

Benchmark was indebted to the bank on its loan in the amount of 

$1,499,149.42. As a result of the liquidation of Benchmark's 

assets, the bank applied $430,402.38 to Benchmark's 

indebtedness. The bank then commenced an action against Suffolk

under G. L. c. 106, § 9-405, for the full amount of the payments 

Suffolk should have sent to the bank pursuant to the payment 

assignment. On appeal, we held that § 9-405 displaced the 

common law, that the bank was entitled to recover the full value 

of the assigned collateral ($3,822,500.49) under § 9-405 rather 

than its actual damages, and that the common-law doctrine of 

mitigation did not apply. Id. at 546, 522, 555. 

Suffolk paid the judgment ordered by this court, which, 

with interest and costs, amounted to $7,640,907.45 (judgment 

payment). Suffolk then filed a multicount complaint, as 

amended, in the Superior Court against the bank and Benchmark, 

asserting common-law claims to establish itself as a judgment 
5

lien creditor of Benchmark under G. L. c. 106, § 9-608 (a) 

(1) (C), or alternatively, as a "debtor" under § 9-608 (a) (4),

to recover any surplus remaining after the bank applied 

Suffolk's judgment payment to Benchmark's outstanding debt to 

the bank and the bank's collection costs.4,5 It also asserted 

equitable claims of implied subrogation and implied 

indemnification. By agreement of the parties, a preliminary 

injunction issued, enjoining the bank from transferring to 

Benchmark any portion of the surplus from Suffolk's judgment 

payment. 

A judge in the Superior Court (rule 12 judge) allowed in 

part the bank's motion to dismiss under rule 12 (b) (6), and 

Benchmark's motion for judgment on the pleadings under rule

12 (c).6 She dismissed the counts alleging theories of 

subrogation and indemnification on grounds that these claims 

sought to recover funds for which Suffolk had been primarily, 

rather than secondarily, responsible, such that Suffolk was not 

entitled to the equitable relief sought. 

4 The National Labor Relations Board later intervened to 

assert claims against Benchmark totaling $27,770.25. 

5 The reasonableness of the bank's collection costs is in 

dispute. 

6 The judge treated the motion under rule 12 (c) as a motion 

under rule 12 (b) (6), 365 Mass. 754 (1974). 

 
6

Subsequently, on cross motions for summary judgment under 

rule 56, a different judge (rule 56 judge) allowed Benchmark's 

motion as to the counts of Suffolk's complaint alleging theories 

of restitution for unjust enrichment, reimbursement, money had

and received, and restitution for money paid by mistake, on 

grounds that they were barred by the six-year statute of 

limitations applicable to contracts. See G. L. c. 260, § 2. 

She also dismissed the count seeking a determination that 

Suffolk was entitled to the surplus because it was the "debtor" 

for purposes of G. L. c. 106, § 9-608 (a) (4).7

 

2. Implied subrogation and indemnification. The rule 12 

judge dismissed the counts alleging implied subrogation and 

indemnification. She reasoned that because Suffolk was 

"primarily" liable to the bank under the payment assignment, it 

was not entitled to implied subrogation or implied 

indemnification. 

Implied "[s]ubrogation is an equitable adjustment of rights 

that operates when a creditor . . . is entitled to recover from 

7 The parties stipulated to entry of separate and final 

judgment as to the eight counts that were dismissed under rules 

12 and 56, 365 Mass. 824 (1974). See Mass. R. Civ. P. 54 (b), 

365 Mass. 820 (1974). They further stipulated that the three 

remaining counts for (1) reach and apply, (2) remedies under 

G. L. c. 106, § 9-625, and (3) constructive trust, would be 

dismissed with prejudice, and Suffolk waived any right of appeal 

with respect to such dismissal, on condition that the separate 

and final judgment dismissing all eight counts is affirmed in 

its entirety on appeal. 

 
7

two sources, one of which bears a primary legal responsibility. 

If the secondary source (the subrogee) pays the obligation, it 

succeeds to the rights of the party it has paid (the creditor,

. . . called the subrogor) against the third, primarily

responsible party." (Emphases added.) Frost v. Porter Leasing 

Corp., 386 Mass. 425, 426-427 (1982). The underlying principle 

of implied subrogation is to prevent an unwarranted windfall, 

something disfavored in the law. Id. at 428. 

Implied indemnification is an equitable principle that 

creates an obligation for reasons of justice, akin to a duty to 

make restitution (quotations and citations omitted). See Mike 

Glynn & Co. v. Hy-Brasil Restaurants, Inc., 75 Mass. App. Ct. 

322, 326 (2009). "A person who, in whole or in part, has 

discharged a duty which is owed by him but which as between 

himself and another should have been discharged by the other, is 

entitled to indemnity from the other, unless the payor is barred 

by the wrongful nature of his conduct." Santagate v. Tower, 64 

Mass. App. Ct. 324, 330 (2005), quoting Restatement of 

Restitution § 76 (1937). Both implied subrogation and implied 

indemnification are viable claims in the circumstances of this 

case. 

The rule 12 judge focused on the words "primary legal 

responsibility" in Frost and concluded that because Suffolk was 

"primarily" liable to the bank under the payment assignment by 
8

Benchmark, it was not entitled to equitable subrogation or 

equitable indemnification. Because we are concerned with the 

equities of the over-all situation, however, it is appropriate 

to examine the bigger picture, not just the specific obligations 

of Suffolk. Suffolk certainly was directly liable to the bank, 

as we held in Suffolk I, but the primary obligor in the 

transaction was Benchmark. Payments owed by Suffolk to 

Benchmark were merely partial collateral for Benchmark's debt to 

the bank. The bank could have proceeded against either 

Benchmark or Suffolk, or both. For obvious reasons it chose 

Suffolk. Had that collateral been insufficient to satisfy 

Benchmark's debt, the bank's only remaining recourse would have 

been to sue Benchmark. 

When determining whether receipt or retention of a benefit 

is unjust we look to the reasonable expectations of the parties. 

See The Community Bldrs., Inc. v. Indian Motocycle Assocs., 44 

Mass. App. Ct. 537, 560 (1998). Benchmark had no reasonable 

expectation of receiving and retaining the payments mistakenly 

made by Suffolk. Having retained those payments, it has even 

less reason to expect to receive the surplus derived from 

Suffolk's judgment payment to the bank after the bank satisfied 

Benchmark's indebtedness. Basic fairness requires that 

Benchmark not enjoy any of the surplus derived from Suffolk's 
9

judgment payment to the bank, where Benchmark had wrongfully 

retained the monies mistakenly sent by Suffolk. 

The application of equitable principles to the distribution 

of surplus, although not expressly appearing in G. L. c. 106, 

§ 9-608 (a), is not inconsistent with that section. Indeed, 

G. L. c. 106, § 1-103 (b), contemplates precisely such 

application. Section 1-103 (b) states: "Unless displaced by 

the particular provisions of this chapter, the principles of law 

and equity . . . supplement its provisions." See The French 

Lumber Co. v. Commercial Realty & Fin. Co., 346 Mass. 716, 719 

(1964) (Uniform Commercial Code [UCC] does not bar equitable 

subrogation claim); Summers, General Equitable Principles Under 

Section 1-103 of the Uniform Commercial Code, 72 Nw. U. L. Rev. 

906, 920-921 (1978) (antiwindfall principle and unjust 

enrichment should be applied to art. 9 of the UCC in light of 

§ 1-103). 

Suffolk's subrogation and indemnification claims did not 

ripen until a surplus materialized from the bank's application 

of Suffolk's judgment payment to Benchmark's indebtedness. At

that point, when Benchmark stood to receive a windfall that in 

all good conscience it should not have accepted, Suffolk's 

subrogation and indemnification claims accrued. Suffolk's civil 

action as to those claims was timely. "Occasionally, a claimant 

will be able to point to different grounds of unjust enrichment 
10

occurring at different stages of the parties' dealings with each 

other. "Although restitution on one theory may be time-barred, 

restitution on another theory may yield a viable claim." 

Restatement (Third) of Restitution and Unjust Enrichment (2011), 

§ 70 comment f. Such are the circumstances here. 

Suffolk's subrogation and indemnification claims are 

inherently different from its other claims. They also developed 

at different times. Indeed, Suffolk emphasizes that under these 

theories, it stands in the shoes of Benchmark as to the surplus 

flowing from its judgment payment. Suffolk acknowledges that

because it stands in Benchmark's shoes under these claims it is 

not, at least as to them, a subordinate lien creditor, and

stands behind subordinate lien creditors for purposes of G. L. 

c. 106, § 9-608 (a) (4), as to which Suffolk argues that it 

qualifies as the "debtor." In this regard Suffolk contends that 

summary judgment dismissing the count seeking a determination 

that it is the "debtor" for purposes of § 9-608 (a) (4) is 

error. We agree. Suffolk's equitable claims of subrogation and 

indemnification allow it to stand in Benchmark's shoes as to the 

surplus flowing from its judgment payment, which is the source 

of Benchmark's potential windfall and unjust enrichment. In the 

event of a surplus from some other source, Suffolk is neither a 

subordinate lien creditor nor the debtor. The result in this 
11

case is determined by principles of equity applied to the unique 

circumstances presented. 

Finally, Suffolk argues that because our review is de novo, 

see Champa v. Weston Pub. Schs., 473 Mass. 86, 90 (2015) (rule 

12 [c]), and Pinti v. Emigrant Mtge. Co., 472 Mass. 226, 231 

(2015) (summary judgment), we should direct entry of judgment in 

its favor. Where the rule 12 judge did not consider matters 

outside the pleadings and expressly treated the rule 12 (c) 

motion as a motion to dismiss under rule 12 (b) (6), and where 

Suffolk did not request entry of judgment in its favor in its 

opposition to the rule 12 (c) motion, we decline to order entry 

of judgment for Suffolk on its claims for subrogation and 

indemnification. 

3. Summary Judgment. Summary judgment was granted against 

Suffolk as to the three counts alleging (1) reimbursement for 

money mistakenly paid and fraudulently retained, (2) money had 

and received, and (3) restitution for money paid by mistake. 

The basis for dismissal of these counts was that they were time 

barred. These claims have origins in the common law, and they

are similar in nature. See New Bedford v. Lloyd Inv. Assocs., 

363 Mass. 112, 118 (1973). See also Mass. R. Civ. P. 84,

Appendix of Forms, forms 7 and 8, Mass. Ann. Laws Court Rules, 

at 1312-1313 (LexisNexis 2015-2016). The best known of the 

counts here pleaded, money had and received, "is broad and 
12

includes all money received by the defendant which in equity and 

good conscience belongs to the plaintiff." G.E. Lothrop 

Theatres v. The Edison Elec. Illuminating Co. of Boston, 290 

Mass. 189, 192 (1935). The claims are quasicontractual, and are 

subject to the six-year statute of limitations applicable to 

contracts. New Bedford, supra at 118, 119. A cause of action 

under these claims accrues upon "receipt of payment without 

regard to when the mistake is discovered," id. at 119, and it is 

immaterial that the cause of action is presented as a claim at 

law or in equity. Id. The last mistaken payment was deposited 

on January 3, 2005. The statute of limitations ran on January 

3, 2011, as to these three counts. The instant action commenced 

on April 22, 2013, well beyond the six-year statute of 

limitations. 

Suffolk maintains that these claims are not time barred 

because in Suffolk I we said, after acknowledging the harsh 

result occasioned by our holding, that "Suffolk nonetheless has 

recourse to mitigate the excessive loss occasioned by double 

payment. It may bring suit against [Benchmark] . . . to recover 

the misdirected payments, and thereby establish itself as a 

subordinate creditor in line for disbursement of excess funds 

recovered by the bank." Suffolk I, 464 Mass. at 554. The 

quoted language is dictum, and we were describing the remedy 

available to Suffolk in the ordinary course to recover the 
13

payments mistakenly made to Benchmark. The statute of 

limitations was not an issue in Suffolk I, and we were not 

addressing the potential loss of that remedy if the action had

not been commenced within the applicable statute of limitations. 

Moreover, the reference to a "subordinate creditor" in G. L. 

c. 106, § 9-608, as applied to the circumstances of this case, 

was to a judgment creditor. Suffolk necessarily would have to 

have had its claim for payments mistakenly made to Benchmark 

reduced to a judgment. Here, the claims to recover judgment 

against Benchmark for the amount of payments mistakenly made 

were time barred. Summary judgment correctly was granted. 

Summary judgment against Suffolk also was granted on the 

count for restitution for unjust enrichment, also on the ground 

that it was time barred. This count is based on theories of 

implied subrogation and indemnification, and seeks only to 

prevent Benchmark from receiving a windfall. Suffolk does not 

seek a judgment on this count against Benchmark for the moneys 

paid by mistake, and it does not seek to establish itself as a 

judgment creditor for purposes of G. L. c. 106, § 9-608. For 

reasons previously discussed with respect to the counts based on 

theories of subrogation and indemnification, this claim is not 

barred by the statute of limitations. It did not accrue until a 

surplus arose. The claim is viable, and judgment must be 

reversed as to this count. 
14

Summary judgment against Suffolk was granted on its count 

seeking a determination that it is the "debtor" for purposes of 

G. L. c. 106, § 9-608 (a) (4), and as such is entitled to the 

surplus. The rule 56 judge reasoned that a "debtor," as defined 

in G. L. c. 106, § 9-102 (28) (A), and illuminated in a comment 

to that section of the statute, is a person who has "a stake in 

the proper enforcement of a security interest by virtue of [that 

person's] non-lien property interest (typically, an ownership 

interest) in the collateral." See, 9A W.D. Hawkland & F.H. 

Miller, UCC Series, § 9-102, comment 2(a) (2001). She concluded 

that Suffolk is not such a person. In most cases she would have 

been correct, but Suffolk's claim has a further dimension. 

Suffolk alleged in its complaint that it is the debtor by virtue 

of being Benchmark's subrogee. For reasons described in the 

previous section of this opinion, this claim, based on the 

theory of implied subrogation, is viable. Summary judgment on 

this count must be reversed. 

In conclusion, so much of the judgment that dismisses the 

subrogation and indemnification counts (counts 3, 6, and 7), the 

count alleging restitution for unjust enrichment (count 1), and 

the count seeking a determination that Suffolk is the debtor for 

purposes of G. L. c. 106, § 9-608 (a) (4) (count 11), is 

reversed. So much of the judgment that dismisses the common-law 
15

counts (counts 2, 4, and 5) is affirmed. The case is remanded 

for further proceedings consistent with this opinion.

So ordered.