USCA1 Opinion

UNITED STATES COURT OF APPEALS

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT

____________________

No. 95-1036

ADMIRAL DRYWALL, INC., ET AL.,

Plaintiffs, Appellants,

v.

JOHN F. CULLEN,
TRUSTEE OF VAPPI & COMPANY, INC.,

Defendant, Appellee.

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APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. William G. Young, U.S. District Judge]

___________________

____________________

Before

Boudin, Circuit Judge,

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Aldrich and Bownes, Senior Circuit Judges.

_____________________

____________________

Peter J. Gagne
________________

with whom

Corwin & Corwin was

_________________

on

brief

appellants.

Robert Owen Resnick with whom Posternak, Blankstein & Lund was
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_____________________________
brief for appellee.

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June 8, 1995
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ALDRICH, Senior Circuit Judge.

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Defendant John

F.

Cullen is the trustee in

general

contractor

completing its

Plaintiffs,

bankruptcy of Vappi & Co.,

who

contract

Admiral

defaulted

to

build

Drywall

after

substantially

condominium

and

Inc., a

others,

complex.

are

unpaid

subcontractors who furnished labor and materials, and seek to

impose an equitable lien

of the trustee and

all other creditors.

statutory liens, nor

contract for

the

court's summary

They did not

a surety bond

The

or any

file

other

district court affirmed

judgment

in

favor of

the

We affirm.

We look

interests

was there

their protection.

bankruptcy

trustee.

on undisbursed contract funds ahead

to Massachusetts law for

in assets

of the

determination of

bankruptcy estate.

Butner
______

v.

United States, 440 U.S. 48, 54 (1979).

_____________

Service Co., 272 Mass. 385,

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In Ehrlich v. Johnson
_______
_______

172 N.E. 508

(1930), a general

contractor, within four months of bankruptcy paid some of its

subcontractors,

recover.

and

its

trustee

Defendants claimed

in

bankruptcy

sued

they had equitable liens.

to

The

court held that, in the absence of any special contract, they

had

none,

and hence

preferences.

protection of

can

escape

the

payments

Plaintiffs

a surety,

here,

to them

who

and no special

foreclosure of

their

likewise

voidable

have

no

contract otherwise,

equitable

persuading us that Ehrlich is no longer law.

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were

claim only

by

Plaintiffs would reach that result

that in Canter
______

v. Schlager,
________

358 Mass. 789,

by pointing out

267 N.E.2d

(1971), the

court recognized

subrogation rights.

held

performance

that

surety

on

subcontractors has a priority

bond

492

There it

that

paid

"right of subrogation over the

rights of a construction contractor's trustee in bankruptcy."

358

Mass. at 792,

267 N.E.2d at

494.

Strictly

this meant

priority for

rights

of

N.E.2d

the

494.

subcontractors were

because

providing

267

was "subrogated

the subcontractors

at

here there

surety who

was a

"they

are

This

held to

contract.

entitled

it paid."

differed

. . . to

Id. at
___

from

rely

on

expressly that they may sue thereon."

N.E.2d at 496.

The court noted,

where

rights because

The subcontractors

to

791, 267

Ehrlich
_______

have no special

the

had rights

payment

bond

Id. at 795,
___

further, that, unlike

Ehrlich, the surety was

_______

not claiming, timewise, in violation

of the Bankruptcy Act.

"[T]he surety's right dates

the date

of the bond."

Id. at
___

795-96, 267 N.E.2d

back to

at 496.

For present plaintiffs, who lack a bond, and such timeliness,

these are fatal distinctions.

Since we

the

treatment of

are concerned

creditors,

and

with state law

not

choices in

federal law,

it

is

pointless for plaintiffs to argue that Canter's reasoning and

________

its treatment of subcontractors' rights as depending upon the

presence of a

surety bond was inconsistent with Ehrlich, and

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therefore must be taken as overruling

said it distinguished it.

Our sole duty is to take state law

as we find it, not build on

build.

difference

There

is

when

sound

there

Ehrlich -- although it
_______

it.

public

is

Nor would we be tempted

policy

surety

"Traditionally

sureties compelled

to

principal have

been deemed entitled to

in

in

pay

to

recognizing a

the

picture.

debts for

their

reimbursement."

See
___

Pearlman v. Reliance Insurance Co., 371 U.S. 132, 136 (1962).

________
______________________

If

they were not, there

subcontractors can seek

254.

would be few

sureties.

mechanics liens.

Individual

Mass. Gen. L.

c.

Affirmed.
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