Cruz Construction v. Beacon Communities in breach of implied contract suit
As their work on the 72-unit Camden Street housing development was drawing to a close in 2019, Cruz Construction staff were knee deep in pre-construction work on the larger 285-unit Lenox apartments.
During the first phase of the redevelopment project, Cruz completed the $23 million renovation of the aging apartment complex. The next phase, valued at $125 million, would be significantly larger.
But unbeknownst to them, the real estate development firm the Boston Housing Authority selected to head the project, Beacon Communities, had no intention of working with Cruz on the Lenox portion of the project. Cruz Construction President John B. Cruz III says Beacon had tapped his firm in 2016 as general contractor for both the Camden and Lenox portions of the project and that had been performing pre-construction work for the Lenox development since 2017.
However, on Sept. 18, 2019, Cruz says Beacon Communities’ then-CEO Pamela Goodman informed him that Cruz Construction would no longer be the general contractor for the Lenox phase and that his firm would be barred from competing for work on the project. Goodman gave no reason for dismissing Cruz from the project, he said.
“It was a sucker punch,” Cruz said of Goodman’s notification. “In hindsight, what they were probably doing was waiting on all their approvals from the city.”
Beacon Communities did not return voice messages requesting comments on this story.
Cruz said the firm may have wanted to use his name to satisfy the city’s minority contracting goals. Former Mayor Martin Walsh had in 2016 issued a directive ordering city departments to expand contracting with minority-owned businesses. Cruz noted that when Beacon Communities presented its redevelopment plan for the Lenox development to the Boston Redevelopment Authority board for approval on Dec. 11, 2019, the firm still listed Cruz as “construction manager,” despite having severed their ties with them nearly three months earlier. The board voted in favor of the project.
But Beacon was then in the process of awarding the construction contract to a Seekonk-based, white-owned firm, DF Pray.
Cruz last year filed a lawsuit against Beacon Communities for breach of implied contract.
“In breach of its obligation of good faith and fair dealing, Beacon solicited and identified Cruz as the minority-owned general contractor member of the Project Team, utilized Cruz’s pre-construction and construction services and work, and misled Cruz into believing and expecting that Cruz would be the general contractor on the Lenox phase of the Project,” the complaint reads in part.
During discovery, Cruz says his attorney found a May 2019 email from Beacon Communities to a Boston Housing Authority official stating that the firm would not use Cruz Construction for the Lenox development, indicating that the firm intended to sever its ties with him long before their September meeting.
During that time, Cruz Construction invested thousands of hours of labor on pre-construction work requested by Beacon Communities, in value engineering — estimating construction costs on various aspects of the project, providing budgets and cost estimates as well as devoting staff hours to regular project planning meetings.
The lawsuit underscores the precarious position minority contractors are in, according to Max Charles, president of the Massachusetts Minority Contractors Association. Charles, who subcontracted with Cruz on the Camden redevelopment project, said minority-owned firms often face hostility from the white-owned firms that for decades have dominated the city’s construction industry.
“As we make progress, you’re going to have pushback, as was the case with Cruz,” he said.
Cruz said Beacon Communities treated his firm, started by his father 75 years ago, as if they were new to construction, demanding he provide proof of its bonding capacity for the job. Cruz Construction has over the decades produced hundreds of units of housing including the 144-unit Council Towers building on Washington Street, the Taurus Apartments on Humboldt Avenue. Cruz said Beacon Communities’ board chairman, Howard Cohen, had served as his attorney on a number of those projects.
“Howard knew we had bonding capacity because he was our lawyer for more than 15 years,” Cruz said.
In his lawsuit, Cruz is seeking unspecified damages and attorney fees from Beacon Communities. A trial date has not yet been set.
