CONSTRUCTION LENDER LIABILITY TO SUBCONTRACTORS IN FLORIDA
Does a subcontractor have rights against a construction lender?
Yes. The Third District Court of Appeal held that a subcontractor may have a good-faith basis to allege a claim for equitable lien against a lender's undisbursed construction loan proceeds. In RC Aluminum Industries v. Regions Bank, the Third District reversed an order dismissing a complaint by a subcontractor against a lender to impose an equitable lien and for unjust enrichment. The court held that the facts may show that the lender exercised affirmative deception on the subcontractor to keep it on the job; therefore the basis for an equitable lien may rest upon material misrepresentation, fraud, mistake, or unjust enrichment.
127 So. 3d 881 (Fla. 3d DCA 2013).
...
Blog
Construction Warranty – Material Supplier v. Manufacturer
Who Does a Condominium Association Have a Construction Warranty Claim Against for a Defective Product?
Answer: The Supplier and not the Manufacturer Pursuant to Florida's Statutory Warranty Provision Section 718.203.
In Port Marina Condominium Association v. Roof Services, Inc. et al., a condominium developer entered into an agreement with Best Roofing to install a roof on a boat storage building. The developer entered into a separate contract with GAF Materials to guaranty a roof product called TOPCOAT. After construction leaks appeared in the roof of the boat storage building. A dispute arose as to whether Best Roofing was responsible for improper application of the TOPCOAT or whether GAF was responsible for the failure of the product itself.
The Condo Association sued the developer, Best Roofing and GAF under Florida's Condominium Warranty Statute (section 718.203, Florida Statutes). GAF moved to dismiss the complaint alleging that it was the product manufacturer and not...
Construction Lien Errors
Construction Lien Errors & Omissions
In Premier Finishes, Inc. v. Maggirias, Florida's Second District Court of Appeal reversed the trial court's order which discharged a claim of lien because the trial court failed to find any prejudice to the owner due to the defective lien.
Premier Finishes, under the Fictitious name of PFI Construction, entered into a construction contract with the Soulos Family Trust. Maggirias, the trustee of the Soulos Family Trust terminated Premier Finishes and failed to pay the outstanding balance due. Premier Finishes recorded a claim of lien on the property and then sued to foreclose the lien.
Maggirias filed a motion to dismiss alleging the lien was filed by Premier Finishes but the contract was entered into by PFI Construction. The trial court granted the motion to dismiss finding that since the contract was in the name of PFI Construction and there was no alleged or proven contract in the...
Bid Protest Standing
When does a contractor have standing to sue under 42 U.S.C. section 1983 based on a bid protest?
Answer: When the contractor has an entitlement under statute, ordinance, or regulation to the award of the contract.
In Grace & Naeem Uddin, Inc. v. North Broward Hospital District, Grace sued the Hospital District for deprivation of Plaintiff's property interest in the award of a construction project without due process of law. The Hospital District released a Formal Request for Quotation (RFQ) for the Homeless Grant Project. Grace submitted its bid of $1,909,175. Another contractor, MBR, submitted its bid of $1,951,903. Grace was determined to be the lowest bidder and MBR was second. However, the Hospital District began negotiations with MBR on the project. Grace went through the administrative process, filing a Notice of Dispute which was denied, and Notice of Appeal which was also denied.
Grace sued the Hospital...
Construction Lien Transferred to Bond Venue
In Kelsey Construction, Inc. V. Travelers Casualty and Surety Company of America, 120 So. 3d 77 (Fla. 4th DCA 2013), the Fourth District held that where a subcontractor's claim of lien was transferred to a bond, pursuant to section 713.24, the proper venue for such dispute is the county where the claim of lien was recorded.
Attaway Electric recorded two liens against two Winn-Dixie projects in Broward County. The general contractor, Kelsey, transferred the liens to bonds, pursuant to section 713.24, Florida Statutes. Attaway sued Kelsey for breaches of the contracts, and sued Kelsey and Travelers on the lien transfer bonds. Kelsey and Travelers moved to transfer venue to Orange County in accordance with the contracts' forum selection provisions. The trial court transferred the case to Orange County.
On appeal, the Fourth District reversed holding that section 713.24 requires that “[a]ny party having an interest in such security or...
Jason Katz Wins Back Job for Town of Medley Assistant Town Clerk After Wrongful Termination
See the attached story in the Miami Herald.
Unlicensed Contracting
Can an Unlicensed Contractor Use the Other Party's Knowledge as a Defense to Enforcement of the Contract?
No. The Florida Supreme Court just ruled in Earth Trades, Inc. v. T&G Corporation that the other party's knowledge that a contractor or subcontractor is not properly licensed to perform the construction work of the contract is legally insufficient to establish the defense that the parties stand in pari delicto or in equal fault.
T&G was the general contractor on a parking garage project and entered into a subcontract with Earth Trades to perform site work on the project. Earth Trades was not licensed to perform this site work. A dispute arose and Earth Trades sued T&G for breach of contract. T&G filed a counterclaim against Earth Trades for breach of contract. T&G argued that since Earth Trades was unlicensed that its breach of contract claims were barred as a...
Vacant and Unoccupied – Insurance Claim
Property insurers often reject claims based on the vacant and unoccupied provisions in the policy. Often times the insurance company breaches its contract when it improperly rejects claims based on these provisions.
In Independent Fire Insurance Comnpany v. Butler, 362 So. 2d 980 (Fla. 1st DCA 1978), the First District Court of Appeal defined the terms "vacancy" and "occupancy". The term vacancy as used in these policies applies to inanimate objects. Therefore, a court will look to furniture or furnishings located in the property to determine whether the property is vacant. The term "occupied" referse to a dwelling which is in actual use by human beings. It is not essential that someone sleep in a dwelling in order to render it occupied. Occupancy is largely a matter of intent. A court will look to the nature and character of the building, the purposes for which it...
Contractual Indemnification
The First District Court of Appeal issued an opinion on section 725.06, Florida Statutes. Section 725.06 prohibits and limits certain indemnification provisions in construction contracts. In Griswold Ready Mix Concrete v. Reddick et al. (Apr. 12, 2012), the First District acknowledged that 725.06 applies even if the contract at issue does not involve the project owner. The statute applies to all construction related contracts among any combination of the following: owner, architect, engineer, general contractor, subcontractor, sub-subcontractor, or materialman. If you are involved in construction, you should review your indemnification provisions very carefully to ensure that they are enforceable....