In Business Transactions, Litigation, News & Updates, Property

On October 5, the Third DCA held that strict compliance with Florida’s construction lien laws is a condition precedent to a claim against a payment bond. What was likely a scrivener’s error precluded recovery of more than $269,000.

In Stock Building Supply, Inc. v. Soares Da Costa Construction Services, LLC, a material supplier failed to provide the proper statutory notice concerning provision of materials and was barred from making a claim.

The project concerned a mixed-use condominium. During construction, a supplier provided notice of delivery to the general contractor, but made a mistake. Rather than correctly state that the supplies were delivered under order from a subcontractor, the notice stated that the order had come from the general contractor.

The general contractor later paid the subcontractor in full, including amounts actually owed to the supplier. Apparently, the subcontractor absconded with the payment and the supplier sought recovery from the general contractor’s payment bond.

Both the trial court and the Third DCA held that strict compliance with the construction lien law (Chapter 713, Florida Statutes) is required. §713.23(1)(c), in the case of a bond, requires notice to the general contractor that supplies are being delivered to a project under the order of a subcontractor and that the supplier will look to the contractor’s bond for protection. Although the general contractor had notice of the delivery, the misidentification of the order’s source did not strictly comply with the statutory notice requirements. The Third DCA held that actual notice is not enough – the notice itself must be accurate. Because of the error, the supplier’s claim against the surety bond was barred.

The lesson for suppliers (as well as other contractors) is careful compliance with all statutory notice requirements. Notice provisions must be taken seriously. As in this case, the devil is in the details and courts are not sympathetic to sloppy administration. Although the supplier obtained a full judgment against the subcontractor, his pursuit of an appeal against the surety bond and general contractor suggests that the subcontractor was insolvent. Thus, the failure to properly identify the source of the supplier’s order likely cost the supplier $269,475.63 plus fees and costs to pursue the claim.

Author(s): Eric P. Hockman

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