Florida Construction Law

In SureTec Insurance Co. v. National Concrete Structures, Inc., Case No. 12-cv-60051 (S.D. Fla. July 3, 2012) the surety paid losses and expenses and sued the principal and  individual indemnitors on account of those losses. One of the individual indemnitors  filed a counterclaim for damages and rescission based on alleged violation of the federal  Equal Credit Opportunity Act (“ECOA”). The surety moved to dismiss the counterclaim. The court held that “neither the payment and performance bonds issued by  SureTec nor the Indemnity Agreement constitute a credit transaction within the meaning  of the ECOA, because no defendant obtained any right to defer the payment of a debt.”   The court therefore dismissed the indemnitor’s ECOA counterclaim with prejudice. (from RPPTL Subcommittee). Trenton H. Cotney Florida Bar Certified Construction Lawyer Trent Cotney, P.A. 1211 N Franklin St Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

In Bruno v. Mona Lisa at Celebration, LLC ( In re Mona Lisa at Celebration, LLC ), Case No. 6:09-bk-458, Adv.Proc. No. 6:09-ap-49 (Bankr.M.D.Fla. May 16, 2012) numerous prospective purchasers of units in a hotel-condominium made deposits but, after the Florida condominium market collapsed, did not go through with their purchases and demanded return of their deposits even though the project was constructed as promised (“The likely reason the plaintiffs rely on these conclusory statements is that they cannot demonstrate any actual damages because, by and large, Mona Lisa did everything it promised.”). Pursuant to section 718.202, Florida Statutes, Mona Lisa posted a bond to allow it to use the first 10% of the prospective purchasers’ deposits. Many of the plaintiffs had deposited more than 10%, and the Act permitted the developer to use such excess deposits for construction and development, but not for advertising. The court foun...

In Safeco Ins. Co. of Am. v. Victoria Mgmt., LLC , 2012 WL 1606101 (S.D. Fla. May 7, 2012), the surety issued performance and payment bonds for the construction of a nursing home. The surety required the contractor and others to execute a general agreement of indemnity in its favor as a condition of issuing the bonds. The owner of the nursing home terminated the contractor and called upon the surety to complete the project in accordance with the terms of the bonded contract. The surety sued the owner for amounts due under the contract for approved change orders totaling $3,201,326.63. The surety also sued the architect for common law indemnity and professional negligence. The architect moved to dismiss the surety’s common law indemnity claim arguing that there was no special relationship between the architect and the surety or the contractor. Citing to  Amwest Surety v. Ernst & Young , 677 So. 2d 409 (Fla. 5th DCA 1996), the court...

If the claimant requested a copy of the bond from the contractor or owner and did not receive one, then the claimant may have rights against them for failure to provide a copy, but that will not excuse the claimant’s failure to timely perfect its claim against the surety.    Mursten Const. Co. v. C.E.S. Industries, Inc. , 588 So. 2d 1061 (Fla. 3d DCA 1991).  (RPPTL Subcommittee). Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

A surety may assert any defense available to its principal. U.S. Fidelity and Guaranty Company v. Miami Sheet Metal Products, Inc. , 516 So.2d 29 (Fla. 3d DCA 1987). Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

Hartford Cas. Ins. Co. v. City of Marathon , 2011 WL 5825503 (S.D. Fla. 2011),  held that a performance bond surety is not responsible for a cardinal change on the  project, despite language in the contract where the surety consented to  changes. (RPPTL Subcommittee). Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

"Actual notice that a materialman is providing materials to a project, therefore, is insufficient to satisfy the notice requirements of Section 713.23(1)(c) . A subcontractor is not excused from the notice requirement of Section 713.23(1)( c) even where the owner, surety or contractor did not fully adhere to the requirements of chapter 713, Florida Statutes. See Prof'l Plastering & Stucco, 940 So.2d at 448 (“[E]ven if the Subcontractor is correct that the Owner, the Surety, and the Contractor did not fully adhere to the requirements of chapter 713, the Subcontractor [is] not excused from complying with the requirements of Section 713.23  that it provide notice ....” (quoting Bridgeport, Inc. v. Tampa Roofing Co., 903 So.2d 306, 309 (Fla. 2d DCA 2005) )." Stock Building Supply of Florida, Inc. v.  Soares Da Costa Construction Services, LLC , 2011 WL 2694522 (Fla. 4th DCA October 5, 2011). Trenton H. Cotney Board Certified in Construction Law Tren...

Generally, a surety cannot be held liable beyond the penal amount or sum of the bond.  The concept is similar to insurance where a carrier can tender its policy limits.   Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

A surety is not bound by an arbitration provision contained in a subcontract agreement between the prime contractor and subcontractor.  Because the surety did not sign the agreement, the surety is not bound by the arbitration provision.  Graham Contracting, Inc. v. Flagler County , 458 So.2d 418 (Fla. 5th DCA 1984).   Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

In Austin Building Company v. Rago, Ltd. And Federal Insurance Company , Case No. 3D09-3238, filed April 27, 2011, there were cross-claims by both the prime contractor and concrete structural subcontractor based on Section 489.128, Fla. Stat. which were resolved by summary judgments in favor of each party (and the surety, who insured both the contractor and the subcontractor). Both judgments were reversed in this appeal based on the Court’s retroactive application of the 2009 statutory changes that delete reference to a “local” license, and on the genuine issue of material fact as to the extent of the contractor’s knowledge of the subcontractor’s unlicensed status citing Castro v. Sangles , 637 So.2d 989 (Fla. 3d DCA 1994) barring relief to a plaintiff who participated in a wrongdoing . Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

In Auto-Owners Ins. Co. v. Classic Carpet & Tile, Inc ., 2009 WL 350750 (S.D. Fla. 2009), a surety sued indemnitors under an indemnity agreement for losses resulting from the issuance of a payment and performance bond.  The indemnitors, in their individual capacity, argued that the company had been sold to a third party and that they did not request the bond.  The Court held that the indemnity agreement bound the indemnitors and that they were liable for the debts incurred by the company.  Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

In Fisk Electric Co. v. Travelers Casualty and Surety Co ., 2009 WL 196032 (S.D. Fla. 2009), the Court held that a subcontractor could pursue delay damages against a surety based on a private payment bond.  The Court reasoned that the language of the private bond was simliar to a Miller Act bond and that language would allow the subcontractor to pursue delay damges. Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com