[CLC-Discussion] Garnishment lien v. construction lien

[Daniel Moody]

Steve,

I have encountered your situation in garnishment actions as well as similar
scenarios in bankruptcy court where the rights of the judgment creditor or
secured creditor are pitted against the rights of the supplier/subcontractor
lienor whose customer's funds are the subject of the garnishment.  I don't
recall there being dispositive authority on the issue the last time I
addressed it, but on behalf of the supplier/subcontractor lienor I have made
the following arguments for priority of the lienor's interests:  

	1.	To the extent of the funds owed to the
supplier/subcontractor lienor, to apply the funds in any way other than
payment of the monies then due and owing to the supplier/subcontractor
lienor would constitute a misapplication of construction funds under F.S.
Section 713.345, and the court cannot enter an order directing the
commission of a felony.

	2.	Creditors claiming against the accounts receivable of a
debtor have no greater rights than the account debtor, and must take the
accounts receivable subject to the claims and equities in favor of third
parties, especially in the context of construction payments from which
payment is due to third party subcontractors/suppliers.  See, Prestress
Erectors, Inc. v. James Talcott, Inc., 213 So. 2d 296 (Fla. 3rd DCA 1968).

	3.  	The unpaid supplier/subcontractor has equitable lien rights
against the funds.  See, Crane Co. v. Fine, 221 So. 2d 145 (Fla. 1969).
 
Dan

Daniel L. Moody, Esq. 
Moody and Shea, P.A. 
14501 Walsingham Road 
Largo, Florida  33774 			
Phone:  727-596-3000 
Fax:  727-596-3006 
email:  dmoody at moodyandshea.com 

   
www.moodyandshea.com

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-----Original Message-----
From: clc-discussion-bounces at lists.flabarrpptl.org
[mailto:clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of Steve
Thompson
Sent: Thursday, August 29, 2013 1:22 PM
To: 'CLC Discussion'
Subject: [CLC-Discussion] Garnishment lien v. construction lien


Anyone have any familiarity with this scenario:

Creditor of electrical subcontractor garnishes general contractor for funds
owed to subcontractor.  General contractor answers that it owes money to
electrical subcontractor but wants to hold funds potentially due to supplier
of electrical subcontractor who has served NTO. (assume creditor's claim
does not arise from the construction project itself).

Fla. Stat. 77.06 was revised in 2000 in response to the Misvidal case to
clarify that a lien is created on funds held by the garnishee upon service
of the writ of garnishment.  Arguably, creditor has a lien on all funds due
to the electrical subcontractor which is superior in dignity to any
potential, and unperfected, construction lien of subcontractor's supplier.
Also, supplier technically has no direct remedy against general contractor
(i.e the garnishee).  On the other hand, it is understandable that the
general contractor would want to protect the owner from potential liens by
ensuring that a material supplier who provided notice receives payment.

Thoughts or law?

Steven F. Thompson, Esq.
Thompson & Brooks
412 E. Madison St., Ste 900
Tampa, Fl. 33602
813-387-1821
Fax 813-387-1824

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