[CLC-Discussion] Paid If Paid Incorporated By Reference From Subcontract To 713.23 Statutory Payment Bond

Tue Jul 7 10:26:45 PDT 2015

As we remember from the best of law school exams, the question breaks into
several parts. I concur with the analysis that if the language of the bond
tries to vary the statutory provisions, it creates a common law bond.
Conversely, if the bond tracks the statutory language, it remains a
statutory bond to secure whatever is due the subcontractor. But it seems to
me the real question is "What is due the subcontractor?" If the court views
the clause in the subcontract as a "pay WHEN paid" clause, then as we all
know that's interpreted to mean a "reasonable" time. In that event the lien
is proper because the sub will be convinced the two days it waited for
payment is more than reasonable. (Sorry, couldn't resist the snarky comment)
If it really is a "pay IF paid" clause, then is it too simplistic to say
that the subcontractor isn't due anything from the contractor? To answer
that we have to look at whether payments to the general are contractually
due. If the owner is not yet obligated to make a contractual payment, the
sub can file its lien, and the lien will transfer, but if there is no money
presently due then wouldn't the lien amount have to be zero? And if the
answer to that is a 'yes' then wouldn't filing anything with a larger amount
be a fraudulent lien? Conversely, if payment is due from the owner to the
general, even if the sub is not in privity with the owner, money owed to the
sub IS contractually due. Then the sub should be able to lien the owner's
property. I think.

Langfred W. White, Esq.
Board Certified in Construction Law

The Law Offices of Langfred W. White, PA
P. O. Box 8334
Clearwater, FL 33758-8334
Phone: (727) 422-5064
email: lan at lwwhiteattorney.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 John S.
Vento
Sent: Tuesday, July 07, 2015 11:15 AM
To: 'William L. Grant'; Robert Worman; clc-discussion at lists.flabarrpptl.org
Subject: Re: [CLC-Discussion] Paid If Paid Incorporated By Reference From
Subcontract To 713.23 Statutory Payment Bond

I believe that Bill's analysis is correct. I would add that since the Bond
is a co-obligation the language may bar a subcontractor from suing the
contractor on the Bond if the Owner did not make payment, just as it would a
suit on the contract. But that language would not, in my opinion, bar suit
against the surety. 

JOHN S. VENTO
Florida Bar Board Certified in Construction Law Florida Supreme Court
Certified Circuit Civil Mediator

Trenam Kemker
101 E. Kennedy Boulevard, Suite 2700     Tampa, FL 33602
Phone: 813-223-7474     Fax: 813-227-0483
Direct: 813-227-7483
Cell: 813-787-5579

email: JVento at trenam.com
www.trenam.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 William
L. Grant
Sent: Monday, July 06, 2015 7:38 PM
To: Robert Worman; clc-discussion at lists.flabarrpptl.org
Subject: Re: [CLC-Discussion] Paid If Paid Incorporated By Reference From
Subcontract To 713.23 Statutory Payment Bond

Robert, I have recorded liens when faced with subcontracts with this
language, but clerks accept the bonds to transfer the liens because there is
nothing in the bond to exempt it from subcontractor liens.  It appears to me
that the bond is subject to subcontractor claims despite the language of the
subcontract.  Also note the last sentence in 713.23(1)(a) - "Any form of
bond given by a contractor conditioned to pay for labor, services, and
material used to improve real property shall be deemed to include the
condition of this subsection."  I have not researched the intent of
subsection (f), but it does say, "The surety is not entitled to the defense
of pro tanto discharge as against any lienor because of changes or
modifications in the contract to which the surety is not a party; but the
liability of the surety may not be increased beyond the penal sum of the
bond."  I interpret this to say the surety is liable despite any contrary
language in the subcontract.
________________________________________
From: clc-discussion-bounces at lists.flabarrpptl.org
[clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of Robert Worman
[rworman at wormanlaw.com]
Sent: Monday, July 06, 2015 5:56 PM
To: clc-discussion at lists.flabarrpptl.org
Subject: [CLC-Discussion] Paid If Paid Incorporated By Reference From
Subcontract To 713.23 Statutory Payment Bond

I have recently reviewed several large project subcontracts for clients
where the contractor is incorporating by reference in the subcontract the
risk shifting "paid if paid" condition precedent to also be a condition
precedent in the contractor's Payment Bond.

Am I missing a case out there that allows a 713.23 bond to enjoy this
condition precedent and still allow for the property's exemption from
construction liens?  Isn't that the whole reason behind 713.245 payment
bonds?

Am I wrong to think that if the contractor tries to make its 713.23 bond
conditioned upon payment by the owner, and it is not otherwise designated as
a Conditional Payment Bond with 713.245 referenced in the bond, then either
(a) the condition precedent would be void, such that the property would be
exempt from construction liens, or (b) the bond would be a common law bond,
no lien exemption would be enforced, and the owner's interest in the
property would be subject to construction liens?

Anyone's thoughts on this would be appreciated and should be sent directly
to me unless you feel it is an issue worthy of all hearing your comments.

Regards,

Robert B. Worman
Worman & Sheffler, P.A.
2707 West Fairbanks Avenue
Suite 200
Winter Park, FL 32789
407 843-5353
rworman at wormanlaw.com<mailto:rworman at wormanlaw.com>
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