[CLC-Discussion] Project Cross-Collateralization: Hypothetical question to CLC Members

[Arnold Tritt]

Gang:  I have a situation where a large, national multi-family GC is attempting to set-off monies owed to a MEP Subcontractor on Project A, which was satisfactorily completed, against back-charges stemming from an unrelated project, Project B, in which the Subcontractor was allegedly in default.  Both jobs were private projects. Different owners.  Different counties in Florida.  Assume that Project A's subcontract authorizes set-off based upon claims for other, unrelated projects.

Fla. Stat. §713.345(1)(a) makes the misapplication of construction funds a felony.  In addition, the statute limits bona fide disputes to a "dispute regarding the amount due, if any, for such services, labor, or materials" (emphasis added). Attached is a cool article by Frank Pohl who argues that "such" services, labor, or materials is intended to mean services, labor, or materials furnished on that project only, and not on other, unrelated projects.

Thus, isn't the enforcement of the cross collateralization provision by the GC in the above fact pattern a felony? Any guidance would be greatly appreciated.   Thanks, Arnie.

Arnold D. Tritt, Jr.
Board Certified Construction Attorney
[TrittAssociates_Logo_CMYK]
707 Peninsular Place
Jacksonville, Florida 32204

Phone (904) 354-5200
Facsimile (904) 354-5256
Arnold.Tritt at atritt.com <mailto:%5Be-mail%5D>
www.atritt.com<http://www.atritt.com/>

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