[CLC-Discussion] Show Cause Lien Discharge & Fraudulent Lien Hearing

Wed Jan 20 14:04:28 PST 2021

Section 713.31(c) frames a fraudulent claim as an “action for damages” irrespective of whether it is brought by itself, in conjunction with a show-cause complaint, or as a counterclaim/crossclaim:

(c) An owner against whose interest in real property a fraudulent lien is filed, or any contractor, subcontractor, or sub-subcontractor who suffers damages as a result of the filing of the fraudulent lien, shall have a right of action for damages occasioned thereby. The action may be instituted independently of any other action, or in connection with a summons to show cause under s. 713.21<http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0713/Sections/0713.21.html>, or as a counterclaim or cross-claim to any action to enforce or to determine the validity of the lien.

I don’t have a definitive answer for you, but if I were arguing against your position that a counterclaim is not allowed under the procedural posture you’ve given, I would say that the Owner’s fraudulent lien claim is, by definition, an “action for damages” and not only would a breach of contract counterclaim be allowed under Rule 1.170, it would be compulsory.

I think if the fraudulent lien claim were removed from the equation and the only relief sought by the Owner in the initial complaint was the show-cause order, a counterclaim that did not seek to foreclose the lien would probably be improper.

Also, as a practical matter, the Judge would likely want to adjudicate the breach of contract dispute and the fraudulent lien dispute at the same time in the interest of judicial economy.

So to answer your questions (in my opinion):

  1.  Are counterclaims permitted in a 713.21 proceeding? Likely yes, if there is a fraudulent lien claim. Likely no, if there is not a fraudulent lien claim and the proposed Counterclaim does not seek to foreclose the lien.
  2.  Is an owner entitled to an expedited evidentiary hearing to determine fraudulent lien damages and entitlement and amount of attorney’s fees to be awarded? In the absence of a Counterclaim, this seems correct in light of 713.31(c) permitting fraudulent lien claims to be brought in 713.21(4) actions.
  3.  Is discovery available in such a proceeding? Likely yes. Rule 1.280(b)(1) provides that parties may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter of the pending action, and, as I mentioned above, a claim for fraudulent lien is an “action for damages” regardless of whether it is brought by itself or as part of a show-cause complaint.

Paul Washington
Board Certified in Construction Law
Taylor Espino Vega & Touron, PLLC
201 Alhambra Circle, Suite 801
Coral Gables, Florida 33134
Telephone: (305) 443-2043
Facsimile:  (305) 443-2048
Email:  PWashington at TEVTlaw.com<mailto:PWashington at TEVTlaw.com>

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From: clc-discussion-bounces at lists.flabarrpptl.org <clc-discussion-bounces at lists.flabarrpptl.org> On Behalf Of RPPTL CLC-Discussion
Sent: Wednesday, January 20, 2021 4:12 PM
To: clc-discussion at lists.flabarrpptl.org
Subject: [CLC-Discussion] Show Cause Lien Discharge & Fraudulent Lien Hearing

Good afternoon.  I seek the collective knowledge of fellow experts on the above topic, specifically on procedure.

Section 713.21(4) establishes the show cause procedure.  Owner follows that procedure in initiating a lien discharge action.  The implication of the statute is that this is an expedited proceeding.  The owner is entitled, pursuant to section 713.31(c), to include in that proceeding a claim for fraudulent lien damages.  The implication is that since 713.21 is an expedited proceeding, a determination of fraudulent lien damages (and attorney’s fees incurred in procuring lien discharge) should also be expedited.  Florida Rule of Civil Procedure 1.010 indicates that the “form, content, procedure, and time for pleading in all special statutory proceedings shall be as prescribed by the statutes governing the proceeding unless these rules specifically provide to the contrary.”

Now to the fact pattern since procedure is not easily applied in a vacuum.  Owner seeks all of the above-described relief in its complaint.  Contractor files a pleading within the 20 days but does not commence foreclosure or show cause why the lien should not be discharged.  In that pleading contractor consents to immediate discharge of the lien (while making no admission of grounds alleged by owner) and files a counterclaim for breach of contract damages against owner.  Contractor and Owner submit an agreed order to the court discharging the lien and reserving jurisdiction as to the remaining relief sought in owner’s complaint.

It seems that since a counterclaim is a pleading and that counterclaims are not expressly authorized by section 713.21, no counterclaim should be allowed.  That would leave the court left to adjudicate fraudulent lien damages and both the right attorney’s fees and amount.  That would not require a massive undertaking by the court (the grounds for discharge and fraudulent lien damages are:  (1) a request for sworn statement was not timely responded to but the lien was recorded anyway, and (2) on the same date the lien was recorded the contractor issued a written statement claiming it was owed roughly $14k but liened for roughly $200k.)

Here are the questions:

  1.  Are counterclaims permitted in a 713.21 proceeding?
  2.  Is an owner entitled to an expedited evidentiary hearing to determine fraudulent lien damages and entitlement and amount of attorney’s fees to be awarded?
  3.  Is discovery available in such a proceeding?

Justin R. Zinzow
Admitted to Practice Florida & Texas
AV Preeminent® Rated Attorney
Fla. Board Certified in Construction Law

P: (727) 787-3121
F: (727) 375-5593
8750 Hawbuck Street
Trinity, Florida 34655
www.zinzowlaw.com<http://www.zinzowlaw.com>
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