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<p class="MsoNormal"><span style="color:#1F497D">In my opinion, the answer is no.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoListParagraph" style="text-indent:-.25in;mso-list:l0 level1 lfo1"><![if !supportLists]><span style="color:#1F497D"><span style="mso-list:Ignore">1.<span style="font:7.0pt "Times New Roman"">
</span></span></span><![endif]><span style="color:#1F497D">The question is what is “due” for such labor, services, or materials, since the statute specifically authorizes withholding “in accordance with the terms of a contract.” If the contract authorizes withholding
for amounts due on another project, then what is left after the withholding is what is “due” for “such services, labor, or materials.” Most such provisions in contracts are written around what is “due” and when it is “due.”
<o:p></o:p></span></p>
<p class="MsoListParagraph"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoListParagraph" style="text-indent:-.25in;mso-list:l0 level1 lfo1"><![if !supportLists]><span style="color:#1F497D"><span style="mso-list:Ignore">2.<span style="font:7.0pt "Times New Roman"">
</span></span></span><![endif]><span style="color:#1F497D">Another reading is that the “such services, labor, or materials” modifies only the “bona fide dispute regarding the amount due” and not the other basis of withholding authorized in the statute since
they are framed disjunctively—withholding any payment or part of a payment in accordance with the terms of a contract for services, labor, or materials, OR pursuant to a bona fide dispute regarding the amount due.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoListParagraph" style="text-indent:-.25in;mso-list:l0 level1 lfo1"><![if !supportLists]><span style="color:#1F497D"><span style="mso-list:Ignore">3.<span style="font:7.0pt "Times New Roman"">
</span></span></span><![endif]><span style="color:#1F497D">Another reading is to assume that “such services, labor, or materials” DOES apply to the first part, so you could re-write it like this, which would permit the withholding: “from withholding any payment,
or any part of a payment, in accordance with terms of a contract for services, labor, or materials, for such services, labor or materials.”<o:p></o:p></span></p>
<p class="MsoListParagraph"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D">I don’t know how one could read “regarding the amount due” to apply to anything other than the second part—“pursuant to a bona fide dispute regarding the amount due” – there are no commas or conjunctions or any
other indicators to make it applicable to the first part.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D">Then there are the common law doctrines of setoff and recoupment which would also apply.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:13.5pt;color:#0000A0">Bruce D. Partington</span></b><span style="color:#1F497D"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;color:#1F497D">Clark,</span><span style="color:#1F497D">
</span><span style="font-size:10.0pt;color:#1F497D">Partington, Hart, Larry<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;color:#1F497D">Bond & Stackhouse</span><span style="color:#1F497D"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><a href="mailto:bpartington@cphlaw.com" title="blocked::mailto:bpartington@cphlaw.com"><span style="font-size:10.0pt;color:blue">bpartington@cphlaw.com</span></a><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;color:#1F497D">Direct: 850-432-1399</span><span style="color:#1F497D"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;color:#1F497D">Fax: 850-432-7340</span><span style="color:#1F497D"><o:p></o:p></span></p>
<p class="MsoNormal"><i><span style="font-size:9.0pt;color:#1F497D">*Board Certified in Construction Law</span></i><span style="color:#1F497D"><o:p></o:p></span></p>
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<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b>From:</b> clc-discussion-bounces@lists.flabarrpptl.org [mailto:clc-discussion-bounces@lists.flabarrpptl.org]
<b>On Behalf Of </b>Arnold Tritt<br>
<b>Sent:</b> Thursday, October 29, 2015 1:35 PM<br>
<b>To:</b> clc-discussion@lists.flabarrpptl.org<br>
<b>Subject:</b> [CLC-Discussion] Project Cross-Collateralization: Hypothetical question to CLC Members<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="color:#7030A0">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. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#7030A0"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="color:#7030A0">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<i>
<b><u>such</u></b> </i>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. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#7030A0"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="color:#7030A0">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.<o:p></o:p></span></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D">Arnold D. Tritt, Jr.</span></b><span style="font-size:9.0pt;font-family:"Times New Roman",serif;color:#1F497D"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Times New Roman",serif;color:#1F497D">Board Certified Construction Attorney
<o:p></o:p></span></p>
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