[RPPTL-constructionlaw] Setoff

[Gibbons, Michael]

      Good question George.  I don't have caselaw.  The issue does come
up periodically with Owners contracting with same GC over several
projects and GC's contracting with same subs over several projects.  One
practical constraint on the application of setoff in this context is the
ripple prejudicial effect on othewise "innocent" lower tier subs and
suppliers (or owners on unbonded projects).  
 
      Assuming GC withholds payment to Sub on project A  due to damages
caused by Sub to GC on project B, any subs or suppliers on project A
will now be prejudiced and likely unpaid even for conforming work.  If
such lienors record liens, now Owner is prejudiced.  If GC pays directly
such subs and suppliers, the value of the setoff may be lost or greatly
reduced.
 
      Also, you should take a look at Fla. Stat. s. 713.345.  A GC
receiving monies for improvements on Project A may be guilty of
misappropriation of construction funds if GC fails to pay out such
monies to lienors on Project A due to damages incurred on Project B
especially if there is no contractual right to withhold the monies.  The
statute does allow a GC or other lienor to withhold monies pursuant to
terms of a contract.  It also references withholding "pursuant to a bona
fide dispute regarding the amounts due".  Open question whether claim on
unrelated project fits within the "bona fide dispute" safe harbor.
 

Michael R. Gibbons  (Bio
<http://lowndes-law.com/our-people/michael-r-gibbons> )
Shareholder
Lowndes, Drosdick, Doster, Kantor & Reed, P.A.
450 South Orange Avenue, 8th Floor
Orlando, FL 32801
Phone: 407-418-6378
Fax: 407-843-4444
email: michael.gibbons at lowndes-law.com
<mailto:michael.gibbons at lowndes-law.com> 
website: http://www.lowndes-law.com <http://www.lowndes-law.com/> 

      


 

________________________________

From: constructionlaw-bounces at lists.flabarrpptl.org
[mailto:constructionlaw-bounces at lists.flabarrpptl.org] On Behalf Of
George Dramis
Sent: Wednesday, August 17, 2011 11:36 AM
To: RPPTL constructionlaw
Subject: [RPPTL-constructionlaw] Setoff



Is anyone familiar with a right to offset/setoff monies owed to party A
by party B on one project against damages caused by party A to party B
on a separate project where the contracts do not contain a cross default
provision?

 

Negative or positive case law is welcome.  Thank you in advance. 

 

George J. Dramis

Attorney at Law

Florida Bar Board Certified in Construction Law

  

 

MorgannDramis

2364 Fruitville Rd.

Sarasota, Fl. 34237

(941) 953-4555 Office

(941) 953-4533 Facsimile

 

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