[RPPTL-constructionlaw] Lien Law Legislative Proposal
Reese J. Henderson, Jr.
Reese.Henderson at atritt.com
Mon Jul 11 14:43:40 PDT 2011
Michael,
Regarding 85.021, I concede the statute is not elegantly drafted, but it
does appear to provide currently for personal liability by the owner for
non-privity liens. I base this conclusion on three authorities:
(1) 85.021 cross-references 85.011, which provides for a "special
action at law" in subsection (4) of 85.011 as to which "The judgment for
plaintiff is a personal judgment against defendant as well as a lien on
the property, which it shall describe, and shall direct execution
against the property, as well as against the property generally of
defendant." See F.S. 85.011(4);
(2) 85.021 itself provides that "The judgment may provide for the
recovery from the contractor or other person for whom the labor or
material was furnished, if the contractor or other person is joined in
the action, of the amount due by him or her, and from the owner of the
amount due by the owner to the contractor . . . as well as enforce the
lien against the property of such owner for such amount." The "as well
as" language is meaningless unless the language after the word "and" is
intended to provide for a personal money judgment against the owner.
Prior to the "as well as" language, the sentence starts with providing
for a "recovery from the contractor" and continues with "and from the
owner". What is a recovery against a contractor except a money
judgment?
(3) Logan Constr. Co. v. Warren Bros. Constr. Co., 268 So.2d 369,
371 (Fla. 1972) - the Supreme Court interpreted 85.021 as providing for
a personal money judgment against a property owner by a materialman in
privity with a subcontractor. Specifically, the court cited with
approval the following statement by Chief Judge Carroll of the Third
District stating as follows: "I concur in the judgment affirming the
holding that a lien was established against the affected property of the
owner and affirming the granting of a money judgment against the owner,
for the value of materials supplied by the plaintiff to the
sub-contractor, since the statute expressly so authorizes." (Emphasis
original). The Logan court went on to hold that the statute did not
similarly provide for a personal money judgment against the contractor,
"but only for the lien against the property and any personal judgment
against an owner . . . ." Id. at 371.
You also make some interesting points about 95.11. That said, I'm not
sure what direction you are suggesting. First, you acknowledge
conflicts among the various sections of 95.11, 255.05(10), 713.23(1)(e)
and 337.18(1)(d). However, it is not clear what you would do
differently about it. For those who don't have these statutes at their
fingertips, I attach a Word document with these sections reproduced with
the conflicting language italicized. There is simply no way to
reconcile 95.11(5)(e) and 255.05(10), for example. Section 95.11(5)(e)
references as the "trigger" date for the SOL the last date of work of
the claimant OR the last date of work of the contractor. Why is the
last date of work for the contractor even relevant? In any event, that
provision directly conflicts with 255.05(10), which makes the last date
of work of the claimant the relevant date EXCEPT FOR retainage, as to
which there are no fewer than 22 lines of text defining the "trigger"
date for the SOL for actions on the payment bond FOR RETAINAGE. If you
ask me, that's an ambiguity and a conflict.
You contend the words "governed by" are ambiguous as compared with the
"principal on the bond" language. I simply don't see the ambiguity. Is
anyone really unclear as to which bonds 255.05(10) applies? To the
extent there was any ambiguity before, 255.50 was amended several years
ago to provide that "The payment bond provisions of all bonds required
by subsection (1) shall be construed and deemed statutory payment bonds
furnished pursuant to this section and such bonds shall not under any
circumstances be converted into common law bonds." See 255.05(4).
Thus, there is no need to maintain a duplicative - and conflicting -
statute of limitations in 95.11 for public project payment bonds. The
SOL is defined in exacting detail in 255.05(10) and should be left
intact. Similarly, the specific SOLs for transportation projects
(337.18(1)(d)) and private project statutory payment bonds
(713.23(1)(e)) should also be preserved and the existing ambiguity
eliminated.
The only conceivable reason to keep 95.11(5)(e) around is to shorten the
statute of limitations on non-statutory bonds (sometimes referred to
confusingly as "common law bonds") to one year versus the normal five
year SOL for any other action founded on a written instrument. As
currently worded, 95.11(2)(b) (five year SOL for actions on a written
instrument, excepting only statutory bonds) and 95.11(5)(e) (one year
SOL for all payment bond actions) appear to provide five year and one
year SOLs, respectively, for these bonds, an obvious conflict. If we
can agree this conflict should be resolved, what is the policy reason
behind a shortened SOL for non-statutory bonds? An action under a
statutory bond is a creature of statute and subject to the strict limits
in the statute. For example, there are notice provisions that apply to
statutory bonds that do not apply to non-statutory bonds. Why should
the SOL for a statutory bond apply to a non-statutory bond? No one has
made that case yet to my knowledge.
Reese
From: constructionlaw-bounces at lists.flabarrpptl.org
[mailto:constructionlaw-bounces at lists.flabarrpptl.org] On Behalf Of
Gibbons, Michael
Sent: Monday, July 11, 2011 2:38 PM
To: RPPTL constructionlaw
Subject: Re: [RPPTL-constructionlaw] Lien Law Legislative Proposal
We are in agreement that the various SOL provisions are in conflict
and need some "tightening up". I disagree with the proposed manner of
eliminating the existing inconsistencies. The fatal flaw in the
proposed language is abandoning the existing reference to "principal on
the bond" and replacing it with the ambiguous "bond governed by the
applicable provisions of Fla. Stat. s. 255.05 and 713.23". This
language replaces certainty with uncertainty and represents a "fix" we
don't need.
I would concede that certainty and predictibility, while important,
are not the only polestars for good legislation. I would also agree
that GC's and their sureties should not benefit when they fail to list
surety information on a NOC or fail to record Payment Bond in public
records on public projects. Those limited circumstances can be
adequately addressed by adding tolling language that tolls the running
of the one year period until the bonds are recorded in the public
records or a corrected NOC is recorded listing the omitted surety and
attaching the payment bond. A longer SOL for unrecorded subcontractor
payment bonds may also be appropriate.
What we don't need is the proposed ambiguous language that invites
attorneys to litigate hypertechnical issues of whether the bond in
question is "governed by" 255.05 or 713.23. Use the existing reference
to "bonds on which the principal is a contractor ... for private work as
well as public work". If it ain't broke don't "fix" it.
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/>
Reese J. Henderson, Jr.
Board Certified Construction Attorney
707 Peninsular Place
Jacksonville, Florida 32204
Phone (904) 354-5200
Facsimile (904) 354-5256
Reese.Henderson at atritt.com
www.tritthenderson.com
CONFIDENTIALITY NOTICE: The information and all attachments contained in this electronic communication are legally privileged and confidential information, subject to the attorney-client privilege and intended only for the use of intended recipients . If the reader of this message is not an intended recipient, you are hereby notified that any review, use, dissemination, distribution or copying of this communication is strictly prohibited . If you have received this communication in error, please notify us immediately of the error by return email and please permanently remove any copies of this message from your system and do not retain any copies, whether in electronic or physical form or otherwise . Unauthorized interception of this e-mail is a violation of federal criminal law.
TAX ADVICE DISCLOSURE: Pursuant to the requirements of Internal Revenue Service Circular 230, we advise you that any federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of: (1) avoiding penalties that maybe imposed under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction or matter addressed in this communication.
Disclaimer regarding Uniform Electronic Transactions Act ("UETA") (Florida Statutes Section 668.50): If this communication concerns negotiation of a contract or agreement, UETA does not apply to this communication; contract formation in this matter shall occur only with manually-affixed original signatures on original documents.
________________________________
From: constructionlaw-bounces at lists.flabarrpptl.org
[mailto:constructionlaw-bounces at lists.flabarrpptl.org] On Behalf Of Dan
Vega
Sent: Monday, July 11, 2011 1:46 PM
To: RPPTL constructionlaw
Subject: Re: [RPPTL-constructionlaw] Lien Law Legislative Proposal
Michael, your concern about the change to 95.11 misses the mark.
First and most importantly, there is an initial obvious conflict in the
statutes in question that needs to be resolved as to when the SOL on a
payment bond claim starts to run. That's priority.
Second, there is no need for a one year SOL on claims against bonds that
are not required or provided for by statute such as 255.05, 337.18 or
713.23 bonds. The reasons are as follows: (1) those statutory bonds
are simply that - statutory creatures to be strictly construed as they
derogate the common law by providing a statutory claim/basis to get paid
for something otherwise protected by contract law; and (2) the statutory
bonds are required to be identified and attached to the Notice of
Commencement and recorded in the public records placing the
beneficiaries of those bonds on "notice" that they exist, hence the
short SOL.
A bond issued on behalf of a subcontractor is simply a contract. It is
not provided for or required by any statute and does not need to be
recorded. As such, it should be subject to the standard 5 year SOL
applicable to claims on written contracts, especially since those bonds
are not recorded nor identified in the NOC.
Finally, the common law v. statutory bond dichotomy is for the most part
extinct. Additionally, from my experience the argument generally
centered on the position that a GC statutory bond was rendered a common
law bond because it was not recorded or identified and/or attached to
the NOC. Those are legitimate concerns as they impact the time
requirements for serving a Notice to Contractor and/or a Notice of
Non-payment as well as the time to file suit. However, those concerns
are not applicable to subcontractor bonds. And for the most part, the
common law bond concerns were cured by different amendments to 255.05
and 713.23 and 713.13.
In sum, I see no harm in making sure that we are all on the same page as
it pertains to when the SOL starts to run on GC bond claims and that
those claims against bonds not required by statute be subject to the
same SOL applicable to any other contract.
Thank you.
Daniel R. Vega
Board Certified in Construction Law
Vezina, Lawrence & Piscitelli, P.A.
121 Alhambra Plaza, Suite 1604
Coral Gables, Florida 33134
Main (305) 443-2043
Fax (305) 443-2048
Cell (305) 962-5186
dvega at vlplaw.com
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From: constructionlaw-bounces at lists.flabarrpptl.org
[mailto:constructionlaw-bounces at lists.flabarrpptl.org] On Behalf Of
Gibbons, Michael
Sent: Monday, July 11, 2011 1:01 PM
To: RPPTL constructionlaw
Subject: Re: [RPPTL-constructionlaw] Lien Law Legislative Proposal
I could not make the call today but write to express my views on the
proposed legislative changes. The proposed changes to Ch. 85 (dealing
with Owner's exposure to personal judgments on claims brought by
non-privity claimants) and Ch. 95 (dropping the one year SOL for all
bonds) are problematic for following reasons:
1. Fla. Stat. s. 85.021--- This unintelligible legislation
admittedly cries out to be rewritten. Issue is making the Owner liable
personally to non-privity lienors foreclosing their construction liens.
I realize that there is a 1917 case and a 1969 case that arguably
supports holding an Owner personally liable for claims of non-privity
lienors. As construction law is practiced today, however, at least in
my universe, the Owner is only personally liable to lienor claimants who
enjoy a direct contractual relationship with owner. So, for example,
when a subcontractor lien is bonded off by a GC pursuant to Fla. Stat.
s. 713.24, the Owner is no longer a proper party to the action. Owners
should not bear personal liability for construction debts owed to
subcontractors. I believe having an in rem remedy along with a
contractual remedy against the contracting party (other than Owner) is
adequate for the protection of lower tier subs and suppliers. I would
recommend that the statute be clarified, consistent with practice today,
that the Owner not be subject to personal liability when a non-privity
lienor is foreclosing its lien. Owner, under certain circumstances,
should continue to be liable to non-privity claimants for unjust
enrichment.
2. Fla. Stat. s. 95.11 (2) (b) and (e)-- While there is an
inconsistency among the SOL's as noted, the prescribed "cure" will
prove far more harmful than the existing shortcoming (which boils down
to measuring the one year SOL period from the date of sub's last date of
furnishing vs. GC's last date of furnishing). The proposed change will
lead us right back to the bad old days when bond claims were dominated
by arguments about whether the bond was a "statutory bond" or a "common
law bond". The provision sought to be deleted at s. 95.11 (2) (e) was
actually passed to eliminate all the uncertainty and expense associated
with litigating that issue which generated great confusion in the trial
courts. The beauty of the existing language is that it doesn't matter
whether the bond is "statutory" or "common law"-- the one year period
applies. Now we are going to replace that clarity with the ambiguous
proposed language which introduces the same fog that generated the years
of unproductive and wasteful litigation on common law vs. statutory
bonds. If you want to make the SOL's all consistent, it is easy to do
without injecting all the uncertainty and ambiguity the proposed
legislation offers.
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
Reese J. Henderson, Jr.
Sent: Monday, July 11, 2011 11:24 AM
To: constructionlaw at lists.flabarrpptl.org
Subject: [RPPTL-constructionlaw] Lien Law Legislative Proposal
Importance: High
Folks,
In connection with today's call, please find attached the legislative
committee's proposal for which we are seeking approval to forward to the
Executive Council for further action and, hopefully, submission during
the 2012 legislative session. Attached are:
1. Legislative Position Request Form
2. Proposal
3. White Paper
The long and short is that we are seeking to clarify certain provisions
of the lien law to eliminate contradictory references, clarify the
statute of limitations on actions on payment bonds, tweak the statutory
claim of lien form; tweak the statutory notice of commencement form and
clean up the section dealing with electronic proof of delivery. I will
be on the call to answer any questions.
Thanks,
Reese
Reese J. Henderson, Jr.
Board Certified Construction Attorney
707 Peninsular Place
Jacksonville, Florida 32204
Phone (904) 354-5200
Facsimile (904) 354-5256
Reese.Henderson at atritt.com <mailto:%5Be-mail%5D>
www.tritthenderson.com <http://www.tritthenderson.com/>
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Disclaimer regarding Uniform Electronic Transactions Act ("UETA")
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<http://www.lowndes-law.com/>
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