[RPPTL-constructionlaw] Joint Check Overpayment Question

Thu Aug 2 17:03:54 PDT 2012

Blaik,

Check the law on "money had and received", a common count in assumpsit.  It may cover money paid and received in error.  This is a very old legal concept that (I suspect) has morphed into a form of unjust enrichment.

Dick Burt

Richard A. Burt, Esq.
BURT & BURT
220 So. Ridgewood Avenue
Suite 200
Daytona Beach, Florida 32114
(386) 252-2090 (office)
(866) 240-7043 (facsimile)
dick at burt-burt.com<mailto:dick at burt-burt.com>
www.burt-burt.com<http://www.burt-burt.com/>

From: constructionlaw-bounces at lists.flabarrpptl.org [mailto:constructionlaw-bounces at lists.flabarrpptl.org] On Behalf Of Blaik Ross
Sent: Thursday, August 02, 2012 7:13 PM
To: RPPTL constructionlaw
Subject: Re: [RPPTL-constructionlaw] Joint Check Overpayment Question

Ian,

Thank you very much for your response I appreciate it!

The Release does indeed reference the particular project.  The Invoice (both the "real" and the "fake" one) also references the particular project.  The joint check on the check stub and the memo section states the particular project.  The supplier admitted to me that he knew full well there was an overpayment, but decided to just credit the overpayment to the sub's house account (presumably because the supplier was owed additional monies from this sub so he took the opportunity to pay down more of the debt).  The Supplier never called the GC and asked why there was an overpayment.  The supplier definitely knew the payment was for a specific project, as the specific project was on his own "real" Invoice he generated, it was on the Release he signed, and it was on the check he endorsed and deposited.  Also, the check was for materials only because the supplier at issue is strictly a materialman and performs no labor - he is purely a distributor of goods.  I am not sure though whether the supplier was aware that the Sub dummied up his Invoice, but regardless of that knowledge, he certainly seized the opportunity to grab more cash.  Hopefully the above facts change your analysis?

Thanks again though and thank you to all of my friends and colleagues (both known and unknown) who replied.  The list-serve sometimes gets a bum rap,  but when you need it its there for you, and you all have been a huge help - so thank you!

Best Regards,
Blaik

________________________________
From: constructionlaw-bounces at lists.flabarrpptl.org<mailto:constructionlaw-bounces at lists.flabarrpptl.org> [mailto:constructionlaw-bounces at lists.flabarrpptl.org] On Behalf Of lan at lwwhiteattorney.com<mailto:lan at lwwhiteattorney.com>
Sent: Thursday, August 02, 2012 9:56 AM
To: 'RPPTL constructionlaw'
Subject: Re: [RPPTL-constructionlaw] Joint Check Overpayment Question

Let's start with the usual quibble, "It depends on the facts."  The supplier signed  a release, but exactly what did it say.  Specifically did it reference the particular job, or a particular invoice, or something else that would put the supplier on notice of the overpayment.  The facts assume the supplier didn't know what was going on, and you may never be able to prove otherwise, but is that a rabbit worth chasing down the hole?  Was there any kind of communication from the GC (or from anyone else) to the supplier directing application of the funds to a particular job?

With all that, however, my guess is the answer to your question is no.  From the supplier's perspective, how would he know what the payment represented?  I agree that a joint check from a GC affords some notice the payment is for a particular project, but is there any reason for the supplier to think the payment was for materials only?  If the check represented payment for both labor and materials, the sub-contractor would have every right to direct the labor portion toward it s house account.  How would the supplier know?  In addition, it isn't a case where the supplier is getting a windfall.  They are simply being paid what they are owed.  My gut call is that unless you can assign some knowledge to the supplier, there would not be a right of action.

Regards,
Lan White
(727) 797-5599

From: constructionlaw-bounces at lists.flabarrpptl.org<mailto:constructionlaw-bounces at lists.flabarrpptl.org> [mailto:constructionlaw-bounces at lists.flabarrpptl.org] On Behalf Of Blaik Ross
Sent: Wednesday, August 01, 2012 5:42 PM
To: RPPTL constructionlaw
Subject: [RPPTL-constructionlaw] Joint Check Overpayment Question

Hello Everyone,

I hope I am sending this to the right list-serve address as I know there are two now.

Factual Background:

I represent a General Contractor ("GC").  GC has hired a subcontractor to perform a certain scope of work.  The subcontractor buys his materials from a supplier.  Due to problems with the subcontractor's line of credit with the supplier, GC must pay for subs materials via joint check. GC receives an Invoice, purportedly from the supplier.  It is on the supplier's letterhead.  GC pays it via joint check and the check is deposited by the supplier and a release signed by both the sub and supplier.  GC later finds out that the invoice it paid was "dummied up" by the subcontractor, who added $30,000 to it fraudulently in order to try and get ahead of GC on the subcontract and get more cash flow.  Subcontractor has already failed before GC discovers that it was a "dummied up" invoice and sub has been terminated from the project.

I wonder why the supplier, when they received a joint check for an amount in excess of the true invoice amount, did not call the general contractor or refund the general contractor back the $30,000?  GC calls the supplier and asks what happened - i.e. why it is that GC paid them $130,000 in a joint check, but that the real invoice was only for $100,000, and why didn't GC get a refund.  Supplier says this is not uncommon and they just credited the subcontractor's house account - so in effect GC has paid for this failed subcontractor to have an additional $30,000 of credit, or it went to other debts sub held with the supplier.  GC asks the supplier to send it a refund and supplier refuses saying GC's only recourse is to backcharge it against the subcontractor's lump sum contract.  Supplier claims no knowledge of the "dummied up" invoice and claims that there is nothing wrong with his crediting the overpayment by the general contractor to the subcontractor's house account.

Question:

Does GC have a direct cause of action against the supplier who it overpaid and who signed a release stating it was paid $130,000 for materials delivered to Project XYZ, but the materials delivered were only really worth $100,000 per the "true" invoice?  Is there not something fundamentally wrong with the supplier taking the $30,000 overpayment and using it to satisfy the subcontractor's other debts with him...regardless of supplier's intent or knowledge of the "dummied up" invoice and subcontractor's fraudulent motives?

Thank you,
Blaik P. Ross, Esq.
bross at beauchampco.com<mailto:bross at beauchampco.com>
305-445-0819

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We look forward to providing our clients with many more years of delivering the highest quality buildings in our community.
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