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Middle District Of Florida Rules In Favor Of Unpaid Sub Subcontractor

Taylor Industrial Construction v. Westfield Insurance Company involved a general contractor, subcontractor, sub-subcontractors, and a surety disputed over payment after termination of the contract. 2019 WL 3068395 (M.D. Fla. 2019). In May 2016, general contractor Slone Associates, Inc. (“Slone”) was hired to provide construction-related services and materials for the ceiling area of a WalMart Distribution Center (“the Project”). Slone entered into a subcontract with Daniels Welding Services, Inc. (“Daniels”) to perform certain roof joist reinforcement work. Taylor Industrial Construction, Inc. (“Taylor”) was hired by Daniels as a sub-subcontractor to perform welding work, which Taylor began on June 25, 2016.

The Daniels/Taylor sub-subcontract was originally a fixed price contract in the amount of $194.400.00. Daniels and Taylor then entered into a change order for compensation to be calculated instead on a time and materials basis at $60.00 per hour. However, in late July, Daniels notified Slone and Taylor of its intent to discontinue working on the Project. Taylor then contacted Slone requesting it be kept on the Project, but Slone informed Taylor that it had already hired another welding company to complete the work. Taylor left the project on July 26, 2016.

Taylor had not been paid by Daniels for its work, so it filed a construction lien on August 22, 2016. Slone bonded off Taylor’s lien with a lien transfer bond (“the bond”) with Slone as principal and Westfield Insurance Company (“Westfield”) as surety. Ultimately, Taylor filed a complaint against Westfield seeking to collect $175,453.36 on the bond. Slone moved to intervene, alleging a fraudulent lien claim against Taylor. Taylor filed a Motion for Summary Judgment against Slone and Westfield seeking a finding that Taylor’s lien is not fraudulent.

Florida law holds that when a contractor is owed money for labor, services, materials, or other items used to improve real property in accordance with a contract, that contractor may assert a claim of lien on the real property he has improved. The fundamental purpose of this law is to protect those who have provided labor and materials for the improvement of real property. Florida law does, however, protect an owner from fraud or collusion on the part of the contractor.

Westfield alleged that Taylor’s lien was fraudulent because it included time billed for defective work, time and costs not authorized under the contract, and was compiled in a grossly negligent manner. The Court acknowledged that an inspector found only minor defects with Taylor’s work and that, if the work was defective, Taylor was entitled the opportunity to cure, which it was not provided.  The Court held Westfield failed to provide any authority for its contention that costs such as water, rest, or food breaks and lodging were not collectible under Taylor’s contract. Lastly, the Court found that the errors in Taylor’s lien were only typographical in nature and did not adversely affect Westfield.

As a result, the Court found in favor of Taylor and granted its Motions for Summary Judgment. Generally, courts are in favor of subcontractors getting paid for the work they perform and this Florida Court had a high standard of proof for Slone and Westfield’s claims that Taylor’s lien was fraudulent.