For over a decade, construction businesses in Florida have been required to obtain and maintain Qualified Business Licenses (QBLs). No more. As of October 1, 2009, the amendment to Chapter 489 of the Florida Statutes eliminated all traces of QBLs — called “certificates of authority” within the statutes themselves. Among other things, the amendment clears up any ongoing confusion as to whether the lack of a QBL renders a business unlicensed according to Chapters 455 and 489.
Overbroad statements in case law have left some with the incorrect impression that contractors may not include charges for overhead and profit charges when compiling their lien amounts. The confusion is due in large part to Martin v. Jack Yanks Construction Co., 650 So. 2d 120, 121-22 (Fla. 3d DCA 1995) , where the court stated that “recovery for overhead and profit as separate items are not within the purview of the lien law.” However, when viewed in the context of the entire case and of the case law to which it cites, this statement stands for a different proposition.
When it comes to materials, a contractor or supplier may generally only make a claim of lien or claim against a bond for materials actually delivered to and incorporated into the property. However, all too often, construction projects get cancelled or contractors get terminated before all materials are incorporated into the property. For contractors or suppliers with materials custom-made off-site (for instance, cabinetry), this poses a special problem, as custom-made material can rarely be sold at full value or used on other projects.
The Courts have again addressed the powers of an arbitrator in Commercial Interiors Corporation of Boca Raton v. Pinkerton & Laws, Inc. This case involved a claim between a general contractor and a subcontractor. The contracts at issue had binding arbitration clauses. The Subcontractor initially brought suit for failure to pay and the general contractor filed a motion to compel arbitration and to abate the lawsuit. Subcontractor agreed and the case moved into the arbitration forum. In the arbitration, the general contractor filed a motion to dismiss claiming that the subcontractor was not entitled to recover any amounts under the subcontracts because the subcontracts were illegal. The general contractor asserted that the Subcontractor was not licensed and therefore under Florida Statute Sec. 489.128 it had no obligation to pay the Subcontractor. Apparently the work required a license under a local ordinance but was not required to be licensed under Florida Statutes.
We are pleased to present our annual review of the legislation impacting the construction industry. It is not intended to be an exhaustive review of all of the changes brought about by these pieces of legislation, but to highlight what appears to us to be the significant changes. The full text of the bills can be found on our website.
The purpose of the type of contract provision is to bring another document into the contract without fully setting forth the incorporated document. It places “hidden” obligations in your contract. Since these clauses are enforced by the Florida courts, the old saw “ignorance is bliss” is an invitation to disaster.
Changes in the work or claims for changes in the work are where we see the greatest volume of problems. As a practical matter, problems and changed circumstances which were not foreseen at the time the parties signed the contract will arise during every construction project. A changes clause provides the vehicle by which, without breaching the original contract, changes can be ordered to add work, correct errors in the specifications, or improve the quality of materials or methods of construction.
Florida Statute Section 713.31 provides that where a lien claimant has willfully exaggerated the amount of the lien, or has compiled the lien in a grossly negligent manner, such action is a complete defense to enforcement of the lien. In addition, and of critical importance to lienors, an injured party such as the owner may assert an affirmative claim of its own against the lienor for damages, costs and attorneys’ fees resulting from the fraudulent lien.
One of the more problematical contract clauses under Florida law is the payment clause in a subcontract where the general contractor seeks to avoid payment to the subcontractor or supplier until payments are received from the owner. These so-called “pay when paid” provisions in subcontracts are usually classified as either condition precedent or time of payment provisions.
1. Contractors and Suppliers Contracting Directly with the Owner
Ensure that owner has recorded and posted Notice of Commencement prior to starting work or delivering materials;
Record Claim of Lien in the county where the property is located within 90 days of final furnishing of labor, services or materials;
Serve copy of Claim of lien on owner either before or within 15 days of recording;
Contractors only – serve Final Contractor’s Affidavit at least five days before filing suit;
File suit within one year of recording the Claim of Lien.
The Supreme Court recently issued a ruling which will impact all contractors doing business with public bodies. In County of Brevard v. Miorelli Engineering, Inc., the Court dealt with a situation where the County contracted with Miorelli to build a spring training facility for the Florida Marlins. After work had commenced on the facility, the County terminated the contract and withheld amounts due to the contractor. Miorelli sued the County, asserting a variety of claims, including a claim for extra work.