Court: District Court of Appeal of Florida; December 7, 2010; Florida; State Appellate Court
CDC Builders, Inc. appeals a trial court's order granting partial summary judgment in favor of the developers—Riviera Almería, Riviera Biltmore, and Riviera Sevilla—claiming the court erred in ruling that inaccurate interim payment affidavits, in violation of chapter 713 of the Florida Statutes, warranted the automatic discharge of a lien. The factual background involves CDC Builders as a general contractor engaged by the developers to construct twenty-five homes in Coral Gables, Florida, with a total estimated cost of $40 million. The developers terminated the contract for convenience partway through construction of eight homes but requested CDC Builders to finish those units. Subsequently, CDC Builders sought compensation for the canceled homes after the developers stopped payments, alleging contractual breaches. The developers countered with claims of overcharging and withheld payments to recoup perceived overcharges. Following the completion of the homes, CDC Builders filed claims of lien for unpaid work, leading to the developers' counterclaims of breach of contract and fraudulent lien. The developers' motion for partial summary judgment, which argued that CDC Builders’ alleged submission of false interim payment affidavits invalidated the liens, is the focus of the appeal. They contended that CDC Builders had sufficient funds and violated the Florida Lien Statutes, rendering the liens invalid under state law. The court agreed with CDC Builders and granted the petition for writ of certiorari.
The trial court determined that chapter 713 mandates contractors to adhere to all statutory provisions, including the prohibition against knowingly filing false payment status information regarding subcontractors. It found that CDC Builders had submitted false interim payment applications, leading to a ruling in favor of the developers, granting their motion for partial summary judgment and discharging the liens. CDC Builders appealed, contesting the trial court's interpretation of chapter 713, particularly regarding whether inaccuracies in interim payment requests could invalidate a legitimate construction lien.
The appellate court disagreed with the trial court’s conclusion that CDC Builders violated specific statutory provisions (sections 713.345 and 713.35). It noted that CDC Builders submitted the payment applications due to contractual obligations rather than statutory requirements, and the contract permitted the withholding of retainage from subcontractors. Section 12.1.8 of their agreement explicitly allowed retainage of at least five percent. Furthermore, section 713.345(1)(a) acknowledges that contracts can permit withholding payments, suggesting that the developers were aware of the retainage issue.
Even if the trial court's factual findings were accepted, the appellate court argued that violations would only warrant criminal penalties and not lien discharge. The trial court itself recognized that neither section 713.345 nor section 713.35 provided grounds for lien discharge, stating that false interim payment affidavits alone do not necessitate such action. It criticized the trial court's broad interpretation of chapter 713 as not aligning with statutory language or state precedent, specifically referencing section 713.37, which states that the chapter should not be liberally construed in favor of any party involved. The appellate court cited previous case law to support its position.
Construction liens are defined as statutory instruments that must be strictly interpreted according to Florida law, as highlighted in Home Electric of Dade County, Inc. v. Gonas. The court recognizes the significant implications this interpretation has for the construction industry, emphasizing that allowing inaccuracies or minor errors in lien filings to invalidate them would undermine their purpose, which is not what the legislature intended. The dual purpose of the Construction Lien Law, reaffirmed in Trytek v. Gale Industries, is to protect suppliers by ensuring payment and to safeguard owners from being charged twice for the same services or materials. Adhering to the trial court's decision would hinder these protections, allowing contractors to lose their rights due to clerical errors or contract compliance. The conclusion establishes that since CDC Builders had the contractual right to withhold retainage from subcontractors, and the developers were aware of this, the trial court's interpretation of chapter 713 was incorrect. It concluded that filing inaccurate payment claims does not justify discharging valid liens, which would contradict the intent of Florida’s Construction Lien Law. Consequently, the petition for writ of certiorari was granted, and the court acknowledged the document filed on July 21, 2010, as a Petition for Writ of Certiorari.
