WOOLEMS, INC. v. CATALINA CASTSTONE CREATIONS, INC.

Citation: Not availableDocket: 22-0770

Court: District Court of Appeal of Florida; April 5, 2023; Florida; State Appellate Court

Original Court Document: View Document

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Woolems, Inc. appeals a non-final order from the Third District Court of Appeal of Florida, which denied its motion to release a lien transfer bond. The case arises from a construction project where Woolems contracted Stone House 1, LLC for materials and services and subcontracted Catalina Caststone Creations, Inc. for exterior stonework. Catalina completed its work but claims Woolems refused payment, citing delays and defects. In response, Catalina filed a construction lien against Stone House’s property. Woolems subsequently filed a complaint to discharge the lien, asserting its damages exceeded the lien amount due to Catalina’s alleged failures. Following this, Woolems posted a cash deposit and filed a lien transfer bond, effectively transferring the lien from the property to the bond, which released the property from the claimed lien. The court found Woolems did not inform the trial court or Catalina’s counsel about the cash deposit, but the Clerk of Court appropriately notified both parties of the lien transfer. The appellate court affirmed the lower court's order, confirming the legal removal of the lien from the property.

On June 29, 2021, Stone House filed a notice contesting a lien held by Catalina, which required Catalina to file suit within sixty days following the Clerk’s certification of the notice. The Clerk sent the notice to Catalina on October 19, 2021, but Catalina did not respond. On October 26, 2021, Catalina moved to file a third-party complaint against Stone House, which the court granted. Catalina’s third-party complaint sought to foreclose on the lien against the property, with stipulations regarding privity and limitations on judgments against the property owner.

On December 23, 2021, Woolems requested a release of its Cost Deposit, arguing that under Florida Statutes section 713.24(4), Catalina was required to sue Woolems within one year unless shortened by law. Woolems claimed that the notice of contest filed by Stone House triggered a sixty-day period for Catalina to initiate suit, which Catalina failed to do, resulting in the automatic extinguishment of the lien. On the same day, Catalina filed a first amended third-party complaint against Stone House, mistakenly attaching a Clerk’s certificate indicating that Woolems posted the Cost Deposit.

Stone House subsequently moved to dismiss the third-party complaint, arguing the lien was against Woolems, not Stone House, and was extinguished due to Catalina’s inaction. On February 24, 2022, Catalina sought to file an amended counterclaim against Woolems regarding the Cost Deposit, which the trial court allowed. A hearing on Woolems’ motion for release of the Cost Deposit divided the issues into the timing of Catalina’s suit and the correctness of suing Stone House.

The trial court ruled Catalina's amended counterclaim was timely because it related back to the original filing against Stone House. The court granted Stone House’s motion to dismiss Catalina’s third-party complaint for lien foreclosure but denied Woolems' motion to release the Cost Deposit. Woolems appealed, and the appellate court has jurisdiction under Florida Rule of Appellate Procedure 9.130(a)(3)(C)(ii), with a de novo review since the trial court’s ruling is based on a legal issue.

The trial court appropriately applied the relation-back doctrine, determining that Catalina's amended counterclaim against Woolems was timely, despite being filed after the applicable limitations period set by sections 713.22 and .24. The court noted that Catalina's claims for quantum meruit and unjust enrichment against Stone House were effectively removed due to the nature of the in rem action against alternate security. These counts will be addressed in a subsequent hearing following a motion to dismiss. Importantly, Catalina's amended counterclaim did not introduce a new party; it maintained the same real parties, interests, and essential elements of the controversy as the original complaint. Citing relevant case law, the court confirmed that amendments do not constitute the introduction of a new party if they merely change the status of an existing party. The relation-back doctrine generally does not apply when introducing entirely new defendants, which was not the case here. The court emphasized Florida's policy favoring liberal amendments, stating that doubts should be resolved in favor of allowing amendments unless specific conditions are met, such as prejudice to the opposing party or futility of the amendment. The relevant rule allows amendments that arise from the same conduct or transaction as the original pleading to relate back to the date of that pleading. Consequently, Catalina's amended counterclaim against Woolems related back to the original timely-filed contest of lien against Stone House, and therefore, her claim regarding the Cost Deposit can proceed. The order denying Woolems’ motion for release of the Cost Deposit was affirmed.