Florida Construction Lawyer Blog

A recent appellate ruling reversed the trial court's decision and cleared the president of a carpentry company from individual liability after the lower court found that he had filed a fraudulent claim of lien. The ruling has the potential to affect many other cases in which the courts determine that a claim of lien is fraudulent and, as a result, statutory damages are awarded.

In the case of Bruce Tansey Custom Carpentry, Inc. v. Goodman, Edmond B. Tansey, as president of the carpentry company, contracted with Goodman and subsequently filed a claim of lien and an amended claim of lien against Goodman. In its final judgment, the trial court determined that the contracting parties were Gary W. Goodman, Jennifer Goodman, Edmond B. Tansey, individually, and Bruce Tansey Construction, which was the fictitious name of Edmond B. Tansey at the time that the contracts were executed.

The trial court found that Tansey's claim of lien and amended claim of lien were fraudulent, and that Edmond B. Tansey, individually, and Bruce Tansey Custom Carpentry, Inc. were both liable to the Goodmans for statutory damages. The Florida Second District Court of Appeals reversed the ruling that Tansey was individually liable on the grounds that the complaint and amended complaint did not allege individual liability and, even if the complaints had alleged that Tansey was individually liable, the evidence did not support individual liability because Custom Carpentry was the lienor and Tansey signed the liens as president of Custom Carpentry. The appellate ruling also found that neither the original lien nor the amended lien stated or implied that Tansey, individually, was the lienor.

The attorneys who focus on construction law in South Florida at our firm as well as others throughout the state will be sure to reference this decision whenever questions arise about individual liability in cases where the court finds that a claim of lien is fraudulent. Our firm will continue to monitor and share information about important court decisions for the Florida construction industry in this blog, and we encourage industry members to submit their e-mail address in the box on the right in order to subscribe to the blog and automatically receive all of our future posts.

A recent decision by the First District Court of Appeals represents a potentially significant boon for the scores of contractors and other lienors that turn to the courts to seek payment for their work under the terms of a construction contract. In the case of Whitehead v. Tyndall Federal Credit Union the appellate court reversed the lower court's decision and found that Florida law required the credit union to notify the contractor of its decision to stop advancing funds while the contractor continued work on a construction project.

In Whitehead, the contractor (Whitehead) entered into a contract with a developer for the construction of a home. Disputes arose between the contractor and the developer. Consequently, the developer advised the contractor that no further draws would be disbursed to the contractor. However, having not been formally terminated, the contractor continued to work.

The contractor was terminated approximately one month after being advised by the developer that it would not receive further disbursement. It was not compensated for the work it performed between informal and formal termination, and the bank did not disburse any money for its benefit. Approximately one month after termination, the developer hired a completion contractor. Upon the completion contractor completing its work, the bank disbursed the remaining construction loan funds to the completion contractor.

In Whitehead's lawsuit seeking payment for its work on the project, it named the credit union as a party defendant, alleging violation of Fla. Stat. 713.3471 based upon the lender's failure to notify the company of its decision to cease disbursing funds. In the case, the lower court entered final summary judgment in favor of the lender, finding that the credit union had not decided to discontinue disbursement of the construction loan, as it eventually disbursed the entire construction loan when it issued payments to the contractor that was hired to complete the project. The appellate court reversed the ruling and stated in its judgment that Florida statutes required that once a construction lender "knows that it will stop advancing funds to a contractor or any other lienor, the lender has a duty to notify the contractor of its decision." In reaching its decision, the court concluded that "the obvious purpose of [Fla. Stat. 713.3471] is to prevent exactly what occurred here: the unjust termination of payments to a contractor who continues work, without any notice from the lender that payments will be terminated."

The construction law attorneys in South Florida at our firm and throughout the state will certainly reference this decision in other cases involving lenders which terminated payments to contractors and other lienors without advance notice. We will continue to write about court decisions such as this that have important implications for the construction industry in Florida, and we encourage industry members to subscribe to our blog by adding their e-mail address in the box on the right in order to automatically receive all of our future posts.