The contract between the parties required that the contractor provide the final payment affidavit described in 713.06, Florida Statutes, before final payment was due. This case illustrates the importance of complying with contractual requirements pre-suit, and the consequences they can have, including increased litigation costs.
Age of Empire, Inc. v. Ocean Two Condominium Association, Inc., arises from a dispute between a general contractor and a condominium association. The associated hired the contractor to provide certain restoration and improvement services at the condominium property.
After the contractor completed its work, it filed a lawsuit against the association, claiming that the association had failed to make the final payment due under the contract. Four months later, the contractor filed an amended complaint, to which it attached the contractor’s final payment affidavit required by 713.06, Florida Statutes. The affidavit was attached by the contractor to establish satisfaction of the condition precedent to final payment set forth in the contract between the parties. The association moved to dismiss the complaint, pointing to the late affidavit as proof that the original complaint was filed before the contractor had complied with the requirements of the contract. The trial court dismissed the lawsuit and the contractor appealed.
On appeal, the Third District Court of Appeal affirmed the dismissal, first noting that the contract between the parties imposed the following requirement:
“[f]inal payment shall not be due until the Contractor has delivered to the Association . . . a final contractor's affidavit pursuant to Section 713.06(2), Florida Statutes.”
Because the exhibits to the amended complaint illustrated that the contractor had not provided this affidavit before filing suit, the appellate court concluded that the trial court properly dismiss the claim, because the payment sought by the lawsuit could not be due until the condition precedent was satisfied. The appellate court noted however, that while the lawsuit was dismissed with prejudice, the contractor still had the ability to file a new action now that it had complied with the condition precedent to that lawsuit.
There are a few key takeaways from this case. First, contractors should review their contracts and make sure they have complied with all conditions required before payment is due, or that such conditions are otherwise excused. Second, while it may not seem like the dismissal is a big deal, because the court expressly stated the contractor could file a new lawsuit now that it had complied with the conditions of the contract, there are some problems that creates for the contractor that may not be obvious.
For example, if the contract between the parties included an attorneys’ fee provision, the association could be the prevailing party and entitled to an award of attorneys’ fees incurred in the first lawsuit, which would reduce the net recovery over the contractor in the second lawsuit. Further, the contractor could be required to the association’s non-attorneys’ fee costs incurred in the first lawsuit before being able to file the second lawsuit. Finally, the contractor spent attorneys’ fees and costs on the first lawsuit that it now likely must spend again on a second lawsuit. Thus, even assuming the contractor was completely justified in filing suit and seeking payment from the association, and even likely to win, it now must start that process again, while possibly digging out of a financial hole from the first lawsuit.