The case involves a $100,000.00 dispute over the installation of stairs at an apartment complex, a claim seeking a declaration of potential lien rights, and the application of the “place of payment” and “local action” rules to determine the proper venue for the dispute between the subcontractor and general contractor.
Schultz Builders & Pools Inc v. Icon Welding & Fabrication, LLC, arises from a payment dispute between a general contractor and a subcontractor. The general contractor hired the subcontractor to fabricate and install exterior stairs at an apartment complex in Pinellas County, Florida. When the building inspector determined that the stairs did not meet the requirements of the Florida Building Code, the general contractor refused to make the final payment to the subcontractor of over $100,000.00.
In response, the subcontractor sued the general contractor in Sarasota County, where the subcontractor was located. The subcontractor asserted claims for “breach of contract, declaratory judgment, unjust enrichment, account stated, open account, and a violation of section 713.346, Florida Statutes.” The declaratory judgment claim sought clarification from the court as to whether the subcontractor had lien rights against the apartment complex’s property in Pinellas County.
The general contractor filed a motion in the trial court, asking the court to transfer the case to Pinellas County, because (1) the general contractor was located in Pinellas County, (2) the real property at issue was in Pinellas County, and (3) the declaratory judgment claim involved lien rights to property in Pinellas County. The trial court denied the motion, and the general contractor appealed. Florida’s Second District Court of Appeal affirmed the denial, evaluating three specific arguments in reaching its conclusion.
First, the appellate court noted that the general contractor only challenged venue as to the breach of contract count and the declaratory judgment count. This left several other counts with venue unchallenged. The court noted that, in Florida, “[w]hen a complaint alleges multiple counts, proper venue for any count is proper venue for all counts.” Thus, the failure to challenge venue as to all counts was fatal to the attempt to transfer venue for two of the counts to Pinellas County.
The court then turned to the general contractor’s argument that venue was proper in Pinellas County because the breach of contract occurred in Pinellas County. The court disagreed, applying the “place of payment” rule, stated as follows:
If a plaintiff alleges breach of a covenant to pay money due or already earned under a contract, the cause of action accrues where performance of the act of payment was to occur. If the action is for breach of some other covenant, venue is proper in the county where that covenant was to be performed.
The court also noted that the aforementioned rule typically applies only where the payment sued upon is liquidated and is for a specific amount of money. Here, the subcontractor sued claiming that the general contractor failed to make final payment in the amount of $100,480.00, plus interest. Thus, the court concluded, the “place of payment” rule applied, and venue in Sarasota County was proper.
The court then turned to the general contractor’s next argument that the subcontractor’s declaratory judgment claim required transfer to Pinellas County under the “local action rule” because the declaratory relief sought involved real property located in Pinellas County. The appellate court rejected this argument, noting first that the subcontractor did not seek to enforce or foreclose a construction lien, specifically recognizing:
[The subcontractor] requested the trial court “render its declaratory judgment on the interpretation of [section] 713.06 as regards [the subcontractor’s] right to a lien against the project.” [The subcontractor] alleged that it was uncertain as to its duty to serve a notice on the apartment complex owner, and when such notice need be served, as [the general contractor] had failed to remit its final payment to [the subcontractor] and the project was not yet completed. See § 713.06(2)(a), Fla. Stat. (2021) (“The notice must be served before commencing, or not later than 45 days after commencing, to furnish his or her labor, services, or materials, but, in any event, before the date of the owner's disbursement of the final payment after the contractor has furnished the affidavit under subparagraph (3)(d)1.”). In other words, [the subcontractor] only sought clarification as to its “ability to file a lien against the ‘Project.' ”
The court concluded that the declaratory judgment claim by the subcontractor was not a claim against real property, such that only a court located in Pinellas County could rule on it. The court also clarified that in the event the subcontractor ultimately did seek to foreclose a construction lien against the property, then that action would have to be brought in Pinellas County.
Contractors should take note that procedurally, this appeal arose very early in the litigation process, and that the court’s ruling, while shedding light on some principles applicable to construction payment claims, largely just determines where, geographically, those claims will be heard.
The declaratory judgment claim is also interesting, because the opinion makes clear that the general contractor made several quarterly payments to the subcontractor in the amount of $125,000.00 for work performed, before failing to make the final payment. This would seem to suggest that if the subcontractor was required to serve a notice to owner under 713.06, Florida Statutes, the time to do so would have passed long before the appeal was taken. Because the Second District Court of Appeal’s opinion does not reach the merits of the declaratory judgment claim, contractors should be cautious about thinking this amounts to a recognition by the court that lien rights could be restored or created through a declaratory judgment action where the contractor has otherwise failed to comply with the requirements of Florida’s Construction Lien Law.