Florida’s Third District Court of Appeal recently declined to reverse a trial court’s refusal to increase the amount a construction lien transfer deposit and the trial court’s related discharge of a lis pendens. The decision seems to rest, at least in part, on the fact that the lien foreclosure action and related breach of contract claims were progressing in two separate, unconsolidated cases.
High Road Construction v. Peegz I, LLC arises from a dispute between a contractor and the owner of a lot regarding a residence the owner hired the contractor to build. After disagreements arose, the parties terminated the contract, disputing who was responsible for the dipsutes between them. The contractor claimed to have incurred $83,000 in costs before the contract was terminated, and recorded a construction lien and lis pendens against the property, where it was located in Monroe County.
In response, the property owner sued the contractor for breach of contract, fraud, and conversion in Miami-Dade County, based on the venue provision in the parties’ contract. The contractor filed a counterclaim in Miami-Dade County. A year later, the contractor filed an action to foreclose its lien in Monroe County. That lawsuit was transferred to Miami-Dade County but not consolidated with the breach of contract case, and the property owner transferred the lien to a bond pursuant to 713.24, Florida Statutes. The owner moved to discharge the lis pendens, which the trial court granted. The contractor moved to increase the amount of the surety bond, which the trial court denied. The contractor filed a petition for writ of ceriorari challenging both orders.
The Third District Court of Appeal first noted that certiorari review was avialable to address the inadequate funding of a deposit to which a construction lien is transferred pursuant to 713.24, Florida Statutes. The court continued noting that the purpose of a lien transfer bond is to ensure that a contractor is “roughly" in the same position it would be in if the lien remained against the real estate,” and agreed that the transfer deposit could also be increased to include attorneys’ fees relating to intertwined claims and counterclaims that could defeat the lien. The court also recognized that the contractor could, at any time, and any number of times, file motions to have the court require additional security to be added to the deposit or bond.
After reviewing the record, the court concluded that the $121,000.00 deposit was sufficient to cover the $83,000.00 lien, though that could change in the future. The court also noted that the two cases had not been consolidated, and seemed to take this into account in reaching this decision. Based on this, the court declined to reverse the trial court’s decision.
As to the lis pendens, the appellate court also held that once the lien was transferred under 713.24, Florida Statutes, the lis pendens could appropriately be discharged.
Though not expressly stated in the opinion, it seems like the contractor sought to have the transfer deposit increased to cover the lien, plus all the attorneys’ fees and costs incurred in both actions. Part of the basis for the court’s decision not to disturb the trial court’s ruling denying this request seems to be that the two cases were not consolidated. Lawyers may want to ensure that their lien foreclosure cases are part of the full dispute in order to take full advantage of the ability to increase lien transfer deposits or bonds.