With improvements in technology and material transport, it is becoming more and more common for contractors in Florida to work on projects outside of the state and outside of the country. This is particularly true of contractors in specialty trades that possess skills and expertise that may not always be available in other areas. But if problems arise, working outside of Florida may also mean that you have to resolve any disputes where the work was performed.
Earlier this week, in Johnny’s Pool Super Center, Inc. v. Foreverpools Caribbean, LLC, the Third District Court of Appeal addressed whether a tile subcontractors could require a Puerto Rican pool contractor to litigate disputes arising in Florida. The pool contractor was hired to construct two Olympic-sized pools in Puerto Rico in preparation for the 2019 Pan American Games. As part of this work, the pool contractor purchased Spanish glass tiles from a Puerto Rican distributor. The tiles came with a 15-year warranty that the Spanish manufacturer would only be honored if the pool contractor hired the Florida-based tile subcontracctor, Foreverpools, to install the tiles.
The pool contractor made several payments to the tile subcontractor by wire transfer to its bank in Miami. Ultimately though, the pool contractor claimed the tile work was faulty and untimely, and hired another contractor to finish the work. The pool contractor also refused to make the remaining payments to the tile subcontractor.
The tile subcontractor sued the pool contractor in court in Miami-Dade county, claiming that the court had jurisdiction over the Puerto Rico-based pool contractor because:
The tile subcontractor was based out of Miami;
The failure to make payments occurred in Miami;
The payments that were made were made in Miami; and
The 15-year warranty on the tile would require repeated contacts with the tile subcontractor in Miami.
The pool contractor sought to quash the lawsuit claiming that the court had no jurisdiction over it. The trial court denied this request and said the litigation could proceed in Miami.
In reversing this decision, the Third District Court of Appeal examined two issues. First, the court determined that the contract between the parties and the pool contractor’s failure to make payment in Miami was sufficient to bring the pool contractor under Florida’s long-arm jurisdiction statute. But the court concluded this was not enough to establish the Miami court’s jurisdiction over the pool contractor.
Second, the court looked at whether the pool contractor had sufficient minimum contacts with Florida to be brought into court here. On this point, the court looked at the relationship between the pool contractor and the tile contractor. While the court noted that the pool contractor sought out the tile contractor in Miami, the deciding factor was that substantially all of the services performed by the tile contractor were performed in Puerto Rico. Further, the court concluded that any warranty work required would also be performed in Puerto Rico. Any minimal preparation or gathering of materials in Miami were not sufficient to over come this.
The key takeaway from this case is that contractor’s doing work in other states or countries should not assume that they can use Florida’s courts (or arbitrators) to resolve disputes that arise. This can make the cost of dispute resolution much higher or subject you to a different set of rules or laws than might be applicable in Florida. Further, many states have similar jurisdictional requirements, so companies from other states or countries doing work in Florida could likely be required to litigate in Florida as opposed to their home jurisdictions.