Tag Archives: Unjust enrichment

BREACH OF AN ORAL CONTRACT AND UNJUST ENRICHMENT AND IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING

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In an ideal world, parties would have written contracts.  In reality, parties should endeavor to ensure every transaction they enter into is memorialized in a written contract.  This should not be disputed.  Of course, written contracts are not always the case. Parties enter transactions too often whereby the transaction is not memorialized in a clean written agreement.  Rather, it is piecemealing invoices, or texts, or discussions, or proposals and the course of business. A contract can still exist in this context but it is likely an oral contract.  Keep in mind if there is a dispute, what you think the oral contract says will invariably be different than what the other party believes the oral contract says. This “he said she said” scenario gets removed, for the most part, with a written contract that memorializes the written terms, conditions, and scope.

A recent federal district court opinion dealt with the alleged breach of an oral contract. In Movie Prop Rentals LLC vs. The Kingdom of God Global Church, 2023 WL 8275922 (S.D.Fla. 2023), a dispute concerned the fabrication and installation of a complex, modular stage prop to be used for an event. But here lies the problem. The dispute was based on an oral contract and invoices. The plaintiff, the party that was fabricating the modular stage prop, sued the defendant, the party that ordered the stage prop for the event, for non-payment under various claims.  The defendant countersued under various claims.

The trial court analyzed a motion for summary judgment relating to the defendant’s breach of oral contract claim against the plaintiff. Each party claimed a different fixed price term for the transaction. The trial court found that while the parties disputed the fixed price amount, and whether there were fixed installment payments, it was undisputed that an oral contract existed for a fixed price with money being exchanged for the fabrication of the stage prop, and within a specific duration, as consideration. However, the trial court found that whether the payments were to be installment payments were not an essential term when “it is undisputed that the Oral Contract contains a specified price, a specific duration, and a defined scope of work to be performed.” Move Prop Rentals, supra, at *6.

Because of the oral contract, the trial court granted summary judgment as to an unjust enrichment claim. “As noted, Defendants rely on their payments under the Oral Contract to support their unjust enrichment claim. That fact is fatal to their unjust enrichment claims, as [a]ny proof of an express agreement between the parties as to the compensation to be paid for the services rendered…defeat[s] rather than sustain[s] an action based upon quantum meruit.” Movie Prop Rentals, supra, at *8 (internal quotations and citation omitted). Stated differently, the oral contract precluded the unjust enrichment claim.

Because of the oral contract, the trial court granted summary judgment as to a breach of an implied duty of good faith and fair dealing claim.

Where a party to a contract has in good faith performed the express terms of the contract, an action for breach of the implied covenant of good faith will not lie. Accordingly, a cause of action for breach of the implied covenant cannot be maintained (a) in derogation of the express terms of the underlying contract or (b) in the absence of breach of an express term of the underlying contract.

Movie Prop Rentals, supra, at *8 (internal quotations and citation omitted).

Here, the trial court found that the breach of implied covenant of good faith and fair dealing was in derogation of the express terms of the oral contract because it was based on the plaintiff’s failure to fabricate in exchange for payment:

Defendants content that the Oral Contract obligated Plaintiffs to fabricate the Stage Prop in exchange for Defendants’ installment payments, contingent on Plaintiffs’ status updates. Defendants’ breach of the Oral Contract claim is based on Plaintiffs breach of this express term rather than on an implied duty to perform in good faith. Plaintiff’s failure to fully perform either constitutes a breach of this express term, or, should Plaintiff prevail on their breach of contract claim, Plaintiff’s partial performance does not constitute a breach in light of Defendants’ failure to continue making payments.

Movie Prop Rentals, supra, at *8.

Could this dispute have been avoided with a written contract? Maybe. Maybe not.  However, one thing is clear.  A written contract would have memorialized terms and conditions and each of the parties’ expectations under the contract as it relates to payment and work progress.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

UNJUST ENRICHMENT CLAIMS WHEN THERE IS NO BINDING CONTRACT

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A recent appellate opinion starts off, “This is a typical South Florida construction dispute.”  (See case citation at the bottom) Let’s see, is it?  No. It’s a garden variety payment dispute where the parties did NOT have a binding contract.  Why? That’s for a different day (because the smart practice is ALWAYS to have a contract!) but it touches on the equitable, unjust enrichment claim. And it touches on competing unjust enrichment claims and the apportionment of those claims. In other words, can both parties be right on their unjust enrichment claims?

An owner hired a general contractor for home renovations. Work started but the relationship soured and the general contractor did not complete the work. The general contractor filed a payment dispute against the owner based on unpaid invoices.  It pled alternative theories of recovery against the owner: breach of contract and unjust enrichment. The owner filed a counterclaim against the general contractor for the same claims. During the non-jury trial, the general contractor presented unpaid invoices along with testimony that the invoices represented the value of services rendered. The owner presented evidence of the completion of work damages.

The trial court found that the parties did NOT have a binding contract. Thus, there was no breach of contract. The trial court found that the parties both satisfied the elements for unjust enrichment claims against one another, but a net judgment was rendered in favor of the general contractor based on the general contractor’s unpaid invoices minus the damages the owner satisfactorily proved.

The owner appealed claiming the trial court “was required to employ an all-or-nothing approach in adjudicating the competing unjust enrichment claims.”   The appellate court disagreed:

This court has held that damages in such [unjust enrichment] cases must not be speculative or the product of conjecture.  They may, however, “be valued based on either (1) the market value of the services; or (2) the value of the services to the party unjustly enriched.” 

Against these principles, we examine the instant case. Here, [the general contractor] produced the unpaid invoices and established the amount billed represented a reasonable value of the services performed. Further, while the court rejected evidence in arriving at its determination of damages, “[c]ompetent, substantial evidence is tantamount to legally sufficient evidence, and a reviewing court must assess the record evidence for its sufficiency only, not its weight.” 

To the extent that [the owner] contend damages must be awarded on an all-or-nothing basis, we agree with the proposition that contractual damages are not ordinarily subject to apportionment.  However, we can find no authoritative source extending this general rule to the doctrine of unjust enrichment. Instead, the opposite holds true. The availability of a remedy in unjust enrichment is qualified to avoid unfair hardship. Consistent with this premise, principles of restitution, rather than contract, guide any award of damages. 

The Restatement (Third) of Restitution and Unjust Enrichment provides that the measure of “the unjust enrichment of a conscious wrongdoer . . . is the net profit attributable to the underlying wrong.”  The object is, the Restatement explains, “to eliminate profit from wrongdoing while avoiding, so far as possible, the imposition of a penalty.” 

Although this case does not involve profits in the traditional sense, it is analogous. To protect against a windfall, the trial judge credited [the owner] for the damages they established they sustained during construction. This methodology is consistent with the principles embodied in the Restatement and the underpinnings of unjust enrichment law. Accordingly, we discern no error and affirm the judgment under review.

Dooley v. Gary the Carpenter Construction, Inc., 48 Fla.L.Weekly D2143a (Fla. 3d DCA 2023) (internal citations omitted).

There are some interesting takeaways from this case.

First, testimony that the unpaid invoices represented the value of services performed is important. Here, the unpaid invoices coupled with the testimony was competent, sufficient evidence to support an unjust enrichment claim.

Second, unjust enrichment claims can be apportioned. Thus, both parties perhaps may be right to come up with an equitable approach that gets netted out in a final judgment.

Third, have a contract.  A negotiated, agreed-upon contract with terms and conditions. If you have a binding contract then unjust enrichment does not and should not come into play.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

INDIRECT BENEFIT DOES NOT SUPPORT UNJUST ENRICHMENT CLAIM AGAINST PRIME CONTRACTOR

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A recent case out of the Northern District of Florida dealing with a federal project provides an interesting discussion about a sub-subcontractor asserting a claim against the prime contractor for unjust enrichment. The prime contractor argued any benefit to it was indirect which does not support an unjust enrichment claim as the actual direct benefit flowed to the owner of the project – the government.  The federal district court agreed and dismissed the sub-subcontractor’s unjust enrichment claim against the prime contractor because an indirect benefit does NOT support an equitable unjust enrichment claim. See U.S.A f/u/b/o Eco Universe Contracting, LLC v. Calvary Construction Group, Inc., 2023 WL 3884642 (N.D.Fla. 2023).

The sub-subcontractor’s alleged benefit to support the unjust enrichment claim was the work it performed on the project. “A benefit conferred through a third party is indirect and does not satisfy the first element of an unjust enrichment claim.” Calvary Construction Group, supra, at *5. The federal district court explained:

The direct beneficiary of that [sub-subcontractor’s] work was the owner of the property that was improved by the work, not [the prime contractor]. The benefit to [the prime contractor] came directly from the payment that it received from [the federal government – owner], not [the sub-subcontractor]. Thus, any benefit that [the prime contractor] received from the [the sub-subcontractor’s] work was indirect, not direct.

The [sub-subcontractor] has not cited, nor has the Court located, any Florida cases holding that the payment received by a general contractor for work done by a sub-subcontractor on the owner’s property is a ‘direct’ benefit to the general contractor that can support an unjust enrichment claim.

Cavalry Construction Group, supra, at *5-6.

Keep this case in mind when dealing with an unjust enrichment claim because, as the court noted, the direct benefit for improvements to the property went to the owner of the project; not the prime contractor.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

QUICK NOTE: UNJUST ENRICHMENT CLAIM REQUIRES PROOF OF DIRECT BENEFIT

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An unjust enrichment claim is an equitable claim when there is no direct contract between the parties governing the merits of the claim.  It is not uncommon for these claims to be asserted in a construction dispute. A plaintiff suing a defendant for unjust enrichment must prove that they conferred a benefit on the defendant. This is the first element of an unjust enrichment claim that a plaintiff must prove. Without such proof, the unjust enrichment claim fails.

A recent case, discussed here, explains that the benefit conferred must be a DIRECT BENEFIT and not an indirect benefit.  This means that the plaintiff must prove that the benefit conferred on the defendant was not some indirect or peripheral benefit, but a direct benefit.  In certain contexts, this makes sense.  In others, not so much.  Nevertheless, when asserting an unjust enrichment claim, make sure you can prove that you conferred a direct benefit on the defendant to support this claim.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

DEATH OF SUBCONTRACTOR’S UNJUST ENRICHMENT CLAIM AGAINST PROJECT OWNER

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In a previous article, I discussed a subcontractor’s unjust enrichment claim against a project’s owner and the death of this equitable claim if the owner fully paid the general contractor or paid the general contractor for the subcontractor’s work.  This can be best summarized from a very short 1995 opinion out of the Fourth District Court of Appeal: “Unjust enrichment is equitable in nature and cannot exist where payment has been made for the benefit conferred. [Owner] paid [General Contractor] the full amount of its contract for the construction project.  Accordingly, there can be no unjust enrichment claim to support [Subcontractor’s] claim.”  Gene B. Glick Co., Inc. v. Sunshine Ready Concrete Co., Inc., 651 So.2d 90 (Fla. 4th DCA 1995).

There are instances where there is value to a subcontractor pursuing an unjust enrichment claim against a project’s owner.  But again, these instances die if the owner fully paid the general contractor or paid the general contractor for the subcontractor’s work because the owner paid the general contractor for any benefit conferred by the subcontractor.   This does not mean the subcontractor is without recourse as it can pursue rights against the general contractor, as well as payment bond or lien rights presuming those rights are properly preserved.  Typically, an unjust enrichment claim is explored because lien or bond rights were not properly preserved, there is a pay-when-paid provision in the subcontract and the subcontractor knows the owner has not paid the general contractor for its work, or there are other strategic, personal reasons why a lien or payment bond claim may not want to be pursued.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

UNJUST ENRICHMENT OR QUANTUM MERUIT CAN APPLY FOR EXTRA-CONTRACTUAL WORK IF THE EXPRESS CONTRACT DOES NOT CONCERN THE SAME SUBJECT MATTER

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Can a subcontractor recover from a general contractor for extra-contractual work under an unjust enrichment or quantum meruit theory even though an express contract exists between the parties?   Can a general contractor recover from an owner for extra-contractual work under the same theories even though an express contract exists with the owner?    The case below answers this question in the affirmative IF the express contract does not concern the same subject matter.

In the preceding post, I discussed the case, F.H. Paschen, S.N. Nielsen & Associates, LLC v. B&B Site Development, Inc., 2021 WL 359487 (Fla. 4th DCA 2021), regarding the validity of a dispute resolution provision in a subcontract that allows an architect, engineer, or owner to render a final decision as to the interpretation of the plans, specifications, or contract documents.

This case involved a dispute between a subcontractor and general contractor as to whether the demolition of a 561 square yard asphalt area and replacement with concrete was included in the subcontractor’s scope of work.  The subcontractor performed the disputed work and filed suit against the general contractor.  In addition to suing the general contractor for breach of contract, the subcontractor also asserted equitable claims for unjust enrichment and quantum meruit, claims that generally fail when there is an express contract between the parties.  B&B Site Development, supra, at *6 (“As a general principle, a plaintiff cannot pursue an implied contract theory, such as unjust enrichment or quantum meruit, if an express contract exists.”).

Quantum meruit, known as a contract implied in fact, “imposes liability, in the absence of an express agreement, ‘based on a tacit promise, one that is inferred in whole or in part from the parties’ conduct, not solely from their words.’”  Id. at *6 (citation omitted).

Unjust enrichment, known as a contract implied in law, is also not based on the finding of an express agreement, and requires proof that “(1) the plaintiff has conferred a benefit on the defendant; (2) the defendant has knowledge of the benefit; (3) the defendant has accepted the benefit conferred; and (4) the circumstances are such that it would be inequitable for the defendant to retain the benefit without paying the fair value of it.”  Id. (citation omitted).

As the B&B Site Development Court explained, there are circumstances where such equitable theories, or implied contract theories, will apply even though there is an express contract between the parties. “Reliance upon a theory of implied contract is barred only if an express contract concerns the same subject matter as the implied contract.”  B&B Site Development, supra, at *7 (discussing cases where implied in contract theories applied for subcontractor to recover extra-contractual work).

Those equitable theories, or implied in contract theories, applied in this case to support a judgment in favor of the subcontractor against the general contractor for the extra-contractual work:

The GC and the Sub entered into a construction contract. While the Sub performed under the contract, the GC requested and accepted a change to the scope of work, an extra that the GC erroneously claimed was included within the work described in the subcontract. Under these circumstances, “the law implies an obligation to pay the reasonable costs thereof in addition to the stipulated sum named by the parties in the original agreement.”

The GC is also liable under a theory of unjust enrichment. The Sub conferred a benefit on the GC in the form of asphalt removal and replacement that was required under the master contract but not the subcontract. The GC accepted the benefit and the circumstances are such that it would be inequitable for the GC to retain the benefit without paying fair value for it. As the trial court ruled, “it would be both inequitable and unjust to allow [the GC] to retain the benefit without paying [the Sub] fair value for it, because it was [the GC’s] unilateral mistake and breach of the General Contract that created the problem.”

The existence of the subcontract did not defeat recovery under either implied contract theory of recovery, as the subcontract did not cover removal and replacement of the existing asphalt.

B&B Site Development, supra, at *7-8

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

EQUITABLE LIEN DESIGNED TO PREVENT UNJUST ENRICHMENT

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There are instances where a party does not have construction lien rights but, nevertheless, feels the need to pursue an equitable lien against the real property.

No different than a construction lien, an action to enforce an equitable lien has a one-year limitations period if it arises from the “furnishing of labor, services, or material for the improvement of real property.”  Fla. Stat. s. 95.11(5)(b).  In other words, an equitable lien–not nearly as powerful as a construction lien because a construction lien is recorded in the official public records whereas an equitable lien is not–is tied to an analogous one-year limitations period for those liening for construction improvements.  (Notably, if the equitable lien arises outside of the construction improvement context, the one-year statute of limitations would not apply.  See Gabriji, LLC v. Hollywood East, LLC, 45 Fla. L. Weekly D2251a (Fla. 4th DCA 2020) (one-year statute of limitations period does not apply to all equitable liens such as those that do not arise from furnishing labor, services, or material for the improvement of real property)).

An equitable lien is designed to prevent unjust enrichment when there is no adequate remedy at law although it is a completely separate cause of action than a cause of action for unjust enrichment.  Gabriji, supra.   An equitable lien:

[I]s “ ‘a right granted by a court of equity, arising by reason of the conduct of the parties affected which would entitle one party as a matter of equity to proceed against’ certain property.”  “Such a lien ‘may be declared by a court of equity out of general considerations of right and justice as applied to the relations of the parties and the circumstances of their dealings.’ ” 

Gabriji, supra (internal citations omitted).

However, importantly, there is also law that supports that a claim for an equitable lien must be supported by “evidence of fraud, misrepresentation, or other affirmative deception.”  Wal-Mart Stores, Inc. v. Ewell Industries, Inc., 694 So.2d  756, 757 (Fla. 1st DCA 1997); Gordon v. Flamingo Holding Partnership, 624 So.2d 294, 297 (Fla. 3d DCA 1993).  Such evidence will likely be needed to support an equitable lien in a construction context which is pursued because a party did not properly perfect construction lien or payment bond rights.  An equitable lien may be an appropriate cause of action in certain instances as an argument to pursue recourse for non-payment where the cause of action is designed to foreclose a lien based on equity–not a statute or written instrument.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

ECONOMIC DAMAGES CANNOT BE BASED ON SPECULATION

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shutterstock_630016574Economic damages, unlike non-economic damages (such as those in personal injury disputes), need to rest on a reasonable basis.  Economic damages are those routinely seen in a construction dispute.  These damages cannot be based on conjecture or guesswork and need to be supported by competent substantial evidence.  Otherwise, the economic damages will be deemed too speculative because they are not reasonably quantifiable.   I recently discussed a case involving the professional boxer Canelo Alvarez that was sued by a former promoter for unjust enrichment.  Although the promoter recovered a jury verdict for unjust enrichment damages against Canelo Alvarez, the verdict was reversed because the methodology utilized by the promoter to demonstrate damages was speculative.  This is definitely not what a plaintiff wants to happen after prevailing at the trial level! 

 

Parties are generally involved in civil disputes because of damages.  Without damages, there is no lawsuit.  Thus, a party’s damages, and the methodology used to calculate the damages, is critical.  While economic damages do not need to be demonstrated with mathematical precision, they do need to be supported by competent substantial evidence, i.e., they need to be based on a reasonable degree of certainty. 

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

BREACH OF A CONSTRUCTION CONTRACT & AN EQUITABLE REMEDY?

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In payment or collection-type lawsuits, the party suing for money sometimes asserts a claim for unjust enrichment or quantum meruit as an alternative equitable remedy to a breach of contract claim.   Frankly, sometimes a party will do this as a means to throw everything against the wall hoping something, just something, sticks.   However, if there is a contract by and between the parties, equitable claims such as unjust enrichment or quantum meruit will invariably fail.   They will fail because a party cannot circumvent a contract simply because their recourse may prove better under an equitable theory.  It doesn’t work like that! And, it should not!

For example, in Daake v. Decks N Such Marine, Inc., 41 Fla. L. Weekly D1992e (Fla. 1st DCA 2016),  a contractor was hired to construct a seawall and a beach house on two lots.  One lot was owned by the homeowners in a personal capacity and the other lot was owned by them in the name of a family trust. The contractor was unpaid and sued the owners for breach of contract and sued the family trust for quantum meruit.  The problem was that the family trust was deemed a party to the contract.  Because the family trust was a party to the contract, the contractor could NOT recover any damages under an equitable theory such as quantum meruit or unjust enrichment.   This was a harsh ruling, but the correct ruling since the contractor was deemed a party to the contract.  The contractor was owed money but did not sue the family trust for breach of contract.  As a result, the contractor could not recover money by bypassing a breach of contract claim for an equitable quantum meruit claim.  A court cannot award damages under an equitable theory when the contractor has an adequate remedy of law—a breach of contract claim. See Daake, supra, (“Quantum meruit is premised upon the absence of an express and enforceable agreement; accordingly, the existence of a valid, written contract between the parties necessarily precludes the doctrine’s application.”).

 

There are times where pleading alternative theories of liability is important.  This includes pleading a breach of contract claim and an alternative equitable claim such as unjust enrichment or quantum meruit.  This becomes important if you do NOT know whether a certain party will actually be bound by and deemed a party to the contract, which was the situation in Daake.    With that said, in your typical payment / collection-type lawsuit, there is a contract between the parties and the equitable claim will fail and should fail.  If parties could bypass the harsh remedy of contractual provisions by suing for unjust enrichment or quantum meruit, believe me, they would.   When parties are owed money or lost money on a contract, they typically want to avoid risks they agreed to by virtue of the contract.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

 

LIMITATION OF LENDER LIABILITY ON FAILED CONSTRUCTION PROJECT (FLORIDA STATUTE S. 713.3471)

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Here is an interesting lender liability dispute by a contractor against a construction lender on a failed construction project with a potentially harsh outcome to the contractor. 

In Jax Utilities Management, Inc. v. Hancock Bank, 40 Fla. L. Weekly D948a, (Fla. 1st DCA 2015), a housing development project went belly up, for lack of a better expression.  The developer defaulted under the construction loan and the lender ceased future disbursements under the loan and ultimately foreclosed on its mortgage.  At the time of the default and the lender’s decision to cease future disbursements, the contractor was owed in the neighborhood of $500,000.  The contractor sued the construction lender for equitable relief:  a claim for an equitable lien (presumably as to undisbursed loan proceeds) and for unjust enrichment.  For unknown reasons, the contractor did not assert a statutory cause of action against the lender pursuant to Florida Statute s. 713.3471 which details under Florida’s Lien Law a construction lender’s responsibilities under a construction loan and provides in material part:

 

(2)(a) Within 5 business days after a lender makes a final determination, prior to the distribution of all funds available under a construction loan, that the lender will cease further advances pursuant to the loan, the lender shall serve written notice of that decision on the contractor and on any other lienor who has given the lender notice. The lender shall not be liable to the contractor based upon the decision of the lender to cease further advances if the lender gives the contractor notice of such decision in accordance with this subsection and the decision is otherwise permitted under the loan documents.

(b) The failure to give notice to the contractor under paragraph (a) renders the lender liable to the contractor to the extent of the actual value of the materials and direct labor costs furnished by the contractor plus 15 percent for overhead, profit, and all other costs from the date on which notice of the lender’s decision should have been served on the contractor and the date on which notice of the lender’s decision is served on the contractor. The lender and the contractor may agree in writing to any other reasonable method for determining the value of the labor, services, and materials furnished by the contractor.

(c) The liability of the lender shall in no event be greater than the amount of undisbursed funds at the time the notice should have been given unless the failure to give notice was done for the purpose of defrauding the contractor. The lender is not liable to the contractor for consequential or punitive damages for failure to give timely notice under this subsection. The contractor shall have a separate cause of action against the lender for damages sustained as the result of the lender’s failure to give timely notice under this subsection. Such separate cause of action may not be used to hinder or delay any foreclosure action filed by the lender, may not be the basis of any claim for an equitable lien or for equitable subordination of the mortgage lien, and may not be asserted as an offset or a defense in the foreclosure case.

 

 

The crux of the case was whether the contractor could bypass any of the obligations in this statute (including the statutory liability of a lender for not complying with this statute) and assert common law claims against the lender for unjust enrichment and an equitable lien.  The First District Court of Appeal firmly said NO!  Florida Statute s. 713.3471 precluded the contractor’s common law claims against the construction lender as the contractor’s only recourse, which it did not pursue, was recourse under the statute.

 

What this means is that if a construction lender disregards the requirements of this statute by not properly notifying the contractor when it elects not to fully disburse loan proceeds, the lender’s liability to the contractor is based solely on this statute.  This also means that if the lender complies with the requirements of this statute, it would have no liability to the contractor. 

If you are on a failed project, it is imperative to consult with counsel to explore all of your rights and potential avenues of recovery.  In this case, the contractor pursued equitable claims against the lender while strategically trying to bypass the statutory requirements and liability of a lender per s. 713.3471.  Unfortunately, the First District was not sympathetic to these claims for equitable relief holding that the contractor only had statutory relief per s. 713.3471 and did not have any other relief (that would otherwise be available to the contractor under common law).

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.