Public payment bonds (excluding FDOT payment bonds) are governed under Florida statute s. 255.05. As it pertains to venue—the location to sue a public payment bond–the statute provides in relevant portion:
(5) In addition to the provisions of chapter 47, any action authorized under this section may be brought in the county in which the public building or public work is being construction or repaired.
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(1)(e) Any provision in a payment bond…which restricts venue of any proceeding relating to such bond…is unenforceable.
Now, what happens if a subcontractor sues only a payment bond but its subcontract with the general contractor contains a mandatory venue provision? For example, what if the general contractor is located in Lee County and the subcontract contains a venue provision for Lee County, the project is located in Collier County, the subcontractor is located in Miami-Dade County, and the surety issues bonds in Miami-Dade County? Does venue have to be in Lee County per the mandatory venue provision?
According to the decision in Travelers Casualty and Insurance Co. of America v. Community Asphalt Corp., 42 Fla. L. Weekly D1318a (Fla. 3d DCA 2017), a claimant can sue a public payment bond anywhere where venue is permitted irrespective of a mandatory venue provision in a subcontract. In this case, the project was in Collier County and the subcontract contained a mandatory venue provision for Lee County. However, the subcontractor sued the public payment bond in Miami-Dade County. The Third District held that the subcontract’s venue provision could not be read into the bond because it would be unenforceable since Florida Statute s. 255.05 renders such language that restricts venue unenforceable.
The Third District, however, did importantly note that this ruling may likely have been different if the subcontractor also sued the general contractor in the lawsuit. Because the subcontractor only sued the public payment bond, the venue provision in the subcontract did not apply.
Strategically, there are reasons why a payment bond claimant (e.g., subcontractor) does not want to sue the general contractor. One such reason is venue, as in the instant case. The subcontractor did not want to sue in Lee County and had a strong argument to sue the public payment bond in Miami-Dade County, a more preferable and convenient venue to it, and was able to do so notwithstanding the venue provision in the subcontract.
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.