Florida’s Third District Court of Appeal rules in favor of subcontractor in dispute over unpaid funds

By Shanice Harris | Jun 19, 2017

MIAMI — A Florida appeals court recently rejected claims of improper venue in a dispute over alleged unpaid funds involving an airport construction project.

On June 7, Florida’s Third District Court of Appeal ruled that a provision in a subcontract that sought to restrict the venue of any potential legal action was void.

The legal dispute came about after Collier County Board of County Commissioners hired a general contractor (GC), who is not named in the appeals court decision, to carry out a construction project on an airport runway. The contract stipulated that the GC issue “a public payment bond and public performance bond underwritten by a surety,” according to appeals court’s decision.

The GC then hired a subcontractor (SC), Community Asphalt Corporation, to provide asphalt paving for the runway. A provision of the subcontract, however, restricted the venue for any legal action to Lee County, according to court filings. 

The SC later filed suit against the surety in Miami-Dade County, claiming unpaid funds under public bond laws. Though the SC accused the GC of violating the subcontract, it did not name the GC as a defendant.

The surety, Travelers Casualty and Insurance Company of America, asked the trial court to dismiss the case for improper venue, contending that the case should have been filed in Lee County. 

The SC disagreed, arguing that the provision was “unenforceable” under Chapter 47 of Florida Statutes, which “prohibits any provision in a payment bond that restricts venue, where the subcontract restricts venue, and where the principal on the bond (the general contractor) is not named in the subcontractor’s action.”

The lower court agreed with the SC, and the surety appealed.

But the appeals court upheld the lower court’s decision, ruling that the venue provision was “void.”

“The subcontractor brought an action against the surety based on the public payment bond and the public bond statute,” the appeals court said in its decision. “Thus, contrary to the surety’s argument, the subcontractor’s cause of action against the surety is based first and foremost upon the surety bond.”

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