In short: It is hard: a subcontractor that loses its construction lien usually has to prove the owner was unjustly enriched, and an owner that paid the full contract price generally was not. In GMPF Framing, LLC v. Villages at Lake Lily Associates, a framing subcontractor whose contractor went bankrupt sued the owner and general contractor of an apartment project for unjust enrichment and an equitable lien after its lien was lost. The trial court ruled against the subcontractor, and the Fifth District affirmed without a written opinion on February 16, 2016.
The Facts
GMPF Framing was a framing subcontractor on a large apartment project, the Villages at Lake Lily, in Orange County. It was hired by Reliant Building Products, which had a turnkey framing subcontract with the general contractor, Texas Morgan Construction Company. The owner was Villages at Lake Lily Associates. As the lawyers described it, a dispute developed in 2008 over the timeliness and quality of the work, change orders and payment. Reliant refused to endorse a joint check from the general contractor over to GMPF, GMPF stopped work (it says it was forced off the job; the owner’s side says it walked off), and GMPF recorded a construction lien.
GMPF’s own lawyer conceded that it lost its statutory lien rights by not acting in time after the lien was contested. According to the owner’s lawyer, a second, smaller lien was also discharged. Reliant went into bankruptcy. GMPF then pursued the owner and general contractor for unjust enrichment and an equitable lien. After a bench trial, the court denied all of GMPF’s claims and its motion to conform the pleadings to the evidence. GMPF appealed (No. 5D2014-4614). The points below are what the lawyers argued at oral argument, not findings by the court.
- GMPF argued that the rule that an owner who paid the full contract price is not unjustly enriched should not apply to a roughly $60 million commercial job with change orders and contingency funds, where money was still left in the overall construction budget.
- It argued that an owner and contractor who knew the framing sub’s contractor was insolvent, and paid anyway, can be subject to an equitable lien even after the statutory lien is lost, and that the availability of a fund should be measured when notice is given, not years later at trial.
- It argued its damages were proved in quantum meruit through signed pay applications, retainage and unpaid change orders.
- The owner and contractor argued they paid the full framing subcontract and the full construction contract, so there was nothing left and no unjust enrichment. They said the leftover money GMPF pointed to was undisbursed construction loan money held by the bank for other purposes.
- They argued GMPF never pleaded an equitable lien on a fund, that its claimed amount changed five times, that percentage-of-completion is not a proper measure of damages for a partially performed contract, and that GMPF showed no fraud or misconduct that could support an equitable lien on the real property, which by then had a new owner.
The Decision
The Fifth District affirmed on February 16, 2016, in a per curiam affirmance without a written opinion. The mandate issued March 4, 2016.
A PCA does not explain the court’s reasons. It leaves the judgment for the owner and general contractor in place, but it is not a ruling that a subcontractor who loses its lien can never recover from an owner.
The Law
Florida’s Construction Lien Law, chapter 713, is how most unpaid subcontractors get paid when their contractor does not pay them. The deadlines are strict. An owner or contractor can shorten the time to sue on a lien by recording a notice of contest under section 713.22, or by asking the court to order the lienor to show cause within 20 days why the lien should not be enforced under section 713.21(4). Miss that window and the lien can be cancelled.
The lien law also protects owners who make proper payments. Under section 713.06, an owner who follows the statute’s payment rules is generally not liable to lienors for more than the contract price, which is why the owner here relied on paying the full contract.
When the statutory lien is gone, a subcontractor may try equitable theories. Florida courts generally do not find an owner unjustly enriched when it has paid the full price for the improvements. An equitable lien requires special circumstances, such as fraud or other misconduct, and a specific property or fund to attach to. A claim to enforce an equitable lien for labor, services or material furnished to improve real property must be brought within one year under section 95.11, a point the owner’s lawyer said he would have raised had the theory been pleaded.
Lessons
- Protect your lien rights first. Calendar every deadline in chapter 713, especially after a notice of contest or an order to show cause.
- An owner who pays the full contract price is in a strong position against a sub who lost its lien. Unjust enrichment is not a backup lien.
- Plead every theory you intend to try. An equitable lien on a fund that first surfaces at trial invites a fight over whether the issue was tried by consent.
- Prove damages the way the law requires for your claim. The owner here attacked a percentage-of-completion method as the wrong measure for a contract that was only partly performed.
Watch the Oral Argument
This is the recording of the actual oral argument, posted on the channel. What lawyers and judges say at argument is not the ruling; the decision is summarized above.
🔨🏗️ Construction Contract Dispute
Go Deeper
- When Is an Overstated Construction Lien Fraudulent in Florida? (Cherry Bomb Electric)
- Developer's Insiders Bought the Mortgage to Wipe Out the Contractor's Lien (CDC Builders)
- Equitable Lien vs. a Third-Party Buyer Ends in a PCA (Osman v. Whitburn, LLC)
Frequently Asked Questions
Can a subcontractor sue the property owner if the contractor doesn't pay?
Usually through a construction lien under chapter 713, which requires strict notices and deadlines. Without a valid lien, the sub generally must prove the owner was unjustly enriched, which is difficult when the owner paid the full contract price, as the owner argued in GMPF Framing.
What happens if I miss the deadline after a notice of contest of lien?
The lien can be lost. Under section 713.22 a notice of contest shortens the time to file suit, and under section 713.21(4) a lienor ordered to show cause has 20 days. GMPF conceded it lost its lien by missing a deadline after the lien was contested.
What is an equitable lien in a construction case?
A lien a court may impose when fairness requires it, usually because of fraud or other misconduct, on specific property or a fund. It is not automatic, and a claim to enforce one for improvements to real property has a one-year limitations period under section 95.11.
Is the owner unjustly enriched if a subcontractor wasn't paid?
Generally not if the owner paid the full price for the work. In GMPF Framing, the owner and contractor said they paid the full framing and construction contracts, the trial court denied the sub’s claims, and the Fifth District affirmed without opinion.
Talk to a Florida real estate litigation lawyer
Weidner Law, P.A. handles Florida real estate disputes, title problems and appeals from St. Petersburg. If you need a real estate litigation lawyer, call (727) 954-8752 or email weidner@mattweidnerlaw.com.
Read the law yourself, free: every Florida statute and court rule is on floridarules.net.
This article is general information about Florida law, not legal advice about your situation. Reading it, watching the videos, or contacting the firm does not create an attorney-client relationship. Every case turns on its own facts, and past results do not guarantee a similar outcome. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
