Can I Recover Attorney Fees On My Payment Bond Claim?

Can I Recover Attorney Fees On My Bond Claim?

Rules, more rules, exceptions to the rules, and an infinite number of exceptions to the exceptions - this may be the popular belief about what civil law is made of. Whether that perspective is accurate or not, understanding those rules, exceptions, etc., can translate into having more of the bottom line: $$$.

In Continental Casualty Company v. A.W. Baylor Versapanel-Plastering, Inc., 2012 WL 3870415 (Fla. 5th DCA Sept. 7, 2012), a Subcontractor sued the General Contractor and its surety that had issued a payment bond pursuant to Florida Statutes, sec. 713.23. Due to the terms of the subcontract, the dispute was referred to arbitration. Before the hearing, the parties stipulated that the arbitrators should determine whether any party was entitled to recover attorney's fees under the Florida Construction Lien Law. The arbitrators heard the dispute and awarded the Subcontractor $139,498.00 on change order claims and $213,762.29 for delay damages. However, the arbitrators found that neither party was a "prevailing party" and declined to award attorney's fees.

Subcontractor took the arbitration award to the circuit court and asked the circuit court to award fees under Florida Statutes, sections 627.756 and 627.428. The trial court agreed that those sections provided an alternative basis for an award of fees on Subcontractor's bond claim and found that Subcontractor was entitled to an award of attorney's fees. General Contractor and Surety appealed.

The appellate court disagreed with the trial court and reversed. The appellate court determined that the payment bond was "713.23 bond", meaning that bond was procured in accordance with Florida Statutes, sec. 713.23, which is a section in the Florida Construction Lien Law. Such bonds are given to prevent as a matter of law construction liens from attaching to the property being improved. The appellate court held that because the subject bond was a 713.23 bond, the rules for determining entitlement to attorney's fees on the bond claim were exclusively established by the provisions of the Florida Construction Lien Law. The arbitrators had declined to award fees under the provisions of the Florida Construction Lien Law, and the trial court did not have discretion to award fees under other statutes.

The narrow rule arising from Continental Casualty Company v. A.W. Baylor Versapanel-Plastering, Inc. is that a party suing on a 713.23 bond cannot be awarded fees based on other statutes. In its opinion, the appellate court noted that Florida Statutes, sections 627.756 and 627.428 would appear to control when the subject bond is a common law bond, not a 713.23 bond. (An example of a common law bond is one given by a subcontractor, a situation where the conditions of a statutory bond do not apply.)

In addition to the foregoing, one might commit to memory the following point for small talk at the next cocktail party. The standard for determining whether a party is entitled to an award of attorney's fees is different under 713.23 than it is under 627.756 or 627.428. Under 713.23, the arbitrator or court must determine which party prevailed on the "significant issues", while under 627.756 or 627.428 the bond claimant need only obtain an award.

Had Subcontractor, General Contractor, and Surety stipulated that the arbitrators should determine the right to attorney's fees under 713.23 or, in the alternative, 627.756 or 627.428, Subcontractor would have been far more likely to be awarded its attorney's fees. A stipulation is an agreement, and in the eyes of the law parties may agree to nearly anything that is not illegal, so even if the arbitrators had declined to award fees under 713.23, the trial court's award under the "alternative" statutes very likely would have stuck.