One Bite at the Apple Is All You Get

ONE BITE AT THE APPLE IS ALL YOU GET

By: Larry R. Leiby, Esq. and Robert S. Tanner, Esq.

About the Author: Larry Leiby, Esq. was the founder and first chairman of the Florida Bar Construction Law Committee in 1976. He is the author of the Florida Construction Law Manual. He is Board Certified in Construction Law and was on the Construction Law Certification Committee that creates and grades the tests for construction law board certification. He was awarded the lifetime achievement award by the Florida Bar Construction Law Committee and teaches construction law at the Florida International University College of Law. He can be reached at leiby@mkpalaw.com. For more information, please visit www.mkpalaw.com.

In W&W Lumber of Palm Beach, Inc. v. Town & Country Builders, Inc., 2010 WL 1879270 (Fla. 4th DCA May 12, 2010), Town & Country Builders, Inc. was the general contractor ("Contractor") on six residential projects. Contractor subcontracted with W&W Lumber of Palm Beach, Inc. ("Subcontractor") to supply and install windows and to perform millwork. As part of the subcontract, Subcontractor was required to comply with the state and local laws and to indemnify Contractor for failure to do so. Subcontractor entered a contract with Florida Extruders International, Inc. ("Supplier") to supply the windows.

During construction, Palm Beach County ordered a stop to shipments of Supplier's windows due to some concerns over the design and construction of the windows. Before the issue was eventually cleared up, Subcontractor ordered and began receiving windows from another supplier. As a result of the County's order, some delays were experienced to the projects. Several months later, Subcontractor and Contractor had a dispute concerning Subcontractor's invoices and Contractor refused to pay Subcontractor's invoices. As a result, Subcontractor stopped work, and Contractor hired a replacement subcontractor.

Contractor filed suit against Subcontractor alleging two grounds of breach of contract. In the first, Contractor sued for Subcontractor stopping work before it was complete. In the second, Contractor sued Subcontractor for the delays caused by its failure to provide windows that complied with applicable law and regulations. Subcontractor filed a counterclaim against Contractor and, in addition, sued Supplier in the lawsuit seeking to pass on to Supplier any liability for Contractor's claim for delays related to the non-compliant windows. Contractor settled with Supplier, and on the first day of trial Contractor dismissed with prejudice its claim against Subcontractor regarding any damages related to Supplier's windows.

After dismissal of Contractor's claim against Subcontractor related to Supplier's windows, Contractor then asked the trial court to allow it to add a setoff defense to Subcontractors claim. Over Subcontractor's objection, the trial court allowed the setoff defense, in which Contractor claimed that it would be entitled to a deduction from any amounts found to be due and owing to Subcontractor for the delays related to Supplier's windows.

While the Court found in favor of Subcontractor on its claims, the Court also found that Contractor was entitled to a setoff for the damages sustained by Contractor as a result of the delays caused by Supplier's window issues. The net result of the judgment was an award to Contractor for $53,054.44, which included a $50,000.00 setoff for the delay. Subcontractor appealed, arguing that the trial court's decision to allow Contractor to assert the setoff defense was improper because when Contractor had already dismissed its second count for the delay, and as a result, was barred from re-litigating that issue again.

The appellate court agreed with Subcontractor. It ruled that when Contractor dismissed with prejudice the second count dealing with the delay claim, the issue had been "adjudicated on the merits." As a consequence of the adjudication on the merits, the legal doctrine of res judicata ("the thing decided") applied to bar Contractor from relitigating the delay claim, even though it was now couched as a setoff defense. The matter was remanded to the trial court for the $50,000.00 setoff amount to be eliminated from the judgment.