Claim of Lien by the Wrong Party Renders the Claim of Lien Fraudulent and the Recording Party Liable for Damages
CLAIM OF LIEN BY THE WRONG PARTY RENDERS THE CLAIM OF LIEN FRAUDULENT AND THE RECORDING PARTY LIABLE FOR DAMAGES
By Ian Kravitz, 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 [email protected]. For more information, please visit www.mkpalaw.com.
In Bruce Tansey Custom Carpentry, Inc. v. Goodman, 2010 WL 74937 (Fla. 2d DCA March 5, 2010), Gary and Jennifer Goodman (“Owners”) entered into a contract with Edmond B. Tansey (“Tansey”) to remediate water damage caused by a leak in the kitchen of Owners’ home. Shortly thereafter, the parties entered into two additional contracts that expanded the scope of the project to include additional remodeling work unrelated to the water damage. After Owners failed to tender payment for all work furnished, Tansey executed a claim of lien as President of Bruce Tansey Custom Carpentry, Inc. (“Custom Carpentry”), alleging that $19,351.10 remained unpaid by Owners for work furnished. Several months later, Custom Carpentry recorded an amended claim that added the warning language required by section 713.08 Florida Statutes. Both liens were signed as “Bruce Tansey Custom Carpentry, Inc,. By: Bruce Tansey, President.”
Owners filed suit against Custom Carpentry seeking to discharge both claims of lien, alleging damages resulting from the recording of those alleged fraudulent liens, and also against Tansey, individually, for breach of contract. Custom Carpentry filed a counterclaim seeking to foreclose the amended claim of lien, as well as damages against Owners for breach of contract, unjust enrichment, and quantum meruit. Tansey, however, did not seek any affirmative relief in his individual capacity. The trial court found that Owners were entitled to some damages for work not furnished by Tansey as required, and that Tansey was likewise entitled to damages for services furnished for which payment had not been tendered.
As to the claims of lien recorded by Custom Carpentry, the trial court found that Tansey was the party that had contracted with Owners, and not Custom Carpentry. As a result, the court held that the claims of lien recorded by Custom Carpentry were fraudulent pursuant to section 713.31 Florida Statutes. The court entered judgment in favor of Owners for statutory damages for the recording of each claim of lien, as well as attorney’s fees, and costs from both Custom Carpentry as well as Tansey, individually. Both Tansey and Custom Carpentry appealed.
As to Tansey, he argued on appeal that the trial court should not have found him personally liable on either of the claims alleging recordation of a fraudulent lien by Custom Carpentry. The appellate court agreed on two grounds. First, the appellate court held that Owners could not recover damages against Tansey individually for claims that were only alleged in their pleadings against Custom Carpentry. The appellate court also held that since Tansey had clearly signed the claims of lien solely in his representative capacity as President of Custom Carpentry, he could not be individually liable for damages caused by recordation of those claims of lien.
As to Custom Carpentry, it argued on appeal that the trial court should not have awarded punitive damages for the recordation of both the original claim of lien as well as the amended claim of lien. The appellate court agreed and held that any damage caused by the recordation of the claims of lien in this case were the same regardless of whether one or two claims of lien had been recorded. The original claim of lien and the amended claim of lien were identical, except for the inclusion of additional warning language, and the damages sought as to each claim of lien were duplicative of the other.
While often the best leverage for an unpaid contractor, subcontractor, or sub-subcontractor is the ability to record a claim of lien against the property they improve, care must be taken to ensure that any lien recorded is prepared properly, and recorded by the correct party, for the correct amount, and in the proper manner. One who records a claim of lien that is later found to be fraudulent, subjects themselves to a host of potentially costly claims under Florida’s Construction Lien Law. The advice of experienced construction counsel is recommended to assist constructors and design professionals in steering clear of these potential difficulties.