By: Douglas J. Roberts, Esq. and Alex Beck, Esq., Stearns, Roberts & Guttentag, LLC
When evaluating a potential construction payment bond claim, claimants should not only consider the potential likelihood of success, but also the amount of attorney’s fees that all parties to the suit will incur as result of the litigation. Under Florida law1, actions brought to enforce payment bond claims under Chapter 713, Florida Statutes, provide that the “prevailing party” will be entitled to recover its attorney’s fees from the losing party. The costs and potential risks associated with bringing an action on a payment bond must be measured against the gains to be achieved if the claimant prevails.
In Continental Cas. Co. v. A.W. Baylor Versapanel-Plastering, Inc., 97 So. 3d 937 (Fla. 5th DCA 2012), the court addressed an attorney’s fee issue in an action on a payment bond. A subcontractor filed suit against a general contractor and surety on a payment bond and the case was sent to arbitration. Prior to the arbitration hearing, the parties entered a stipulation providing that the arbitration panel would determine the issue of entitlement to attorney’s fees under section 713.29, Florida Statutes.
After the arbitration hearings, the arbitration panel ruled that the subcontractor was entitled to recover monetary damages from the general contractor and the surety on change order and delay claims; however, the total amount of damages awarded to the subcontractor was far less than the amount of its claim. The panel determined that neither party was entitled to attorney’s fees as the “prevailing party.” The subcontractor challenged the arbitration panel’s ruling and the circuit court agreed with the subcontractor and awarded attorney’s fees on the basis of sections 627.428 and 627.756, Florida Statutes, and not on the basis of section 713.29.
The circuit ruled that sections 627.428 and 627.7562 entitled the subcontractor to an award for attorney’s fees for obtaining a judgment in an action brought against an insurance company or a bonding company. Unlike section 713.29, which requires that a party prevail on the significant issues of the claim, the attorney’s fee statutes for claims against insurance companies and sureties have a much lower threshold for entitlement to attorney’s fees. A party must only obtain a judgment – – no matter how minimal in damages – – to be entitled to an award for its attorney’s fees.
The Fifth District reversed on appeal and ruled that section 713.29 applies solely to actions brought to enforce a lien or to enforce a claim against a bond under Chapter 713, and therefore section 713.29 was the controlling attorney’s fee statute. The court held that sections 627.428 and 627.756 did not apply to an action against a payment bond under Chapter 7133, where a party must prevail on the significant issues in the case in order to be entitled to an award attorney’s fees.
About the Author: Douglas J. Roberts has been Board Certified in Construction Law since 2005, the first year the Florida Bar offered its members the opportunity to achieve such a designation. He has practiced in the area of Construction Law for 20 years, representing general contractors, subcontractors, suppliers, sureties and owners in South Florida. Mr. Roberts has been recognized by his peers as a “Florida Super Lawyer” and focuses his practice exclusively on construction law related representation. For more information, please contact him at [email protected]
Section 627.428, Florida Statutes, applies to suits brought by owners, subcontractors, laborers, and materialmen against a surety insurer under payment or performance bonds written by the insurer under the laws of the state to indemnify against pecuniary loss by breach of a building or construction contract.