Opinion
No. 4D11-4426
05-23-2012
BAYVIEW CONSTRUCTION CORPORATION, Petitioner, v. JOMAR PROPERTIES, LLC., ET AL., Respondents.
Petition for writ of certiorari to the Circuit Court for the Nineteenth Judicial Circuit, Martin County; Sherwood Bauer, Judge; L.T. Case No. 07-865 CA. Ryan V. Kadyszewski and John A. Hockin of Linkhorst & Hockin, P.A., Jupiter, for petitioner. Raymond M. Masciarella II of Raymond M. Masciarella II, P.A., North Palm Beach, for respondents.
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Bayview Construction Corporation (Bayview), the plaintiff below, filed a petition for writ of certiorari, seeking review of a non-final order granting the motion of the defendants below, Jomar Properties, L.L.C. (Jomar) and Accredited Surety and Casualty Company, Inc. (the surety), for reduction in transfer bond. We grant the petition because the trial court departed from the essential requirements of the law by granting the defendants' motion for bond reduction without allowing Bayview to present evidence regarding the appropriate amount of the bond.
Bayview provided labor, services, and materials to Jomar pursuant to a construction contract the parties had entered into. There was a dispute over payment, and Bayview sued Jomar for breach of contract and to foreclose a construction lien for completed work. Pursuant to section 713.24, Florida Statutes, Jomar transferred the construction lien to a bond in the amount of $1,602,455.40, which was calculated based on the $1,014,212.30 face amount of the lien.
The parties agreed to submit their dispute to binding arbitration. The arbitrator entered an award in Bayview's favor on the lien in the amount of $633,087.80, reserving jurisdiction as to pre-judgment and post-judgment interest and attorney's fees. Thereafter, the arbitrator awarded Bayview pre-judgment interest in the amount of $82,836.63 and determined that Bayview was entitled to attorney's fees.
The trial court confirmed the arbitration award, but, for reasons beyond the scope of this petition, the court has been unable to enter a final judgment.
Meanwhile, in September 2011, Jomar and its surety served a verified motion to reduce the transfer bond. They argued that the amount which Bayview was still seeking now totaled only $1,297,991.70, and asked that the transfer bond be reduced accordingly.
At a non-evidentiary hearing on the motion, Jomar and its surety argued that the "unrebutted evidence" showed the bond was too high. Bayview suggested that the matter should have been set for an evidentiary hearing and argued that, while the statute requires an increase in a transfer bond under certain circumstances, it does not require a decrease. Bayview further argued that, because the case was ongoing, there had been additional attorney's fees, costs, and interest since the lien had been transferred to a bond. At the time of the hearing, Bayview calculated that the total amount due was approximately $1,524,985, which was very close to the amount of the bond. Bayview explained that the most by which the transfer bond could be reduced was $77,470.40, but that it would have to seek an increase each month for the fees and interest generated.
Bayview then asked the court to consider affidavits which showed the additional amounts that had already accrued. The trial court refused to consider the affidavits and granted the defendants' motion. The court reduced the bond amount to $1,297,991.70 after considering the arbitrator's award, attorney's fees, and pre-judgment interest. The court instructed Bayview that it could move to increase the bond, as often as once a week, if it could prove that additional amounts had accrued.
Bayview moved for rehearing. In its motion, Bayview alleged that the current bond amount would be insufficient to guaranty its damages. Bayview also renewed its request for an evidentiary hearing so that it could prove that its damages already exceeded the bond amount. The trial court denied the motion and Bayview sought certiorari relief.
To obtain relief by certiorari, the petitioner must demonstrate that the order being challenged constitutes a departure from the essential requirements of the law, will cause the petitioner to suffer a material harm, and that the harm cannot be adequately remedied by appeal. Cmty. Psychiatric Centers of Fla., Inc. v. Bevelacqua, 673 So. 2d 948, 950 (Fla. 4th DCA 1996) (citations omitted).
The fundamental purpose of the construction lien law is to protect those who have provided labor and materials to improve real property. WMS Constr., Inc. v. Palm Springs Mile Assocs., Ltd., 762 So. 2d 973, 974-75 (Fla. 3d DCA 2000). Section 713.24, Florida Statutes, allows property owners to remove a lien clouding the property while preserving the lienor's right to adequate security for the amounts due. Coppenbarger Homes, Inc. v. Williamson, 611 So. 2d 33, 34 (Fla. 1st DCA 1992). The lienor is entitled to a bond sufficient to guaranty payment because the lienor once had the security of a lien on the real property - a substantial asset. Brickell Bay Club, Inc. v. Ussery, 417 So. 2d 692, 695 (Fla. 3d DCA 1982) ("[T]he lienor was entitled to a bond sufficient to guaranty his payment the same as he would have been if the lien had not been transferred but remained an encumbrance against the real estate.").
Section 713.24(3) requires a trial court to increase the bond if it is insufficient; it allows, but does not require, a trial court to decrease a bond that is more than the amount necessary:
(3) Any party having an interest in such security or the property from which the lien was transferred may at any time, and any number of times, file a complaint in chancery in the circuit court of the county where such security is deposited, or file a motion in a pending action to enforce a lien, for an order to require additional security, reduction of security, change or substitution of sureties, payment of discharge thereof, or any other matter affecting said security. If the court finds that the amount of the deposit or bond in excess of the amount claimed in the claim of lien is insufficient to pay the lienor's attorney's fees and court costs incurred in the action to enforce the lien, the court must increase the amount of the cash deposit or lien transfer bond. Nothing in this section shall be construed to vest exclusive jurisdiction in the circuit courts over transfer bond claims for nonpayment of an amount within the monetary jurisdiction of the county courts.(Emphasis added.)
A surety's liability is limited to the face amount of the transfer bond. Aetna Cas. and Sur. Co. v. Buck, 594 So. 2d 280, 283 (Fla. 1992) ("[T]he lienor is left with an unsecured judgment for any costs which exceed the remaining face amount of the bond."); see also Smith Original Homes, Inc., v. Carpet King Carpets, Inc., 896 So. 2d 844, 846-47 (Fla. 2d DCA 2005) (reversing final judgment entered in favor of carpet company after the trial court struck the pleadings of a home building company for failure to pay increase in the transfer bond because the trial court imposed this severe sanction without express statutory authority or findings of deliberate disregard or gross indifference to the court's order). In this case, if the order is not quashed, then Bayview's claims, which continue to accrue, will not be sufficiently protected by the bond amount because the surety will not be liable for any damages which exceed the bond amount and there is no guarantee that Jomar will be able to pay the difference. This constitutes a material harm which Bayview will be unable to remedy on appeal.
Based on the order on review, it appears that the transfer bond may no longer provide sufficient security to Bayview. We conclude that the trial court departed from the essential requirements of the law by reducing the transfer bond without considering evidence as to the amount of Bayview's damages as of the date of the order. The purpose of section 713.24 is thwarted if security is not maintained in the amount claimed solely because it has not yet been determined by the trial court. If, as the trial court noted, another hearing would have been necessary for Bayview to submit the affidavits that its attorney tried to provide to the court during the non-evidentiary hearing, then the trial court should have deferred ruling until it could hold the additional hearing.
Certiorari granted and order quashed. STEVENSON, GROSS and TAYLOR, JJ., concur.
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Petition for writ of certiorari to the Circuit Court for the Nineteenth Judicial Circuit, Martin County; Sherwood Bauer, Judge; L.T. Case No. 07-865 CA.
Ryan V. Kadyszewski and John A. Hockin of Linkhorst & Hockin, P.A., Jupiter, for petitioner.
Raymond M. Masciarella II of Raymond M. Masciarella II, P.A., North Palm Beach, for respondents.