Opinion
Case No. 04-80712-CIV-MIDDLEBROOKS/JOHNSON.
March 24, 2005
ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT IN PART
THIS CAUSE comes before the Court upon Defendants' Motion for Final Summary Judgment as to Plaintiff's Complaint and Partial Summary Judgment as to Defendants' Third Counterclaim [DE #28], filed with this Court on January 24, 2005. The Court has reviewed the Motion, the Response and Reply thereto, and is otherwise fully apprised in the premises.
BACKGROUND
This Case arises out of an Agreement entered into between Plaintiff Robert Jacobs, Defendant Edward Dickman ("Dickman"), and Non-party Jim White on May 15, 2001. (Agreement, Compl. at Ex. A.) The Agreement contemplates that the three individuals would be "partners," (Agreement, Compl., Ex. A at 1), and would jointly "renovate, demolish and rebuilt (sic)" a house. (Id.) The Agreement contains numerous specifications for the layout and amenities of the house-to-be. (Id. at 1-2.) It also requires that the partners secure a Certificate of Occupancy from local authorities. (Id. at 2.) Once these requirements are satisfied, the Agreement provides
the partners will . . . shared (sic) the profit above the cost generally dispersed by Edward Dickman for the land (as purchased by ownership and mortgage) construction cost, soft cost, permits, and other expenses. A ratio of 27.5% each for Jim White and Rob Jacobs and 45% for Edward Dickman of this profit derived from the sale will be distributed accordingly to the partners based above on all itemized expenses submitted.
(Agreement, Compl., Ex. A at 2.)
During the course of renovations and construction, Plaintiff performed a number of active duties such as coordinating and supervising subcontractors, (Am. Pretrial Stip. at 8), and paying certain subcontractors and day laborers with funds provided by Edward Dickman. (Id.) Plaintiff also claims that he "oversaw the entire project. . . . performed work on concrete, drywall, framing, steel, window and door installations, and work on the septic system." (Am. Pretrial Stip., Pl.'s Statement at 3.) In exchange, Plaintiff was to receive $700.00 per week as a nominal salary. (Id.; Defendants' Statement at 4.)
On April 19, 2004, some time after an alleged argument between Plaintiff and Dickman where Plaintiff walked off the job, (Am. Pretrial Stip., Defendants' Statement at 4), Plaintiff recorded a Claim of Lien, (see Claim of Lien, Compl. at Ex. D), in the public records of Palm Beach County, Florida. (Am. Pretrial Stip. at 9.) Plaintiff recorded the lien in a deliberate attempt to prevent a Certificate of Occupancy from being issued for the renovated house. (Id.)
The Lien is a sworn declaration stating that Plaintiff "furnished labor, services or materials," (Claim of Lien, Compl., Ex. D at 1), that had a total value of $317,000.00. (Id. at 2.) Plaintiff described the labor, services, and materials as being to "renovate, demolish, supervise and rebuild a new two-story dwelling." (Id.) Plaintiff also swore that, of the alleged $317,000.00 owed, there remained unpaid "55% of sales price." (Id.)
On June 15, 2004, Plaintiff entered into an Assignment with Non-party Jim White. (Assignment, Compl. at Ex. B) The Assignment provides that the Assignor, Jim White, assigns and transfers to the Assignee, Robert Jacobs, "all of [Jim White's] rights, title, and interest in, to, and under [the Agreement between White, Jacobs, and Dickman] as assigned." (Id. at ¶ 1.) The Assignment also provides that the "[Robert Jacobs] . . . assumes and agrees to perform all duties, obligations and responsibilities of Jim White and Robert Jacobs under the Agreement." (Id. at ¶ 2.) Finally, the Assignment "represents and warrants to [Robert Jacobs] that . . . [Jim White] has fully performed all of its [sic] duties under the Agreement through the date of this Assignment . . ." (Id. at ¶ 3.)
On July 7, 2004, Plaintiff recorded an Amended Claim of Lien. (Amended Claim of Lien, Compl., Ex. D at 3.) The Amended Lien again swore that Plaintiff furnished labor, services, or materials but described them as "supervising the hiring of contractors and subcontractors to demolish and rebuild a two-story dwelling, manual labor, and materials . . ." (Id.) The Plaintiff claimed that these services were "of a total value of 55% of the net profit or approximately $300,000.00, whichever is greater . . ." (Id.)
On July 12, 2004, Plaintiff brought the instant case before the Court. In his Complaint, Plaintiff alleges two counts. Count I is an action to foreclose the Construction Lien filed and amended by Plaintiff in Palm Beach County, Florida. Count II is an action to impress and then foreclose an equitable lien on real property, with Plaintiff alleging no adequate remedy at law. In response, Defendants have argued a number of affirmative defenses and counterclaims, including Counterclaim III for Fraudulent Lien. (Defendants' Am. Answer at 12-13.) Defendants now bring this Motion for Summary Judgment with respect to Plaintiff's lien claims, and Partial Summary Judgment as to liability on Defendants' Third Counterclaim.
DISCUSSION
Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law," FED. R. CIV. P. 56(c). A material fact is one that might affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Where the non-moving party fails to prove an essential element of its case for which it has the burden of proof at trial, summary judgment is warranted. See Celotex Corp. v. Batrett, 477 U.S. 317, 323 (1986); Hilburn v. Murata Elecs. North Am., Inc., 181 F.3d 1220, 1225 (11th Cir. 1999). Thus, the task is to determine whether, considering the evidence in the light most favorable to the non-moving party, there is evidence on which the trier of fact could reasonably find a verdict in his favor. See Liberty Lobby, 477 U.S. at 251; Hilburn, 181 F.3d at 1225; Allen v. Tyson foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997).
The facts of this Case involve both written and oral contracts, but the Case itself does not raise any contract claims; it raises only the two lien claims brought forward by Plaintiff. The Court now considers each of these lien claims in turn.
1. Plaintiff's Construction Lien Claim
Defendants argue that Plaintiff's Construction Lien fails because 1.) Plaintiff cannot, as a partner in the joint endeavor, assert a construction lien claim; 2.) Plaintiff cannot assert an assigned construction lien claim from Jim White because Jim White had no lien rights; and 3.) Plaintiff's construction lien is a fraudulent lien. (Defendants' Mot. at 4-10.)
Defendants also presented a condition-precedent argument that was rendered moot by the property's sale in January 2005. (See Am. Pretrial Stip. at 10 18.)
The parties agree that Count I of Plaintiff's Complaint is governed by Chapter 713 of the Florida Statutes, Part I dealing with Construction Liens, and the applicable caselaw. (Am. Pretrial Stip. at 15.) The parties also agree
In order to establish a construction lien, a lienor must prove that he is a statutorily defined lienor pursuant to Chapter 713 of the Florida Statutes, that he furnished labor, services or materials that were incorporated into the project, that he recorded his Claim of Lien within ninety (90) days of last furnishing labor, services or materials on the property, that he is entitled to payment pursuant to a contract, and that his claim of lien sets forth the actual amount due, not an inflated amount unless there is a good faith dispute as to the amount due.
(Am. Pretrial Stip. at 15.)
Defendants first argue that Plaintiff fails to satisfy the requirement that he be "a statutorily defined lienor" because Plaintiff was a "partner" under the terms of the Agreement, (see Agreement, Compl. at Ex. A), and a partner is not one of the six specific people permitted to be a lienor under Fla. Stat. § 713.01(17). Plaintiff counters by arguing that, though he was a partner, he also qualifies as a "laborer" under Chapter 713, (see Pl.'s Resp. at 6), which is defined as "any person . . . who, under properly authorized contract, personally performs on the site of the improvement labor or services for improving real property and does not furnish materials or labor service of others." Fla. Stat. § 713.01(15).
Fla. Stat. § 713.01(17) provides that, to be a lienor, a person must be a contractor, subcontractor, sub-subcontractor, laborer, materialman, or a professional lienor. Id. This subsection goes on to specifically say that "[n]o other person may have a lien under this part." Id.
Essentially, Plaintiff is arguing that being a "partner" is not mutually exclusive to qualifying as a lienor under § 713.01(17). In support of this argument, he cites Green v. Putnam, 93 So.2d 378 (Fla. 1957). In Green, the Florida Supreme Court declined to directly answer the question of whether a partner or "joint venturer" was also entitled to a claim of lien. The Court did specifically note, however, that its opinion was not to "be construed to decide that one co-adventurer who furnishes labor, services or materials in the improvement of real estate owned by the other co-adventurer is not entitled to claim and enforce a lien therefor . . . for he may well be entitled to such a lien." Id. at 380.
The clear terms of the definition of "laborer" encompass "any person" who satisfies the other requirements of the definition. Fla. Stat. § 713.01(15). The definition is broadly inclusive and, combined with the Supreme Court's suggestion that a partner may also be entitled to a lien, is sufficient evidence (when viewed in a light most favorable to Plaintiff) to establish that Plaintiff is not excluded from being a "laborer" under Chapter 713 by virtue of also being a "partner."
With regard to the specific facts of this Case, however, the more important aspect of the definition of "laborer" is the requirement that the labor be performed under a properly authorized contract. See Fla. Stat. § 713.01(15); (Am. Pretrial Stip. at 15.) In the instant case, there were two different alleged contracts: the Agreement, made between Plaintiff, Dickman, and Jim White, and an oral contract between Plaintiff and Dickman for a nominal salary of $700 per week.
Under the Agreement, Plaintiff was entitled to a share of the profit derived from sale of the property. (See Compl., Ex. A at 2.) As a partner in that Agreement, however, Plaintiff was only to receive compensation in the event that a profit was made. The Agreement specifically provided that "all parties shall be liable for their shares of the loss should one occur." (Id.) Thus, the Agreement contemplates payment to Plaintiff contingent on there being a profit from the sale of the property.
Under the alleged oral contract for a nominal salary of $700 per week, however, there was no contingency; the salary would be paid. Plaintiff swore in his Claim of Lien that he provided labor, services, or materials starting April 3, 2002 and ending April 13, 2004. (See Compl., Ex. D at 2.) Thus, Plaintiff alleges a maximum of 105 weeks of labor, services, or materials. Plaintiff conceded that he received some of these payments, (see Pl.'s Resp. at 3), but even assuming arguendo that there were no payments made, Plaintiff would only be entitled to a maximum of $73,500.00.
The question then remains: under the terms of which contract did Plaintiff assert a laborer's construction lien? Examining the original Claim of Lien, (Compl. at Ex. D), it is perfectly clear that Plaintiff intended to state a laborer's claim of lien under the terms of the Agreement, not the alleged oral contract. First, the Claim of Lien states that it is made "in accordance with a contract with Edward W. Dickman and Jim White." (Id. at 1.) This is undoubtedly a reference to the Agreement because the alleged oral contract for nominal salary was made only with Dickman. (Pl.'s Resp. at 3.) The Claim of Lien then goes on to describe the claimed labor, services, or materials using language that tracks the Agreement's language almost verbatim. Finally, the Claim of Lien attempts to use the same "contingency" language that is found in the Agreement by claiming a lien unpaid in the amount of $317,000.00 or "55% of sales price." (Compl., Ex. D at 2.) Notwithstanding the parallel language, this nominal amount far surpasses the maximum amount Plaintiff could seek as payment of his nominal salary, even assuming he had received none of the salary payments.
The Claim of Lien says "renovate, demolish, supervise and rebuild a new two-story dwelling," (Claim of Lien, Compl., Ex. D at 1), while the Agreement says "renovate, demolish and rebuilt [sic] a new two (2) story dwelling. . . ." (Agreement, Compl., Ex. A at 1.)
Having now established that Plaintiff's claim of lien was for labor performed pursuant to the Agreement, the Court must consider whether the "claim of lien sets forth the actual amount due, not an inflated amount unless there is a good faith dispute as to the amount due." (Am. Pretrial Stip. at 15.) Upon consideration, the Court finds that Plaintiff grossly inflated the amount he was due under the terms of the Agreement. First, with regard to the sum-certain of $317,000.00, Plaintiff had no basis upon which to claim he was owed a sum-certain under the terms of the Agreement. Payment under the Agreement was contingent on making a profit from the sale of the property. If the property had sold for an ultimate loss, the Agreement provides that Plaintiff and his partners would be equally responsible for that loss. (See Agreement, Compl., Ex. A at 2.) Thus, for Plaintiff to state a claim of lien with any degree of accuracy, he would have to track the same profit-contingent language that the Agreement uses, since he was conceivably entitled to $0.00 if the sale of the property failed to yield a profit. To the extent that a claim of lien states an alleged legal right to payment in a certain amount, Plaintiff could not in good-faith, argue that he had a right to any sum-certain under the terms of the Agreement. Moreover, there is absolutely no evidence whatsoever in the Agreement, Assignment, or any of the pleadings in this case, for Plaintiff to state a claim for 55% of the sale price of the property.
With regard to Defendants' argument that Plaintiff's lien also fails because he stated an amount payable that included labor, services, or material that were not actually performed or furnished. Specifically, Defendants argue that Plaintiff stated an amount payable in his claim of lien that included Jim White's share of the profits, as determined by the Agreement. (Defendants' Mot. at 8-9; Defendants' Reply at 7.) Plaintiff argues that he was entitled to assert a lien for Jim White's share of the profits because lien rights are assignable and Mr. White assigned his rights to Plaintiff. (Pl.'s Resp. at 7-8.) Defendants counter that Mr. White had no lien rights and therefore, there were no lien rights to assign to Plaintiff. (Defendants' Mot. at 8-9; Defendants' Reply at 7.)
In making his argument that being a "partner" is not mutually exclusive with being a "laborer" under Chapter 713 of the Florida Statutes, Plaintiff did not contend that a partner was automatically entitled to make such a claim of lien. Instead, Plaintiff goes to great pains to show that he fits into the definition of a "laborer" under the statute. (Pl.'s Resp. at 6.) Accordingly, in order for Mr. White to state a claim of lien, he, too, must qualify under the statute. Plaintiff's own stipulation, however, admits that "White never personally provided any labor, services or materials to the Property." (Am. Pretrial Stip. at 7.)
Plaintiff attempts to resuscitate his argument by responding that Plaintiff performed White's share of the labor and/or services under the Agreement and therefore, White had a lien claim which was subsequently assigned to Plaintiff for Plaintiff to assert. (Pl.'s Resp. at 7-8.) Plaintiff makes this bare allegation, however, without providing any evidence or other documentation to show that Plaintiff performed labor and/or services in White's stead. Moreover, the Assignment cited repeatedly by Plaintiff is dated June 15, 2004; a date almost two months after Plaintiff filed his original Claim of Lien. (See Assignment, Compl. at Ex. B; Claim of Lien, Compl., Ex. D at 1.)
Interestingly, neither party in the Case discussed the applicability of Fla. Stat. § 713.19 which seems to restrict assignment of liens claimed by laborers.
Finally, with regard to the Amended Claim of Lien filed by Plaintiff on July 7, 2004, (Compl., Ex. D at 3), the Court finds that this Amended Lien is also claimed under the terms of the Agreement. Though Plaintiff amended the original Lien to delete Jim White's name and describe, in greater detail, the labor, services and materials that were furnished, it is still clear from the amount claimed that Plaintiff seeks to recover under the terms of the Agreement. Plaintiff claims "55% of the net profit or approximately $300,000.00, whichever is greater. . . ." (Id.) As discussed, supra, the maximum amount Plaintiff could have claimed under the terms of the alleged oral contract, even if none of the salary payments were made, was $73,500.00.
The Court also finds that, for the same reasons discussed, supra, the Amended Claim of Lien grossly overstates the amount due Plaintiff under the Agreement by asserting a claim for 55% of the net profit or a sum-certain of $300,000.00 whichever is greater. Unlike the original Lien, the Amended Lien openly claims that Plaintiff is entitled to a sum-certain regardless of whether there is a profit realized on the sale of the property. This claim is in clear disregard of the terms of the Agreement which authorize payment from the profit and indicate Plaintiff's willingness as a partner in the endeavor to assume any resulting loss as well. (See Agreement, Compl., Ex. A at 2.)
The parties have stipulated that "[a] construction lien is rendered unenforceable in its entirety if . . . the lienor willfully exaggerated the amount of the Claim of Lien." (Am. Pretrial Stip. at 16.) Here, the Court finds that Plaintiff willfully exaggerated the amount of the Claim of Lien by first demanding a sum-certain as a percentage of the sale price on the property, and later by demanding a minimum sum-certain. These claims were in contravention of the terms of the Agreement which provide for payment only as a share of profits realized on the sale of the property. Accordingly, Plaintiff's construction lien is rendered unenforceable in its entirety.
2. Plaintiff's Equitable Lien Claim
The second claim of Plaintiff's Complaint asks the Court to impress and foreclose an equitable lien on the real property at issue. (Compl. at 4.) Plaintiff argues that Defendants have been unjustly enriched at his expense by withdrawing the property from the market and thereby withholding payment to him. (Compl. at 4.) Plaintiff also alleges that he is without an adequate remedy at law. (Id.) Essentially, Plaintiff argues that it is unjust for Defendants to withhold the property from sale since he is entitled to a share of "profit derived from the sale." (Agreement, Compl., Ex. A at 2.) He asks the Court to impress an equitable lien and order foreclosure so that the net profit from sale can be ascertained and Plaintiff can collect his entitled share of the profits under the Agreement.
Since the time the Complaint was filed, however, this claim has effectively been rendered moot. Defendants are no longer withholding the property from sale on the market. The property was sold for $1,600,000.00 on January 28, 2005. (Am. Pretrial Stip. at 10.) Plaintiff now has an adequate contract remedy at law: he may file suit in the appropriate court to enforce the terms of the Agreement, determine the amount of net profit, and collect any percentage-share to which he is entitled.
Notwithstanding the mootness of the issue, Plaintiff brought this claim in equity, allegedly distraught that Defendants had not yet sold the property and Plaintiff could not collect his share of any profit. At the same time, however, Plaintiff concedes that he intentionally recorded a Claim of Lien in a willful attempt to prevent a Certificate of Occupancy from being issued on the project. (Am. Pretrial Stip. at 9.) The Agreement specifically provides that the partners will "build this dwelling ready for occupancy with a Certificate of Occupancy from the local authority." (Agreement, Compl., Ex. A at 2.) Plaintiff, therefore, intentionally sabotaged and delayed completion of the project and satisfaction of the terms of the Agreement.
It is well established that
whenever a party who, as actor, seeks to set the judicial machinery in motion and obtain some remedy, has violated conscience, or good faith, or other equitable principle, in his prior conduct, then the doors of the court will be shut against him in limine; the court will refuse to interfere on his behalf, to acknowledge his right, or to award him any remedy.
Pomeroy, Equity Jurisprudence, 4th ed., § 397. See Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245 (1933); Deweese v. Reinhard, 165 U.S. 386, 390 (1897) ("A court of equity acts only when and as conscience commands, and if the conduct of the plaintiff be offensive to the dictates of natural justice, then, whatever may be the rights he possesses and whatever use he may make of them in a court of law, he will be held remediless in a court of equity."). As long as there is an "immediate and necessary relation" between the bad-faith act and the equity sought, the principle of unclean hands applies. See Pomeroy, id., § 399.
Here, Plaintiff's deliberate attempts to delay and sabotage the project contributed directly to Defendants' inability to sell the property and distribute any profits realized in accordance with the Agreement. Plaintiff actively proceeded to bring about the circumstances (specifically, delay in sale of the property) which he now seeks relief from. Indeed, the Court questions whether the equitable lien itself was not merely another attempt by Plaintiff to prevent sale of the property and otherwise hinder completion of the project. The Court therefore finds that there is an immediate and necessary relation between Plaintiff's bad-faith actions of delay and sabotage and the rationale behind the equitable lien sought. Accordingly, Plaintiff's second claim is dismissed with prejudice.
3. Defendants' Counterclaim for Fraudulent Lien
Defendants have also moved for partial summary judgment with regard to liability on Counterclaim III. Counterclaim III alleges that Plaintiff "willfully exaggerated the amount of the Claim of Lien and Amended Claim of Lien . . ." (Defendants' Am. Answer at 13.) The parties have stipulated that Defendants will succeed on this Counterclaim if it is shown that "the lienor willfully exaggerated the amount of the Claim of Lien . . . or compiled his Claim of Lien and Amended Claim of Lien with such willful and gross negligence as to amount to a willful exaggeration unless there is a good faith dispute as to the amount due." (Am. Pretrial Stip. at 19.)
As discussed, supra at 8-10, the Court finds that Plaintiff willfully exaggerated both the amount of his Claim of Lien and the amount of his Amended Claim of Lien. Moreover, while there may have been some dispute as to the appropriateness of including Mr. White's share of the profits in Plaintiff's claim, under no circumstances did Plaintiff have a right to 55% of the sale price of the property, nor did he have a right to any minimum sum-certain under the terms of the Agreement. There was no good-faith dispute as to the amount due in this regard, and Plaintiff is therefore liable for filing a fraudulent lien.
ORDER
For the foregoing reasons, it is hereby
ORDERED AND ADJUDGED that:
1.) Defendants' Motion for Summary Judgment as to Count I of Plaintiff's Complaint is GRANTED;
2.) Defendants' Motion for Partial Summary Judgment on Counterclaim III is GRANTED with regard to liability;
3.) Count II of Plaintiff's Complaint is DISMISSED WITH PREJUDICE;
4.) The Case remains pending with regard to Counterclaims I II, and with regard to damages for Counterclaim III; and
5.) The parties shall submit to mediation before the Honorable Peter R. Palermo for discussion and possible resolution of these remaining matters.
DONE AND ORDERED.