By: Richard E. Guttentag, Esq., Stearns, Roberts & Guttentag, LLC

In Tern Bay Community Development District v. Ryangolf Corp., 2014 WL 7404023 (Fla. 2d DCA December 31, 2014), a portion of a contractor’s recovery against a community development district was reversed as an improper double recovery. In this case, litigation ensued following the failed development of a residential and golf community. The community was developed by two entities. The first entity, the Developer, was responsible for developing the golf course and amenities such as swimming pools, clubhouses, and tennis courts. The other entity was a Community Dev elopment District (“District”) created by the Florida Land and Water Adjudicatory Commission, which was responsible for infrastructure such as public roadways, water management, and utilities. The Developer and the District both contracted with the General Contractor to construct the improvements on the project.

The development was never completed. The General Contractor brought suit, claiming that the Developer and the District owed it more than two million dollars for unpaid work on the project. The Developer was dropped from the lawsuit after it became insolvent. The General Contractor’s suit against the District was limited to two categories of damages: damages owed for additional work performed for the District, and damages owed by the District for work that had been accidentally billed to the Developer due to coding errors.

The evidence at trial showed that at the beginning of the project, the General Contractor submitted its invoices to the project manager. The project manager then determined whether each line item of the invoice was chargeable to the Developer or the District. After the first thirteen invoices were paid, the project manager requested that the General Contractor submit separate invoices to the Developer and the District. At trial, it was established that the project manager made coding errors on several of the first thirteen invoices, resulting in the Developer paying the General Contractor for work that should have been billed to and paid by the District. Nevertheless, the jury’s verdict awarded the General Contractor damages both for the extra work performed for the District, as well as for the work performed for the District, but incorrectly billed to the Developer. The District appealed the judgment.

The appellate court reversed the judgment on the work improperly billed to the Developer. The court reasoned that because the General Contractor had been paid for these invoices, although by the wrong party, the jury’s verdict resulted in an improper double payment to the General Contractor. The General Contractor argued that it was entitled to the money because it could not collect millions of additional dollars owed by the Developer due to its insolvency. However, the appellate court rejected this argument, holding that one party’s insolvency does not justify an award of damages for money that it has already been paid.

The appellate court also reversed a portion of the judgment that would have allowed the General Contractor to execute its judgment against the District’s property. Pursuant to Florida Statutes § 190.044, all property owned by a community development district is exempt from levy or execution.

This case demonstrates that Florida courts will seek to prevent parties from receiving double recovery for work performed under a construction contract, even if other work under the contract remains unpaid.

About the Authors: Richard E. Guttentag is a partner with Stearns, Roberts & Guttentag, LLC, and is Board Certified in Construction Law by the Florida Bar. Mr. Guttentag exclusively in construction law including construction lien claims and defense, payment and performance bond claims and defense, bid protests, construction contract preparation and negotiation, and construction and design defect claims and defense. He can be reached for consultation at [email protected]. For more information visit Roberts & Guttentag, LLC. in construction law including construction lien claims, payment and performance bond claims, construction contract preparation, construction and design defect claims, and appellate matters. He can be reached for consultation at[email protected]

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