A mechanics lien is the single most powerful tool for recovering payment in the construction industry. But securing, perfecting, and enforcing your lien rights can be a tedious task. Attention to details is crucial, and Florida lien laws are no exception. This is particularly true when your claim is contested by the owner. Claimants will be forced to file an action or show good cause for failing to foreclose their claim. A recent case out of the Florida District Court of Appeals highlights how failing to strictly comply with the procedures and requirements can prove fatal to a lien claimant’s rights.
Special thanks to Jason Lambert, partner at Dinsmore & Shohl LLP, who brought this to case to our attention on his blog Hammer & Gavel.
Florida’s lien foreclosure process
The mechanics lien process itself, is typically enough to get paid on a construction project. However, in some cases, a lien claim may need to be enforced if payment isn’t forthcoming.
Under Florida mechanics lien rules, a filed claim is generally only valid for a period of one month after the claim is filed. If no action is taken within that timeframe, the claim expires and is no longer enforceable.
However, Florida gives property owners or other interested parties the right to take action to shorten this deadline. One is sending a Notice of Contest of Lien, which reduces the foreclosure deadline to just 60 days. The second action that can be taken is filing an Action to Show Cause. This is the more drastic of the two, which requires the lienholder to take action within a mere 20 days. But this isn’t as clear cut as it seems.
In a Florida Court of Appeals case, an electrical subcontractor attempted to respond after receiving an action to show cause. The court found that they failed to adequately comply with the requirements.
Florida subcontractor neglects to show good cause for failure to foreclose
The case in question is Management & Consulting, Inc. v. Tech Electric, Inc.
Project snapshot:
- Owner: Nicover, LLC (Nicover)
- General Contractor: Management & Consulting Inc. (M&C)
- Represented by: Francisco Touron III, Paul Washington, & Vanessa A. Van Cleaf 0f Taylor Espino Vega & Touron, PLLC
- Subcontractor: Tech Electric, Inc. (Tech)
- Represented by: Lowell J. Kuvin & Sundeep K. Mullick of the Law Office of Lowell J. Kuvin, LLC
Subcontractor served with Action to Show Cause
Tech was hired by M&C to perform electrical work on property owned by Nicover. Shortly thereafter, due to unlisted reasons, Tech was terminated from the project. After the termination, Tech filed a mechanics lien for unpaid amounts under their subcontract.
Since no action was being taken concerning the lien, M&C filed a lawsuit seeking a summons/order to show cause under Fla. Stat. §713.21(4), which states:
“Upon filing a complaint therefor by an interested party the clerk shall issue a summons to the lienor to show cause within 20 days why his or her lien should not be enforced by action or vacated and canceled of record. Upon failure of the lienor to show cause why his or her lien should not be enforced or the lienor’s failure to commence such action before the return date of the summons the court shall forthwith order the cancellation of the lien.”
Essentially, this action gave Tech 20 days to enforce the lien, or explain why they should not be required to enforce the lien yet.
Sub responded with an affidavit to show cause the claim was valid
Pursuant to the statutory requirements, the summons was served on Tech on September 10th; which triggered the 20 day period to take action. 14 days later, Tech filed a “Verified Response to the Order to Show Cause” detailing the reasons why the claim of lien was valid.
In response to this response, M&C filed a motion to discharge the lien for failure to comply with the §713.21(4) requirements. The GC’s motion was denied. The trial court found that the response “showed good cause why the lien is valid,” and “at least shows or attempts to show why it should not be vacated or cancelled of record.” M&C appealed the decision.
Sub’s claim dismissed for insufficient response
The appeals court made short work of the case, reversing the trial court’s decision and discharged the lien claim. In its opinion the court (as it typically does in mechanics lien cases) stressed that the provisions governing mechanics liens must be strictly complied with:
“Section 713.21(4) provides the lienor with two options following the issuance of a summons/order to show cause. Within twenty days, the linear must either (1) demonstrate good cause why the action has not yet been filed and the lien should not be discharged, or (2) file a foreclosure action.”
Tech obviously didn’t file a foreclose action, but did they demonstrate good cause? The subcontractor’s filed response only spoke to the validity of the lien claim. Yet the statute clearly requires a show of good cause as to why the claim had not been enforced. The statute makes no mention of explaining the validity of the claim.
The court went further by stating the “statute provide the sole procedure available to lienors in response to an action of this nature.” Therefore, the lienor must strictly comply with that procedure to effectively protect their lien.
A lesson for Florida contractors: Show good cause
Contractors and subs in Florida should take care to be sure they are following the lien law requirements to a “T.” The lien process is challenging to take on by yourself, not to mention what comes after filing your claim.
Those working on Florida construction projects should always consult with an attorney to ensure that all the filings and procedures are complied with, and strictly. This is particularly true when it comes to the foreclosure filings and responses to actions to show cause. Or they could end up having an otherwise valid lien get discharged on a technicality.