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Home>Levelset Community>Legal Help>URGENCY When a GC won't pay, and after trying to collect earned funds, they terminated me .

URGENCY When a GC won't pay, and after trying to collect earned funds, they terminated me .

LouisianaConstruction ContractMechanics Lien

We are a Contractor from Louisiana; we contracted with a GC from Mobile AL to perform commercial trim work in Florida on two projects. I was given a last minuit contract by the GC. I began performing the work using only payroll employees, no sub contractors were involved. As the job progressed the GC never produced any type of schedule , deadline, or completion dates for any of my scope. After the projects had been stopped several times by two hurricanes ,many issues with the roof leaking in many areas and many material deficiencies on the part of the GC. The COO decided that he was going bto try to catch up his schedule by demanding more manpower. When I was honest with him by informing him that that large an increase of manpower was going to severely impact my operating capital. At that time , he reluctantly gave me a loan of $30,000.At this point I hired sub contractors to help with the demands of the GC. Apparently it wasn't enough. He insisted on more that I just couldn't afford so he gave me a Notice of Remedy for not supplying enough manpower to the jobs. This loan was from the GC not part of the AIA payment apps. My payment apps were paid in most cases at least 50- 55 days after invoiced submittal dates. After being paid through my normal payments I added more subs. This once again required me to ask him to pay on owed invoices, and once again he gave me a loan of $25,000 to pay subs because he was getting the production he needed from my subs. We had verbally agreed that this loan money was going to be taken out at the end of the project so I could operate. Instead he kept my one of my monthly payments to pay on the loan without informing me. I repeatedly asked for payment of some sort that way I could continue. He told me he wasn't my bank and wasn't paying me. Then he went even further by holding my next months payments on both projects. Although he wasn't paying me my subs remained on the project. He couldn't pay me so he said he would excercise his rights in the contract and start supplementing my work but was not terminating me. He offered to pay my subs their owed money if they signed a lien release and also offered me to go supervise for a weeks pay. His crew came in. and told my guys to leave . At the end of last week he terminated my contract based on that I didn't rectify his notice and abandoned the projects. This has left me in a financial crisis with unpaid subs and no money to operated has created a personal financial hardship on me and my family. Questions; What steps can I take to collect my money? Shouldn't I release invoices to The GC fo subs can get paid by GC? Should they sign a Lien release to collect payments? Should I wait until the project is completed to make a claim on the bond? Should I hire a lawyer to at least get to mediation?

1 reply

Jan 11, 2021

First: Note that if the project is in Florida, then Florida's lien and bond claims laws will apply. If you have sent a Notice to Owner on this project, then I'd say that filing a mechanics lien for amounts that you have earned but haven't been paid would be a good option to collect payment. If a Notice to Owner wasn't sent, then mechanics lien rights generally won't be available. 

Note, however, that in the event that there was a payment bond on the project, and if you were hired directly by the project's GC, then a payment bond claim could be available - even if no preliminary notice was sent. These articles break down helpful information on FL payment bonds: (1) Conditional Payment Bonds on Florida Private Projects; and (2) Payment Bond Claims: How to get paid by a surety bond in construction

Finally, note that legal claims can help to get paid, too. Claims like breach of contract or claims under Florida's prompt payment laws could be on the table, among others. And, simply threatening to pursue legal claims with a payment demand letter could lead to payment, too: Construction Demand Letters – How To Write One That Gets You Paid. Of course, as you mentioned hiring a lawyer can be really useful, too - they can negotiate on your behalf and at least bring the other side to the table. More on that below.

Florida mechanics lien waivers

Generally, unconditional lien waivers shouldn't be signed until payment is in hand. If the waivers are conditional, however, then signing a waiver before payment is made is much more acceptable. So, when deciding on whether or not to sign a lien waiver so a customer will make payment, it's important to evaluate the waiver document on-hand. If payment is being promised, but the customer is requiring an unconditional lien waiver beforehand, that may well be a red flag that something is amiss.

Levelset has some great content regarding waivers and when they should be exchanged. Here are a few pieces I think will be particularly helpful for the situation you described above: (1) Do I Have to Sign a Lien Waiver to Get Paid?; (2) Should You Sign That Lien Waiver?; (3) Florida Lien Waiver Forms & Guide – All You Need to Know; and (4) Florida Lien Waivers Guide and FAQs.

When to make a claim

The deadline to make a Florida mechanics lien claim, if appropriate, is generally 90 days after the last furnishing of labor or materials to the project. Payment bond claims must generally also be made before that time. However, that doesn't mean a claimant has to wait until the entire project is completed to make a payment bond claim. In fact, it's possible that waiting until the overall project is complete could result in a claimant missing their own specific deadline.

For further discussion on last furnishing date and how it's different from the overall completion date: Confusing Dates: What’s the Difference Between Date of Last Furnishing and Date of Substantial Completion?

Letting the GC directly pay subcontractors

Letting a GC leapfrog their subcontractor so they can directly pay sub-subcontractors or laborers can be risky business. On one hand, that's one less obligation for the GC's direct subcontractor. On the other hand, it could add a lot of complexity to the dispute and reduce the amounts owed to the direct sub, whether that's appropriate or not. Typically, direct subcontractors prefer to avoid the GC leapfrogging them to pay sub-subs. But, it's possible thats a good option. For more insight into the pros and cons about letting that happen, it'd probably be helpful to consult with a FL construction lawyer to see about the potential fallout of letting that happen.

Is it time to hire a lawyer?

This can be an extremely question to answer, and only the party considering representation can answer it. With that being said, when large sums of money are in play, and when there are a variety of complex issues on the table, it may well be time to consider hiring a lawyer. At the very least, they may be able to help you straighten out the situation so you can make an educated decision on how to proceed. And, of course, they could go steps further to help dispute claims, negtoiate payments, and even bring suit, if necessary.

If you think a lawyer would be helpful, then you can begin that search here: Top Florida Construction Lawyers. A Louisiana lawyer could be helpful, too - but they may not be as familiar with FL-specific laws that will apply to the project.

Termination considerations

Finally, if you're facing termination, these articles should help to identify whether the termination was appropriately made. A lawyer could help to add clarity, as well.

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