Unpaid subcontractors should not overlook unjust enrichment claims against an owner on a private construction project. There is Florida law that maintains that if it is proven that an owner has not paid the general contractor (or anyone) for the subcontractor’s scope of work, an unjust enrichment claim against the owner can survive. On the other hand, if it is proven that an owner has paid anyone for the subcontractor’s work, the unjust enrichment claim will not survive. See, e.g., 14th Henberg, LLC v. Terhaar and Conley General Contractors, Inc., 43 So.3d 877 (Fla. 1st DCA 2010); Commerce Partnership 8098 Limited Partnership v. Equity Contracting Company, Inc., 695 So.2d 383 (Fla. 4th DCA 1997); Zalay v. Ace Cabinets of Clearwater, Inc., 700 So.2d 15 (Fla. 2d DCA 1997); Zaleznik v. Gulf Coast Roofing Co., Inc., 576 So.2d 776 (Fla. 2d DCA 1991).
The case of Commerce Partnership demonstrates that a subcontractor’s unjust enrichment claim can survive if evidence proves that the owner never paid the general contractor or anyone for the subcontractor’s work:
“The judgment appealed is reversed, and the cause is remanded to the trial court to take additional evidence from the parties on whether Commerce [owner] made payment to or on behalf of its general contractor covering the benefits Equity [subcontractor]conferred on the subject property. Equity shall have the burden of proving is claim of contract implied in law that Commerce has failed to make such payment by the greater weight of the evidence. If the court shall determine that Commerce [owner] has not paid anyone for the benefits conferred by Equity, then it shall enter judgment for Equity; correspondingly, if the court shall determine that Equity has failed to prove that Commerce did not make such payment, then the court shall enter judgment for Commerce.”
Commerce Partnership, 695 So.2d at 390.
The reason this argument should not be overlooked is because subcontracts often have a pay-when-paid provision meaning the general contractor is not responsible for paying the subcontractor until it receives payment from the owner. Hence, if the general contractor has not been paid by the owner, then the subcontractor may not have good legal recourse against the general contractor. For this reason, exploring the possibility of pursuing an unjust enrichment claim against the owner may be worthwhile.
The question becomes whether the subcontractor has preserved any payment bond or lien rights. If it has, irrespective of the pay-when-paid provision, these arguments should definitely be explored and perhaps pursued. But, sometimes, a subcontractor does not properly preserve lien or bond rights, or the subcontractor is owed amounts in which there are arguments as the lienability. In these circumstances, pursuing the unjust enrichment claim could be a worthwhile alternative especially if the subcontractor has a good feeling that the general contractor was not paid the amounts it is seeking.
For more information on unjust enrichment claims, please see: http://www.floridaconstructionlegalupdates.com/legal-complexities-when-there-is-a-failed-development-project/
Please contact David Adelstein at firstname.lastname@example.org or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.