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Dealing with a Contractor’s Invoice Paid by the Wrong Developer

golf-carts-parkedA recent ruling from the 2d District Court of Appeal in a case involving a failed golf and resort community development that pitted a contractor against the developers serves as a reminder that, even if the entity that owed you a debt never paid it, you are generally not allowed to get paid twice for the same work. When the wrong developer paid the contractor’s $280,000 invoice for work completed, that developer took over from the contractor all of the rights of a creditor to pursue the other developer and demand that it pay up.

The ill-fated development was that of Tern Bay, north of Fort Myers. The project was to include condos, single-family residences, a golf course, and a resort, among other amenities. A private company, Tern Bay LLC, and a quasi-governmental entity, Tern Bay Community Development District, which were responsible for the project, hired Ryangolf to build some improvements on the property.

Unfortunately, the real estate market dipped, and the project flopped. The golf course closed only a year after opening in 2007. The private LLC abandoned the project and later became insolvent. Ryangolf eventually sued for the more than $2 million the LLC and the district owed for work completed. Ryangolf also asserted a lien against the property and sought to foreclose. While this was occurring, the district sued the LLC and sought to foreclose against the LLC.

After the LLC became insolvent, Ryangolf altered its action to seek money damages from the district, totaling almost $390,000. In addition to $109,600 the contractor had billed to the district, Ryangolf also asserted that the district owed $280,000 for sums the contractor mistakenly billed to the LLC.

The contractor achieved a nearly total victory in the trial court, but it saw some of that success rolled back on appeal. While the district clearly owed the $109,600 sum for work Ryangolf performed under the terms of the parties’ contract, the contractor was not entitled to recover the additional $280,000. The $280,000 represented the sum that the contractor had also assigned as owed by the district, but, due to clerical errors by the property manager, it was billed to the LLC.

The reason the contractor could not recover was that the LLC had already paid the $280,000 sum to Ryangolf. Once the contractor had been paid for its work, even though that payment came from the wrong entity (the LLC), it was not allowed to go to another entity (the district) and ask to be paid again. By paying the debt, the LLC assumed all the rights previously held by the original creditor, Ryangolf. After the payment, only the LLC, and not Ryangolf, had a legal right to demand that the district pay the $280,000 that it had so far escaped. By ruling in favor of the contractor, the trial court improperly allowed Ryangolf to collect double payment for the work that was incorrectly invoiced.

Real estate projects in Florida can be filled with many complexities, including multiple contractors, multiple developers, and the ever-present risk of the project’s premature end, whether due to mismanagement or market forces. If your real estate project has yielded disputes regarding work performed and debts owed, you should talk to the experienced Florida real estate law and commercial litigation attorneys at Stok Folk + Kon. Our attorneys are here to offer you the skilled representation and reliable advice you need to handle your dispute.

Contact us online or by calling (305) 935-4440 to schedule your consultation.

More blog posts:

Contract Addendum Establishes Agreement as Unambiguous, Defeats Need for Extrinsic Evidence in Real Estate Dispute, Florida Business Lawyers Blog, Dec. 5, 2014

Property Owner Liable to Contractor, Despite Contractor’s Lack of License, Florida Business Lawyers Blog, Nov. 20, 2014