Court Reverses $85,000.00 Attorneys’ Fee Award in Construction Lien Case After Applying Significant Issues Test Despite Award to Contractor
Neilen v. ProForce Staffing, Inc. arises from a dispute between a property owner and a staffing company over unpaid invoices and a construction lien. In July and August 2020, the staffing company provided an employee to the property owner to perform electrical work. After the work was done, the owner failed to pay $2,933.14 to the staffing company. The staffing company recorded a construction lien and ultimately sued to foreclose it. The property owner asserted multiple defenses, including that the lien was fraudulent, and also filed a counterclaim for a fraudulent lien.
At trial, the staffing company introduced four timesheets supporting the amount charged. While the property owner approved the first two timesheets, he did not approve the last two. Text messages with the property owner also show that he informed the staffing company that the hours on those two timesheets were inaccurate and that the employee only worked 5.5 of the 57 hours claimed on the last two timesheets.
After this presentation of evidence, the staffing company moved for involuntary dismissal, arguing that the evidence did not support the fraudulent lien counterclaim. The trial court agreed and dismissed the counterclaim. After trial concluded, the trial court found that the staffing company was entitled to recover $1,215.69 of the $2,933.14 claimed, and found that a good faith dispute existed between the parties as the work performed and the amounts due. The staffing company subsequently moved for and was awarded attorneys’ fees under Chapter 713, Florida Statutes. The property owner appealed these outcomes.
As to the involuntary dismissal, the appellate court found (1) that the trial court improperly weighed the evidence in granting the motion and (2) that the property owner had presented a prima facie case for a fraudulent lien by presenting evidence that the lien was for hours for which no work was performed. However, the appellate court found that the trial court ultimately properly considered the facts in evaluating the fraudulent lien as a defense to the staffing company’s lien foreclosure claim, and instructed the court to enter a judgment on the merits of the fraudulent lien counterclaim finding that the property owner did not prevail on the counterclaim.
The appellate court also reversed the $85,000.00 award of attorneys’ fees and costs because the trial court applied the net judgment rule rather than the significant issues test. The appellate court found that the significant issue in the case was whether the staffing company was entitled to payment for the 57 hours charged on the last two timesheets, and for which the court only awarded 5 hours of time in the final judgment and that the staffing company did not prevail on that. The court also found that the property owner had not prevailed on its significant issue and therefore remanded the case for the entry of a judgment vacating the attorneys’ fee award.
One of the key takeaways from this case should be the amount of attorneys’ fees involved in taking a $2,933.14 dispute all the way through trial. In construction disputes, in many instances, the rules and evidentiary burdens are the same whether $1.00 is in dispute or $1,000,000.00 is in dispute. Contractors should be mindful of this and they fact that even if they are awarded money from the opposing party, that may not automatically trigger entitlement to the recovery of attorneys’ fees.
About the Author
Jason Lambert is a Florida Board Certified Construction Attorney and Partner in the Construction Industry Practice Group at Hill Ward Henderson, in Tampa, Florida. He is also the founder and chief contributor to the Hammer & Gavel construction law blog. Jason focuses his practice on representing contractors, subcontractors, and materials suppliers throughout the state of Florida. Before law school, Jason spent a decade working in the construction industry, primarily as a project manager and operations director for both new construction and remodeling. He can be reached at jason.lambert@hwhlaw.com or 813-227-8495.
