K & M Electric Supply, Inc. v. Brown Electrical Solutions, LLC
A material supplier on a public construction project filed a bond claim under §255.05, Florida Statutes, for approximately $123,000 — more than double the value of materials actually incorporated into the project (~$56,000) — without conducting any pre-filing investigation. The general contractor and surety moved for summary judgment on the fraudulent notice of nonpayment defense. The Fourth DCA affirmed, holding that the notice was fraudulent as a matter of law because the supplier prepared it with such willful and gross negligence as to amount to a willful exaggeration.
Key facts
- GlobalTech, Inc. was the general contractor for improvements to the Riviera Beach Water Treatment Plant and obtained a §255.05 payment bond from Arch Insurance; GlobalTech subcontracted with Brown Electrical Solutions, LLC for about $99,000 in electrical work, and Brown in turn ordered materials from K&M Electric Supply, Inc., a materialman.
- Brown ordered over $100,000 in materials from K&M, representing they were for the project; when Brown failed to pay, K&M filed a bond claim for approximately $123,000 — the full amount Brown claimed to have ordered — without conducting any pre-filing investigation into how much had actually been incorporated into the project.
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Holdings
- 'A claimant who serves a fraudulent notice of nonpayment forfeits his or her rights under the bond,' and '[t]he service of a fraudulent notice of nonpayment is a complete defense.'…
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Why it matters
Clarifies that a material supplier's wholesale reliance on a subcontractor's designations — without any pre-filing investigation into what materials were actually incorporated — can constitute willful and gross… — full analysis with a trial
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