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Can a surety transfer a lawsuit to a venue referenced in a subcontract not incorporated into the bond? The answer is no. Attached is a June 2021 opinion in the case of Southeastern Concrete Constructors, LLC v. Western Surety Company issued by the Florida Second District Court of Appeal that offers an opportunity to revisit incorporation provisions in the context of venue.
General contractor D.A.B. Constructors, Inc. (general contractor.) contracted with the Florida Department of Transportation (FDOT) for a project in Hillsborough County, Florida. The general contractor secured a bond from Western Surety Company (surety) under § 337.18 Fla. Stat., the statutory provision applicable to payment bonds issued on construction and maintenance contracts entered into with FDOT. The general contractor subcontracted with Southeastern Concrete Constructors LLC (subcontractor) for a portion of the work. The subcontractor claimed it was not paid and filed a lawsuit against the surety in Hillsborough County. The surety moved to transfer the lawsuit to Levy County, Florida based on the venue provision in the subcontract. The trial court granted the motion to transfer but the Florida Second District Court of Appeal reversed citing that the bond did not have a venue provision and the subcontract along with its venue clause was not incorporated into the bond.
The venue provision asserted by the surety in its motion to transfer was referenced only in the subcontract, but the court would not allow the surety to rely upon it. Why? Because the subcontract was not incorporated into the bond. The payment bond incorporated the terms of the contract between the general contractor and the FDOT, but not the subcontract, which is quite normal. Florida statute 337.18 does not have a venue provision and neither does the bond, nor would a venue provision in the bond be acceptable. Although § 337.18 is silent on the matter, under § 255.05 Fla. Stat., the statute governing payment bonds on public buildings and public works, which courts will look to when interpreting § 337.18, a bond term restricting venue is unenforceable.
Can the surety ever be held to the venue provision in a subcontract not incorporated into the bond? Maybe. If the subcontractor sued the general contractor and the surety, which it has the right to do under § 337.18 Fla. Stat., then an argument can be made that the venue provision in the subcontract applies. Additionally, it’s possible that the plaintiff could litigate against the contractor and surety in different courts, though this would not be preferrable due to overlapping issues being determined in two different courts possibly resulting in conflicting results.
Absent a suit against both the contractor and surety, a surety can expect a court to uphold a plaintiff subcontractor’s decision to sue in the county where the project is located, in the absence of a contract venue provision incorporated into the bond. Had this been a lawsuit by a sub-subcontractor against the subcontractor under the subcontractor’s bond, where venue can be specified (unlike the situation here) then the result could have been different.
Jonathan P. Cohen, P.A. is a surety and construction law firm in Fort Lauderdale, Florida. Please contact Jonathan with any questions: 954-462-8850; jcohen@jcohenpa.com.