Garrido v. National Union Fire Ins. Co.

• Decision Date: 15 December 2004
• Docket Number: No. 4D03-2460.,4D03-2460.
• Citation: 891 So.2d 1091
• Parties: Reinaldo GARRIDO d/b/a R.G. Mechanical Services, Appellant, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA; JMAC of South Florida, Inc.; and Jorge Banos, Appellees.
• Court: Florida District Court of Appeals

891 So.2d 1091

Reinaldo GARRIDO d/b/a R.G. Mechanical Services, Appellant, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA; JMAC of South Florida, Inc.; and Jorge Banos, Appellees.

No. 4D03-2460.

District Court of Appeal of Florida, Fourth District.

December 15, 2004.

Rehearing Denied February 9, 2005.

Brian A. Wolf of Smith, Currie & Hancock LLP, Fort Lauderdale, and S. Elysha Luken of Smith, Currie & Hancock LLP, Tallahassee, for appellant.

Robert A. Bauman of Robert E. Morris, P.A., Tampa, for Appellee-National Union Fire Insurance Company of Pittsburgh, PA.

Andrew T. Trailor of Burger, Trailor & Farmer, P.A., Miami, for Appellees-JMAC of South Florida, Inc. and Jorge Banos.

STONE, J.

We reverse a judgment on the pleadings entered in Broward County in favor of National Union, surety on a conditional payment bond arising out of a Dade County construction project.

Garrido, a subcontractor, filed a claim of lien against the property in Dade County. The owner then filed a notice of bond, issued pursuant to section 713.245, Florida Statutes. When National Union refused to pay, Garrido filed suit in Broward, where National Union's representatives are located.

National Union answered the complaint without asserting improper venue as a defense. It also filed third party claims against JMAC and one of its principals, Banos. JMAC and Banos moved for change of venue but lacked standing to do so. See Capitol Fid. Life Ins. Co. v. Dept. of Ins., 478 So.2d 1105, 1106 (Fla. 1st DCA 1985)

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Following discovery, National Union moved for judgment on the pleadings, claiming that the circuit court in Broward County lacked subject matter jurisdiction. National Union claimed that, under section 713.24(3), Florida Statutes, the suit could only be filed in Dade. Rather than treating this as a venue issue, the trial court reasoned that the "local action rule; applicable to in rem proceedings, not only placed venue in Dade County but deprived all other circuits of subject matter jurisdiction." See Morganti South, Inc. v. Hardy Contractors, Inc., 397 So.2d 378 (Fla. 4th DCA 1981)

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We conclude that it was error to apply the local action rule as to the insurer where a claim of lien has been transferred to a surety bond. There is a significant distinction between a lien against property and a claim against a bond. A lien against property is in rem, affecting title to the property, and must be brought in the circuit with jurisdiction over the property. Griveas v. Amoco Oil Co., 854 So.2d 841, 843 (Fla. 4th DCA 2003). This court has recognized that "[t]he local action rule is one of subject matter jurisdiction, not venue." Hudlett v. Sanderson, 715 So.2d 1050 (Fla. 4th DCA 1998).

Once a bond is in place, however, the property is no longer at issue in the litigation. "The transfer of the security of the lien from the land to the bond pursuant to statute apparently results in a conversion of the lienor's cause of action from one in rem to one in personam." Greene v. A.G.B.B. Hotels, 505 So.2d 666, 667 (Fla. 5th DCA 1987). The claim becomes an issue of contract law between the surety, the procurer of the bond (in this case, the general contractor and the owner of the property), and the lienor. The agreement, here, being that, if owner pays contractor, then surety will pay unpaid lienors.

We note that the Florida Supreme Court has held that bringing an action on a bond changes a party's rights to attorney's fees because "a claimant seeking to enforce rights under a construction bond is no longer bringing an action to enforce a lien." Shores Supply Co. v. Aetna Cas. & Sur., 524 So.2d 722, 724 (Fla. 3d DCA 1988). Further, substituting a bond for a lien can change which statutory provisions control awarding fees precisely because of the legal effect of furnishing a payment bond. Id. See also Willey v. M.K. Roark, Inc., 616 So.2d 1140, 1142 (Fla. 4th DCA 1993).

Section 713.24(3), Florida Statutes, has both a jurisdictional element and a venue element. It provides that once a lien has transferred to a bond, an action may be filed in either the circuit court (jurisdiction) of the county (venue) where the security is deposited, or in a motion in a pending action to enforce a lien, or in an order granting additional or reducing security, changing or substituting sureties, or any other matters pertaining to the subject security (no venue specified).

Here, clearly, if the trial court has subject matter jurisdiction, National Union's statutory right fixing venue in Dade County, was waived by National Union's failure to timely raise it. See Fla. R. Civ. P. 1.140(b); Host Marriott Tollroads, Inc. v. Petrol Enters., 810 So.2d 1086, 1088 (Fla. 4th DCA 2002). There also is no doubt that circuit courts have jurisdiction over actions against transfer bonds and claims that have been transferred to bonds via section 713.245(4), by way of section 713.24(3), Florida Statutes, regardless of dollar amount. See Blackton, Inc. v. Young, 629 So.2d 938, 940 (Fla. 5th DCA 1993)

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We have considered Morganti and Halls Ceramic Tile, Inc. v. Tiede-Zoeller Tile Corp., 522 So.2d 111 (Fla. 5th DCA 1988), as to National Union's...