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Special Statutory Proceedings for the Discharge of Construction Liens

Real Property, Probate and Trust Law

Florida has long been under the procedural mandate that special statutory proceedings are authorized by the Supreme Court of Florida as long as they do not conflict with the Florida Rules of Civil Procedure. Fla. R. Civ. P. 1.010 states in part:

These rules apply to all actions of a civil nature and all special statutory proceedings in the circuit courts and county courts except those to which the Florida Probate Rules, the Florida Family Law Rules of Procedure, or the Small Claims Rules apply. The form, content, procedure, and time for pleading in all special statutory proceedings shall be as prescribed by the statutes governing the proceedings unless these rules specifically provide to the contrary.

The discharge of construction liens under F.S. §§713.21 and 713.22 are such special statutory proceedings, but the courts are not consistent as to when it is appropriate to fall back on a rule of procedure. In most instances, the statute prescribes nonadversarial means of discharging construction liens. See F.S. §713.21(1) permitting the satisfaction of the lien upon the margin of the record in the clerk’s office when not otherwise prohibited by law. Additionally, subsection (2) authorizes the filing of a satisfaction by the lienor “duly acknowledged and recorded in the clerk’s office.” Subsection (5) directs that construction liens may be satisfied “[b]y recording in the clerk’s office the original or a certified copy of a judgment or decree of a court of competent jurisdiction showing a final determination of the action.”

Far more difficult is the application of subsection (4) which provides for the discharge of a construction lien:

an order of the circuit court of the county where the property is located, as provided in this subsection. Upon filing a complaint therefor by any interested party the clerk shall issue a summons to the lienor to show cause within 20 days why his or her lien should not be enforced by action or vacated and canceled of record. Upon failure of the lienor to show cause why his or her lien should not be enforced or the lienor’s failure to commence such action before the return date of the summons the court shall forthwith order cancellation of the lien.

In a series of rulings, courts have emphasized the strict construction of the statute, and have further discussed the limitation of their own discretionary power under the rules of procedure that exist apart from the authorized statutory scheme. In Matrix Construction Corp. v. Mecca Construction, Inc., 578 So. 2d 388 (Fla. 3d DCA 1991), the lienor opted to file a motion for enlargement of time so as to select a substitute attorney. Having failed to foreclose the claim of lien or alternatively show “cause” why the lien should not be vacated and cancelled of record within the 20 days prescribed by the statute, the court remanded with directions to discharge the lien, stating:

The procedures of the above section have been held to constitute special statutory proceedings. Federated Stores Realty, Inc., v. Burnstein, 392 So. 2d 573 (Fla. 4th DCA 1980; Wesley Constr. Co. v. Yarnel, 268 So. 2d 454 (Fla. 4th DCA 1972). Florida Rule of Civil Procedure 1.010 provides that the rules of civil procedure do not apply to the “form, content, procedure and time for pleading in all special statutory proceedings.” These matters shall be controlled by the statute itself unless the rules specifically provide otherwise. Federated Stores, 392 So. 2d at 574; Wesley Constr. , 268 So. 2d at 455. Thus, the time element of §713.21 is one established by the legislature and recognized by the Supreme Court in the promulgation of the Florida Rules of Civil Procedure.

Consequently, the statute is not subject to the ordinary exercise of judicial discretion. In the present case, although the trial court’s intuitive reaction and rulings were entirely consistent with our common law heritage, it nonetheless ignored the statutory time frame in which the defendant was obligated to show cause why his lien should not be enforced. (Emphasis supplied.)

In Matrix, the lienor was doomed because his motion for enlargement of time was unauthorized as part of the special statutory proceedings and at the same time did not constitute “cause” sufficient to preclude the lien from being discharged. Similarly, see Federated Stores Realty, Inc. v. Burnstein, 392 So. 2d 573 (Fla. 4th DCA 1980) (“Rule 1.010, Florida Rules of Civil Procedure provides that the rules of civil procedure do not apply to the ‘form, content, procedure and time for pleading in all special statutory proceedings’ but these matters shall be controlled by the statute itself unless the rules provide otherwise.” ).

Other courts have clearly shown their lack of clarity as to if and when the rules of procedure would become applicable to a construction lien discharge proceeding. In W.R. Scott v. Premium Development, Inc. , 328 So. 2d 557 (Fla. 1st DCA 1976), the trial court discharged a claim of lien. The lienor subsequently filed a motion to set aside the discharge under Fla. R. Civ. P. 1.540 (b). The appellate court affirmed, but noted that in addition to the lienor failing to show a “meritorious” claim under the rule, there existed the threshold question as to whether a trial court could apply a rule of procedure in a special statutory proceeding in the absence of a clear conflict:

For the same reasons, we hold that the trial court acted properly within the limits of its discretion in declining to set aside the final judgment against Scott consequent upon the default. Assuming without deciding that trial courts have power to set aside defaults in §713.21(4) proceedings, this was not a case requiring such extraordinary action by the trial judge. (Emphasis supplied.)

On the other hand, the Fourth District in Krasne-Gold Coast Joint Venture v. Allied Drywall, Inc. , 573 So. 2d 194 (Fla. 4th DCA 1991), did not hesitate to adjudicate that the special statutory proceedings governing construction lien foreclosures were not subject to Rule 1.540(b) motions to set aside:

Of course, the statute does not contain any prohibition against such procedure, either, but because of the extreme consequences occasioned by the imposition of a mechanic’s lien on one’s real property, as recognized in Scott and a multitude of other cases dealing with Ch. 713, and because of the appellate court’s uniform insistence on strict application of the mechanic’s lien law, we hold that any order discharging a mechanic’s lien under the quoted subsection, for failure to file a response showing cause why the lien should not remain in force and effect within the 20-day period, cannot be subject to subsequent review by the trial court on grounds of excusable neglect and due diligence. (Emphasis supplied)

The Third District in Sturge v. LCS Development Corporation, 643 So. 2d 53 (Fla. 3d DCA 1994), reached a similar result and, relying on Matrix to enforce the 20-day statutory period, stated:

The legislature, in Ch. 713, has conferred upon materialmen, workmen, and certain other groups, the special privilege of asserting a mechanic’s lien against real property. Matrix Constr. Corp., 578 So. 2d at 389. Section 713.21, Florida Statutes (1993), provides the means by which a properly perfected lien may be discharged. The procedures in this section are considered special statutory proceedings. Matrix Constr. Corp. ; Federated Stores Realty, Inc., v. Burnstein, 392 So. 2d 573 (Fla. 4th DCA 1980), and in these cases, the Florida Rules of Civil Procedure do not apply to the “form, content, procedure and time for pleading. . . . ” Fla. R. Civ. P. 1.010. “Consequently, the statute is not subject to the ordinary exercise of judicial discretion.” Matrix Constr. Corp. , 578 So. 2d at 389. The time limits delineated in the statute must be strictly observed. . . .

A lienor must strictly comply with the statutory provisions to protect its lien. Goldberger v. United Plumbing & Heating, Inc. , 358 So. 2d 860, 863 (Fla. 4th DCA 1978). The statute does not contain a provision authorizing extensions of time which would serve to toll the statutory 20-day period.

Very recently, the Fourth District in Dracon Construction, Inc., v. Facility Construction Management, Inc. , 27 Fla. L. Weekly D 2311 (Fla. 4th DCA 2002), again strictly applied the statutory proceedings in F.S. §713.21(4) by refusing to treat the 20-day period to foreclose or show cause for failing to do so as discretionary: “In a special statutory proceeding, such as one under §713.21(4), the trial court does not have the same discretion to bend time requirements that might be allowed under the rules of civil procedure. See Matrix Constr. Corp. v. Mecca Constr. Inc., 578 So. 2d 388, 389 (Fla. 3d DCA 1991).”

F.S. §713.21(4) does not state the manner or procedure for the lienor to respond to the 20-day notice. However, the case law fills in the gap (rightly or wrongly). In Goldberger v. United Plumbing and Heating, Inc., 358 So. 2d 860 (Fla. 4th DCA 1978), the court stated that the foreclosure by the lienor could be filed within the same action as a counterclaim to the owner’s F.S. §713.21(4) action. (“A lienor may commence an action to enforce his lien, and thereby avoid cancellation of the lien under §713.21(4), by filing a lien foreclosure action as a counterclaim to the owner’s §713.21(4) complaint.”). In Mainlands Construction Co. Inc., v. Wen-Dic Construction, Co. Inc., 482 So. 2d 1369 (Fla. 1986), the Supreme Court agreed that the procedure for filing a counterclaim set out in Goldberger was appropriate.

What constitutes “cause” sufficient to keep a court from discharging a construction lien is, of course, a factual matter subject to much discretion. In Burnstein, the court determined that a stipulation between the parties did represent adequate “cause” to refuse to discharge a construction lien.

F.S. §713.21(3) also sets a statutory time limitation for the discharge of a construction lien “failure to begin an action to enforce the lien within the time prescribed in this part.” F.S. §713.22(1) mandates: “No lien provided by this part shall continue for a longer period than one year after the claim of lien has been recorded, unless within that time an action to enforce the lien is commenced in a court of competent jurisdiction.” Unlike F.S. §713.21(4), this subsection requiring the foreclosure of a construction lien within one year requires no specific court order to be entered upon the failure of the lienor to timely meet this statutory limitation. Instead, the failure to foreclose within one year under F.S. §713.22(1) causes the lien to expire as a matter of law. See Regal Wood Products, Inc., v. First Wisconsin National Bank of Milwaukee, 347 So. 2d 643 (Fla. 4th DCA 1977) (“The subcontractor, having failed to bring an action to enforce its lien within one year after the claim of lien was recorded, no longer has a right of action on its claim of lien.”). Moreover, the Regal Wood Products, Inc., court further confirmed that the transfer of the lien to a transfer bond under F.S. §713.24 would not change the situation. This is because the fundamental purpose of the one-year statute of limitations is the speedy determination of construction lien claims. Harris Paint Company v. Multicon Properties, Inc. , 326 So. 2d 43 (Fla. 1st DCA 1976).

In a series of cases on the statutory one-year time limitation to foreclose construction liens under F.S. §713.22(1), the courts have been called upon to determine the “relation back” of pleadings in the application of the statute. In so doing, the courts have not hesitated to apply Fla. R. Civ. P. 1.190(c) to allow foreclosures of a construction lien even when amended pleadings were filed beyond the one-year period. Associated Television and Communications, Inc. v. Dutch Village Mobile Homes of Melbourne, Ltd., 347 So. 2d 746 (Fla. 4th DCA 1977); B&H Sales, Inc., v. The Fusco Corporation, 342 So. 2d 105 (Fla. 2d DCA 1977); Scarfone v. Marin, 442 So. 2d 282 (Fla. 2d DCA 1983). But amending a claim of lien does not toll the one-year statute to enforce the lien foreclosure. Hoepner & Associates, Inc., v. Stewart Gilman Company, Inc. , 648 So. 2d 854 (Fla. 5th DCA 1995). Nor does a notice of recommencement extend the one-year statute beyond one year as measured from the original claim of lien date. Foy v. Mangum, 528 So. 2d 1331 (Fla. 5th DCA 1988).

The statutory scheme and interplay between F.S. §§713.21 and 713.22 allows an owner to choose a procedure to force a lienor to take action. While F.S. §713.21(4) requires the lienor to foreclose a claim of lien or show cause why the lien should not be discharged within 20 days, F.S. §713.22(2) permits an owner to shorten the one-year period in subsection (1) of the statute down to a period of 60 days by recording a “notice of contest of lien” in the clerk’s office. The statute includes a suggested form for the notice and further states:

The lien of any lienor upon whom such notice is served and who fails to institute a suit to enforce his or her lien within 60 days after service of such notice shall be extinguished automatically. The clerk shall mail a copy of the notice of contest to the lien claimant at the address shown in the claim of lien or most recent amendment thereto and shall certify to such service on the face of such notice and record the notice. Service shall be deemed complete upon mailing.

As in the case of F.S. §713.21(4), the purpose of contesting the lien by filing a notice is to speed up the lienor’s extended one-year statutory right to foreclose. Boston v. Ames Appliance Center, Inc. , 312 So. 2d 548 (Fla. 3d DCA 1975).

Moreover, the notice of contest of lien shortens the one-year period for claims against an F.S. §713.23 payment bond and an F.S. §713.24 transfer bond down to 60 days.

Shortening the process for foreclosing a construction lien under §713.22(2) has generated its own line of cases as did the shortening process under F.S. §713.21(4). In Jack Stilson & Co., v. Caloosa Bayview Corporation, 278 So. 2d 282 (Fla. 1973), the Supreme Court held that the filing of an amended claim of lien did not toll the running of the 60-day period under a notice of contest of lien requiring the lien claimant to foreclose or lose its lien rights. The Fifth District in Site-Prep, Inc., v. TAI, 472 So. 2d 766 (Fla. 5th DCA 1985), faced the question of whether the time required for responding to a notice of contest of lien included the date of service. The appellate court stated rather adroitly, “The uniform rule in computing time periods is that the first day of the period is excluded from the computation, and the last is included.” (Citations omitted). The court’s use of the phrase “uniform rule” is particularly interesting by its avoiding reference to a rule of procedure in excluding the date of service. Had the court referenced the rule of procedure instead of the nondescript “uniform rule,” the additional problem to be considered would involve the continuing question of using a procedural rule in a special statutory proceeding.

In Lehmann Development Corporation v. Nirenblatt, 629 So. 2d 1098 (Fla. 2d DCA 1994), the court faced up to the question of whether to apply a rule of procedure to the time period for enforcing a construction lien under F.S. §713.22(1). In so doing, the court stated, “In this case we are called upon to decide whether the method of time computation prescribed by Florida Rule of Civil Procedure 1.090 (a) applies to the time period within which an action to enforce a construction lien must be commenced under §713.22(1), Florida Statutes (1991).” The Lehmann court was confronted with a situation where the 365th day fell on a Sunday so that if the special statutory proceedings were to be applied strictly, the one-year statute would prohibit the filing of an action on the following day. The court declined to do this and ruled that Fla. R. Civ. P. 1.090(a) applies, thus allowing for a timely filing the following Monday.

The horns of the dilemma are apparent. Fla. R. Civ. P. 1.010 sets forth that the rules apply to all actions “of a civil nature and all special statutory proceedings in the circuit court and county courts. . . . ” At the same time this rule also states: “The form, content, procedure, and time for pleadings in all special statutory proceedings shall be as prescribed by the statutes governing the proceedings unless these rules specifically provide to the contrary.” Special statutory proceedings such as F.S. §713.21 and F.S. §713.22 controlling the discharge of construction liens set up the time limitations within the statute, and of course, time, together with form, content, and procedure are supposed to be governed by the statute. In fact, absent a specific conflict, the Rules of Civil Procedure are considered inapplicable to special statutory proceedings. Yet, the struggle to properly apply the statutory procedure versus a rule of civil procedure does not always provide a bright line. Thus, some courts stress the unyielding rigidity of special statutory proceedings and in so doing refuse the flexible approach by the discretionary use of a rule of procedure.

The safest practice, of course, is to stay well within the one-year enforcement period or well within the statutory shortening of the one-year enforcement period down to 20 days under F.S. §713.21(4) or down to 60 days under F.S. §713.22(2). The risk of having your client’s construction lien discharged is thereby avoided, and the merits of the lien can be tested on a substantive basis.

Howard J. Hollander has been a practicing attorney in the state and federal courts of Florida since 1964, concentrating his practice in the field of construction litigation since 1970. He has represented owners, condominium associations, general contractors, subcontractors, and bonding companies. Mr. Hollander is the author of Construction Law Manual of Practice & Procedures . He earned his B.A. from the University of Florida in 1961 and his J.D. from the University of Miami in 1964.

This column is submitted on behalf of the Real Property, Probate and Trust Law Section, Richard R. Gans and William P. Sklar, editors.

Real Property, Probate and Trust Law