Case: Don Facciobene v. Hough Roofing, Inc., 2017 WL 3051578 (Fla. 5th DCA July 21, 2017).
What to know:
“A contract entered into between two parties can be replaced if the two parties agree. For example, a contract may be formed when a contractor accepts a proposal submitted by a subcontractor; but, if the subcontractor subsequently signs the contractor’s written subcontract agreement that contains a merger clause, the estimate will be extinguished and the written subcontract agreement ill control.”
In Don Facciobene v. Hough Roofing, Inc., 2017 WL 3051578 (Fla. 5th DCA July 21, 2017), the general contractor (“GC”) accepted a written estimate provided by a roofing subcontractor (“Roofer”). After Roofer was 90% complete, the parties signed a written subcontract agreement. The written subcontract agreement established several “conditions precedent” to be met before Roofer’s payments would be due, including (1) owner had to pay GC for Roofer’s work and (2) if GC requested, Roofer had provide a sworn statement listing subs and suppliers who furnished labor and materials and proof that Roofer had paid them. It contained additional conditions for final payment.
The written subcontract agreement also contained a merger clause. A merger clause can result in existing contract being discharged or extinguished by being merged into the later contract between the parties.
Roofer finished the work but General Contractor refused to pay, despite having received payment in full from the owner. Roofer sued.
GC defended on the grounds that the signed subcontract agreement established certain conditions precedent that had to be met in order for progress and final payment to become due to Roofer. GC argued that Roofer failed to meet those conditions.
The appellate court found that the written subcontract agreement had replaced the original estimate due to the merger clause but rejected GC’s defense based on Roofers alleged failure to comply with the conditions precedent. However, the appellate court’s rejection of GC’s “conditions precedent” defense was not on the merits. Rather, the appellate court ruled that GC’s defense was not properly asserted in accordance with the rules of procedure.
Rule 1.120(c) of the Florida Rules of Civil Procedure requires a defendant to allege “specifically and with particularity” any conditions precedent the defendant alleges were not met. GC merely asserted that Roofer had failed to comply with “each and every condition precedent to recovering payment”. The appellate court ruled that GC had failed to sufficiently “specify which conditions precedent [Roofer] did not comply with or how [Roofer] failed to comply with them.” As a result, GC did not meet the requirements of Rule 1.120(c) and was prohibited from requiring Roofer to prove in court that it had complied with those conditions precedent to payment, essentially nullifying those requirements of the written subcontract agreement.
This case warns that an agreement initially entered into can be supplanted or replaced with a subsequent agreement even though no additional exchange of value (consideration) is given. But the general advice still holds: understand what you are signing and be prepared to fully perform the obligations created by the agreement. The case also warns about the heightened pleading requirements for defenses based on conditions precedent.