Where Is The Appropriate Venue To Litigate A 713.24 Transfer Bond?

The appropriate venue for litigating the foreclosure of a construction lien is obvious.  The appropriate venue must be the county in which the property is located.  Clearly, the county in which the property is located must issue the foreclosure judgment and hold the foreclosure sale.  This is the case even when the contract has a forum selection clause that designates exclusive venue in some other county. But what happens when an owner or contractor posts a transfer bond pursuant to Fla. Stat. 713.24 and the contract has a forum selection clause that designates exclusive venue in a county which is different from the county in which the project is located?

When a transfer bond is posted there is no longer a need for the Court in the county in which the property is located to issue a foreclosure judgment or hold a foreclosure sale.  However, the transfer bond is posted and recorded in the county in which the property is located.  This means that if an action on a transfer bond is transferred or filed in a county separate from where the property is located then the Court may eventually enter an order instructing another clerk (i.e. the clerk holding the bond) to take action on the bond.

Read how the courts ruled when an owner or contractor posted a transfer bond pursuant to Fla. Stat. 713.24, but the contract had a forum selection clause.

Transfer Bond: From Construction Lien To Security

There are two Florida Statutes that are helpful in the analysis of where an action on a transfer bond may be filed.  Fla. Stat. 713.24 governs transfer of construction liens to security.  This section provides:

Any lien claimed under this part may be transferred, by any person having an interest in the real property upon which the lien is imposed or the contract under which the lien is claimed, from such real property to other security . . . [f]iling in the clerk’s office a bond executed as surety by a surety insurer licensed to do business in this state.

Further, the statute provides that “[a]ny party having an interest in such security or the property from which the lien was transferred may at any time, and any number of times, file a complaint in chancery in the circuit court of the county where such security is deposited . . . .”  Fla. Stat. 713.24(3) (emphasis added).  There is no dispute that the filing party may always choose to litigate a transfer bond in the county in which the bond is deposited, which should be the county in which the property is located.  However, does Fla. Stat. 713.24(3) provide for exclusive venue in the county in which the property is located?  When a contractual forum selection clause that designates exclusive venue in a county other than where the property is located does the statute or the contract prevail on a motion to transfer venue?

Forum Selection Clause: Current Case Law Examples

There is a split of authority on this issue with no resolution from the Florida Supreme Court.  The Fourth and Fifth District Court of Appeal find the language in the statute to mandate exclusive venue in the county in which the bond is deposited, i.e. the county in which the property is located.  See Morganti South, Inc. v. Hardy Contractors, Inc., 397 So. 2d 378 (Fla. 4th DCA 1981) (concluding that 713.24 is “mandatory to the extent that any suit on such security must be brought in the county where the security is deposited); Attaway Elec., Inc. v. Kelsey Constr., Inc., 120 So. 3d 77 (Fla. 4th DCA 2013) (holding that because “the bonded lien claims must be brought [in the county in which the security was deposited] . . . the contractual claims must be brought in the same county to avoid multiple suits and potentially conflicting results.”); Halls Ceramic Tile, Inc. v. Tiede-Zoeller Tile Corp., 522 So. 2d 111 (Fla. 5th DCA 1988) (citing Morganti South, holding that claims on the transfer bonds must be brought in the county in which the security is deposited pursuant to 713.24); Girdley Constr. Co. v. Architectural Exteriors, Inc., 517 So. 2d 137 (Fla. 5th DCA 1987) (denying a motion to transfer venue contractual claims based on a venue provision, stating that this would result in multiple suits and splitting of causes of action).  However, the Third District Court of Appeal has concluded that a contractual forum selection clause that designates exclusive venue in a county other than the county in which the bond is deposited trumps the statute.  Walbridge Aldinger Co. v. Robert’s Plumbing Contractors, Inc., 800 So. 2d 285 (Fla. 3d DCA 2001) (Reversing the denial to transfer venue and holding that a mandatory venue selection clause in a contract should be enforced when there is no contention that the venue clause was somehow unreasonable, unjust, or procured through fraud.)

Conclusion

With the above split of authority and only three of the five district courts of appeal providing some guidance on how to move forward predicting the final destination of an action on a transfer bond is difficult.  This is particularly true if the county in which the bond is deposited is in the First or Second District Court of Appeal, which haven’t yet weighed in on this subject.  Until clarification is provided from the Florida Supreme Court, whether an action on a transfer bond must be brought in the county in which the bond is deposited is an uncertain question.

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