Business and Legal Insights

Construction contracts serve a vital role in every project to protect the interests of parties and dictate the roles and obligations of each interested entity. Parties to a contract must review and understand each term within a contract and the interplay such terms may have with one another. But what happens when a lawsuit is filed and in response a party raises both defenses and affirmative relief they are rightfully entitled to under a contract, although such defenses and rights may otherwise be inconsistent with one another. The answer according to the Florida Third District Court of Appeal may very well be the inadvertent waiver of those very same rights.

Unfair as it may sound, the Third District Court of Appeal in TBI Caribbean Co. Ltd. v. Stafford-Smith, Inc., 239 So. 3d 103, 104 (Fla. 3d DCA 2017) found that defendants waived their objections to personal jurisdiction by seeking affirmative relief under a subcontract, inconsistent with their jurisdictional objection.

In Stafford-Smith, the parties entered into a subcontract where the contractor agreed to pay the subcontractor to complete work on the Baha Mar resort in Nassau, Bahamas. The lawsuit’s only allegation regarding personal jurisdiction was that jurisdiction was proper in Miami-Dade County, Florida under the subject subcontract. In response, the contractor sought dismissal for failure to allege a sufficient basis for asserting personal jurisdiction and included a request for attorney’s fees pursuant to a fee provision in the subject subcontract. The subcontractor argued, and the Third District agreed, that the contractor waived their objection to personal jurisdiction by requesting attorney’s fees under the subcontract. The Third District reasoned that “[i]t is well established that personal jurisdiction may be waived by seeking relief that is inconsistent with a jurisdictional objection” and the “pertinent inquiry is whether the request is inconsistent with the jurisdictional objection.”

Essentially, the contractor attempted to seek an order from the trial court that the court had no jurisdiction to oversee the matter but it did in fact have jurisdiction to rule in the contractor’s favor in awarding attorneys’ fees under the subcontract. The Third District’s opinion makes it clear that you cannot have your cake and eat it too.

The decision in Stafford-Smith highlights the importance of arming parties with the rights and obligations provided under a construction contract and not allowing those very same terms to disarm you of rights through inadvertent waiver. Parties must ensure the defenses raised in a lawsuit are not inconsistent with the relief sought, whether it be for jurisdictional defenses or otherwise. One wrong move and a party could inadvertently waive its rights otherwise afforded under the law.