Empathy List Archives

BR

Blaik Ross

Wed, Aug 1, 2012 9:41 PM

Hello Everyone,

I hope I am sending this to the right list-serve address as I know there
are two now.

Factual Background:

I represent a General Contractor ("GC"). GC has hired a subcontractor
to perform a certain scope of work. The subcontractor buys his
materials from a supplier. Due to problems with the subcontractor's
line of credit with the supplier, GC must pay for subs materials via
joint check. GC receives an Invoice, purportedly from the supplier. It
is on the supplier's letterhead. GC pays it via joint check and the
check is deposited by the supplier and a release signed by both the sub
and supplier. GC later finds out that the invoice it paid was "dummied
up" by the subcontractor, who added $30,000 to it fraudulently in order
to try and get ahead of GC on the subcontract and get more cash flow.
Subcontractor has already failed before GC discovers that it was a
"dummied up" invoice and sub has been terminated from the project.

I wonder why the supplier, when they received a joint check for an
amount in excess of the true invoice amount, did not call the general
contractor or refund the general contractor back the $30,000? GC calls
the supplier and asks what happened - i.e. why it is that GC paid them
$130,000 in a joint check, but that the real invoice was only for
$100,000, and why didn't GC get a refund. Supplier says this is not
uncommon and they just credited the subcontractor's house account - so
in effect GC has paid for this failed subcontractor to have an
additional $30,000 of credit, or it went to other debts sub held with
the supplier. GC asks the supplier to send it a refund and supplier
refuses saying GC's only recourse is to backcharge it against the
subcontractor's lump sum contract. Supplier claims no knowledge of the
"dummied up" invoice and claims that there is nothing wrong with his
crediting the overpayment by the general contractor to the
subcontractor's house account.

Question:

Does GC have a direct cause of action against the supplier who it
overpaid and who signed a release stating it was paid $130,000 for
materials delivered to Project XYZ, but the materials delivered were
only really worth $100,000 per the "true" invoice? Is there not
something fundamentally wrong with the supplier taking the $30,000
overpayment and using it to satisfy the subcontractor's other debts with
him...regardless of supplier's intent or knowledge of the "dummied up"
invoice and subcontractor's fraudulent motives?

Thank you,

Blaik P. Ross, Esq.

bross@beauchampco.com

305-445-0819

Hello Everyone, I hope I am sending this to the right list-serve address as I know there are two now. Factual Background: I represent a General Contractor ("GC"). GC has hired a subcontractor to perform a certain scope of work. The subcontractor buys his materials from a supplier. Due to problems with the subcontractor's line of credit with the supplier, GC must pay for subs materials via joint check. GC receives an Invoice, purportedly from the supplier. It is on the supplier's letterhead. GC pays it via joint check and the check is deposited by the supplier and a release signed by both the sub and supplier. GC later finds out that the invoice it paid was "dummied up" by the subcontractor, who added $30,000 to it fraudulently in order to try and get ahead of GC on the subcontract and get more cash flow. Subcontractor has already failed before GC discovers that it was a "dummied up" invoice and sub has been terminated from the project. I wonder why the supplier, when they received a joint check for an amount in excess of the true invoice amount, did not call the general contractor or refund the general contractor back the $30,000? GC calls the supplier and asks what happened - i.e. why it is that GC paid them $130,000 in a joint check, but that the real invoice was only for $100,000, and why didn't GC get a refund. Supplier says this is not uncommon and they just credited the subcontractor's house account - so in effect GC has paid for this failed subcontractor to have an additional $30,000 of credit, or it went to other debts sub held with the supplier. GC asks the supplier to send it a refund and supplier refuses saying GC's only recourse is to backcharge it against the subcontractor's lump sum contract. Supplier claims no knowledge of the "dummied up" invoice and claims that there is nothing wrong with his crediting the overpayment by the general contractor to the subcontractor's house account. Question: Does GC have a direct cause of action against the supplier who it overpaid and who signed a release stating it was paid $130,000 for materials delivered to Project XYZ, but the materials delivered were only really worth $100,000 per the "true" invoice? Is there not something fundamentally wrong with the supplier taking the $30,000 overpayment and using it to satisfy the subcontractor's other debts with him...regardless of supplier's intent or knowledge of the "dummied up" invoice and subcontractor's fraudulent motives? Thank you, Blaik P. Ross, Esq. bross@beauchampco.com 305-445-0819

L

lan (at) lwwhiteattorney.com

Thu, Aug 2, 2012 1:56 PM

Let's start with the usual quibble, "It depends on the facts." The supplier
signed a release, but exactly what did it say. Specifically did it
reference the particular job, or a particular invoice, or something else
that would put the supplier on notice of the overpayment. The facts assume
the supplier didn't know what was going on, and you may never be able to
prove otherwise, but is that a rabbit worth chasing down the hole? Was
there any kind of communication from the GC (or from anyone else) to the
supplier directing application of the funds to a particular job?

With all that, however, my guess is the answer to your question is no. From
the supplier's perspective, how would he know what the payment represented?
I agree that a joint check from a GC affords some notice the payment is for
a particular project, but is there any reason for the supplier to think the
payment was for materials only? If the check represented payment for both
labor and materials, the sub-contractor would have every right to direct the
labor portion toward it s house account. How would the supplier know? In
addition, it isn't a case where the supplier is getting a windfall. They
are simply being paid what they are owed. My gut call is that unless you
can assign some knowledge to the supplier, there would not be a right of
action.

Regards,

Lan White

(727) 797-5599

From: constructionlaw-bounces@lists.flabarrpptl.org
[mailto:constructionlaw-bounces@lists.flabarrpptl.org] On Behalf Of Blaik
Ross
Sent: Wednesday, August 01, 2012 5:42 PM
To: RPPTL constructionlaw
Subject: [RPPTL-constructionlaw] Joint Check Overpayment Question

Hello Everyone,

I hope I am sending this to the right list-serve address as I know there are
two now.

Factual Background:

I represent a General Contractor ("GC"). GC has hired a subcontractor to
perform a certain scope of work. The subcontractor buys his materials from
a supplier. Due to problems with the subcontractor's line of credit with
the supplier, GC must pay for subs materials via joint check. GC receives an
Invoice, purportedly from the supplier. It is on the supplier's letterhead.
GC pays it via joint check and the check is deposited by the supplier and a
release signed by both the sub and supplier. GC later finds out that the
invoice it paid was "dummied up" by the subcontractor, who added $30,000 to
it fraudulently in order to try and get ahead of GC on the subcontract and
get more cash flow. Subcontractor has already failed before GC discovers
that it was a "dummied up" invoice and sub has been terminated from the
project.

I wonder why the supplier, when they received a joint check for an amount in
excess of the true invoice amount, did not call the general contractor or
refund the general contractor back the $30,000? GC calls the supplier and
asks what happened - i.e. why it is that GC paid them $130,000 in a joint
check, but that the real invoice was only for $100,000, and why didn't GC
get a refund. Supplier says this is not uncommon and they just credited the
subcontractor's house account - so in effect GC has paid for this failed
subcontractor to have an additional $30,000 of credit, or it went to other
debts sub held with the supplier. GC asks the supplier to send it a refund
and supplier refuses saying GC's only recourse is to backcharge it against
the subcontractor's lump sum contract. Supplier claims no knowledge of the
"dummied up" invoice and claims that there is nothing wrong with his
crediting the overpayment by the general contractor to the subcontractor's
house account.

Question:

Does GC have a direct cause of action against the supplier who it overpaid
and who signed a release stating it was paid $130,000 for materials
delivered to Project XYZ, but the materials delivered were only really worth
$100,000 per the "true" invoice? Is there not something fundamentally wrong
with the supplier taking the $30,000 overpayment and using it to satisfy the
subcontractor's other debts with him.regardless of supplier's intent or
knowledge of the "dummied up" invoice and subcontractor's fraudulent
motives?

Thank you,

Blaik P. Ross, Esq.

bross@beauchampco.com

305-445-0819

Capability Integrity and Value.
We look forward to providing our clients with many more years of delivering
the highest quality buildings in our community.
http://www.beauchampco.com

Let's start with the usual quibble, "It depends on the facts." The supplier signed a release, but exactly what did it say. Specifically did it reference the particular job, or a particular invoice, or something else that would put the supplier on notice of the overpayment. The facts assume the supplier didn't know what was going on, and you may never be able to prove otherwise, but is that a rabbit worth chasing down the hole? Was there any kind of communication from the GC (or from anyone else) to the supplier directing application of the funds to a particular job? With all that, however, my guess is the answer to your question is no. From the supplier's perspective, how would he know what the payment represented? I agree that a joint check from a GC affords some notice the payment is for a particular project, but is there any reason for the supplier to think the payment was for materials only? If the check represented payment for both labor and materials, the sub-contractor would have every right to direct the labor portion toward it s house account. How would the supplier know? In addition, it isn't a case where the supplier is getting a windfall. They are simply being paid what they are owed. My gut call is that unless you can assign some knowledge to the supplier, there would not be a right of action. Regards, Lan White (727) 797-5599 From: constructionlaw-bounces@lists.flabarrpptl.org [mailto:constructionlaw-bounces@lists.flabarrpptl.org] On Behalf Of Blaik Ross Sent: Wednesday, August 01, 2012 5:42 PM To: RPPTL constructionlaw Subject: [RPPTL-constructionlaw] Joint Check Overpayment Question Hello Everyone, I hope I am sending this to the right list-serve address as I know there are two now. Factual Background: I represent a General Contractor ("GC"). GC has hired a subcontractor to perform a certain scope of work. The subcontractor buys his materials from a supplier. Due to problems with the subcontractor's line of credit with the supplier, GC must pay for subs materials via joint check. GC receives an Invoice, purportedly from the supplier. It is on the supplier's letterhead. GC pays it via joint check and the check is deposited by the supplier and a release signed by both the sub and supplier. GC later finds out that the invoice it paid was "dummied up" by the subcontractor, who added $30,000 to it fraudulently in order to try and get ahead of GC on the subcontract and get more cash flow. Subcontractor has already failed before GC discovers that it was a "dummied up" invoice and sub has been terminated from the project. I wonder why the supplier, when they received a joint check for an amount in excess of the true invoice amount, did not call the general contractor or refund the general contractor back the $30,000? GC calls the supplier and asks what happened - i.e. why it is that GC paid them $130,000 in a joint check, but that the real invoice was only for $100,000, and why didn't GC get a refund. Supplier says this is not uncommon and they just credited the subcontractor's house account - so in effect GC has paid for this failed subcontractor to have an additional $30,000 of credit, or it went to other debts sub held with the supplier. GC asks the supplier to send it a refund and supplier refuses saying GC's only recourse is to backcharge it against the subcontractor's lump sum contract. Supplier claims no knowledge of the "dummied up" invoice and claims that there is nothing wrong with his crediting the overpayment by the general contractor to the subcontractor's house account. Question: Does GC have a direct cause of action against the supplier who it overpaid and who signed a release stating it was paid $130,000 for materials delivered to Project XYZ, but the materials delivered were only really worth $100,000 per the "true" invoice? Is there not something fundamentally wrong with the supplier taking the $30,000 overpayment and using it to satisfy the subcontractor's other debts with him.regardless of supplier's intent or knowledge of the "dummied up" invoice and subcontractor's fraudulent motives? Thank you, Blaik P. Ross, Esq. bross@beauchampco.com 305-445-0819 Capability Integrity and Value. We look forward to providing our clients with many more years of delivering the highest quality buildings in our community. http://www.beauchampco.com

BR

Blaik Ross

Thu, Aug 2, 2012 11:13 PM

Ian,

Thank you very much for your response I appreciate it!

The Release does indeed reference the particular project. The Invoice
(both the "real" and the "fake" one) also references the particular
project. The joint check on the check stub and the memo section states
the particular project. The supplier admitted to me that he knew full
well there was an overpayment, but decided to just credit the
overpayment to the sub's house account (presumably because the supplier
was owed additional monies from this sub so he took the opportunity to
pay down more of the debt). The Supplier never called the GC and asked
why there was an overpayment. The supplier definitely knew the payment
was for a specific project, as the specific project was on his own
"real" Invoice he generated, it was on the Release he signed, and it was
on the check he endorsed and deposited. Also, the check was for
materials only because the supplier at issue is strictly a materialman
and performs no labor - he is purely a distributor of goods. I am not
sure though whether the supplier was aware that the Sub dummied up his
Invoice, but regardless of that knowledge, he certainly seized the
opportunity to grab more cash. Hopefully the above facts change your
analysis?

Thanks again though and thank you to all of my friends and colleagues
(both known and unknown) who replied. The list-serve sometimes gets a
bum rap, but when you need it its there for you, and you all have been
a huge help - so thank you!

Best Regards,

Blaik

From: constructionlaw-bounces@lists.flabarrpptl.org
[mailto:constructionlaw-bounces@lists.flabarrpptl.org] On Behalf Of
lan@lwwhiteattorney.com
Sent: Thursday, August 02, 2012 9:56 AM
To: 'RPPTL constructionlaw'
Subject: Re: [RPPTL-constructionlaw] Joint Check Overpayment Question

Let's start with the usual quibble, "It depends on the facts." The
supplier signed a release, but exactly what did it say. Specifically
did it reference the particular job, or a particular invoice, or
something else that would put the supplier on notice of the overpayment.
The facts assume the supplier didn't know what was going on, and you may
never be able to prove otherwise, but is that a rabbit worth chasing
down the hole? Was there any kind of communication from the GC (or from
anyone else) to the supplier directing application of the funds to a
particular job?

With all that, however, my guess is the answer to your question is no.

From the supplier's perspective, how would he know what the payment

represented? I agree that a joint check from a GC affords some notice
the payment is for a particular project, but is there any reason for the
supplier to think the payment was for materials only? If the check
represented payment for both labor and materials, the sub-contractor
would have every right to direct the labor portion toward it s house
account. How would the supplier know? In addition, it isn't a case
where the supplier is getting a windfall. They are simply being paid
what they are owed. My gut call is that unless you can assign some
knowledge to the supplier, there would not be a right of action.

Regards,

Lan White

(727) 797-5599

From: constructionlaw-bounces@lists.flabarrpptl.org
[mailto:constructionlaw-bounces@lists.flabarrpptl.org] On Behalf Of
Blaik Ross
Sent: Wednesday, August 01, 2012 5:42 PM
To: RPPTL constructionlaw
Subject: [RPPTL-constructionlaw] Joint Check Overpayment Question

Hello Everyone,

I hope I am sending this to the right list-serve address as I know there
are two now.

Factual Background:

I represent a General Contractor ("GC"). GC has hired a subcontractor
to perform a certain scope of work. The subcontractor buys his
materials from a supplier. Due to problems with the subcontractor's
line of credit with the supplier, GC must pay for subs materials via
joint check. GC receives an Invoice, purportedly from the supplier. It
is on the supplier's letterhead. GC pays it via joint check and the
check is deposited by the supplier and a release signed by both the sub
and supplier. GC later finds out that the invoice it paid was "dummied
up" by the subcontractor, who added $30,000 to it fraudulently in order
to try and get ahead of GC on the subcontract and get more cash flow.
Subcontractor has already failed before GC discovers that it was a
"dummied up" invoice and sub has been terminated from the project.

I wonder why the supplier, when they received a joint check for an
amount in excess of the true invoice amount, did not call the general
contractor or refund the general contractor back the $30,000? GC calls
the supplier and asks what happened - i.e. why it is that GC paid them
$130,000 in a joint check, but that the real invoice was only for
$100,000, and why didn't GC get a refund. Supplier says this is not
uncommon and they just credited the subcontractor's house account - so
in effect GC has paid for this failed subcontractor to have an
additional $30,000 of credit, or it went to other debts sub held with
the supplier. GC asks the supplier to send it a refund and supplier
refuses saying GC's only recourse is to backcharge it against the
subcontractor's lump sum contract. Supplier claims no knowledge of the
"dummied up" invoice and claims that there is nothing wrong with his
crediting the overpayment by the general contractor to the
subcontractor's house account.

Question:

Does GC have a direct cause of action against the supplier who it
overpaid and who signed a release stating it was paid $130,000 for
materials delivered to Project XYZ, but the materials delivered were
only really worth $100,000 per the "true" invoice? Is there not
something fundamentally wrong with the supplier taking the $30,000
overpayment and using it to satisfy the subcontractor's other debts with
him...regardless of supplier's intent or knowledge of the "dummied up"
invoice and subcontractor's fraudulent motives?

Thank you,

Blaik P. Ross, Esq.

bross@beauchampco.com

305-445-0819

Capability Integrity and Value.
We look forward to providing our clients with many more years of
delivering the highest quality buildings in our community.
http://www.beauchampco.com

Ian, Thank you very much for your response I appreciate it! The Release does indeed reference the particular project. The Invoice (both the "real" and the "fake" one) also references the particular project. The joint check on the check stub and the memo section states the particular project. The supplier admitted to me that he knew full well there was an overpayment, but decided to just credit the overpayment to the sub's house account (presumably because the supplier was owed additional monies from this sub so he took the opportunity to pay down more of the debt). The Supplier never called the GC and asked why there was an overpayment. The supplier definitely knew the payment was for a specific project, as the specific project was on his own "real" Invoice he generated, it was on the Release he signed, and it was on the check he endorsed and deposited. Also, the check was for materials only because the supplier at issue is strictly a materialman and performs no labor - he is purely a distributor of goods. I am not sure though whether the supplier was aware that the Sub dummied up his Invoice, but regardless of that knowledge, he certainly seized the opportunity to grab more cash. Hopefully the above facts change your analysis? Thanks again though and thank you to all of my friends and colleagues (both known and unknown) who replied. The list-serve sometimes gets a bum rap, but when you need it its there for you, and you all have been a huge help - so thank you! Best Regards, Blaik ________________________________ From: constructionlaw-bounces@lists.flabarrpptl.org [mailto:constructionlaw-bounces@lists.flabarrpptl.org] On Behalf Of lan@lwwhiteattorney.com Sent: Thursday, August 02, 2012 9:56 AM To: 'RPPTL constructionlaw' Subject: Re: [RPPTL-constructionlaw] Joint Check Overpayment Question Let's start with the usual quibble, "It depends on the facts." The supplier signed a release, but exactly what did it say. Specifically did it reference the particular job, or a particular invoice, or something else that would put the supplier on notice of the overpayment. The facts assume the supplier didn't know what was going on, and you may never be able to prove otherwise, but is that a rabbit worth chasing down the hole? Was there any kind of communication from the GC (or from anyone else) to the supplier directing application of the funds to a particular job? With all that, however, my guess is the answer to your question is no. >From the supplier's perspective, how would he know what the payment represented? I agree that a joint check from a GC affords some notice the payment is for a particular project, but is there any reason for the supplier to think the payment was for materials only? If the check represented payment for both labor and materials, the sub-contractor would have every right to direct the labor portion toward it s house account. How would the supplier know? In addition, it isn't a case where the supplier is getting a windfall. They are simply being paid what they are owed. My gut call is that unless you can assign some knowledge to the supplier, there would not be a right of action. Regards, Lan White (727) 797-5599 From: constructionlaw-bounces@lists.flabarrpptl.org [mailto:constructionlaw-bounces@lists.flabarrpptl.org] On Behalf Of Blaik Ross Sent: Wednesday, August 01, 2012 5:42 PM To: RPPTL constructionlaw Subject: [RPPTL-constructionlaw] Joint Check Overpayment Question Hello Everyone, I hope I am sending this to the right list-serve address as I know there are two now. Factual Background: I represent a General Contractor ("GC"). GC has hired a subcontractor to perform a certain scope of work. The subcontractor buys his materials from a supplier. Due to problems with the subcontractor's line of credit with the supplier, GC must pay for subs materials via joint check. GC receives an Invoice, purportedly from the supplier. It is on the supplier's letterhead. GC pays it via joint check and the check is deposited by the supplier and a release signed by both the sub and supplier. GC later finds out that the invoice it paid was "dummied up" by the subcontractor, who added $30,000 to it fraudulently in order to try and get ahead of GC on the subcontract and get more cash flow. Subcontractor has already failed before GC discovers that it was a "dummied up" invoice and sub has been terminated from the project. I wonder why the supplier, when they received a joint check for an amount in excess of the true invoice amount, did not call the general contractor or refund the general contractor back the $30,000? GC calls the supplier and asks what happened - i.e. why it is that GC paid them $130,000 in a joint check, but that the real invoice was only for $100,000, and why didn't GC get a refund. Supplier says this is not uncommon and they just credited the subcontractor's house account - so in effect GC has paid for this failed subcontractor to have an additional $30,000 of credit, or it went to other debts sub held with the supplier. GC asks the supplier to send it a refund and supplier refuses saying GC's only recourse is to backcharge it against the subcontractor's lump sum contract. Supplier claims no knowledge of the "dummied up" invoice and claims that there is nothing wrong with his crediting the overpayment by the general contractor to the subcontractor's house account. Question: Does GC have a direct cause of action against the supplier who it overpaid and who signed a release stating it was paid $130,000 for materials delivered to Project XYZ, but the materials delivered were only really worth $100,000 per the "true" invoice? Is there not something fundamentally wrong with the supplier taking the $30,000 overpayment and using it to satisfy the subcontractor's other debts with him...regardless of supplier's intent or knowledge of the "dummied up" invoice and subcontractor's fraudulent motives? Thank you, Blaik P. Ross, Esq. bross@beauchampco.com 305-445-0819 Capability Integrity and Value. We look forward to providing our clients with many more years of delivering the highest quality buildings in our community. http://www.beauchampco.com

RA

Richard A. Burt

Fri, Aug 3, 2012 12:03 AM

Blaik,

Check the law on "money had and received", a common count in assumpsit. It may cover money paid and received in error. This is a very old legal concept that (I suspect) has morphed into a form of unjust enrichment.

Dick Burt

Richard A. Burt, Esq.
BURT & BURT
220 So. Ridgewood Avenue
Suite 200
Daytona Beach, Florida 32114
(386) 252-2090 (office)
(866) 240-7043 (facsimile)
dick@burt-burt.com mailto:dick@burt-burt.com
www.burt-burt.com http://www.burt-burt.com/

From: constructionlaw-bounces@lists.flabarrpptl.org [mailto:constructionlaw-bounces@lists.flabarrpptl.org] On Behalf Of Blaik Ross
Sent: Thursday, August 02, 2012 7:13 PM
To: RPPTL constructionlaw
Subject: Re: [RPPTL-constructionlaw] Joint Check Overpayment Question

Ian,

Thank you very much for your response I appreciate it!

The Release does indeed reference the particular project. The Invoice (both the "real" and the "fake" one) also references the particular project. The joint check on the check stub and the memo section states the particular project. The supplier admitted to me that he knew full well there was an overpayment, but decided to just credit the overpayment to the sub's house account (presumably because the supplier was owed additional monies from this sub so he took the opportunity to pay down more of the debt). The Supplier never called the GC and asked why there was an overpayment. The supplier definitely knew the payment was for a specific project, as the specific project was on his own "real" Invoice he generated, it was on the Release he signed, and it was on the check he endorsed and deposited. Also, the check was for materials only because the supplier at issue is strictly a materialman and performs no labor - he is purely a distributor of goods. I am not sure though whether the supplier was aware that the Sub dummied up his Invoice, but regardless of that knowledge, he certainly seized the opportunity to grab more cash. Hopefully the above facts change your analysis?

Thanks again though and thank you to all of my friends and colleagues (both known and unknown) who replied. The list-serve sometimes gets a bum rap, but when you need it its there for you, and you all have been a huge help - so thank you!

Best Regards,
Blaik

From: constructionlaw-bounces@lists.flabarrpptl.org mailto:constructionlaw-bounces@lists.flabarrpptl.org [mailto:constructionlaw-bounces@lists.flabarrpptl.org] On Behalf Of lan@lwwhiteattorney.com mailto:lan@lwwhiteattorney.com
Sent: Thursday, August 02, 2012 9:56 AM
To: 'RPPTL constructionlaw'
Subject: Re: [RPPTL-constructionlaw] Joint Check Overpayment Question

Let's start with the usual quibble, "It depends on the facts." The supplier signed a release, but exactly what did it say. Specifically did it reference the particular job, or a particular invoice, or something else that would put the supplier on notice of the overpayment. The facts assume the supplier didn't know what was going on, and you may never be able to prove otherwise, but is that a rabbit worth chasing down the hole? Was there any kind of communication from the GC (or from anyone else) to the supplier directing application of the funds to a particular job?

With all that, however, my guess is the answer to your question is no. From the supplier's perspective, how would he know what the payment represented? I agree that a joint check from a GC affords some notice the payment is for a particular project, but is there any reason for the supplier to think the payment was for materials only? If the check represented payment for both labor and materials, the sub-contractor would have every right to direct the labor portion toward it s house account. How would the supplier know? In addition, it isn't a case where the supplier is getting a windfall. They are simply being paid what they are owed. My gut call is that unless you can assign some knowledge to the supplier, there would not be a right of action.

Regards,
Lan White
(727) 797-5599

From: constructionlaw-bounces@lists.flabarrpptl.org mailto:constructionlaw-bounces@lists.flabarrpptl.org [mailto:constructionlaw-bounces@lists.flabarrpptl.org] On Behalf Of Blaik Ross
Sent: Wednesday, August 01, 2012 5:42 PM
To: RPPTL constructionlaw
Subject: [RPPTL-constructionlaw] Joint Check Overpayment Question

Hello Everyone,

I hope I am sending this to the right list-serve address as I know there are two now.

Factual Background:

I represent a General Contractor ("GC"). GC has hired a subcontractor to perform a certain scope of work. The subcontractor buys his materials from a supplier. Due to problems with the subcontractor's line of credit with the supplier, GC must pay for subs materials via joint check. GC receives an Invoice, purportedly from the supplier. It is on the supplier's letterhead. GC pays it via joint check and the check is deposited by the supplier and a release signed by both the sub and supplier. GC later finds out that the invoice it paid was "dummied up" by the subcontractor, who added $30,000 to it fraudulently in order to try and get ahead of GC on the subcontract and get more cash flow. Subcontractor has already failed before GC discovers that it was a "dummied up" invoice and sub has been terminated from the project.

I wonder why the supplier, when they received a joint check for an amount in excess of the true invoice amount, did not call the general contractor or refund the general contractor back the $30,000? GC calls the supplier and asks what happened - i.e. why it is that GC paid them $130,000 in a joint check, but that the real invoice was only for $100,000, and why didn't GC get a refund. Supplier says this is not uncommon and they just credited the subcontractor's house account - so in effect GC has paid for this failed subcontractor to have an additional $30,000 of credit, or it went to other debts sub held with the supplier. GC asks the supplier to send it a refund and supplier refuses saying GC's only recourse is to backcharge it against the subcontractor's lump sum contract. Supplier claims no knowledge of the "dummied up" invoice and claims that there is nothing wrong with his crediting the overpayment by the general contractor to the subcontractor's house account.

Question:

Does GC have a direct cause of action against the supplier who it overpaid and who signed a release stating it was paid $130,000 for materials delivered to Project XYZ, but the materials delivered were only really worth $100,000 per the "true" invoice? Is there not something fundamentally wrong with the supplier taking the $30,000 overpayment and using it to satisfy the subcontractor's other debts with him...regardless of supplier's intent or knowledge of the "dummied up" invoice and subcontractor's fraudulent motives?

Thank you,
Blaik P. Ross, Esq.
bross@beauchampco.com mailto:bross@beauchampco.com
305-445-0819

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Blaik, Check the law on "money had and received", a common count in assumpsit. It may cover money paid and received in error. This is a very old legal concept that (I suspect) has morphed into a form of unjust enrichment. Dick Burt Richard A. Burt, Esq. BURT & BURT 220 So. Ridgewood Avenue Suite 200 Daytona Beach, Florida 32114 (386) 252-2090 (office) (866) 240-7043 (facsimile) dick@burt-burt.com<mailto:dick@burt-burt.com> www.burt-burt.com<http://www.burt-burt.com/> From: constructionlaw-bounces@lists.flabarrpptl.org [mailto:constructionlaw-bounces@lists.flabarrpptl.org] On Behalf Of Blaik Ross Sent: Thursday, August 02, 2012 7:13 PM To: RPPTL constructionlaw Subject: Re: [RPPTL-constructionlaw] Joint Check Overpayment Question Ian, Thank you very much for your response I appreciate it! The Release does indeed reference the particular project. The Invoice (both the "real" and the "fake" one) also references the particular project. The joint check on the check stub and the memo section states the particular project. The supplier admitted to me that he knew full well there was an overpayment, but decided to just credit the overpayment to the sub's house account (presumably because the supplier was owed additional monies from this sub so he took the opportunity to pay down more of the debt). The Supplier never called the GC and asked why there was an overpayment. The supplier definitely knew the payment was for a specific project, as the specific project was on his own "real" Invoice he generated, it was on the Release he signed, and it was on the check he endorsed and deposited. Also, the check was for materials only because the supplier at issue is strictly a materialman and performs no labor - he is purely a distributor of goods. I am not sure though whether the supplier was aware that the Sub dummied up his Invoice, but regardless of that knowledge, he certainly seized the opportunity to grab more cash. Hopefully the above facts change your analysis? Thanks again though and thank you to all of my friends and colleagues (both known and unknown) who replied. The list-serve sometimes gets a bum rap, but when you need it its there for you, and you all have been a huge help - so thank you! Best Regards, Blaik ________________________________ From: constructionlaw-bounces@lists.flabarrpptl.org<mailto:constructionlaw-bounces@lists.flabarrpptl.org> [mailto:constructionlaw-bounces@lists.flabarrpptl.org] On Behalf Of lan@lwwhiteattorney.com<mailto:lan@lwwhiteattorney.com> Sent: Thursday, August 02, 2012 9:56 AM To: 'RPPTL constructionlaw' Subject: Re: [RPPTL-constructionlaw] Joint Check Overpayment Question Let's start with the usual quibble, "It depends on the facts." The supplier signed a release, but exactly what did it say. Specifically did it reference the particular job, or a particular invoice, or something else that would put the supplier on notice of the overpayment. The facts assume the supplier didn't know what was going on, and you may never be able to prove otherwise, but is that a rabbit worth chasing down the hole? Was there any kind of communication from the GC (or from anyone else) to the supplier directing application of the funds to a particular job? With all that, however, my guess is the answer to your question is no. From the supplier's perspective, how would he know what the payment represented? I agree that a joint check from a GC affords some notice the payment is for a particular project, but is there any reason for the supplier to think the payment was for materials only? If the check represented payment for both labor and materials, the sub-contractor would have every right to direct the labor portion toward it s house account. How would the supplier know? In addition, it isn't a case where the supplier is getting a windfall. They are simply being paid what they are owed. My gut call is that unless you can assign some knowledge to the supplier, there would not be a right of action. Regards, Lan White (727) 797-5599 From: constructionlaw-bounces@lists.flabarrpptl.org<mailto:constructionlaw-bounces@lists.flabarrpptl.org> [mailto:constructionlaw-bounces@lists.flabarrpptl.org] On Behalf Of Blaik Ross Sent: Wednesday, August 01, 2012 5:42 PM To: RPPTL constructionlaw Subject: [RPPTL-constructionlaw] Joint Check Overpayment Question Hello Everyone, I hope I am sending this to the right list-serve address as I know there are two now. Factual Background: I represent a General Contractor ("GC"). GC has hired a subcontractor to perform a certain scope of work. The subcontractor buys his materials from a supplier. Due to problems with the subcontractor's line of credit with the supplier, GC must pay for subs materials via joint check. GC receives an Invoice, purportedly from the supplier. It is on the supplier's letterhead. GC pays it via joint check and the check is deposited by the supplier and a release signed by both the sub and supplier. GC later finds out that the invoice it paid was "dummied up" by the subcontractor, who added $30,000 to it fraudulently in order to try and get ahead of GC on the subcontract and get more cash flow. Subcontractor has already failed before GC discovers that it was a "dummied up" invoice and sub has been terminated from the project. I wonder why the supplier, when they received a joint check for an amount in excess of the true invoice amount, did not call the general contractor or refund the general contractor back the $30,000? GC calls the supplier and asks what happened - i.e. why it is that GC paid them $130,000 in a joint check, but that the real invoice was only for $100,000, and why didn't GC get a refund. Supplier says this is not uncommon and they just credited the subcontractor's house account - so in effect GC has paid for this failed subcontractor to have an additional $30,000 of credit, or it went to other debts sub held with the supplier. GC asks the supplier to send it a refund and supplier refuses saying GC's only recourse is to backcharge it against the subcontractor's lump sum contract. Supplier claims no knowledge of the "dummied up" invoice and claims that there is nothing wrong with his crediting the overpayment by the general contractor to the subcontractor's house account. Question: Does GC have a direct cause of action against the supplier who it overpaid and who signed a release stating it was paid $130,000 for materials delivered to Project XYZ, but the materials delivered were only really worth $100,000 per the "true" invoice? Is there not something fundamentally wrong with the supplier taking the $30,000 overpayment and using it to satisfy the subcontractor's other debts with him...regardless of supplier's intent or knowledge of the "dummied up" invoice and subcontractor's fraudulent motives? Thank you, Blaik P. Ross, Esq. bross@beauchampco.com<mailto:bross@beauchampco.com> 305-445-0819 [cid:image001.jpg@01CD70E9.DD24F4D0] Capability Integrity and Value. We look forward to providing our clients with many more years of delivering the highest quality buildings in our community. http://www.beauchampco.com ________________________________ I am using the Free version of SPAMfighter<http://www.spamfighter.com/len>. SPAMfighter has removed 3208 of my spam emails to date. Do you have a slow PC?<http://www.spamfighter.com/SLOW-PCfighter?cid=sigen> Try free scan!

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Joint Check Overpayment Question