THE GEORGE HYMAN CONSTRUCTION COMPANY, A MARYLAND CORPORATION, APPELLANT,
v.
CITY OF MIAMI, A MUNICIPAL CORPORATION, APPELLEE

Fla. 3d DCA | 1989-07-05
No. 88-2665
Before BARKDULL, JORGENSON and GERSTEN, JJ.
545 So. 2d 512 Florida District Court of Appeal, Third District (1989)

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Synopsis

George Hyman Construction Company appeals the dismissal of its counterclaim against the City of Miami for unpaid construction contract balance. The court reverses, holding that Hyman adequately pleaded causes of action for breach of express contract, breach of third-party beneficiary contract, and breach of fiduciary duty based on the City's execution of Change Order No. 1.


Holding

Yes. The court held that Hyman's counterclaim alleged sufficient facts to support all three causes of action: (1) breach of express contract based on Change Order No. 1's payment provision; (2) breach of third-party beneficiary contract since Hyman was an intended beneficiary of the City/MCA contract as modified by Change Order No. 1; and (3) breach of fiduciary duty for the City's failure to properly disburse funds held for Hyman's benefit.


Headnotes

[1] A third-party counterclaim for breach of an express contract may be stated when a change order, signed by the parties, provides for direct payment to the third party and…

[2] A third-party counterclaim for breach of a third-party beneficiary contract may be stated when the third party alleges they are the beneficiary of a change order between…

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Key Quotes

“Count I of the counterclaim alleged sufficient facts to support a cause of action for breach of an express contract, to wit: that MCA and the City had entered into a contract, that the City had executed "Change Order No. 1," which provided for payment from the City to Hyman, to induce Hyman to enter into a contract with MCA, and that the City had breached that provision”

Establishes that Change Order No. 1 constituted an express contract enforceable by Hyman against the City.

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Facts & Procedural History

The City contracted with developer MCA to design and construct a parking garage. MCA subcontracted with Hyman to construct the garage. Change Order No…

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Opinion of the Court
PER CURIAM.

PER CURIAM.

Hyman appeals from a dismissal with prejudice of a third party counterclaim for failure to state a cause of action. We reverse and remand.

The City of Miami contracted with a developer, MCA, to design and construct a parking garage which was to form the base of a multi-story office building. The contract provided for MCA to be responsible for all the work and to employ architects, engineers and contractors at its own expense. In turn, MCA contracted with the George Hyman Construction Company to construct the garage.

The City and MCA amended their contract in what was called “Change Order No. 1.” Change Order No. 1 provided, inter alia, for the disbursement of the construction funds by checks jointly payable to MCA and Hyman. Change Order No. 1 also provided that if the City/MCA contract was terminated or the developer defaulted, then the City would pay Hyman directly. The City, MCA and Hyman were all signatories of Change Order No. 1.

Thereafter, Hyman completed the garage and the City accepted delivery, took occupancy and started operations. A balance of $518,238 remained due to Hyman on the construction contract between MCA and the City. During the construction of the office building disputes arose and the City was sued for damages. The City then filed a third party complaint against MCA and Hyman. Hyman counterclaimed against the City to recover the balance owed on the contract. The City moved to dismiss the counterclaim for failure to state a cause of action. The court granted the City’s motion and Hyman appeals.

Hyman’s counterclaim raised three counts against the City. (1) breach of an express contract, (2) breach of a third party beneficiary contract, and, (3) breach of a fiduciary duty. Hyman’s counterclaim also alleged facts to support its contentions that the City had breached its duty to Hyman under each of the theories, thereby causing Hyman injury.

The City contends: (1) that Hyman has no express, written contract with the City and, therefore, no cause of action because the change order is not a contract between the City and Hyman; (2) that the change order lacks mutuality of obligation since the City does not have any contractual privity to compel Hyman to perform; and (3) that since there is no express contract, both counts II and III are barred by sovereign immunity.

We find that: (1) Count I of the counterclaim alleged sufficient facts to support a cause of action for breach of an express contract, to wit: that MCA and the City had entered into a contract, that the City had executed “Change Order No. 1,” which provided for payment from the City to Hyman, to induce Hyman to enter into a contract with MCA, and that the City had breached that provision; (2) Count II alleged sufficient facts to support a cause of action for breach of a third party beneficiary contract since it maintained that Hy-man was the beneficiary of the change order between the City and MCA; (3) Count III alleged sufficient facts to support a cause of action for breach of a fiduciary duty by the City for failing to properly disburse the funds which it held for the benefit of Hyman. Therefore, the City’s claim of sovereign immunity is without merit. For the purpose of considering a motion to dismiss, Hyman’s allegations must be assumed to be true. Hochman v. Lazarus Homes Corporation, 324 So. 2d 205 (Fla. 3d DCA 1976). Reversed and remanded for proceedings not inconsistent with this opinion.


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