         IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                              FIFTH DISTRICT

                                               NOT FINAL UNTIL TIME EXPIRES TO
                                               FILE MOTION FOR REHEARING AND
                                               DISPOSITION THEREOF IF FILED


DON FACCIOBENE, INC.,

             Appellant/Cross-Appellee,

 v.                                                   Case Nos. 5D15-1527


HOUGH ROOFING, INC., AND DIGIACINTO
HOLDINGS, LLC,

             Appellees/Cross-Appellants.

___________________________________/

Opinion filed July 21, 2017

Appeal from the Circuit Court
for Brevard County,
Charles M. Holcomb, Judge.

Allan P. Whitehead, of Frese, Hansen,
Anderson,     Anderson,    Heuston  &
Whitehead,     P.A.,    Melbourne, for
Appellant/Cross-Appellee.

Ruth C. Rhodes, of Rhodes Law, P.A.,
Melbourne, for Appellee/Cross-Appellant,
Hough Roofing, Inc.

No Appearance for Digiacinto Holdings,
LLC.

BERGER, J.

      Don Facciobene, Inc. (DFI), a licensed general contractor, and its subcontractor,

Hough Roofing, Inc. (HRI), appeal the amended final judgment entered by the trial court

on HRI's breach of contract claim and DFI's counterclaim after a non-jury trial. DFI
asserts, inter alia, that the trial court erred in finding that its subcontract with HRI did not

apply retroactively and that, consequently, HRI was barred from receiving any payment

at all due to noncompliance with the conditions precedent to progress payments and final

payment in section 8 of the subcontract. HRI filed a cross-appeal seeking, inter alia,

payment for the full value of its subcontract.1 We agree with DFI that the trial court erred

in failing to apply the subcontract retroactively. However, we find no merit in DFI’s

argument that HRI was barred from receiving payment for failing to comply with conditions

precedent. To the contrary, we agree with HRI on its cross-appeal and conclude it was

entitled to the full value of its subcontract, minus certain setoffs. Accordingly, we reverse

the amended final judgment.

       In late 2010, DFI contracted with Digiacinto Holdings, LLC, (Owner) to perform

various renovations to a house in Melbourne, Florida, known locally as the Nannie Lee

House or the Strawberry Mansion (Mansion), as part of Owner's preparations to open a

restaurant on the premises. The Mansion, erected in 1905, needed a new roof. As

general contractors are not permitted to place a new roof on an existing structure, DFI

subcontracted the roofing work to HRI, a licensed roofing subcontractor. HRI provided

an estimate and proposed statement of work to DFI in mid-March 2011. DFI's project

manager, Jim Monarchy, signed HRI's proposal on April 5, 2011, as well as an additional

expanded proposal on April 11, 2011. The proposals stated that payment was due on

completion. HRI began work on the roof on April 15, 2011. However, the parties did not




       1 In a separate appeal, HRI challenged the trial court's order denying its motion for
attorney's fees for the trial proceedings. DFI filed a cross-appeal claiming that it was
entitled to attorney's fees. Hough Roofing, Inc. v. Don Facciobene, Inc., No. 5D15-2878
(Fla. 5th DCA July 21, 2017).

                                               2
actually sign the subcontract until June 8, 2011, and, by that time, the project was nearly

complete. The subcontract price was $21,051.

       Under section 8 of the subcontract, HRI was due progress payments, minus a ten

percent retainage, for work completed in a particular month on the twentieth day of the

following month. Final payment was not due until thirty days after the completion of the

entire renovation. Monarchy testified that the final payment amounted to the payment of

the accrued ten percent retainage. Section 8 of the subcontract also imposed several

conditions precedent to progress payments and final payments. For progress payments,

DFI had to (1) receive payment from Owner for HRI's work that was due for the progress

payment and (2) HRI had to provide, upon request from DFI, a sworn statement listing

the parties who furnished labor and materials to HRI with their names and addresses and

documentation showing that HRI paid them. The conditions precedent to final payment

included the conditions precedent for progress payments and additional requirements that

HRI's work was at least ninety-eight percent complete and that HRI submit unspecified

closeout documents to DFI for approval and provide a final lien waiver and release to DFI.

       HRI had mostly finished its work by the end of May 2011, and on June 8, 2011, it

submitted its first "final" invoice for $22,370.2 Due to disputes over some of HRI's

charges,3 DFI never paid HRI anything for its work on the Mansion even though it received


       2 This amount included $10,720 for metal roofing panels, $4100 for plywood
sheathing, $3590 for the flat roof and base sheet, $2635 for thirty-one pitch pockets, $275
for eleven torch patches, and $1050 for Owner requested items.
       3  DFI disputed the $3590 charge for the flat roof and base sheet, seeking a credit
reducing the charge to $2333.50, the eleven torch patches and the owner requested
items. DFI also sought a credit for HRI's use of DFI's crane. On August 15, 2011, HRI
amended its invoice to grant DFI credits of $1440 for the crane rental and $290 for the
flat roof and base sheet installation. HRI also removed the owner requested items. These
changes reduced HRI's invoice to $19,590.

                                            3
payment for HRI's work from Owner on July 15, 2011, final payment for the entire project

from owner on December 21, 2011, and concluded the renovations on December 30,

2011.4 As a result, a claim of lien was filed against the property,5 and on December 6,

2011, HRI filed its complaint for breach of contract against DFI and Owner. On December

27, 2011, DFI notified HRI that Owner had discovered a leak in the roof.6 Despite this,

Owner refused to give HRI permission to come onto the premises and repair the leak until

May 2012. Consequently, DFI undertook repairing the roof, without a roofing license, and

filed a counterclaim seeking damages for the estimated cost of repairing the leak. DFI

also answered HRI’s breach of contract claim by asserting, as an affirmative defense,

noncompliance with unspecified conditions precedent.

       The case proceeded to trial, at which both parties presented expert witness

testimony concerning the leak. DFI's expert, Luke Miorelli,7 testified that while most of

the roof was installed correctly, there were potential problems with the roof installation on

the south and west dormers and estimated repairs would cost $7378.80. HRI's expert,

Joseph Horschel,8 testified that only the portion of the roof with the active leak needed to




       4DFI's notice of termination of renovations stated that it had paid all of its
subcontractors in full.
       5
       DFI transferred the lien from the property by posting bond. The bond cost DFI
$750. Alan Hough, owner of HRI, canceled the lien in December 2011.
       6Owner first reported the leak to DFI in July 2011, but Monarchy was instructed
by the owner of DFI not to mention the leak to HRI.
       7 Miorelli is a licensed general contractor who designs and sometimes installs roofs
but he is not certified or licensed in roofing.
       8   Horschel is a licensed general contractor who also holds a roofing license.



                                              4
and $275 for the eleven torch patches.13 Moreover, because this case involves liquidated

damages, the trial court also erred in failing to award prejudgment interest from July 20,

2011, for the progress payment and January 29, 2012, for the final payment.              See

Argonaut Ins. Co. v. May Plumbing Co., 474 So. 2d 212, 214-15 (Fla. 1985); Metro. Dade

Cty. v. Bouterse, Perez & Fabregas Architects Planners, Inc., 463 So. 2d 526, 527 (Fla.

3d DCA 1985) (citing Jockey Club, Inc. v. Bleemer, Levine & Assocs. Architects &

Designers, Inc., 413 So. 2d 433, 434 (Fla. 3d DCA 1982)). Finally, although the trial court

was correct in offsetting the award by $1440 for the crane rental, and $180 for DFI's

counterclaim,14 it erred in including an offset for the $750 cost DFI incurred in bonding off

Hough's lien. DFI did not request the $750 in bond costs as relief. Therefore, the trial

court erred in granting relief outside the pleadings. See Wachovia Mortg. Corp. v. Posti,

166 So. 3d 944, 945 (Fla. 4th DCA 2015) (citing S. Indus. Tire, Inc. v. Chicago Indus.

Tire, Inc., 541 So. 2d 790, 791 (Fla. 4th DCA 1989)); Bank of N.Y. Mellon v. Reyes, 126

So. 3d 304, 309 (Fla. 3d DCA 2013); Cardinal Inv. Grp., Inc. v. Giles, 813 So. 2d 262,

263 (Fla. 4th DCA 2012) (citing Pond v. McKnight, 339 So. 2d 1149 (Fla. 2d DCA 1976)).


overhead and profit on, the acceptable work performed and/or materials furnished . . . ."
Hough testified that his costs, overhead, and profit for the work performed on the flat roof
and base sheet amounted to $2600.
       13 The testimony at trial indicates that the eleven torch patches were necessary to
conform the work to the contract plans and specifications and did not constitute an
alteration or addition to the contract. See Acq. Corp. of Am. v. Am. Cast Iron Pipe Co.,
543 So. 2d 878, 880 (Fla. 4th DCA 1989) (citing City of Miami v. Nat Harrison Assocs.,
313 So. 2d 99, 100 (Fla. 3d 1975)).
       14 We affirm the trial court's factual findings on the counterclaim and its credibility
determinations as to the expert witnesses as they were supported by competent,
substantial evidence. See Flood v. Union Planters Bank, 878 So. 2d 407, 411 (Fla. 3d
DCA 2004) (citing Iden v. Kasden, 609 So. 2d 54, 57 (Fla. 3d DCA 1992)); Ross v. J.E.
Hill Contractors, 410 So. 2d 638 (Fla. 1st DCA 1982).



                                              8
that HRI was barred from recovering the balance of the contract price because it did not

comply with the conditions precedent to final payment.

       We find multiple errors in the amended final judgment that warrant reversal. First,

the trial court's decision not to apply the subcontract retroactively was error in light of the

merger clause found in section 18 of the subcontract. The merger clause requires

retroactive application because it acts to replace the original contract with the new one.

See Katz v. Fifield Realty Corp., 746 F. Supp. 2d 1265, 1269 (S.D. Fla. 2010); Aly

Handbags, Inc. v. Rosenfeld, 334 So. 2d 124, 126 (Fla. 3d DCA 1976) ("The well

established rule of law is that a contract may be discharged or extinguished by merger

into a later contract entered into between the parties in respect to the same subject which

replaces the original contract." (citing 7 Fla. Jur. Contracts § 166 (1956))). Here, failing

to apply the subcontract retroactively resulted in HRI being barred by the conditions

precedent from collecting the final payment but not being barred from receiving a progress

payment10 for work performed before the subcontract was executed.

       DFI asserts that applying the subcontract retroactively will bar HRI from receiving

any payment at all due to HRI’s failure to comply with the conditions precedent. We

disagree. The fact that the subcontract applies retroactively does not mean that HRI is

barred from receiving payment by the conditions precedent to progress payments and

final payment in section 8 of the subcontract. In its complaint, HRI alleged that it had



       10 DFI's argument that HRI did not request a progress payment in its complaint
ignores the fact that the testimony during the trial established that the final payment
consists of the ten percent retainage while the remaining ninety percent would normally
be disbursed as progress payments. HRI attached a copy of its August 15, 2011 final
invoice to its complaint, in which it requested full payment, thus implicitly requesting both
the progress payment and final payment. This attachment is part of the complaint for all
purposes. Fla. R. Civ. P. 1.130(b).

                                              6
"fully performed all of its obligations under the Contract or has been excused from

performance." In its amended answer, DFI asserted, as an affirmative defense, that HRI

"has failed to allege, nor can it establish that it had meet [sic] each and every condition

precedent to recovering payment in this cause pursuant to its Complaint." Contrary to the

requirements in Florida Rule of Civil Procedure 1.120(c), DFI did not specify which

conditions precedents HRI did not comply with or how HRI failed to comply with them.

Consequently, DFI's answer to the complaint failed to preserve its right to demand proof

that HRI complied with the conditions precedent to progress payments and final

payment.11 See Fla. R. Civ. P. 1.120(c); Deutsche Bank Nat'l Tr. Co. v. Quinion, 198 So.

3d 701, 703-04 (Fla. 2d DCA 2016) ("[T]o construct a proper denial under the rule, a

defendant must, at a minimum, identify both the nature of the condition precedent and the

nature of the alleged noncompliance or nonoccurrence."); Bank of Am., Nat'l Ass'n v.

Asbury, 165 So. 3d 808, 810-11 (Fla. 2d DCA 2015); Cooke v. Ins. Co. of N. Am., 652

So. 2d 1154, 1156 (Fla. 2d DCA 1995); Paulk v. Peyton, 648 So. 2d 772, 774 (Fla. 1st

DCA 1994).

       Second, while awarding HRI the uncontested charges of $10,720 for the metal

roofing panels, $4100 for the plywood sheathing, and $2635 for the thirty-one pitch

pockets was appropriate, the trial court should have also awarded HRI the ten percent

retainage, $2600 out of the $3590 charged for the flat roof and base sheet installation,12


       11
        We take no position on the parties' other arguments regarding the conditions
precedent to progress payments and final payment.
       12 The record indicates that DFI acted, albeit wrongfully, under section 5 of the
subcontract when it installed the flat roof base sheet without informing HRI. Any wrongful
termination under section 5 is, pursuant to paragraph L, construed as a termination for
the convenience of the general contractor. When this happens, paragraph L states that
HRI is entitled only to compensation "for the reasonable cost of, and a reasonable

                                            7
and $275 for the eleven torch patches.13 Moreover, because this case involves liquidated

damages, the trial court also erred in failing to award prejudgment interest from July 20,

2011, for the progress payment and January 29, 2012, for the final payment.              See

Argonaut Ins. Co. v. May Plumbing Co., 474 So. 2d 212, 214-15 (Fla. 1985); Metro. Dade

Cty. v. Bouterse, Perez & Fabregas Architects Planners, Inc., 463 So. 2d 526, 527 (Fla.

3d DCA 1985) (citing Jockey Club, Inc. v. Bleemer, Levine & Assocs. Architects &

Designers, Inc., 413 So. 2d 433, 434 (Fla. 3d DCA 1982)). Finally, although the trial court

was correct in offsetting the award by $1440 for the crane rental, and $180 for DFI's

counterclaim,14 it erred in including an offset for the $750 cost DFI incurred in bonding off

Hough's lien. DFI did not request the $750 in bond costs as relief. Therefore, the trial

court erred in granting relief outside the pleadings. See Wachovia Mortg. Corp. v. Posti,

166 So. 3d 944, 945 (Fla. 4th DCA 2015) (citing S. Indus. Tire, Inc. v. Chicago Indus.

Tire, Inc., 541 So. 2d 790, 791 (Fla. 4th DCA 1989)); Bank of N.Y. Mellon v. Reyes, 126

So. 3d 304, 309 (Fla. 3d DCA 2013); Cardinal Inv. Grp., Inc. v. Giles, 813 So. 2d 262,

263 (Fla. 4th DCA 2012) (citing Pond v. McKnight, 339 So. 2d 1149 (Fla. 2d DCA 1976)).


overhead and profit on, the acceptable work performed and/or materials furnished . . . ."
Hough testified that his costs, overhead, and profit for the work performed on the flat roof
and base sheet amounted to $2600.
       13 The testimony at trial indicates that the eleven torch patches were necessary to
conform the work to the contract plans and specifications and did not constitute an
alteration or addition to the contract. See Acq. Corp. of Am. v. Am. Cast Iron Pipe Co.,
543 So. 2d 878, 880 (Fla. 4th DCA 1989) (citing City of Miami v. Nat Harrison Assocs.,
313 So. 2d 99, 100 (Fla. 3d 1975)).
       14 We affirm the trial court's factual findings on the counterclaim and its credibility
determinations as to the expert witnesses as they were supported by competent,
substantial evidence. See Flood v. Union Planters Bank, 878 So. 2d 407, 411 (Fla. 3d
DCA 2004) (citing Iden v. Kasden, 609 So. 2d 54, 57 (Fla. 3d DCA 1992)); Ross v. J.E.
Hill Contractors, 410 So. 2d 638 (Fla. 1st DCA 1982).



                                              8
       In total, HRI was owed $20,330, including retainage, before the offsets. Ninety

percent of the total, $18,297, was due on July 20, 2011. The ten percent retainage,

$2033, minus the $1440 offset for the use of DFI's crane and the $180 counterclaim

results in a $413 final payment, which was due to HRI on January 29, 2012.15 In total,

HRI was due $18,710 plus prejudgment interest running from the date specified above.

       For the foregoing reasons, we reverse the amended final judgment and remand

for entry of a final judgment consistent with this opinion.

       REVERSED AND REMANDED.

WALLIS and LAMBERT, JJ., concur.




       15   Final payment was due thirty days after the renovations were completed.

                                              9
