SEASCAPE RESTAURANTS, INC., APPELLANT,
v.
VAN D. COSTAS, INC. D/B/A CUSTOM POOLS AND SPAS, APPELLEE
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Reversed and remanded because Custom Pools improperly billed subcontractor services as direct labor, entitling it only to subcontractor costs plus 20% profit rather than hourly rates plus 15% overhead.
A contractor who uses subcontractors must bill them at cost plus 20% profit, not as direct labor at hourly rates plus overhead, when the contract distinguishes between labor and subcontractor charges.
[1] When a construction contract distinguishes between direct labor rates and subcontractor markups, a contractor must bill subcontractor services at actual cost plus the spe…
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Join FLexlaw to unlock all legal intelligenceCustom Pools agreed to create a mystical entrance to a restaurant owned by Seascape under a written contract specifying different rates for direct lab…
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PER CURIAM.
Appellee (Custom Pools) agreed to create a “mystical entrance” to the Magic Moment Restaurant which was owned and operated by appellant (Seascape). The parties entered into a written agreement which provided for payment as follows:
$22.50 per hour, per man. Truck charges: Dump Truck, $22.50 per hour, Loader, $15.50 per hour. Total labor & materials Plus 15% overhead, Custom Pool labor. Plus 20% profit on subs and materials.
As the work proceeded, the parties had various disagreements. Custom Pools ultimately sued Seascape for monies remaining due under the contract. Seascape counterclaimed for damages for inferior work plus other relief. The court ultimately entered judgment for Custom Pools in the sum of $22,910.75.
Seascape raises only one point which has merit. As part of the billing upon which the court made its award, Custom Pools invoiced for the services of Payton (cement work), Long (carpentry), and Marceau (masonry) as Custom Pool labór, thereby charging an hourly rate plus 15% overhead. Actually, these parties were subcontractors who had charged Custom Pools much less for their services. Therefore, Custom Pools was only entitled to reimbursement for their charges plus a 20% profit.
The judgment is reversed, and the case is remanded for entry of a reduced judgment which will reflect the balance owing to Custom Pools according to the analysis set forth above.
BOARDMAN, A.C.J., and GRIMES and DANAHY, JJ., concur.