By Jeffrey T. Donner, Esq.

Florida construction lawyers should pay close attention to the Fourth District’s April 1, 2026 decision in K & M Electric Supply, Inc. v. Brown Electrical Solutions, LLC. The opinion is important not merely because the claimant lost, but because of why it lost: the court held that a supplier’s notice of nonpayment under section 255.05 can be deemed “fraudulent” as a matter of law where the claim was prepared without even a basic investigation into what was actually recoverable under the statute.

That is a serious holding. On public projects, suppliers and subcontractors often treat the notice of nonpayment as a routine preservation device. This decision is a warning that the notice is not just a placeholder. If the amount claimed materially exceeds what the statute allows, the claimant may not merely lose the overstated portion of the claim. It may forfeit the bond claim altogether.

The Core Facts

The case arose from a public construction project at the Riviera Beach Water Treatment Plant. The general contractor obtained a payment bond, and an electrical subcontractor, Brown Electrical Solutions, purchased materials from K&M Electric Supply. After Brown failed to pay, K&M served a notice of nonpayment for approximately $123,000. The problem was that K&M, as a material supplier, could recover only for qualifying materials actually incorporated into the public improvement, because the materials were not specially fabricated. Yet the record showed that at most about $56,000 of the claimed materials were actually incorporated into the project. K&M had also included other nonrecoverable items, including legal fees and charges outside the proper scope of the bond claim.

The Fourth District affirmed summary judgment against K&M on the ground that the notice of nonpayment was fraudulent under section 255.05(2)(a)2.

What the Statute Says

Section 255.05 provides that a claimant who serves a fraudulent notice of nonpayment forfeits its rights under the bond. The statute defines a fraudulent notice as one in which the claimant has willfully exaggerated the amount unpaid, willfully included work not performed or materials not furnished for the subject improvement, or prepared the notice with such willful and gross negligence as to amount to a willful exaggeration. The statute also contains an important safety valve: a minor mistake, minor error, or good-faith dispute does not automatically invalidate the claim.

The decisive issue in K&M was not whether the supplier acted with subjective bad faith in the ordinary sense. The court expressly said that malicious intent was not the point. Instead, the court focused on the third prong of the statute: whether the notice had been prepared with such willful and gross negligence as to amount to a willful exaggeration.

Why the Fourth DCA Found Fraud as a Matter of Law

The majority’s reasoning was blunt. K&M made no investigation whatsoever before filing the notice of nonpayment. Rather than determine what materials had actually been incorporated into the public project, it simply claimed every dollar Brown had billed to the job. That, according to the court, was enough on this record to support summary judgment on the fraud defense.

The court emphasized four features of the claim: it included disallowed expenses, included items outside the subcontract’s scope, exceeded the total value of the subcontract itself, and claimed materials not actually incorporated into the project. Standing alone, the court suggested, some of these problems might not necessarily compel summary judgment. But taken together—and especially where the claim was about $123,000 and the recoverable amount was at most about $56,000—the court concluded that no reasonable factfinder could view the discrepancy as a “minor mistake.” On these facts, the court held that gross negligence was the only reasonable conclusion.

That is the significance of the case. The court did not merely find that K&M had overstated its demand. It held that the degree of overstatement, coupled with the complete absence of any pre-filing inquiry, crossed the line from an inflated claim into a statutory forfeiture.

The Decision’s Most Important Practical Message

The opinion effectively tells suppliers and lower-tier claimants that a notice of nonpayment is not something to be prepared on autopilot. On a public project, a supplier cannot simply rely on what its customer says was ordered “for the job” and then dump the full account balance into a bond claim. At least where the claimant’s rights turn on what was actually incorporated into the improvement, some pre-filing effort must be made to determine what is truly recoverable.

That does not necessarily mean a supplier must perform a full forensic audit or jobsite inspection in every case. The concurring opinion was careful to say the holding should be read narrowly and does not impose some sweeping new duty untethered to the statute. But the concurrence also made clear that a claimant invoking the protection of a public payment bond must make some reasonable effort to ensure that the amount claimed falls within the statute’s recoverable boundaries.

That language matters. It will almost certainly be cited by contractors and sureties in future cases to argue that claimants have an affirmative duty to verify statutory eligibility before serving a notice of nonpayment.

The Dissent’s Warning

Judge Gross dissented, and construction practitioners should read that dissent carefully because it highlights the likely battleground in future cases. The dissent argued that the majority violated two basic summary judgment principles: first, by failing to view the evidence in the light most favorable to the nonmovant, and second, by effectively supplying its own expert view of the standard of care for material suppliers without record evidence establishing industry custom or practice.

The dissent’s point was straightforward. Suppliers commonly rely on their customers’ designations of materials as being for a given project. According to the dissent, whether that reliance amounts to “willful and gross negligence” should ordinarily be a fact question, not something decided as a matter of law on summary judgment. The dissent also stressed that fraud issues are usually fact-intensive and rarely suited for summary judgment.

That critique has force. The majority attempted to cabin its holding to the “extreme facts” of this case, but the dissent correctly recognized that the opinion may influence future litigation well beyond these facts. Once an appellate court says that a claimant’s total lack of investigation can amount to gross negligence as a matter of law, defendants will try to expand that principle. The litigation will then shift to questions like: What counts as enough investigation? How much reliance on a subcontractor is reasonable? At what point does an overstatement cease being a mistake and become a forfeiture?

How This Case Fits with Existing Fraudulent Lien and Bond Law

The Fourth District did not present K&M as a doctrinal outlier. The opinion aligns itself with prior Florida cases in which claimants lost lien or bond rights after including plainly unauthorized amounts, nonlienable items, previously paid items, attorney’s fees, or work outside the contract. The court cited cases such as Newman v. Guerra, Viyella Co. v. Gomes, Hobbs Construction, Ponce Investments, Delta Painting, and Skidmore, Owings & Merrill as examples of Florida courts refusing to tolerate claims that materially overreach the statute or contract.

What distinguishes K&M is that it squarely places the absence of pre-filing inquiry at the center of the analysis. That gives the opinion broader operational significance. It is not just a case about what the claimant included. It is also a case about what the claimant failed to do before including it.

What Lawyers Should Tell Their Clients Now

For suppliers, subcontractors, and anyone serving section 255.05 notices, the lesson is obvious. Investigate first. Do not assume that every invoice coded to a project is recoverable on a public bond. Separate what was ordered from what was delivered, what was delivered from what was actually incorporated, and what is recoverable from what is merely part of the running account between supplier and customer. Exclude attorney’s fees, finance charges, and any other items not clearly authorized. And if there is uncertainty, narrow the claim rather than inflate it. K&M makes clear that overreaching can be fatal.

For contractors and sureties, K&M is now a powerful defense case. It gives them a framework for attacking inflated notices of nonpayment early and aggressively. Expect to see more motions arguing that a claimant’s failure to perform even a minimal investigation before filing supports the “fraudulent notice” defense as a matter of law.

For litigators, the case also reinforces a broader point about Florida’s post-2021 summary judgment regime. The court relied heavily on the modern directed-verdict framing. Once the movant’s proof established an extreme discrepancy and no meaningful pre-filing investigation, the burden shifted, and the claimant’s untimely affidavit about subjective non-willfulness was not enough to create a genuine issue for trial.

Final Thoughts

K & M Electric Supply is a consequential decision because it transforms what many claimants treat as a routine statutory notice into a high-risk event. The message from the Fourth District is that section 255.05 is remedial, but it is not forgiving of substantial overstatement. When a claimant serves a notice of nonpayment without grounding the amount in what the statute actually allows, the claim may be deemed fraudulent, and the consequence is forfeiture—not merely reduction.

That is the real takeaway. In Florida public construction bond practice, sloppiness in the notice stage is no longer just a drafting problem. After K&M, it can be dispositive.