Article from Stuart Sobel in Daily Business Review: The Art of Mediating Catastrophic Construction Claims

StuartSobel2013.jpgThe firm's Stuart Sobel has once again written an article that appeared in the annual special report on Alternative Dispute Resolution published by the Daily Business Review, South Florida's exclusive business daily and official court newspaper. Stuart's article, which was published in today's edition of the DBR and also appeared in Texas Lawyer and the Daily Report (Atlanta), focused on the use of formal mediation proceedings to resolve claims involving catastrophic construction accidents. Earlier this year he represented Miami Dade College in a $33.5 million mediated settlement that included 22 defendants for the collapse of a parking garage during construction.

Stuart's article reads:

Tragically, a collapsed structure introduces personal injuries, wrongful deaths, economic losses and disappointed expectations on top of the impact to the completion of the project. As such, any formal dispute resolution, whether it be arbitration, litigation or several of both types of proceedings, will involve many parties and claims as well as many issues related to each party and each claim.

Add to this, many parties will have insurance available, but the coverage may be offered in layers, with underlying and surplus policies introducing even more grist for the dispute mill. Insurance policies may have several of the construction participants as additional insureds, and they may also have subrogation waivers and other nuances that must be considered in working toward a just resolution. Additionally, there will also likely be performance bond sureties that will have indemnity rights to bring to the party.

Consider then what the trial or arbitration hearing will look like. How long will it take to select a jury given the number of peremptory challenges? How long will a simple side-bar in a jury trial take? How long do depositions take to conclude, with 20-plus parties each having the opportunity to question important lay and expert witnesses? And, how much will all this cost?

How then best to manage this not so rare occurrence? At the risk of being accused of blasphemy, the answer is to run a mediation track parallel to the formal dispute resolution track.

Statistics tell us that nearly 99 percent of all filed lawsuits are settled. The settlement rate of arbitrations is not quite as high, but we should take some solace in the fact that, in all likelihood, a well-managed mediation process can also resolve our catastrophic construction claim.

So then, what is a well-managed mediation process? It must begin with the recognition that mediation is, itself, a process, not an event. Mediation is most effective when the parties understand the process, which calls for everyone to be brought together with a common goal -- settling the claim -- even if the goals diverge when each party wants someone else's money to be used. Still, with everyone in the room, the opportunity for cooperative compromise in furtherance of the common goal becomes possible.

His article concludes:

When successful, mediation also allows for creative solutions that may not be available through formal dispute resolution. Correction of work, rather than the payment of money, may prove an attractive piece of a settlement. Resolutions may be kept confidential and private, while a jury verdict is never confidential.

Successful mediation requires a clear vision of what success will look like on paper. With so many parties, claims and issues, documenting a settlement reached in principle presents its own challenges.

Will all the insurers join in the settlement, disclosing their contributions and submitting to the jurisdiction of the court for the purpose of enforcement? If not, what default mechanism will work best to ensure that all of the parties pay, so that the plaintiff is not left with some paying, some not, and questions about collectability? Consider bringing a draft settlement agreement, leaving numbers blank, to the mediation so that it too can be negotiated, rather than leaving that task, with its own hazards, for the days or weeks after the dollar settlement is achieved.

Mediation provides parties the opportunity to see how their presentation of their case is received by others, and also to see their opponent's case articulated in a manner that allows for more objective consideration. The process enables principals to sit across from each other with the ability to control the outcome of the dispute -- as opposed to placing their fate in the hands of a judge, a jury or a panel of arbitrators. That control is appealing, and it has led the construction industry to embrace mediation as an important tool for the resolution of disputes involving construction catastrophes.

Our firm congratulates Stuart for sharing his insights into this important topic with the readers of the Daily Business Review, Texas Lawyer and the Daily Report. Click here to read the complete article in the DBR's website (registration required).


Firm Congratulates John Criste, Berenice Mottin-Berger on Florida Bar Admissions, Promotions as Associate Attorneys

The mentoring of young lawyers is paramount to their future success in the profession, and our firm is proud of our ongoing mentoring of law school students and graduates as law clerks with the firm before they become newly minted attorneys.

John I. Criste and Berenice M. Mottin-Berger are our firm's latest law clerks to be admitted as members of The Florida Bar. Both of them worked very closely with partner Stuart Sobel, who was honored to preside over their swearing in ceremony at our offices last week.

JCristeswearingin.jpgWe are also very pleased to welcome John and Berenice as our firm's newest associate attorneys. In addition to focusing on commercial litigation, they will both continue to work with Stuart as important new additions to our construction law practice group, and Berenice will also focus on community association law.

BMottinswearingin.jpgBoth John and Berenice graduated with cum laude honors from the University of Miami School of Law in May 2015. They were trial partners for the law school's Litigation Skills Program and the John T. Gaubatz moot court competition. John earned his bachelor's degree from Stanford University in 2011, and Berenice earned her bachelor's degree from the University of Miami in 2010.

On behalf of everyone at our firm, we congratulate John and Berenice on their admissions to the bar and promotions from law clerks to associates.

Herald Editorial Takes Note of PortMiami Tunnel's Success After its First Year

August 7, 2015, Posted by Stuart H. Sobel

StuartSobel2013.jpgA recent editorial by the Miami Herald commemorated the one-year anniversary of the opening of the PortMiami Tunnel by highlighting the impact that this remarkable project has already made.

The editorial reads:

. . . it has been largely smooth sailing for the $643-million tunnel, which came in $90 million under budget -- a feat unheard of for such massive projects. "We did it without the drama," Christopher Hodgkins, CEO of Miami Access Tunnel, told the Editorial Board on Monday.

Built through an innovative public/private partnership, the tunnel is operated and maintained by Miami Access Tunnel, which also built the facility through a contractor, the French firm Bouygues -- all with the help of a German-built tunnel boring machine.
In its first year, the tunnel has diverted 80 percent of the street-clogging cargo trucks headed for the port away from downtown Miami. Thousands of cruise-ship passengers have done the same. Now passengers landing at Miami International Airport don't even have to get on Biscayne Boulevard. They can travel on state roads 836 or 112 and connect to I-395 east to the tunnel, which spills out at the port.

MHerald2015.jpg"The tunnel has been a great success," Mr. Hodgkins said. "We have changed the quality of life in downtown Miami.''

Mr. Hodgkins is absolutely correct, as more than 14,000 vehicles are now using the tunnel every day and bypassing the city's downtown streets. He is also right about the fact the builder was able to avoid "the drama" that typically accompanies construction projects of such a massive scale, and I was pleased to have helped tunnel builder Bouygues Civil Works Florida to do so when it encountered unexpected site conditions that required additional work and funds to overcome. The issue could have created a lengthy impasse during construction, and my work as the lead legal counsel for the builder helped the company to secure a $58.5 million settlement that was the subject of a front-page article in the February 5, 2013 edition of the Daily Business Review titled "Dispute Resolution Board Reaches Rapid Settlement with PortMiami Tunnel Builder." The article read:

Imagine securing a $58.5 million settlement from a dispute panel that bans lawyers from the room.

That's the scenario Coral Gables attorney Stuart Sobel faced while representing Bouygues Civil Works Florida Inc., which is constructing the $1 billion tunnel that will connect PortMiami to I-395.

It didn't surprise Sobel -- he helped set up the tunnel's Technical Dispute Resolution Board when his client won the project.

The report chronicled how I devoted many hours to preparing for the hearings on liability before the Technical Dispute Resolution Board outside of normal schedules. "My work was at night, trying to anticipate the issues that were going to be discussed the next day," I was quoted in the article, which continued to read:

For the board presentation, Sobel put together PowerPoint presentations for his witnesses to use and coached them on how to answer the panel's anticipated questions. The board heard evidence for 13 days before making its decision largely in favor of Bouygues.

dbrlogo.jpgThe article explained that the tunnel dispute was over extra work for grouting the limestone as the company dug. "We determined there was a changed condition. The geologic conditions were different than what we'd been led to expect," I noted.

I was also quoted discussing the merits of using Technical Dispute Resolution Boards for major construction projects. "The concept is you have construction people dealing with construction problems," I concluded.

I am very proud of our firm's work in enabling the tunnel builder to quickly and fairly resolve this matter and avoid any delays during construction. The award-winning tunnel is emblematic of the potential for public/private partnerships, which are expected to continue growing as the predominant paradigm for such large scale infrastructure projects in the years to come.

Appellate Ruling Reinforces Significance of Contractors' Obligations Under the Florida Lien Law in Claims Against Construction Lenders

July 14, 2015, Posted by B. Michael Clark, Jr.

MichaelClark.jpgIn a recent appellate ruling with significant precedential implications for litigation by contractors against construction lenders in Florida, the court found that Florida's Construction Lien Law bars common law remedies for contractors to sue lenders for work performed by the contractors and other lienors. The court affirmed the lower court's summary judgment for a lender over a contractor's claims stemming from a failed housing development.

The case of Jax Utilities Management, Inc. v. Hancock Bank involved contractor Jax Utilities, developer Plummer Creek, LLC and successor lender Hancock Bank. In 2009, after the developer suffered financial difficulties it failed to pay Jax. As a result of the developer's financial difficulties, Hancock Bank obtained a final judgment of foreclosure against Plummer Creek and the project in September 2011. Subsequent to that, in December 2011, Jax filed a claim for breach of contract against Plummer Creek as well as claims for unjust enrichment, and it sought to impose an equitable lien against Hancock Bank.

The trial court issued a final judgment for Jax against Plummer Creek for more than $587,000, but it also granted a summary judgment to Hancock Bank finding that the contractor's equitable lien claim was barred by the one-year statute of limitations which governs actions to enforce equitable liens. It also found that §713.3471 of Florida's lien law precluded Jax's common law remedies.

On appeal, Jax and Hancock disagreed as to when the statute of limitations began to run to enforce an equitable lien. Jax took the position that it did not begin to run until the bank had instituted foreclosure proceedings. The First District Court of Appeals disagreed, holding, "By its plain language, section 95.11(5)(b) requires that a claim for equitable lien be brought within one year of the last furnishing of labor, services, or material for the improvement of real property."

1dca.jpgThe First District Court of Appeal also agreed with Hancock Bank's arguments that the lien law precluded Jax's common law claims for equitable lien and unjust enrichment. §713.3471 establishes the proper procedures for lenders to notify contractors if they decide to cease disbursing funds under a construction loan, and it also sets the damages for a bank's failure to provide notice. The court concluded that:

Section 713.3471(2) expressly immunizes lenders who provide notice, prescribes the damages where notice is not provided, and states that the cause of action cannot become the basis for an equitable lien claim. Moreover, a common law claim would conflict with the statute. If a lender complies with the statute, it has no liability. If the lender fails to comply, a contractor may seek damages as prescribed by the statute.

The court also noted that its holding was reinforced by the lack of a provision preserving common law remedies in the statute.

For contractors such as Jax, which had apparently earned the funds that it was not paid, the court's holding delivers a clear message that they cannot forgo their rights under the lien law in favor of common law claims against lenders. Even in cases in which a construction lender disregards the requirements under the lien law by not issuing the proper notice to the contractor when it decides to stop disbursing loan proceeds, the lender's liability is delineated solely by the statute.

Our firm's other construction law attorneys and I work very closely with contractors, subcontractors and other lienors to enable them to utilize all of their rights to recover the funds that they are owed. We write in this blog on a regular basis about important legal and business matters for the construction industry in Florida, and we encourage industry followers to submit their email address in the subscription box at the top right of the blog in order to automatically receive all of our future articles.

Interview with Firm's Nicholas Siegfried Featured in Surety Solutions Blog

NSiegfried2013.jpgThe firm's Nicholas D. Siegfried was interviewed as part of the Expert Interview Series for the Surety Solutions blog. Nicholas discusses construction law and some of the elements of the Florida Construction Lien Law in the article. Surety Solutions specializes in the Surety Bonds and has over 50 years of experience in the industry. Its clients range from local construction contractors to Fortune 500 companies, foreign conglomerates to financial institutions, government entities to hedge funds, and both public and privately held companies.

Click here to read the feature in the company's blog.


Amazing New Time-Lapse Video of One World Trade Center Construction; Firm Played Important Role in Resolving Dispute That Could Have Caused Significant Construction Delays

In recognition of the opening of One World Observatory in New York City, EarthCam has created a commemorative time-lapse video showing the building's construction progress from October 2004 to Memorial Day 2015. The firm's Stuart Sobel represented ADF Steel Corp. in 2012 in a lawsuit filed against the U.S. subsidiary of Canada-based ADF Group Inc. by WTC Tower 1 LLC, an assignee of 1 World Trade Center LLC owned by the Port Authority of New York and New Jersey. The suit alleged that ADF breached its contractual obligations by refusing to ship the steel for the 458-foot spire that tops the iconic new skyscraper. ADF had not been paid by its client, the subcontractor responsible for fabricating and erecting the steel, even though the Port Authority apparently paid the subcontractor for ADF's work. With Stuart's help, ADF Group settled the dispute, getting ADF paid, while allowing the steel to be shipped before the St. Lawrence Seaway froze over for the winter, thus insuring that the erection of the spire crowning the tower could proceed as scheduled.

Click below to watch the incredible new time-lapse video.

Appellate Ruling Adds Considerations for Trigger Date of Statute of Repose in Construction Defect Cases

May 15, 2015, Posted by Diane J. Zelmer

DianeZelmer.jpgA recent opinion by the Fifth District Court of Appeal has significant implications for the application of the statute of repose in construction defect cases.

In Cypress Fairway Condominium v. Bergeron Construction Co., the condominium association brought suit on February 2, 2011 on behalf of the condominium, and as assignee of claims held by the general contractor, for recovery of more than $15 million in damages caused by construction defects. Da Pau Enterprises, Inc., the only remaining defendant after other parties reached settlements, moved to dismiss and/or for summary judgment against the association, alleging that the ten-year statute of repose period expired three days prior to the date the litigation commenced.

The ten-year statute of repose in Section 95.11(3)(c) provides that actions for latent construction defects must commence within 10 years of the latest of the following four events:

  • the date of actual possession by the owner;
  • the date of the issuance of a certificate of occupancy;
  • the date of abandonment of construction if not completed; or
  • the date of completion or termination of the contract between the professional engineer, registered architect or licensed contractor and their employer.

At issue was the last of the four trigger events under Section 95.11(3)(c). The defendant argued that the statute of repose commenced the date the contractor submitted its Final Application for Payment on January 31, 2001, which signified the "completion of construction." However, the association contended that the repose period did not begin until the date final payment was actually paid by the owner on February 2, 2001, which signified the date of the "completion of contract." The trial court disagreed with the association and granted summary judgment to the defendant, dismissing its claims.

5DCA.JPGThe Fifth DCA reversed, reasoning that the plain unambiguous statutory language of Section 95.11(3)(c) required the completion of performance of the contract by both parties, and not just the completion of the performance of the contractor's duties under the contract. Thus, the statute of repose was not triggered upon completion of construction. Rather, here, the appellate panel held that the final act for the "completion of the contract" was final payment, and not three days earlier when the Final Application for Payment was submitted.

It is unclear how this decision will be applied by the courts when the owner fails to issue final payment or holds off on making the payment for a considerable length of time after the completion of construction and issuance of the certificate of occupancy. There are often disputes that arise resulting in the final payment being withheld, and as in Cypress v. Bergeron, three days can make a critical difference of whether or not the statute bars any claims.

This decision should serve to remind property owners who discover latent defects of the importance of consulting with highly qualified and experienced construction attorneys. Our firm's other construction lawyers and I write in this blog about important legal and business issues for the construction industry in Florida, and we encourage industry followers to submit their email address in the subscription box at the top right of the blog in order to automatically receive all of our future articles.

Stuart Sobel, Steven Siegfried and Michael Clark Secure $33.5 Million Settlement for Miami Dade College Garage Collapse, Sobel Discusses Settlement in Reports by NBC 6, The Miami Herald and Daily Business Review

The firm's Stuart Sobel, Steven Siegfried and Michael Clark represented Miami Dade College in securing a $33.5 million settlement over the partial collapse of its parking garage while it was under construction at the school's West Campus in Doral in 2012.

After repeated mediations over period of more than a year, the construction settlement that was finalized last week enabled all of the 22 parties that were involved to avoid the uncertainties and vicissitudes of litigation.

According to Stuart, the most significant obstacle for the college was to have all of the parties accept the engineering reality that the remaining portion of the newly constructed garage had to be demolished, including removal of its foundation, with a new garage being constructed from the ground up. Based on its belief that it was the safest and most appropriate course, the college demolished the remaining portion of the garage while the mediation was still in progress and before a settlement had been reached. It relied on its trial team to either convince the responsible parties and their insurers through the mediation process or, if necessary, convince a jury through trial that its action was justified. Through the settlement, the SRHL trial team achieved consensus supporting the college's course of action.

Click below to watch the video of the report by Willard Shepard of NBC 6, click here to read the article from the Daily Business Review (registration required), and click here for the article that appeared in The Miami Herald.

MHerald2015.jpg dbrlogo.jpg

Federal Appellate Court Ruling Finds Florida Homebuilder's CGL Insurer Must Cover Defect Lawsuit Because State Has Not Determined Trigger for Damage Occurring in Policy Period

May 7, 2015, Posted by B. Michael Clark, Jr.

MichaelClark.jpgIn the recent decision of Carithers v. Mid-Continent Casualty Company, the Eleventh Circuit Court of Appeals affirmed a trial court's decision that a general liability carrier had an obligation to defend a homebuilder and satisfy a $90,000 consent judgment, which had been entered against the homebuilder.

The appeal stemmed from a lawsuit filed by homeowners Hugh and Katherine Carithers against Cronk Duch Miller, their homebuilder. The Carithers alleged that their home, built in 2005, had been constructed with numerous defects. The suit alleged that shoddy work by subcontractors had resulted in a faulty electrical system, damage to tile and exterior bricks and a leaky balcony that caused wood rot in the garage.

The court first examined what appropriate "trigger" controlled the date on which the property damage "occurred" and thus what policy period was implicated. The court noted that Florida state courts were divided as to whether the injury occurred when it "in fact" occurred or when it "manifested" itself. In this instance, the damages allegedly "manifested" themselves in 2010 after the Mid-Continent policy had expired. However, the trial court found that, although the injury might have manifested itself in 2010, it "in fact" occurred in 2005 giving rise to coverage. Notably, in affirming the trial court, the appellate court limited its holding that the "in fact" trigger applied to this case, noting that its application would be problematic where it is difficult or impossible to determine when the injury actually occurred:

"We note the difficulty that may arise, in cases such as this one, where the property damage is latent, and is discovered much later. We also note that the district court found as a fact in this case that the property was damaged in 2005. For this reason, we limit our holding to the facts of this case, and express no opinion on what the trigger should be where it is difficult (or impossible) to determine when the property was damaged. We only hold that the district court did not err in applying the injury-in-fact trigger in this case."

11circourtappeals.jpgIn the remainder of the decision the appellate court applied Florida law from United States Fire Insurance Co. v. J.S.U.B., Inc. and its progeny in concluding what did and did not constitute covered property damage. Generally speaking, the J.S.U.B. court held that damage which resulted from the defective work of a subcontractor constitutes covered property damage. The Carithers court followed Amerisure Mutual Ins. Co. v. Auchter Co., 673 F.3d 1294 (11th Cir. 2012), which held that property damage constituted an occurrence, giving rise to coverage, if it was damage to work other than that which the subcontractor performed. For instance, if the bricks were damaged by the application of the brick coating, and the installation of the bricks and application of the brick coating was performed by two separate subcontractors, the damage to the brick constituted property damage.

Most notably, perhaps, the court held that the cost to demolish and repair the defective balcony, which was not otherwise covered, was covered property damage because it was necessary to repair the damage to the non-defective garage. The court held that this was part of the "cost of repairing damage caused by the defective work . . . ", quoting U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871, 889 (Fla. 2007).

Complications often arise when ongoing property damage remains latent and is not discovered for years, and this decision will only add some clarity to cases involving the exact set of circumstances and policy language that applied in this case. However, the court's decision to cover "rip and tear" costs as property damage could have far reaching implications.

Recent Case Reiterates that a Construction Lien Must Be Limited to Only Claims Under a Single Contract

April 23, 2015, Posted by B. Michael Clark, Jr.

MichaelClark.jpgA recent case involving an engineering firm's lawsuit for nonpayment against a Miami Beach condominium association illustrates the importance for contractors and engineers to file liens for work performed under a single contract as opposed to umbrella liens for services rendered under multiple contracts.

Pursuant to Florida law, construction liens may only be imposed for work performed under a single contract. However, an engineering firm sought to recover more than $107,000 for concrete and stucco remediation, replacement windows, sliding glass doors, cabanas and a new entrance as part of its work under nine separate contracts with the condominium association.

The Miami-Dade Circuit Court Judge overseeing the case issued partial summary judgment in favor of the condominium association. The decision extinguished the lien for failing to comply with Florida Statute §713.09, which states: "A lienor is required to record only one claim of lien covering his or her entire demand against the real property when the amount demanded is for labor or services or material furnished for more than one improvement under the same direct contract."

It is well established in Florida that separate liens are required for claims attributable to separate contracts, yet filing mistakes such as this one by the engineering firm and its attorneys occur from time to time. flbarbcconstruction.jpg As liens can be filed against real estate only within 90 days of the final furnishing of non-corrective work being performed, the repercussions of flawed lien filings such as the one in this case can prove to be very costly for construction and design firms.

This case is yet another example of the importance of working exclusively with highly experienced construction attorneys for all matters involving construction-related liens and litigation. Our firm's other construction attorneys and I write regularly in this blog about important legal and business issues for construction professionals in Florida, and we encourage industry followers to submit their email address in the subscription box at the top right of the blog in order to automatically receive all of our future articles.

My Presentation on "Expert Opinion Testimony in Florida - Navigating the Mine Field" to The Florida Bar's 8th Annual Construction Law Institute

April 8, 2015, Posted by Stuart H. Sobel

StuartSobel2013.jpgThe Florida Bar Continuing Legal Education Committee and the Construction Law Committee of The Florida Bar Real Property, Probate and Trust Law Section's 8th Annual Construction Law Institute took place in Orlando March 12-14, 2015, and I was privileged to have had the opportunity to work with The Honorable John W. Thornton, Judge of the Complex Business Division of the Circuit Court for Miami-Dade County, presenting "Expert Opinion Testimony in Florida: Navigating the Mine Field."

Our presentation was based on a paper that I developed together with one of our firm's outstanding law clerks, John Criste. It began with a discussion of the necessity for the use of expert testimony due to the technical nature of most construction disputes, which typically involve defects in design, delays, building codes, contractual obligations and the apportion of responsibility. We then covered the guiding principles behind the use of expert testimony, including the "Daubert Reliability Test" and how it applies in construction litigation.

Judge Thornton and I then turned the discussion to the standards that should be used to qualify an expert, and how experts can rely on reports by others if they were used to help form their opinion or conclusion. We covered the statutes governing the use and admissibility of lay opinion testimony, including that of project of personnel, and we also discussed important case management considerations, including the order of the expert disclosures, whether written reports are required, depositions of experts, and the timing of Daubert challenges. We concluded with a discussion of the effective use of non-testifying experts to translate technical construction information for attorneys and find the potential loopholes in your client's case as well as in the opposition's arguments.

The discussion was lively, with very active participation from the standing room audience of some 300 construction lawyers from throughout Florida. Thanks, also, to the insightful comments of audience member, Fourth District Court of Appeal Chief Judge Dorian Damoorgian, the presentation was very well received.

Click here for the complete paper.

Firm's Attorneys to Serve as Featured Speakers at Important Upcoming Construction Industry Seminars

Our firm's construction attorneys have played leading roles in the education and training of our peers in the practice of construction law as well as other construction industry professionals for more than 30 years. The firm's founding partner, Steven Siegfried has served as an adjunct professor of construction law at the University of Miami School of Law since 1984, and many of our other partners and associates who focus on construction law play very active roles as speakers and panelists at some of industry's most respected conferences and seminars in Florida.

In the coming months, our attorneys will be conducting presentations and leading courses at the following construction industry seminars:

"Fundamentals of the Florida Building Codes" Seminar

Handling construction projects in Florida can be a grueling process, but armed with the necessary knowledge, the most complex of situations can be overcome. On March 5, 2015, the firm's Jason Rodgers-Da Cruz will be presenting a complimentary breakfast seminar for all LBA members. The course, which is titled "Fundamentals of the Florida Building Code," will explain the basic principles of Florida building codes in an effort to help attendees avoid sticky complications such as failed inspections and other costly project delays throughout the building process.

The seminar will take place at our Coral Gables office from 7:30 to 9 a.m. For more information or to register to attend, contact the firm's Stephanie Bonilla at (305) 442-8536 or via email at

SRHLseminar.jpgThe American Bar Association Forum on Construction Law's "Stick & Bricks" Seminar

Taking place in six different markets across the country on Friday, February 27, 2015, this event covers the key elements and terminology of all aspects of construction systems and technology, including site work and foundations, structural steel, masonry, building enclosures, and mechanical, electrical, plumbing, and roofing systems. The program is designed to be particularly useful for construction lawyers who need to understand how buildings and building systems are constructed, and how to "speak the same language" as their clients and other construction professionals. Firm partners Stuart Sobel and B. Michael Clark, Jr. will be among the featured speakers at the event, which locally will take place in Fort Lauderdale at One East Broward Blvd., Suite 1800. Click here for additional information.

The Florida Bar's Eighth Annual Construction Law Institute

The firm's Stuart Sobel will be one of the featured speakers at this event, which offers advanced level courses and CLE credits for Florida Bar members. Together with the Honorable John W. Thornton, Sobel will lead the seminar and discussion on expert opinion testimony in construction litigation. The firm is also a proud sponsor of the event, which is taking place March 12-14, 2015, at the JW Marriott Orlando Grande Lakes. Click here for additional information and registration.

Mechanics' Liens in Florida Seminar

This seminar, which qualifies for 7 CLE credits for attorneys and CPE credits for accountants, focuses on the strict deadlines and statutory requirements that can make mechanics' liens challenging to manage. It covers how contractors and subcontractors can fully utilize their mechanics' lien rights, and how owners can protect themselves from lien claims. Firm partners Elisabeth D. Kozlow and Michael J. Kurzman will be among the five featured faculty members at the event. Kozlow will lead the first course of the day titled "Lien Entitlement: Activities, Materials and Properties Lienable," which covers the scope of activities and materials that are lienable, claimant classifications and rights, and the interests subject to attachment under mechanics' liens. Kurzman will conduct the course titled "Notices and Claims: Preserve and Perfect Your Lien Rights While Avoiding Fatal Defects." He will cover lien timing issues, including the last day of work and unusual timing situations, lien notices, service and perfection/recording requirements, title searches, and sample lien language and forms.

The event is taking place on Tuesday, May 12, 2015, at the Courtyard Marriott Miami at 200 S.E. 2nd Avenue in downtown Miami. Click here for additional information and online registration.

Changes to Construction Defect Claims Process Being Considered by Florida Legislature

January 22, 2015, Posted by B. Michael Clark, Jr.

Michael Clark Gort photo.jpgDuring the 2015 legislative session in Tallahassee, the Florida construction industry will be keeping a close eye on the outcome for House of Representatives Bill 87 and the corresponding bill in the Senate that is expected to be filed. The bill was developed with the assistance of the South Florida Chapter of the Associated General Contractors of America, and it seeks to amend Chapter 558, Florida Statutes, to address several issues with the current construction defect notice process in order to help contractors to address these claims and avoid litigation.

The proposed changes include:

  • Revising the legislative intent to address the involvement of insurers.
  • Revising the legislative intent to indicate that Chapter 558 is intended to provide an opportunity to resolve construction defect claims through confidential settlement negotiations.
  • Revising the definition of the term "Completion of a building or improvement" to include issuance of a temporary certificate of occupancy.
  • Providing additional requirements for a notice of claim, including the identification of specific location(s) of each alleged construction defect, as well as the specific provisions of the building code, project plans, project drawings, project specifications, or other documentation, information, or authority that serve as the basis of the claim for each alleged construction defect.
  • Revising the requirements for a response to a notice of claim to address monetary settlement offers.
  • Providing that, if a claimant proceeds with an action that includes any claim previously resolved in accordance with Chapter 558, the associated portion of that action shall be deemed frivolous.
  • Providing for sanctions for such frivolous claims, including attorneys' fees.
  • Revising the provisions relating to production of records requested under Chapter 558, to include a claimant's maintenance records and other documents related to the discovery, investigation, causation, and extent of the alleged defects identified in the notice of claim and any resulting damages.
  • Providing for sanctions for construction defect claims that were solely the fault of a claimant or its agents, including costs of investigation, testing, and attorneys' fees.

The bill also includes additional amendments to conform other statutory sections to the revised definition of the term "Completion of a building or improvement." It is now before the House's Civil Justice Subcommittee, and it will also be referred to the Business & Professions Subcommittee and the Judiciary Committee.

Our firm's other construction law attorneys and I will continue to monitor the status and outcome for this legislation in the coming months, and we will write about this and other important legal and business issues for the Florida construction industry in this blog. We encourage industry followers to submit their email address in the subscription box at the top right of the blog in order to automatically receive all of our future articles.

First-Time Florida Developers from Far and Wide Are behind Many of South Florida's New Condo Developments

November 10, 2014, Posted by B. Michael Clark, Jr.

Michael Clark Gort photo.jpgMiami has a level of international appeal and prestige that is uniquely its own. Annual events such as the Miami Open tennis tournament and Art Basel lure jet-setters from across the globe, and it is largely due to these well-heeled visitors that the area's market for new luxury condominiums has been able to bounce back as strong as it has in the last couple of years. Real estate investors who make their primary residences abroad have become the predominant class of buyers for many of the South Florida area's new condominium developments.

The boom of international investors has had a tremendous effect on South Florida. Land that had once been untouched by most developers is now seeing a robust amount of activity. Nearly 300 towers are expected to be built within the tri-county area in the near future.

constructionMany of these projects are being built by developers who are new to South Florida. We are now seeing scores of international or out-of-state developers who have never developed properties in Florida entering the market with high-profile new projects. New developers are coming in strong, but they must be wary of the obstacles that come with building condominiums and other large projects in Florida. Laws and business practices are not consistent from country to country or even state to state. Consequently, otherwise experienced developers who are new to Florida will be required to educate themselves with development in South Florida in order to maximize their chances of successfully completing their projects.

With the right team, development and construction of a project can be simplified, and obstacles by-passed. Our firm's other attorneys who are board certified by The Florida Bar in construction law and I focus our practices solely on construction matters, and we offer developers as well as contractors, engineers, architects, subcontractors, suppliers and other industry members the experienced guidance and representation that can enable them to build successfully in Florida.

Appellate Ruling for Contractor Represented by Firm's Michael Kurzman is Chronicled by Daily Business Review

MichaelKurzman_59661.jpgThe recent ruling by the Third District Court of Appeal that firm shareholder Michael Kurzman wrote about in the preceding blog post below was the subject of a front-page article in the Oct. 1 issue of the Daily Business Review. The article, which was titled "Third DCA Says Company Can't Foreclose on Itself," focused on the tactics used by a Coral Gables developer to attempt to eliminate the claims and liens filed against it by general contractor CDC Builders, Inc.

CDC Builders was represented on appeal by Michael Kurzman, together with John K. Shubin and Deana D. Falce of Shubin & Bass. The South Florida Chapter of the Associated General Contractors also provided an Amicus Curiae brief through Gary Stein of Pecar and Abramson.

The article reads:

. . . [Developer Brian] McBride struggled to repay SunTrust and took an "unusual step" of renegotiating the construction loan, court records show.

As a condition, SunTrust required curtailment payments that reduced its exposure. McBride authorized SunTrust to debit these payments from other accounts he owned or controlled at the bank.

"He specifically directed SunTrust that these payments should not be treated as reductions in the principal amount of the loan, which would have reduced the interest on the loans. Instead, he insisted the payments be treated as junior liens against the property," Judge Thomas Logue wrote in a Sept. 17 opinion. "He took this unusual step, the SunTrust officials noted, in order to limit the equity available to satisfy the contractor's construction liens."

"These statements by SunTrust officials support an inference that McBride was taking affirmative steps for the express purpose of defeating the contractor's construction liens in the event that a court upheld the liens," Logue concluded.

dbr logo.jpg

[Development company] Biltmore took one more step in its fight with the contractor.

Even though SunTrust was not marketing the construction loan, a Biltmore affiliate approached the bank to purchase the debt. McBride did not ask for extensions. Instead Biltmore used a new loan from Royal Bank of Canada to purchase the SunTrust loan at full face value in 2010, court records show.

"BSDI was able to obtain this loan although it had no assets," Logue wrote. "When questioned, McBride could not recall where the collateral or guarantees for the Royal Bank loan originated. He could not recall whether he had guaranteed the $10 million loan."

Once Biltmore gained control of the note, it moved to foreclose on the property, which would have wiped out secondary liens like the builder's lien.

"They foreclosed on their own company and loan," Kurzman said. "They realized they owed my client $2.3 million they didn't want to pay, and that's when they got crafty."

As Michael concluded in his blog post about the case:

"A contrary decision at the appellate level could have proven to be particularly problematic for Florida's construction industry, as it would have surely led to other developers applying this same scheme in order to terminate construction liens and avoid paying their contractors, subcontractors and material suppliers. Thankfully for CDC as well as for the health of the construction industry in Florida, that will not be the case."

We congratulate Michael, John, Deana and Gary on this extremely important win for firm client CDC Builders as well as for the Florida construction industry.

Click here to read the complete article in the Daily Business Review website (registration required).