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.

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[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).

Appellate Win for Contractor Client Also Represents a Big Win for the Construction Industry

September 25, 2014, Posted by Michael J. Kurzman

MichaelKurzman_59661.jpgOn behalf of my client CDC Builders, Inc., I was very pleased to have served as the company's lead trial court counsel and appellate co-counsel (special thank you to John K. Shubin and Deana D. Falce with Shubin & Bass, P.A.for all of their hard work on this case) in its recent successful appeal before the Third District Court of Appeal. CDC appealed a trial court's decision that could have had significant negative implications for Florida's construction industry. Indeed, we were assisted on the appeal by the South Florida Chapter of the Associated General Contractors in an Amicus Curiae brief, as this case was of critical importance to the construction industry.

In the case of CDC Builders, Inc., v. Biltmore-Sevilla Debt Investors, LLC, the Third District Court of Appeal reversed the lower court's summary judgment, which allowed a developer (through a newly created, developer controlled entity) to purchase its own construction loan from its lender and foreclose on the loan expressly for the purpose of:

  • eliminating the construction liens filed against it by CDC, and
  • transferring the developers' only assets (the real property) to the newly created, developer controlled entity.
This had the effect of extinguishing CDC's construction liens and rendering the developer entities judgment-proof, leaving CDC with no ability to get paid for work performed, while allowing the original developer to obtain ownership of the real property (through the newly created, developer controlled entity) with the benefits of CDC's unpaid hard work. The trial court found that the developers' brazen maneuver was legal and allowed for the foreclosure to proceed.

Fortunately for CDC as well as other members of Florida's construction industry, the Third District Court of Appeal reversed the lower court's decision and, in so doing, prevented the creation of a new formula for unscrupulous Florida developers to cheat their contractors, subcontractors or material suppliers out of payment for work performed or materials provided.

In this case, Riviera Biltmore, Riviera Sevilla and Riviera Almeria (all mostly owned and controlled by Brian McBride of Riviera Development, retained CDC to build 25 luxury homes and townhomes on several parcels in the Biltmore Hotel area of Coral Gables. The developers then borrowed $20 million from SunTrust to finance the construction. To initiate the construction loan, SunTrust required that Brian McBride and McBride Family Properties provide personal guarantees. The McBride family (original owners of the NFL's Cleveland Browns) is a wealthy and successful family with deep roots in Cleveland and Coral Gables.

Consistent with the construction loan documents which limited the number of spec homes that could be built at any one time, the developers directed CDC to begin construction on 8 of the 25 homes. When the economy soured, the developers exercised their contractual right to terminate the contracts for convenience but requested that CDC complete the eight homes under construction. CDC continued working and also presented the developers with a claim for lost profit on the 17 homes that were terminated for convenience, per the terms of the written contracts. To hedge their exposure, the developers began withholding payments from CDC for work being performed on the eight homes under construction. The developers asserted improper billings as a basis for withholding payments. Despite reduced payments and eventual non-payment of its monthly draws, CDC completed the eight homes and obtained certificates of occupancy from the City of Coral Gables.

CDC recorded claims of lien for the unpaid work performed on the constructed homes, and it filed suit seeking money for the work performed and unpaid, money for the lost profits on the homes not constructed, and foreclosure of its construction liens. The construction liens covered the work performed and unpaid on the homes, but they did not cover the claims for lost profits on work not performed, as those items are non-lienable under Florida law.

When the construction loan matured, McBride (as the personal guarantor of the loan) paid curtailment fees from his other companies to SunTrust to extend the loan several times. Then, rather than extending the loan further (which would have had the effect of reducing the loan and increasing equity in the property for the benefit of CDC), the developers took an extremely untoward and questionable next step. McBride created a new LLC owned by other LLCs made up of him and his family members, acquired a new loan from another lender and used the funds to have this new LLC acquire an assignment of the SunTrust construction loan and mortgages for the full amount owed to SunTrust. In internal documents, SunTrust stated that the loan was paid off by the borrower.

3rd district court of appeal.jpgMcBride's new LLC then held a first priority interest because it had "purchased" the original SunTrust construction loan. McBride's new LLC then filed a foreclosure action against the developers (McBride's other developer entities) and CDC in order to eliminate CDC's liens as subordinate liens, and to transfer the real property (developers' only assets) to McBride's new LLC. The trial court found the crafty maneuver to be legal, and thankfully for CDC as well as many other participants in Florida's construction industry, the appellate court disagreed.

In a lengthy 16-page opinion, the Third DCA stated in relevant part as follows:

"The law does not permit a person to borrow money from a bank, give the bank a mortgage, incur additional liens and junior mortgages on the property, purchase the mortgage back from the bank, and then foreclose on the mortgage for the primary purpose of eliminating the additional liens and junior mortgages . . . [I]nvestors cannot grant mortgages, contract for the improvement of the property mortgaged, and then use a network of companies to purchase and foreclose the mortgage for the primary purpose of extinguishing the construction liens that increased the value of the property. To hold otherwise would undermine the long-standing principle . . . persons cannot do indirectly what they are not permitted to do directly."

Unquestionably, fairness and justice prevailed in this case. Unfortunately, the developers delayed payment to CDC by years and caused CDC to incur significant attorney's fees and costs, at great sacrifice, to right this wrong.

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.

Fourth District Court of Appeal: Waiver of Jury Trial Provision Does Not Invalidate Arbitration Clause in Construction Contract

September 2, 2014, Posted by Nicholas D. Siegfried

Nick Siegfried 2013.jpgA recent ruling by the Fourth District Court of Appeal reiterates that Florida's courts will favor arbitration when there is a clear arbitration provision in construction contracts, even if the contracts also include a jury waiver provision.

In the case of Bari Builders, Inc. v. Hovstone Properties Florida, LLC, a condominium association sued the developer for construction defects, and the developer filed a third-party complaint against Bari Builders (its subcontractor). The subcontract with Bari included both a provision that the parties agreed to binding arbitration to resolve any claim as well as a separate provision stating that "the parties waive the right to jury and agree to determination of all facts by the court."

Hovstone prevailed in having the trial court find that the jury waiver provision in its subcontract with Bari rendered the arbitration provision ambiguous and unenforceable. 4th DCA photo.jpg The Fourth DCA reversed this decision, finding that under Florida law arbitration is a preferred method of dispute resolution, and all doubt regarding the scope of an arbitration clause should be resolved in favor of arbitration. The appellate panel also found that the two provisions were actually not in conflict, as the jury waiver provision would be applied if the parties waived their right to arbitrate.

The ruling reads:

"The jury waiver language in the subcontract does not render the arbitration provision ambiguous, as the two provisions can be reconciled in favor of arbitration. Read together, the provisions provide that the parties agree to submit any 'controversy or claim' to arbitration and, thereafter, any award may be reduced to judgment in court without the right to a jury trial. Additionally, in the event that the parties choose to waive their right to arbitration, the clause provides that any 'action' in court will be in the form of a bench trial."

This recent ruling is another reminder to developers and general contractors of the significance of arbitration clauses in construction contracts and subcontracts, and it highlights the importance of working closely with qualified and experienced legal counsel in order to ensure that the provisions of their subcontracts adhere with those of the primary contracts for all construction projects.

Our firm's other construction law attorneys and I write regularly in this blog about important legal and business issues that impact 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 Played Critical Role in Helping PortMiami Tunnel Builder to Resolve Dispute, Avoid Delay as Chronicled in Report from the Daily Business Review

Stuart Sobel 2013.jpgThe firm's Stuart Sobel played a very important role in helping the builder of the new PortMiami Tunnel, which opened for traffic last month, to resolve a significant dispute and avoid a potentially lengthy delay during construction. Stuart served as the lead legal counsel for tunnel builder Bouygues Civil Works Florida, Inc., and he was instrumental in helping 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.

The article, which was titled "Dispute Resolution Board Reaches Rapid Settlement with PortMiami Tunnel Builder," 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 Stuart devoted many hours to preparing for the hearings on liability before the Technical Dispute Resolution Board outside of normal schedules.

dbr logo.jpg"My work was at night, trying to anticipate the issues that were going to be discussed the next day," he was quoted as saying 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."

The 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," Stuart noted.

Stuart is 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," he said.

On behalf of all of the attorneys and professionals at our firm, we congratulate Stuart on his work in helping the builder of this vital new infrastructure project for South Florida to quickly resolve this dispute and avoid a delay. Click below to watch a remarkable time lapse video that illustrates the extraordinary work that went into the construction of the new PortMiami Tunnel.

Guest Column by Firm's Stuart Sobel on the Decline in Trials Appears in Daily Business Review

Stuart Sobel 2013.jpgPartner Stuart Sobel has authored a number of guest columns that have appeared in the Daily Business Review and the National Law Journal during the last several years, and his latest article published in the July 3 edition of the Daily Business Review is drawing considerable attention by the South Florida legal community.

Stuart's column echoed the newspaper's main article for its Litigation Special Report about the decline in trials, especially jury trials, and its impact in our judicial system. He wrote:

About 99.7 percent of cases are resolved without a jury trial. While this may be a testament to other means of resolution, it drastically shrinks the universe of opportunity for trial experience.

Now as a generation of lawyers matures without the cauldron of the courtroom within which to galvanize their skills, many of today's attorneys seek desperately to avoid trial -- exacerbating the loss of experience.

And since our judges are most often selected from our bar of attorneys, those lawyers without trial experience become judges without trial experience. Trials conducted by these judges will become less dependable as an effective means for dispute resolution.

Ultimately, this will intensify the public's negative perception of our justice system in general, and it will undermine the public's confidence in the reliability of a trial as the ultimate means of dispute resolution in particular. Scary.

Stuart concludes:

Can we control the out-of-control discovery and over-lawyering of cases before trial so that budgets are not exhausted and litigants can actually afford the risk of trial?

Hourly lawyers and lawyers wary of malpractice tend to over-lawyer cases until they get close to trial. Then they hedge their bet and begin to persuade clients that trials are just too risky.

Perhaps, if we look to our own practices, we can instead do only what is really necessary to prepare to present a case in trial -- and then present it.

In the process, we save clients money, gain trial experience and restore faith in the system. Just a thought.

Stuart is receiving a great deal of positive feedback and comments from South Florida attorneys and judges on his article, and we hope that the sentiments that he expressed help to bring some added perspective and insight on this critical issue.

Click here to read Stuart's complete article.

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Appellate Decision Finds Contractor's Lien Rights Can Expire in Arbitration Cases

July 14, 2014, Posted by Nicholas D. Siegfried

Nick Siegfried 2013.jpgFlorida's Second District Court of Appeal recently issued an important opinion in the case of Snell v. Mott's Contracting Services, Inc., over the issue of lien rights and the differences between arbitration and litigation.

The case involves a construction contract between homeowners and a contractor that included a provision calling for disputes to be resolved through arbitration. When a dispute arose, the contractor recorded its claim of lien, and the homeowners filed a lawsuit asking the court to determine that the lien was invalid. The contractor responded by asking the court to stay the litigation and compel the parties to arbitration, as stipulated under the contract, and the court agreed.

After the arbitration proceeding, the arbitrator found in favor of the contractor and determined that it was entitled to recover its attorney's fees in accordance with the Florida Construction Lien Law.

2dca.jpgHowever, the appellate court found that the contractor did not bring an action "in a court of competent jurisdiction" within one year of recording its lien as required under the lien law because it had requested to have the dispute resolved through arbitration. The appellate panel found that the contractor's rights under the construction lien law had expired, and it now had no legal basis for recovering its attorney's fees.

Arbitration has become a popular and effective alternative to litigation in the construction field, and this recent decision now calls into question how contractors and other lienors in the industry can protect themselves if they turn to arbitration to resolve a dispute as stipulated by their contracts. Given this ruling, lienholders would now be well advised to first file an action in a court of competent jurisdiction within a year and promptly request that the court stay the proceedings so that the parties can turn to arbitration to resolve the dispute. Otherwise, they may risk losing their right to recover fees or even enforce a lien.

Third DCA Ruling Reinforces the Limited Scope of Courts in Reviewing Arbitration Awards

June 30, 2014, Posted by Nicholas D. Siegfried

Nick Siegfried 2013.jpgArbitration is one of the most common forms of dispute resolution in construction today, but the recent ruling by the Third District Court of Appeal illustrates some of the difficulties that parties to arbitration proceedings can face in appealing or vacating the arbitrator's award.

In The Village of Dolphin Commerce Center, LLC v. Construction Service Solutions, LLC, the contractor was not licensed at the time of the contract and became licensed after the execution of the contract with the Dolphin Commerce Center. The contractor recorded a construction lien subsequent to a payment dispute along with a demand for arbitration with the American Arbitration Association pursuant to the contract. The property owner responded by asserting that the contract was unenforceable under Florida Statute s. 489.128 which provides: "As a matter of public policy, contracts entered into . . . by an unlicensed contractor shall be unenforceable in law or in equity by the unlicensed contractor." Section 489.128 further provides that, "[i]f a contract is rendered unenforceable under this section, no lien or bond claim shall exist in favor of the unlicensed contractor."

arblogo.jpgThe owner also filed suit in circuit court seeking to declare that that the contractor's claim of lien was unenforceable because of the contractor's unlicensed status at the time of contract. However, the court ruled that the parties were compelled to arbitrate the dispute.

The owner, at the start of the arbitration, never objected to the arbitrator's jurisdiction to rule on whether the contractor's unlicensed status at the time of contract prevented it from enforcing the contract and the construction lien. The contractor went on to succeed in the arbitration and then moved to enforce the arbitration award in circuit court. The owner asked the court to vacate the award based on the unenforceability of the contract and lien because the contractor was not properly licensed. When the trial court affirmed the arbitration award, the owner appealed.

The Third DCA was asked to determine whether the arbitrator had jurisdiction to determine the enforceability of the contract and the lien pursuant to s. 489.128. The unanimous opinion held that "the issue of enforceability was submitted to the [arbitration] panel and neither party objected. As such, based on the American Arbitration Association rules, the panel had jurisdiction to determine the issue. To ask the trial court to revisit the issue would require the trial court to step into an appellate position. The Florida Arbitration Statutes do not provide for such. Pursuant to section 682.13, Florida Statutes, the authority of the trial court to vacate an arbitration award is very narrow."

3rd district court of appeal.jpgBased on the United States Supreme Court decision in Buckeye Check Cashing, Inc. v. Cardegna as well as other Florida appellate decisions, the Third DCA wrote that when a party is challenging the legality/enforceability of a contract as a whole (versus only the arbitration provision), that determination must go to the arbitrator and not the court. "Those cases make clear that a trial or appellate court's view that an arbitration panel wrongly decided the issue of illegality of a contract, and specifically illegality of a contract under section 489.128, is not a basis to vacate an arbitration award."

The lessons to be learned for owners and contractors from this decision are clear. Parties are free to determine the scope of the arbitration provision and the issues to be determined by the arbitrator. If an owner seeks to avoid an arbitrator deciding licensing issues, it should specifically exclude the issue from the arbitration provision and make it clear that any licensing issues or issues concerning the enforceability of the contract, as a whole, are to be decided by the court. Additionally, if an owner disputes the authority of an arbitrator, an objection must be made in order to preserve the owner's rights. For contractors, the case is yet another reminder of the importance of ensuring that they are properly licensed.

Our other construction law attorneys and I write about important legal and business issues impacting the construction industry in Florida in this blog, and we encourage industry followers to enter their email address in the subscription box at the top right of the blog in order to receive all of our future articles.

Partner Jeffrey Respler Discusses Quantum Condo Association's Construction Defect Lawsuit in Daily Business Review

Jeffrey Respler srhl-law.jpgThe firm's lawsuits alleging major construction defects against the developer, general contractor, architect and engineers behind Miami's Quantum on the Bay condominium towers were the subject of an article by the Daily Business Review that appeared in the June 16, 2014, edition of the newspaper. The lawsuits allege that the defendants' work resulted in hundreds of defects, including stucco and HVAC problems as well as inadequate drainage that has led to severe flooding in the community's fitness center and loading dock.

Firm Partner Jeffrey S. Respler is quoted in the article indicating that "[t]he unit owners want to have the property that should have been delivered to them. At the end of the day, we're not looking for a windfall. We're only looking to be made whole."

The lawsuit names as defendants developer Terra ADI-International Bayshore LLC, builder Facchina-McGaughan LLC, architect Nichols Brosch Wurst Wolfe & Associates Inc., contractor Fred McGilvray Inc., and engineers Florida Engineering Services Inc., VSN Engineering Inc., Gopman Consulting Engineers Inc. and John J. Kirlin LLC, a Maryland-based firm that specializes in plumbing, heating, ventilation and air conditioning.

"The biggest problem is whenever there's even a minor rain event, there's flooding," explains Respler in the report. "Every single day, the association people have to go out and pump the drainage wells in this luxury development. If not, there's flooding - even when there's no rain."

The article describes how sandbags are being used at the property to keep water out of a service area during storms, and residents have been forced to have repairs made to swamped elevators.

Respler concludes: "The parties who we know are responsible are pointing fingers at each other. We are just the end users. We weren't there when it was being built. The bottom-line fix is we're probably going to have to move the drains to the front of the property. The speculation is the building was built too low."

Click here to read the complete article in the DBR's website (registration required).

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The Scope and Application of Florida's Common Law Implied Warranties

May 29, 2014, Posted by Jason M. Rodgers-da cruz

JRodgers srhl-law.jpg(This article appears in The Dispute Resolver Blog from Division 1 of the American Bar Association Forum on the Construction Industry - ADR, Dispute Avoidance and Litigation. Click on the link below to read the complete article).

In representing a purchaser, developer or a developer/builder involved in a warranty dispute pertaining to a residence in the State of Florida, consider the Florida Supreme Court's most recent ruling concerning the scope and application of common law implied warranties in Maronda Homes, Inc. v. Lakeview Reserve Homeowners Ass'n, 127 So. 3d 1258 (Fla. 2013).

In Maronda, a homeowner's association filed suit against its developer for breach of common law implied warranties for a defective storm water drainage system serving the entire property. The association experienced buckling, splitting of pavement and asphalt, excessive flooding, soil erosion, mosquito infestation and swamp-like conditions, which directly affected the homes and access to the homes.

The developer filed a third party action against the contractor seeking indemnification for the allegations raised by the association. The developer and the contractor filed a motion for summary judgment against the association, and relied, in part, on the Fourth District Court of Appeal's application of common law implied warranties in Port Seawall Harbor & Tennis Club Owners Association, Inc. v. First Federal Savings & Loan Association of Martin County, 463 So. 2d 530 (Fla. 4th DCA 1985). They argued that the defects did not meet the elements required for asserting common law implied warranties because the alleged defects did not immediately support the residences.

{Click here to see the complete article in the ABA blog}.


Firm Attorneys Nicholas Siegfried and Michael Clark Co-Author Chapters for New ABA Book Titled "Construction Subcontracting: A Comprehensive Practical and Legal Guide"

Nick Siegfried 2013.jpg Michael Clark Gort photo.jpg

Our firm's construction law attorneys have had the privilege of authoring a number of books, manuals and chapters that represent some of the most respected and widely disseminated sources in the country for insight into construction law matters. Recently, the firm's Nicholas D. Siegfried and B. Michael Clark, Jr. (pictured above) co-authored chapters in the new book published by the American Bar Association titled "Construction Subcontracting: A Comprehensive Practical and Legal Guide."

The new volume, which is available for $199.95 from the ABA by clicking here, focuses on the participation and contribution of subcontractors with diverse skills and capabilities in construction projects. It examines the legal relationships between the many parties in a typical construction project, including general contractors, subcontractors, suppliers, designers, and others. As with the projects on which these parties work, the relationships, rights, obligations and remedies among them can, and often do, become quite complicated.

The new book was developed by a team of experienced attorneys, and it covers the subcontract document and performance; insurance, bonding and licensure; disputes and different methods for resolution; special project issues, including public projects, alternative delivery methods, and green/sustainable building; and other contracting arrangements. Siegfried in the co-author of the chapter on the subcontract formation in the section focusing on the subcontract document, and Clark is the co-author of the chapter on licensure in the section on insurance, bonding and licensure.

Our firm congratulates Nicholas Siegfried and Michael Clark for their work in helping to make this new volume from the ABA an invaluable resource for construction law practitioners.


Construction Businesses Are Turning to Factoring to Overcome Short-Term Cash Flow Deficits

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

Thumbnail image for Michael Clark Gort photo.jpgAs I wrote in this blog in September, the construction industry is enjoying a strong recovery in South Florida, but the economic strains of the Great Recession took a heavy financial toll on many contractors as well as their suppliers and subcontractors. With the new projects that are now getting underway come new expenses for materials, equipment and labor, and many construction firms are having trouble meeting the financial obligations that come with taking on large new jobs. For many of these businesses, factoring finance companies offer a viable solution that can help them to overcome these short-term cash flow issues.

Factoring entails the selling of a company's accounts receivable (i.e., invoices) to a third-party that is called a factor at a discount. The factor then collects the full amount from the debtors of the invoices in due course and pays the remaining balance to its client after deducting a commission and other charges. Because of the nature of the construction industry, cash flow tends to fluctuate a great deal based on when projects are started and completed, and invoice factoring enables construction firms to cover their short-term cash needs during periods in which their needs exceed their reserves.

The ability of factors to collect on the invoices that have been assigned to them by their clients is protected by the Florida Uniform Commercial Code. The code provides that once a debtor is notified that the company to which it owes money has assigned the right to receive the funds to the factor, the debtor must remit their payments directly to the factor. If they instead pay the factor's client, they will be required to pay the factor again for the same invoice that it paid to the client.

Factoring is likely to grow in popularity with contractors and other construction industry businesses in today's market. Our construction law attorneys have represented factoring clients, invoice debtors and factors, and we are available to assist with all of the aspects of these financing transactions. We write regularly 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 receive all of our future articles.

Nicholas Siegfried Spoke About the ACE Mentor Program- Construction Negotiation Module at the Division 5 and Young Lawyer's Division Lunch Program at the Forum's Mid-Winter 2014 Meeting

The Forum recently conducted the Mid-Winter 2014 Meeting- Unveiling the Mysteries: Building a Better Construction Lawyer Through Best Practices and Technology- The Atlantis Experience, which took place on January 30-31 at the Atlantis Paradise Island, Bahamas.

The program included sessions on the best practices in construction risk management and arbitration, as well as recovery schedules, litigation holds, litigation budgets, and ethical issues that may arise as a result of data stores in today's smartphones and tablets. Following the educational sessions, the Forum Divisions hosted lunch meetings on Thursday, offering attendees a selection of construction law topics, as well as the opportunity to network in a smaller setting. Nicholas Siegfried served as a speaker for the lunch program hosted by Division 5 and YLD: Introduction to the ACE Mentor Program- Construction Negotiation Module. The lunch program's focus was to introduce participants to the ACE Mentor Program and have attendees participate in a hands-on, interactive ACE Construction Dispute Negotiation Activity Module that allowed for some friendly competition. ACE.jpg

Since its inception in 1994, the ACE Mentor Program has benefitted from the ongoing support and participation of the American Bar Association's Forum on the Construction Industry, which is the largest organization of construction attorneys in the world. The ABA Forum has sponsored many of the ACE program's activities and initiatives, including the module on construction negotiation developed by the members of the Forum's Young Lawyers Division. The negotiation module represents an important addition to the ACE Mentor Program's, serving as an educational resource for high school students who are interested in learning more about career options in the construction field. It is now available for use by ACE mentors nationwide.