Florida Construction Lawyer Blog

A recent ruling by the Second District Court of Appeal in a lawsuit against Raymond James Financial Services for securities violations has major implications for the use of arbitration to resolve construction disputes. The court ruled that Florida's statute of limitations does not apply to arbitration unless the contract between the parties expressly provides for its application. This decision has far-reaching implications for those construction contracts which call for arbitration to resolve disputes. Until the decision is reviewed by the Florida Supreme Court or another district court, parties to a construction contract could potentially be liable for construction defects indefinitely if their contract calls for arbitration and does not specifically state that Florida's statute of limitations is applicable.

The Raymond James case hinges on the language in the contract, which fails to expressly state that Florida's statute of limitations is applicable. The contract stated that it will not "limit or waive the application of any relevant state or federal statute of limitation." Therefore, it essentially left it to the courts to determine whether Florida's statute of limitations is relevant to arbitration.

The appellate panel upheld the circuit court's ruling that Florida's statute of limitations was not applicable to the Raymond James account holders' arbitration claims. The lower court applied the Florida Supreme Court's decision in Miele v. Prudential-Bache Securities which determined that arbitrations are not considered "actions" or "proceedings."

The appellate court agreed with the circuit court's decision, noting that if the legislature intended for the word "proceeding" to include arbitrations, it could have expressly defined it to include arbitrations or specifically included a reference to arbitrations in the corresponding statutes. Absent this, the court determined that it was a stretch to determine that the legislators' intent was to extend the state's limitations periods to arbitrations. The appellate court also noted that most jurisdictions which have considered this question have not read into their statute of limitations any implicit extension to arbitrations as they are not generally regarded as "proceedings."

The problem for Raymond James is that it used a standard clause in the contract that it believed was suitable for use nationwide. It did not expressly include in its contract that Florida's statute of limitations would apply to any claims, and thus, the court determined that Florida's statute of limitations was inapplicable.

The appellate court determined that the applicability of the limitations periods to arbitration was an issue of first impression in Florida, and it certified the following question to the Florida Supreme Court as a question of great public importance:

DOES SECTION 95.011, FLORIDA STATUTES, APPLY TO ARBITRATION WHEN THE PARTIES HAVE NOT EXPRESSLY INCLUDED A PROVISION IN THEIR ARBITRATION AGREEMENT STATING THAT IT IS APPLICABLE?

Our construction law attorneys will continue to monitor whether the Supreme Court or another appellate court addresses this issue, which we will cover in this blog as it unfolds. In the meantime, all construction firms in the state should work with qualified legal counsel to ensure that their contracts expressly include Florida's statute of limitations in the arbitration agreement. Otherwise, they will remain potentially liable for construction defect claims in perpetuity.

Last week in our community association blog I wrote about how a recent decision by a Florida appellate court in the case of Lakeview Reserve Homeowners v. Maronda Homes, Inc. 35 Fla. L. Weekly D2413 (Fla. 5th DCA 2010) has far-reaching implications for homeowners associations in construction defect disputes with developers. In its ruling, the Fifth District Court of Appeal court has broadened the implied warranty of fitness and merchantability granted to purchasers of new homes to include structures in common areas of a subdivision that immediately support the residence in the form of essential services. To learn more about this case and how it will further enable community association and construction defect lawyers in Florida to protect consumers who rely on the expertise of the developer for the proper construction of their new home, click here to read the full post.

Construction defect lawsuits against developers and their contractors can become very complicated and prolonged, and our recent $9 million settlement on behalf of the condominium association for the Continuum on South Beach illustrates the complex nature of this litigation for attorneys who focus on construction law.

The Continuum settlement came after more than six years of litigation, and the case had grown so large and complex that if first caught the attention of the editors of the Daily Business Review when they covered it in lengthy report entitled "South Florida Cases Show How Defect Lawsuits Multiply" in April of 2009.

The case took another 18 months to reach its conclusion, and when it did the Daily Business Review decided to share the details with its readers in a report on Tuesday, Nov. 30, which read:

A messy, 6-year-old battle over construction defects at a Miami Beach condo tower is drawing to a pricey conclusion.

The insurer for the developer and contractors of the Continuum on South Beach and the condo association of the 314-unit South Tower have reached a $9 million settlement. The deal is to be submitted to Miami-Dade Circuit Judge Gill Freeman by Wednesday. Once she signs off on the settlement, the costly repairs can begin, ending the dispute that dates to 2004.

The Continuum on South Beach and the South Tower Condominium Association sued developer South Beach Ocean Parcel, managed by Ian Bruce Eichner; the architecture firm Fullerton Diaz Architects; and several subcontractors.

The suit claimed design and construction defects led to leaky windows that damaged stucco, drywall and flooring in portions of the 40-story tower. The condo association also accused Eichner and the developer of misrepresenting the project's amenities, a violation of the state Deceptive and Unfair Trade Practices Act.

The trial was scheduled to begin on Nov. 8, but a tentative settlement in September put that on hold.

This settlement could not have been achieved without the focused efforts of my partner, Steven M. Siegfried, Esq., our dedicated staff and the contributions of our co-counsel, David B. Haber.

Because these types of cases become very complex and time consuming as developers file their own subsequent lawsuits against subcontractors, it is imperative to work exclusively with lawyers who focus on construction defect lawsuits. We have represented hundreds of property owners and community associations in construction defect claims since our inception in 1977, and our experience and capabilities enables us to achieve favorable outcomes.