A 2015 opinion by the Fifth District Court of Appeal had significant ramifications for the application of the statute of repose in construction defect cases. In response to the uncertainty created by the ruling, Florida lawmakers have introduced a bill to clarify one the trigger dates for the tolling of the statute of repose.
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 statute of repose expired three days prior to the date the litigation commenced.
The statute of repose in Section 95.11(3)(c) provides that actions for latent construction defects must commence within 10 years of the last 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 represented 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 represented the date of the “completion of contract.” The trial court disagreed with the association and granted summary judgment to the defendant, dismissing its claims.
The Fifth DCA reversed, reasoning that the 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. The appellate panel concluded that the statute of repose was not triggered upon completion of construction. It found 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.
The ruling created a great deal of uncertainty as to how it would be applied in cases in which owners fail to issue a final payment or hold off on making the payment for a considerable length of time after the completion of construction and issuance of a certificate of occupancy. There are often disputes that arise resulting in the final payment being withheld, and as in Cypress v. Bergeron, even only three days can make a critical difference as to whether or not the statute bars any claims.
As a result, lawmakers have introduced a bill in the Florida House and Senate to amend Florida Statute §95.11(3)(c) to close the “completion of contract” loophole by tying it to the completion of the contract work (not including the punch list work) rather than the receipt of the final payment. The contract completion date would be defined as “the latter of the date of final performance of all the contracted services or the date that final payment for such services becomes due without regard to the date final payment is made.”
This legislative amendment would provide some much needed clarity as to what constitutes “completion of the contract” in cases of latent construction defects involving the statute of repose. Our firm’s other construction law attorneys and I will continue to monitor the bill’s progress in Tallahassee.