Articles Posted in Community Association

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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A 5-2 majority decision by the Florida Supreme Court in the case of Tiara Condominium Association v. Marsh & McLennan limits the legal principle known as the “economic loss rule” only to product liability cases, thereby allowing many claims for breach of contract in the state to be accompanied by tort claims of negligence. The ruling allows the association to proceed with its lawsuit seeking to recover approximately $50 million in damages from its insurance broker, which it claims knew the 42-story oceanfront tower on Singer Island in Palm Beach County was underinsured and failed to tell the association.

The lawsuit stems from the more than $100 million in damages that the luxury condominium tower sustained as a result of two hurricanes in 2004. After settling with the insurance company for $89 million, the association then sued the broker for the remaining balance of the approximately $140 million in repairs, claiming breach of contract, negligent misrepresentation, breach of the implied covenant of good faith and fair dealing, negligence, and breach of fiduciary duty. The trial court in 2009 dismissed the lawsuit, and the association assessed each owner between $110,000 and $150,000 for the repairs and filed an appeal. The Eleventh Circuit Court of Appeals concluded that judgment in favor of the broker was proper as to the breach of contract, negligent misrepresentation and breach of implied covenant of good faith and fair dealing claims. However, as to the negligence and breach of fiduciary duty claims, a matter of state law, the Eleventh Circuit Court of Appeals directed a certified question to the Florida Supreme Court which restated the certified question as follows:

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Does the economic loss rule bar an insured’s suit against an insurance broker where the parties are in contractual privity with one another and the damages sought are solely for economic losses?

The majority opinion found that the economic loss rule did not bar the community association’s lawsuit, and held that the economic loss rule only applies in the products liability context.

The legal principle of the economic loss rule originated as a means of limiting potentially unbounded losses based on a customer’s expected profits from the use of a product that turned out to be defective. The most oft-cited case originating the rule involves a delivery company that sued a truck manufacturer for its lost profits resulting from a truck’s defects that caused it to cease functioning. The court ruled that damages for lost profits and for money paid on the purchase price were appropriate under breach of warranty. However, the delivery company could not pursue the same claim in tort since it suffered only economic loss. The court reasoned that contract law was best to resolve economic losses as the parties are able to negotiate remedies for nonperformance. Tort law was more appropriate to address personal injury and damage to other property. Each state addresses the economic loss rule differently and Florida, while initially expanding the economic loss rule, began limiting the economic loss rule to its principled origins. With this decision, the Florida Supreme Court has now returned the economic loss rule to its original application and has limited it to products liability cases.

The dissenting opinion asserts that the majority expanded the use of “tort law at a cost to Florida’s contract law.” The number of tort claims will likely increase as a party may bring tort claims along with its breach of contract claim and recover remedies that may not otherwise be available under the contract. Our construction law attorneys write regularly in this blog about important business and legal 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.

3rd district court of appeal.jpgIn December, firm partners Helio De La Torre and Laura M. Manning-Hudson, together with of-counsel attorney H. Hugh McConnell, prevailed in their appeal on behalf of the developer of the 28-story Courvoisier Courts condominium tower on Miami’s Brickell Key before the Third District Court of Appeal. The appellate court found that the lower court erred when it entered a Final Judgment requiring the developer to relinquish to the association all of the parking spaces and storage areas that it assigned to an unsold penthouse prior to turning over control of the property to the association.

The appellate court’s decision in the case of Courvoisier Courts, LLC v. Courvoisier Courts Condominium Association, Inc. hinged on the association’s declaration of condominium, which states that the association would receive all parking spaces and storage areas that are left unassigned after the developer has sold all of its units. The panel found that the parking and storage spaces in question did not become the property of the association upon turnover, and the developer retained the right to assign the exclusive use of these limited common elements until such time as it had sold all of its units.

dbr logo.jpgA report on the ruling from the Daily Business Review on December 27, 2012 quoted De La Torre indicating that “The lower court ruling said basically that all of the assignments made since the turnover were invalid. [The appellate decision] means we get our parking spaces back, [and] it’s a very significant opinion.” He, Manning-Hudson and McConnell believe that the trial court’s interpretation of the condominium’s declaration in this case could have set a challenging precedent for condominium developers in Florida.

Click here to read the Third District Court of Appeal’s opinion for the case.

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.