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Articles Posted in Construction defect

If a party is contractually obligated to supervise construction work and determine the suitability of construction materials used in the construction, but the party fails to properly supervise and inferior materials are used by a third party, are the costs to repair damage caused by improper materials general, special or consequential damages? That is the query that led the First District Court of Appeal to certify a question of great public importance to the Florida Supreme Court in a recent case involving a construction defect dispute.

The certified question arose in Keystone Airpark Authority v. Pipeline Contractors, Inc. Keystone retained Pipeline Contractors to build airplane hangars and taxiways, and it contracted separately with Passero Associates, LLC to provide services that included “part-time resident engineering and inspection [and] material testing.”

keystone-airport-300x225Specifically, Passero agreed to “[o]bserve the work to determine conformance to the contract documents and to ascertain the need for correction or rejection of the work,” and to “[d]etermine the suitability of materials on the site, and brought to the site, to be used in construction.”

In Keystone’s eventual lawsuit against Passero for breach of contract and negligence, it alleged that Pipeline used substandard material for stabilization underneath the structures, which Passero failed to detect, causing the premature deterioration of the concrete hangar slabs and asphalt taxiways. It sought to hold Passero as well as Pipeline Contractors responsible for the cost to remove, repair and replace the hangars, taxiways and underlying subgrade.

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George-Ketelhohn-Gort-photo-200x300Firm shareholder Georg Ketelhohn authored an article that appeared as the “Board of Contributors” guest commentary column in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which is titled “Ruling Clarifies the Use of Pre-Suit Notice in Construction Defect Lawsuits,” discusses how the application of the 10-year statute of repose for construction defect lawsuits in Florida became a bit clearer recently after one of the state’s district courts of appeal found that the requisite pre-suit notice qualified as the commencement of an action under the state’s limitation period.  Georg’s article reads:

Florida law provides a four-year statute of limitations for lawsuits founded on construction defects, but in cases of latent defects, the four-year period runs from the time the defect is discovered or should have been discovered. Florida law also provides for a 10-year statute of repose, which requires that any action founded on the design, planning or construction of an improvement to real property must be commenced within 10 years, regardless of whether the construction defect was latent. Florida’s Chapter 558 requires pre-suit notice and compliance with other pre-suit procedural requirements before filing a lawsuit alleging construction defects.

The case of Gindel v. Centex Homes involved allegations of latent defects in townhomes that were discovered by the homeowners only a few months prior to the expiration of the 10-year statute of repose. The owners subsequently provided the requisite pre-suit notice pursuant to Chapter 558 of the Florida Statutes to Centex approximately two months prior to the expiration of the 10-year repose period.

At the completion of the mandatory pre-suit procedure, which was more than one month after the expiration of the 10-year period, the builder declined to provide a remedy for the alleged defects and the homeowners filed suit.

dbrlogo-thumb-220x41-94239The trial court granted summary judgment in favor of Centex. It disagreed with the homeowners’ argument that the action commenced upon the filing of the requisite pre-suit notice as prescribed under Chapter 558. The trial court concluded that the action commenced upon the filing of the suit, so it originated after the expiration of the 10-year period.

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George-Ketelhohn-Gort-photo-200x300For the second consecutive day, an article by one of our attorneys was featured as the “Board of Contributors” guest commentary column in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which is authored by shareholder Georg Ketelhohn and is titled “Going Strong: Slavin Doctrine Continues to Protect Florida’s Builders, Designers,” focuses on a recent appellate ruling that illustrates how the Slavin Doctrine continues to offer vital protections from liability for the state’s contractors, subcontractors and design professionals against future injuries alleged to have been caused by defects in their work.  Georg’s article reads:

The 60 year-old ruling by the state’s highest court held that a contractor’s liability in negligence, which is the duty of care that it owes to third parties, terminates if the property owner accepts the contractor’s work with patent defects. It is used to defend contractors from liability for patently obvious and apparent defects when they cause injuries after the property owner has accepted the improvements together with the responsibility for their ongoing maintenance and repair.

dbr-logo-300x57The recent ruling applying the doctrine was issued by the state’s Third District Court of Appeal in the case of Melitina Valiente v. R.J. Behar. It stems from the tragic death of a motorcyclist who collided with another vehicle at a Hialeah intersection in 2008. The subsequent complaint was filed by the victim’s mother against the city of Hialeah, R.J. Behar & Co., Williams Paving and Melrose Nursery, among others.

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One of the most significant changes in years to the Florida laws governing construction defect litigation will take effect on July 1, and for some of the state’s real estate developers and general contractors the changes are going to bring meaningful relief.  The new law will provide one year for developers and contractors to file claims against design professionals, subcontractors and suppliers when they are hit with defect lawsuits just prior to the expiration of the 10-year deadline for latent defect litigation.

The new amendments to Section 95.11(3)(c) of the Florida Statutes are intended to correct what many believe to be an unfair byproduct of the state’s 10-year statute of repose, which functions as a final deadline for the filing of construction defect suits.  It 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.

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Michael-Clark-Gort-photo-thumb-160x240-13551Firm partner B. Michael Clark Jr. authored an article that appeared as a “Board of Contributors” guest column in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which is titled “Fla. Supreme Court Finds Insurers Liable From Onset of Construction Defect Pre-Suit Process,” discusses the ramifications of the recent decision by the state’s highest court holding that the pre-litigation notice and repair process for construction defect cases does indeed constitute a claim which general liability insurance carriers must recognize.  The article reads:

The state’s pre-litigation defect procedure, outlined in Chapter 558, was enacted in 2003 to provide a means by which property owners could notify builders of alleged construction or design defects. The responsible contractors, subcontractors and design professionals must then either voluntarily resolve the defects or deny liability.  The goal of the statute was to reduce the amount of complex, multiparty construction defect litigation, which had ballooned during dbrlogo-300x57the building boom prior to the collapse of the housing market and the foreclosure crisis.

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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.

5DCA-Court-House-300x183The 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.

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LindseyTLehr-200x300The firm’s Lindsey Thurswell Lehr authored a guest column that appeared in the “Board of Contributors” page of today’s Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which was titlted “Ruling Reinforces Need to Abide by Contracts in Construction Disputes,” focused on a recent Florida appellate court ruling finding that property owners which forgo the contractual mechanisms for resolving construction disputes will not prevail in the state’s courts.  Her article reads:

Strictly adhering to the modus operandi for addressing and resolving disputes that is codified in construction contracts is essential to prevailing in any resulting litigation.

The Florida Third District Court of Appeal recently reinforced the obligation of construction defect litigants to adhere to the terms of their contract, finding that property owners which forgo the contractual mechanisms for resolving disputes will not succeed in Florida’s courts.

The ruling by the Third DCA in the case of Magnum Construction Management v. City of Miami Beach relieved the contractor of liability for alleged safety concerns with a playground that it installed at the city’s South Pointe Park. The appellate panel ruled that the city did not give the contractor the opportunity to fix the purported issues with the playground as required under its contract. Instead, the court stated that the city replaced the playground in its entirety without considering that the safety concerns could have been corrected by the contractor.

dbrlogo-thumb-220x41-94239The court’s decision in this case reinforces the importance of abiding by all contract terms and requirements in construction disputes. Construction contracts often allow the contractor which performed the work to have the opportunity to fix and cure any purported problems and defects. If a property owner ignores this contractual stipulation, as the city of Miami Beach appears to have done in this case, Florida’s courts are very likely to rule against them.

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Steve Siegfried 2013 srhl-lawFirm partners Steven M. Siegfried, Stuart Sobel and Berenice M. Mottin-Berger were featured in an article about their work on behalf of one of the firm’s construction clients that appeared in today’s Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The report, which was titled “Caribbean Construction Firm Scores $4M Judgment,” chronicles the highly contentious litigation and arbitration that led their securing a $4.3 million judgment against DeVry Education Group (NYSE: DV) for Moorjani Caribbean Ltd., a Barbados-based construction company.  The article reads:

Stuart Sobel 2013-thumb-180x270-86799Coral Gables lawyers won a $4.3 million award against a subsidiary of for-profit college company DeVry Education Group in what they say was one of the nastiest arbitration battles they’ve ever fought.

Barbados-based construction company Moorjani Caribbean Ltd. sued over alleged underpayment for the construction of student housing and classroom projects at DeVry’s St. Kitts veterinary school.

Although both parties admitted some aspects of their work relationship was relaxed, with unsigned contracts and loose deadlines, the father-and-son construction company claimed it submitted detailed accounting for both projects and spent years trying to get payment before filing suit.

DeVry Medical International Inc. fought back with counterclaims, alleging it spent more than $1 million fixing design and construction defects in Moorjani Caribbean’s work on the student housing project.

BerenicMottinBergerBut arbitrators found DeVry made improvements to the residence hall so that it could qualify as a place of refuge during a hurricane, not because of deficient construction.

By the time the 2009 bills for the two projects came to the arbitration panel this year, interest and attorney fees made the award much larger than it might have been, Moorjani Caribbean’s lawyers said. Interest on the award continues to grow at a rate of about $593 per day, according to the Aug. 19 final arbitration award.

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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.