Construction Litigation

February 5, 2021

Surety Can Use Defaulting General Contractor to Complete Project Without Owner’s Concurrence

When a property owner finds defects in its general contractor’s work, declares the contractor to be in default and terminates the construction contract, perhaps the last thing it expects is to be forced to rely on the defaulting contractor to complete the project. Yet that is exactly what happened to a Marathon, Fla. condominium association after the provider of its surety bond elected to retain the original contractor to complete the project.

In Seawatch at Marathon Condominium Association v. The Guarantee Company of North America et al., the Florida Keys condominium association retained Complete Aluminum General Contractors for a $5.4 million construction contract for extensive renovations to the community’s three condominium buildings (pictured here). The Guarantee Company of North America executed a surety bond to secure CAGC’s performance under the contract for the association.

When the association discovered defects in the renovations, it declared the contractor in default and terminated the contract. It then requested Guarantee to promptly exercise one of its options pursuant to the performance bond.

August 4, 2020

The Real Deal Chronicles Stuart Sobel, Nicholas Siegfried’s Work Representing Contractor in Suit Against Codina Partners

by Siegfried Rivera

Siegfried Rivera

Firm shareholders Stuart Sobel and Nicholas D. Siegfried were quoted in an article that now appears on the main South Florida page of The Real Deal, the real estate news magazine and website. The article, which is titled “Codina Partners affiliate allegedly owes $3.6M for Downtown Doral condo construction: lawsuit,” focuses on the firm’s work on behalf of the general contractor for the prolific developer’s new 5350 Park condominium tower in Downtown Doral. The article reads:

. . . Grycon LLC is suing 5350 Park LLC and the project’s surety bond provider Arch Insurance Company in Miami-Dade Circuit Court for breach of contract. According to the complaint, Grycon hasn’t been paid for $3.1 million in construction services and $500,000 in bonuses for achieving completion milestones.

In February, the 20-story, 238-unit tower and attached garage were substantially completed, and buyers began closing on 5350 Park condos, the lawsuit states.

“When it came time to pay us and settle up, [the developer] has come up with excuse after excuse,” said Stuart Sobel, a Siegfried Rivera shareholder representing Grycon. “They have played it very heavy-handed.”

October 7, 2019

Firm’s $10.5M Settlement in Miami Train Station Construction Lawsuit Chronicled in Daily Business Review, The Real Deal

by Siegfried Rivera

Siegfried Rivera

Firm shareholders Stuart Sobel and Jason B. Trauth secured a $10.54 million settlement for ADF International, which fabricated and erected the structural steel for the Virgin train station and 2 MiamiCentral office tower, from general contractor Suffolk Construction Co. and the project’s architects and insurers. The settlement was reached on the 10th day of trial in Miami-Dade Circuit Court on the lawsuit, which alleged nonpayment and severe project management failures by Suffolk.

The Daily Business Review, South Florida’s exclusive business daily and official court newspaper, and The Real Deal Miami magazine and website chronicled the settlement. The DBR article reads:

. . . ADF, which amended its complaint twice, argued it received project plans that were missing information, had mistakes and sometimes were conflicting. Also, the construction site was mismanaged as tower cranes weren’t provided and service on the nearby Metrorail and Metromover wasn’t coordinated with the steel installation work.

ADF said it told Suffolk about the issues, but Suffolk either never replied or responded without thoroughly addressing problems, and told ADF to keep working. The complaint said ADF followed up by sending change items with added changes and extra costs, but the change notices were often rejected or ignored.

Miami-Dade Circuit Judge William Thomas presided over the trial from Sept. 16 to 27. ADF International and Suffolk had rested their cases. Skidmore was about to call its witnesses when the emphasis shifted to settlement talks . . .

. . . Suffolk paid some of ADF’s costs during the litigation, and other amounts were recalculated, said ADF attorney Stuart Sobel, a shareholder at Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel in Coral Gables. He worked on the trial with shareholder Jason Trauth.

“We think that the $10.5 is that horrible thing called a fair settlement,” he said flippantly. “We think it’s fair. It may have been half of the liquidated amount we sued for, but it’s a whole hell of a lot more than those guys wanted to pay.”

September 6, 2019

Contractors Could Face Criminal Charges Under New Florida Law

by Nicholas D. Siegfried

Nicholas D. Siegfried

The Florida Senate passed a new bill that took effect on July 1 which could have serious ramifications for contractors. The new bill, House Bill 7125, substantially altered Florida Statute 489.126 in order to afford homeowners more protection against contractor fraud by making it easier for a homeowner to press criminal charges.

The statute provides that once a consumer makes a payment in excess of 10 percent of the contract price for any residential construction, the contractor must first apply for the necessary permits within 30 days and then begin the work 90 days after the permits issue. In the event the contractor fails to apply for the necessary permits or begin the work, pursuant to the revised statute, a homeowner can make a written demand on the contractor and require that the contractor either: (1) applies for the necessary permits, (2) starts the work, or (3) refunds the payment.

The amended statute also provides that a contractor who receives money in excess of the value of the work performed may not fail or refuse to perform any work within a 90-day period or any period mutually agreed upon and specified in the contract. If the contractor doesn’t have just cause for failing to perform any of the work within the 90-day period or specified contractual period, or the contractor doesn’t terminate the contract with proper written notice to the owner, then the owner can likewise make a written demand to the contractor demanding either that (1) the work be performed, or (2) the money be returned.

September 5, 2019

Article by Stuart Sobel in Today’s Daily Business Review: “‘Daubert’ Standard in Fla. Construction Litigation Requires Deft Implementation”

by Siegfried Rivera

Siegfried Rivera

An article authored by shareholder Stuart Sobel 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 titled “‘Daubert’ Standard in Fla. Construction Litigation Requires Deft Implementation,” focuses on the ramifications of a decision earlier this year by the Florida Supreme Court to reinstate the Daubert standard for evaluating and admitting expert testimony, after having abandoned it in favor of the Frye standard. Stuart’s article reads:

. . . The more stringent Daubert standard, which is used in federal courts and most state courts, requires that the court act as the gatekeeper, determining that proposed expert testimony is based upon scientific methods appropriately applied to the matter at hand, presented by appropriately qualified witnesses. The resurrection of the Daubert standard in Florida has the potential to increase the cost and time needed for litigating construction disputes, since Daubert challenges will now become the norm, rather than the exception.

Trial courts will employ a multi-factor test to determine whether experts’ methods are “scientifically reliable.” They will hold pretrial hearings on Daubert motions to determine whether experts will be limited in the scope of their testimony or excluded from testifying at trial.

July 25, 2019

Appellate Ruling Over Arbitration Order Illustrates Repercussions of Ambiguous Provisions in Construction Contracts

by B. Michael Clark, Jr.

B. Michael Clark, Jr.

A recent ruling by the Fifth District Court of Appeal demonstrates the potential ramifications of ambiguities in the mediation and arbitration provisions of construction contracts. The ruling found the lower court correctly determined that the parties had a valid agreement to arbitrate certain claims because the contract clearly required arbitration for claims arising before final payment was due. However, it was silent regarding the procedure for resolving claims arising after the final payment became due, so the case was remanded back to the lower court for a determination as to whether the claims arose before or after final payment was due.

In Royal Palms Senior Apartments Limited Partnership v. Construction Enterprises Inc. et al., Royal Palms appealed the nonfinal order entered in favor of Construction Enterprises Inc. staying the developer’s lawsuit pending mediation and arbitration based on its assertion that the trial court erred in finding a valid arbitration agreement existed and its claim was subject to arbitration.

The Fifth DCA affirmed lower court’s finding that the parties had a valid agreement to arbitrate certain claims. However, because it is unclear whether Royal Palms’ claim was one subject to arbitration, it remanded the case for a determination of that issue.

The parties entered into a contract in 2006 for CEI to build the Royal Palms Senior Apartments. The agreement was comprised of the “AIA Document A201-1997 General Conditions of the Contract for Construction” (“General Conditions”) and a supplementary document (“Supplementary Conditions”), which modified and deleted portions of the General Conditions and controlled if the two documents conflicted.

July 1, 2019

Stuart Sobel Profile in Today’s Daily Business Review: “How Miami Construction Lawyer Stuart Sobel Accidentally Built a Trial Empire”

by Siegfried Rivera

Siegfried Rivera

The firm’s Stuart H. Sobel was the subject of the weekly “Profiles in Law” feature in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper. The article, which is titled “How Miami Construction Lawyer Stuart Sobel Accidentally Built a Trial Empire,” discusses the entire span of Stuart’s career in the law and his varied litigation experience. It reads:

. . . Sobel’s represented Miami’s New World Center concert hall, the contractor who built the Port of Miami tunnel, the steel fabricator who built Miami’s Brightline train terminal — and the one who put the roof on the Hard Rock Stadium, home of the Miami Dolphins.

As shareholder at Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel’s Coral Gables office, construction cases account for 98% of Sobel’s practice, and avoiding trial is the top priority. But in the 1980s, Sobel cut his teeth trying “any kind of case and every kind of case” that got him into the courtroom.

. . . Sobel took the law boards “on a lark” but had decided on a business degree at the Wharton School of the University of Pennsylvania. While driving to Philadelphia for his first semester, Sobel changed his mind. Somehow, his brother Jack Sobel, in law school at the University of Miami at the time, convinced law school dean Soia Mentschikoff to take a call from Sobel on his travels.

“I was literally in my car, pulled over, went to a phone booth and got interviewed by Dean Mentschikoff,” Sobel said. “And at the end of the conversation she said, ‘Keep driving.’ I got to Miami on a Thursday afternoon and I started law school on Monday morning without ever applying.”

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April 8, 2019

Article by Lindsey Thurswell Lehr and Susan Odess in Today’s Miami Herald: “Lawsuits by Condo Associations Against Neighboring Developers, Builders Are New Norm”

by Siegfried Rivera

Siegfried Rivera

An article authored by shareholders Lindsey Thurswell Lehr and Susan C. Odess was featured as the “My View” guest commentary column in the Business Monday section of today’s Miami Herald. The article, which is titled “Lawsuits by Condo Associations Against Neighboring Developers, Builders Are New Norm,” focuses on the spate of recent lawsuits against South Florida condominium developers and general contractors alleging their construction work caused physical damage to neighboring condominium towers. Their article reads:

. . . This new litigation trend appears to have especially taken hold in South Florida, where several prominent condominium developers and contractors have been sued by adjacent associations for damages emanating from their construction sites. The lawsuits raise claims for structural damage, fallen stucco, splattered paint, excessive dirt, broken glass/windows, and other damage resulting from the construction practices of neighboring developments.

The insurer for the 1060 Brickell Condominium Towers brought a lawsuit alleging construction debris from Panorama, 1010 Brickell and the Bond damaged the two 1060 Brickell buildings. The lawsuit claims that the construction activities at these properties damaged 1060 Brickell’s facade, balconies, railings, pool deck, roof, cooling tower and other components.

The entire development team behind the ultra-luxe Porsche Design Tower faced a similar lawsuit brought by the association for the adjacent Millennium Condominium. The association alleged that its building suffered millions of dollars in damage caused by the Porsche Tower’s construction next door, including extensive cracks to the lobby, parking garage and pool deck. Engineers concluded that the cracks were caused by excessive vibrations from the pile-driving equipment used for the neighboring tower’s foundation, and the suit also alleged concrete overspray splattered onto Millennium’s balconies, ruining the building’s paint job and related exterior components.

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January 10, 2019

Appellate Court Certifies Question to Florida Supreme Court on Nature of Damages in Certain Construction Disputes

by Daniel Jovanov

Daniel Jovanov

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.”

Specifically, 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.

November 7, 2018

Article by Georg Ketelhohn in Today’s Daily Business Review: “Ruling Clarifies the Use of Pre-Suit Notice in Construction Defect Lawsuits”

by Siegfried Rivera

Siegfried Rivera

Firm 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.

The 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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