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Articles Posted in Construction defect

Jason-Rodgers-Da-Cruz-002-200x300The efforts of firm shareholder Jason M. Rodgers-da Cruz, together with Patrick S. Montoya of the Coral Gables-based law firm of Colson Hicks Eidson, were the subject of a front-page article headlined “This Miami Case Was Too Big For the Courtroom: Organizing Convention Center Trial ‘Like Setting Up a Show’” in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article discusses how it was going to be impossible for all of the jurors, defendants and their legal counsel to safely hold a trial at the Miami-Dade County Courthouse under Covid restrictions for a lawsuit by firm client Latitude on the River Condominium Association against eight defendants over the property’s allegedly faulty fire-sprinkler system.  Even though the case was ultimately settled confidentially before proceeding to trial, the duo’s plans to hold the proceedings in the James L. Knight Convention Center are now serving as a blueprint for remote courtroom proceedings for large multi-party cases with adequate social distancing precautions.  The article reads:

. . . The case, which took more than five years of litigation and multiple hearings, involved a class-action lawsuit brought by Latitude On The River Condominium Association Inc. against eight defendants over an alleged faulty fire sprinkler system with incompatible components.

dbr-logo-300x57Miami-Dade Circuit Judge Jennifer Bailey allowed plaintiffs attorneys Jason M. Rodgers-da Cruz of Siegfried Rivera and Patrick S. Montoya of Colson Hicks Eidson to work with her staff to plan for the massive jury trial. Jury selection was scheduled to start at the end of April.

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George-Ketelhohn-Gort-photo-200x300Firm shareholder Georg Ketelhohn is quoted in an article in today’s Daily Business Review discussing the firm’s efforts on behalf of the condominium association for the 537-unit Midtown Doral in its construction defect lawsuit against the community’s developer, builders and design professionals.  The firm’s suit, which was filed in December, alleges defects including leaky plumbing with erratic water pressure, rooftop pools of rainwater on the roof, and exposed rebar in cracked concrete.

Located at Northwest 107th Avenue and 74th Street, Midtown Doral was completed in 2016 with four eight-story condo buildings and 70,000 square feet of retail space.

The firm’s lawsuit on behalf of the association is against general contractor Delant Construction Co. in Miami, architectural firm Pascual, Perez, Kiliddjian & Associates in Doral, and MD Residential II LLC, an affiliate used by the development partnership. dbr-logo-300x57 The suit alleges breach of implied warranties against the developer and general contractor as well as a professional negligence count against the architect.

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Firm shareholders Helio De La Torre and Lindsey Thurswell Lehr, together with associate Berenice M. Mottin-Berger, have worked for more than four years in representing the BrickellHouse Condominium Association in litigation over the property’s failed robotic parking garage.  Their work yielded a truly exceptional result last week when a Miami-Dade Circuit Court jury awarded the association $40,590,990 in damages against BrickellHouse Holding LLC, the developer of the 46-story tower in Miami’s Brickell area, and many of South Florida’s most respected media organizations took notice.  The verdict yielded major articles this week in the Miami Herald, Daily Business Review, South Florida Business Journal, The Real Deal and Law 360 about the trial team’s success in demonstrating to the jury that the developer, a subsidiary of Newgard Development Group, breached statutory warranties owed to the association and its unit owners.

Helio-De-La-Torre-2013“The association has been left without parking for its residents in the promised 480 vehicle garage since November 2015,” explained De La Torre to reporters after the verdict.  “Since that date, residents have been parking offsite and incurring increased costs due to the failed robotic parking system sold by the developer. The board of directors and a team of consultants have worked very hard to find a solution for the garage and bring the owners the justice they deserve.”

 

LTLehr-2018-Siegfried-Rivera-200x300Thurswell Lehr concluded:
“As a result of the verdict, the condominium association will now be able to move forward with the replacement of the garage in order to restore the parking for the building that the owners and residents deserve.”

BrickellHouse is located at 1300 Brickell Bay Drive and features 374 residences.  The 46-story tower was one of the first post-recession condo buildings constructed in the Brickell area.  After its completion in October 2014, the problems with the 480-space robotic parking system were immediately apparent.  The developer retained control of the condominium association through September 2015, and the robotic parking system was completely shut down in November 2015.

Below is a video depicting how the garage was designed to use a fleet of autonomous robots that move beneath the vehicles to lift and move them throughout the building and elevators.  Click here to read the Miami Herald article in the newspaper’s website, click here for the Daily Business Review article (registration required) and click here for The Real Deal.

 

 

In addition to our firm’s work involving construction defect litigation on behalf of Florida community associations, our construction law board certified specialists and attorneys also regularly represent construction firms in disputes with property owners, developers, design professionals and insurers.  Firm 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.

dbr logo-thumb-400x76-51605Click here to read an excerpt from the DBR’s report in our construction blog that includes a link to the complete article in the newspaper’s website.

Helio De La Torre 2013Firm partner Helio De La Torre was quoted in an article that appeared today in The Real Deal, an online media outlet that focuses exclusively on South Florida real estate news.  The article, which was titled “BrickellHouse’s Condo Association Runs into Another Snag in Robotic Garage Predicament,” focuses on the firm’s lawsuit against the developer of the 46-story Miami tower over the property’s failed robotic parking garage.  The article reads:

“The condo association has been left with this mess,” lawyer Helio de la Torre told The Real Deal. “We have to clean up this mess.”

On Aug. 23, de la Torre’s client, BrickellHouse Condominium Association, filed an amended lawsuit against Hernandez, his company BrickellHouse Holding LLC and Hartford Steam Boiler Inspection and Insurance Company, seeking additional damages for the possibility that some condo owners may be left without a parking space if the building’s troublesome robotic parking garage is replaced with a new system.

The association initially sued the developer in January and amended its complaint three times in March to add more counts regarding the failure of the the 374-unit building’s robotic parking garage. TRDlogo Court documents allege buyers were promised South Florida’s first fully automated parking system that would deliver their vehicles in and out of the building without drivers inside the cars.

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Fire sprinkler systems, part of a building’s “Life Safety System,” are a crucial component of condominium buildings because they help protect against damage to life and property in the event of a fire.  While maintaining these systems in proper working condition is important, making sure that the fire sprinkler system was properly designed and has compatible materials from inception is imperative.

Our firm, led by Steven M. Siegfried, Alton C. Hale, Jr., Jason M. Rodgers-da Cruz, Nicholas D. Siegfried and Stuart Sobel, together with Ervin Gonzalez and Patrick Montoya of Colson Hicks Eidson, P.A., has filed a class action lawsuit on behalf of a number of condominium associations.  By this action, we are seeking compensation sufficient to replace the hybrid fire sprinkler systems installed in these buildings. blogpipe1 The hybrid systems include CPVC and Allied ABF steel pipes.  These materials are incompatible with each other, and as a result of this incompatibility, cracks have or will develop in the CPVC resulting in system failure over time.

We strongly recommend that condominium associations — and also other high-rise buildings such as office building and hotels — determine whether their fire sprinkler system contains steel pipe manufactured by Allied with the markings “ABF” that were installed in conjunction with CPVC pipes.  Particular attention should be taken, especially if the building was built during the years 2004 to 2010, so that if present, this defect can be identified and addressed.

blogpipe2Those with any questions or in need of assistance in determining whether their building is affected by this defect may contact us at our Coral Gables office at 305.442-3334 or via email at sbonilla@siegfriedrivera.com.

 

CHEpipeslawsuit.jpgThe firm’s Stuart Sobel, Jason Rodgers-da Cruz and Alton Hale, Jr., together with partner Ervin Gonzalez with the firm of Colson Hicks Eidson, held a press conference today on our filing of a class action lawsuit concerning defective fire sprinkler systems and a national cover-up over a significant life safety issue in condominium towers in Florida and across the country. The attorneys believe the total damages for this case will exceed $1 billion nationwide.

The suit alleges that some or all of the defendant manufacturers had knowledge of the defects since 2007 from their own testing, yet they deliberately did not disclose it. It alleges that the defendants’ pipes are incompatible with an array of basic construction products and unsuitable for use in fire sprinkler systems. Their defects cause leaks, cracks and blow-outs in the sprinkler systems, depressurizing and rendering the systems unavailable for fire suppression, giving rise to the potential for loss of life, injuries and property damage. The news release on the lawsuit is available by clicking here.

The Miami condominiums named as the lead plaintiffs in the class action lawsuit are the Wind Condominium at 350 S. Miami Ave. and Latitude on the River at 185 Southwest 7th St.

Media coverage of the case includes reports by The Miami Herald, Daily Business Review, WFOR-CBS 4, WTVJ-NBC 6, WLTV-Univision 23, and WIOD-610 AM. Click below to watch the reports from CBS 4 and NBC 6.

JordanWeinkle.jpg JeffreyBerlowitz.jpg The firm’s Jeffrey S. Berlowitz and Jordan G. Weinkle wrote an article that appeared in today’s edition of the Daily Business Review, South Florida’s only business daily and official court newspaper, about how bankruptcy and community association attorneys must work together in order to assess the strength of an association’s construction defect claim against a debtor company that files for an asset liquidation under the state’s Assignment for the Benefit of Creditors statute. Their article reads:

Unlike federal bankruptcy proceedings, with an Assignment for the Benefit of Creditors (ABC), the assignor, or debtor, company that elects to liquidate its assets in order to repay its creditors is able to do so in a more debtor-friendly state court proceeding in which they are able to select and appoint the assignee, who then serves in the role in which trustees serve in bankruptcy cases to oversee the liquidation of the assignor’s assets in order to pay secured creditors and unsecured creditors.

The ABC liquidation process typically takes the form of a private sale or auction in which creditors and parties of interest are notified of the sale and have the opportunity to present higher and better offers for the assets. Ultimately, the sale of the assignor’s assets must be approved by the state court.

While there is no “automatic stay” on pending litigation imposed upon the filing of an ABC, unlike a bankruptcy stay which is immediately in effect upon the filing of a bankruptcy petition, creditors of the assignor are essentially stayed from continuing their pursuit of claims because the comprehensive liquidation of the debtor’s assets makes it virtually impossible to collect on a judgment.

The most notable benefit of an ABC to the assignor company is the opportunity that the assignor’s principals have to buy back their assets under a newly formed entity, should that newly formed entity offer the highest and best bid for the assets.

With ABCs, the assignors can and often do negotiate the buy-back of their business assets via the liquidation or auction process through a separate entity, enabling them to stay in business with little interruption or disruptions whatsoever while diminishing their debts to pennies on the dollar.

Their article concludes:

As a result, we are now starting to see cases in which condominium associations and homeowner associations that either have pending construction defect litigation or have filed a notice of claim against developers, general contractors, subcontractors or other firms are being notified that their payouts will be determined via ABC actions in state court.

The ability to assess the strength of an association’s construction defect claim against a debtor company filing an ABC requires a unique blend of bankruptcy law and community association law knowledge.

The analysis of the association’s construction defect claim against the debtor would not only take into account the merit and magnitude of the underlying claim itself but also the strength of the claim as it relates to the ABC.

The association counsel, together with experienced bankruptcy counsel, should review the number of secured and unsecured creditors of the debtor, its assets and liabilities, the priority that the association’s claim would take compared to the other claims, the amount that the association might recover through the post-liquidation payouts to creditors, and the practical nuances of an ABC in general.

Depending on how far along in the defect litigation the association may be when the ABC is filed, it is also important to consider whether the assignee will have adequate documentation regarding the association’s claim in order to effectively determine how much of the claim, if any, will be allowed.

They will typically consider all of the engineering reports and evidence of the defects, but they will also take into account the practical considerations of the total sum that the sale of the assets will generate and the sums that are due to other creditors.

An association may seek to resolve its claim with the assignee who has been engaged to liquidate the assets and make distributions on allowed creditor claims by reaching a settlement with them for an allowed unsecured claim in the ABC, staving off unnecessary attorney fees to prove the construction defect claim.

Our firm congratulates Jeffrey and Jordan for sharing their insights into this matter for community associations that file construction defect claims against defendants that resort to using the state’s Assignment for the Benefit of Creditors statute. Click here to read their complete article in the newspaper’s website (registration required).

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GeorgKetelhohn.jpgWhen the Daily Business Review, the South Florida region’s only daily business newspaper, decided to report on the proposed bills at the start of this year’s legislative session that would impact construction defect claims for Florida community associations and property owners, it turned to the firm’s Georg Ketelhohn for his insights on the bills for the front-page story, which also featured his photograph. Georg, who wrote about the concerns for community associations with these bills in recent articles in this blog, served as one of the primary sources for the article, which appeared in yesterday’s edition of the newspaper and was titled “Construction Defect, Claims Bills Favor Contractors, Designers.”

The article focused on Georg’s views about the concerns for community associations with House Bill 87 and House Bill 501. It reads:

One of the most hotly debated proposals comes from Rep. Jay Fant, R-Jacksonville, whose House Bill 501 would reduce the window for homeowners to file claims for latent defects against contractors, designers and planners.

Florida law allows homeowners four years after discovering a structural defect–or four years after they should have discovered the defect with due diligence–to bring a construction claim.

But also at play in the four-year statute of limitation is the statute of repose. That law expires 10 years after the owner takes possession of the property or completes the contract with an engineer, architect or contractor; a certificate of occupancy is issued; or construction is completed or abandoned. It expires even if the statute of limitations has not run.

Under Fant’s proposal, the 10-year window could shrink to seven, leaving homeowners responsible for fixing any defects discovered after the cutoff period for filing suit.

“Most people are very aware of the statute of limitations, but the statute of repose has no tolling or exemptions. It’s an absolute cutoff even if the defect was latent and could not have been discovered until that time,” said construction litigator Georg Ketelhohn, a senior associate at Siegfried Rivera Hyman Lerner De La Torre Mars & Sobel in Coral Gables. “It’s a concern because some construction defects do not manifest for at least seven years.”

Opponents say the bill would especially hurt condominium associations and owners who might not gain control of units for years but would face a shorter window to file claims for faulty construction or design work.

The bill made it past the House’s Civil Justice Committee on a 7-6 vote Feb. 17 and is headed next to the Judiciary Committee. If it becomes law, the change would take effect July 1 and become one of two potential game changers for property owners across the state.

The article continues to discuss HB 87:

Another proposal would require litigants to provide more detailed information when filing claim notices. Instead of identifying only some defects up front, a bill would require homeowners to identify every affected location as the basis of the claim.

Opponents say uncovering the full scope of a faulty construction or design would force property owners to undertake destructive investigations including demolition work to expose all shoddy work.

The bill by Rep. Kathleen Passidomo, R-Naples, also would require the initial notice to specify the building code, project plans, drawings or other project specification to serve as the basis for the claim.

Sen. Garrett Richter, R-Naples, filed a companion Senate bill Jan. 21.

“The intention is to limit construction claims in the state,” Ketelhohn said.

Our firm congratulates Georg for sharing his views on these important new pieces of proposed legislation for community associations with the editors of the Daily Business Review and the newspaper’s readers. Click here to read the complete article in the newspaper’s website (registration required).

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In addition to Florida House Bill 87, which I wrote about in this blog last month, HB 501 also presents serious concerns for associations, property owners and even also public-sector projects. The bill seeks to reduce the statute of repose for construction-related claims from the current 10 years to just seven years, meaning that claimants will have only seven years from the date of the completion of construction to file any claims for the design, planning or construction of any improvement to real property.

Unlike the statute of limitations, which establishes a time limit within which an action must be brought from the time of the accrual of the cause of action, the statute of repose bars a claim after the conclusion of the period of repose, thereby creating an absolute bar to such claims even if the claim is for a latent defect that was not discovered until years after the completion of construction. It holds contractors, subcontractors, architects, engineers and other construction-industry professionals free from all liability after the set term of time expires.

Under Florida law, the statute of limitations for construction defects expires four years after the defect is discovered or should have been discovered using due diligence, but the statute of repose expires (even if the statute of limitations has not run) ten years after the later of:

  • 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 his or her employer.

With HB 501, the legislature would reduce the period of repose from 10 to seven years, so after seven years any latent structural defects or other latent defects that have not manifested themselves beforehand would become solely the responsibility of the property owner. For condominium associations, this change would be particularly troublesome because, unlike the period for the statute of limitations which does not begin to run until after the turnover of control from the developer, the clock starts ticking for the period of repose at the completion of construction, which is often years before the turnover. Thus, if the turnover of a property from the developer is delayed beyond the normal course for some reason, the period for a condominium association to bring any construction claims could be quite short, as no extension is given to the association for the period of repose under current law or under the proposed bill.

constdefect1.jpgTypically, construction defect claims for condominium associations are only brought after turnover has taken place, as the turnover process includes an independent engineering inspection of the structural and mechanical elements. Also, prior to the turnover, the unit owners will not be as informed and involved with the management and administration of the property while it is still being overseen by the developer. And, it would be cost-prohibitive and impractical for individual unit owners to commission an engineering inspection and report for the common areas on their own, and then file suit for the construction defects of the whole condominium on their own.

Thus, the statute of repose, if it gets shortened to seven years, could create an incentive for developers to limit their exposure to construction defect liability by delaying the turnover as long as possible, as the longer they wait to complete the turnover, the shorter the window of opportunity becomes for the association under the statute of repose to identify any defects and pursue a claim.

Builders and their lobbyists in support of this legislation argue that most construction defects become apparent within a few years of the completion of construction, but the fact is that some of the most costly and cumbersome defects to repair are latent structural and mechanical defects that can take well over seven years to become evident. A well-known and oft-cited example of this took place years ago in Key West when one of the area’s largest concrete firms used salt water to mix its concrete. The residual salt in the concrete caused the reinforcing steel to corrode, but the defect did not become fully apparent until years after the completion of construction.

The current ten year statute of repose was already previously reduced from fifteen years in 2006, and the additional reduction to seven years that is being considered appears to be receiving mixed reviews by the lawmakers. Two civil engineers gave expert testimony against the bill before the House’s Civil Justice Subcommittee, which narrowly passed the bill by a vote of 7-6 and sent it on to the House Judiciary Committee.

Our firm encourages associations and property owners to contact their state representatives and senators to share their concerns regarding HB 501 as well as HB 87, which you can learn more about by clicking here to read my recent blog article. Click here to find the contact information for the state legislators for your district.

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