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.
The 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.
The firm’s Lisa A. Lerner authored an editorial feature about the nuances of construction contracts for condominium associations that appears in the July/August issue of Brickell Magazine, one of South Florida’s premier lifestyle magazines. Her article discusses the protections for associations that experienced attorneys recommend and include in their clients’ construction contracts.
Our firm congratulates Lisa for sharing her insight into this important topic with the readers of Brickell Magazine. Click here to read her feature in the magazine’s website.
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.
Typically, 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.
Partner Stuart Sobel has authored a number of guest columns that have appeared in the Daily Business Review and the National Law Journal during the last several years, and his latest article published in the July 3 edition of the Daily Business Review is drawing considerable attention by the South Florida legal community.
Stuart’s column echoed the newspaper’s main article for its Litigation Special Report about the decline in trials, especially jury trials, and its impact in our judicial system. He wrote:
About 99.7 percent of cases are resolved without a jury trial. While this may be a testament to other means of resolution, it drastically shrinks the universe of opportunity for trial experience.
Now as a generation of lawyers matures without the cauldron of the courtroom within which to galvanize their skills, many of today’s attorneys seek desperately to avoid trial — exacerbating the loss of experience.
And since our judges are most often selected from our bar of attorneys, those lawyers without trial experience become judges without trial experience. Trials conducted by these judges will become less dependable as an effective means for dispute resolution.
Ultimately, this will intensify the public’s negative perception of our justice system in general, and it will undermine the public’s confidence in the reliability of a trial as the ultimate means of dispute resolution in particular. Scary.
Can we control the out-of-control discovery and over-lawyering of cases before trial so that budgets are not exhausted and litigants can actually afford the risk of trial?
Hourly lawyers and lawyers wary of malpractice tend to over-lawyer cases until they get close to trial. Then they hedge their bet and begin to persuade clients that trials are just too risky.
Perhaps, if we look to our own practices, we can instead do only what is really necessary to prepare to present a case in trial — and then present it.
In the process, we save clients money, gain trial experience and restore faith in the system. Just a thought.
Stuart is receiving a great deal of positive feedback and comments from South Florida attorneys and judges on his article, and we hope that the sentiments that he expressed help to bring some added perspective and insight on this critical issue.
Many individuals or associations have been victimized by unscrupulous contractors. These experiences include defective work resulting in costly disputes with contractors and efforts to correct deficiencies; contractors abandoning jobs; and the filing of liens on the owners’ property, despite payment for such services or goods having been made to the contractor. A basic understanding of construction lien laws may minimize exposure to the problems described above. Chapter 713, Florida Statutes (the “Construction Lien Laws”), provides protection to owners engaging contractors to perform work on their property, and it protects contractors, their subcontractors, suppliers and other professionals to ensure that they are paid for their services.
Under this law, lienors have the right to record a lien against real property if they are not paid for services, labor or materials provided for the improvement of such property. A lienor may be a contractor; subcontractor; sub-subcontractor; laborer; materialman who contracts with the owner, a contractor, a subcontractor, or a sub-subcontractor; or certain professionals (such as engineers or architects). While the owners of real property may be able to ascertain their exposure to a lien resulting from non-payment to a contractor that was engaged for the improvements, exposure to liens from non-payment to other lienors may be difficult to ascertain given that it is typically the contractor hired by the property owner that is entrusted with the obligation to pay the other parties having a right to place a lien on the property. For example, property owners may be aware that they have entered into a contract with a specific contractor, but they may be unaware that their contractor has engaged a subcontractor to excavate the land for the pool, and they have acquired the plaster and other materials from suppliers.
In the above example, lienors engaged by the contractor must be paid for their services, labor and materials. While the property owners may be aware that they have paid their contractor, they may be unaware of the subcontractors or suppliers. Failure to ensure that payment has been issued to the subcontractors and suppliers may result in the filing of a lien against the property, even if the owner paid the contractor.
The laws provide property owners with tools to notify the general public of their agreements with contractors hired for the improvement of real property so that potential lienors that have a right to file a lien on the owner’s property may then provide the owner with notice of their rights to lien for non-payment. In such cases, the property owner will file a Notice of Commencement in the public records of the county in which the property being improved is located. Those having lien rights for the work being performed and materials being supplied will be able to serve the property owner with a Notice to Owner advising the owner that they have been hired by the contractor to provide services or materials in connection with the project. Once a property owner is alerted as to the existence of all parties having a right to lien the property in connection with the improvement, the owner is in a position to ensure that all lienors are paid by the contractor, thus reducing each respective lienor’s rights to record a lien to the extent that they receive payment on the owner’s behalf. In order to ensure that lienors have been paid, the owner should condition that the contractor and other lienors provide releases of lien upon their receipt of payment.
The construction lien laws consist of a tedious set of statutes – complicated further by case law interpreting legal disputes involving such laws. Although the foregoing serves as a basic introduction of such laws, managers and directors must implement the procedures to protect against pitfalls such as those described above. Managers and directors should work closely with their engineers and attorneys to ensure that a contractor’s requested payment is conditioned upon satisfactory performance of work and compliance with procedures and forms included in the construction lien laws.