On July 20, 2015, diplomatic relations were officially restored between the U.S. and Cuba. Since that date, a number of significant political events have taken place. First, the U.S. reopened its embassy in Cuba on August 14, 2015. Next, on January 26, 2016, offices of the U.S. Departments of the Treasury and Commerce announced new amendments to the Cuban Assets Control Regulations and Export Administration Regulations. These amendments removed “existing restrictions on payment and financing terms for authorized exports and reexports to Cuba of items other than agricultural items or commodities,” and established “a case-by-case licensing policy for exports and reexports of items to meet the needs of the Cuban people, including those made to Cuban state-owned enterprises.” Additionally, these amendments “further facilitate travel to Cuba for authorized purposes by allowing blocked space, code-sharing, and leasing arrangements with Cuban airlines, authorizing additional travel-related and other transactions directly incident to the temporary sojourn of aircraft and vessels, and authorizing additional transactions related to professional meetings and other events, disaster preparedness and response projects, and information and informational materials, including transactions incident to professional media or artist productions in Cuba.” Finally, on March 21, 2016, President Barack Obama was the first sitting U.S. President to visit Cuba since the 1959 revolution, in which Fidel Castro overthrew Fulgencio Batista. This revolution ultimately led to the U.S. severing diplomatic relations in 1961 and President John F. Kennedy imposing a trade embargo between the U.S. and Cuba, which remains in effect today.
Noteworthy developments involving some U.S. construction companies and equipment manufacturers have occurred following the restoration of diplomatic relations. For example, the U.S. recently approved the construction of the first U.S.-operated factory in Cuba since the revolution. Specifically, “a two-man company from Alabama” has been authorized “to build a plant assembling as many as 1,000 small tractors a year for sale to private farmers in Cuba.” While the plant initially “will assemble commercially available components into a durable and easy-to-maintain 25-horsepower tractor selling for less than $10,000,” the two men “have plans to produce excavators, backhoes, trench-diggers and forklifts, equipment that’s badly needed across Cuba, where virtually all the infrastructure is crumbling after years of neglect and mismanagement and a lack of cash that the government blames on the embargo.” In addition, on April 7, 2016, for the first time, a number of U.S. companies participated in Havana’s 11th International Construction Fair, evidencing interest on the part of these companies to conduct business in Cuba. Continue Reading
In Brock v. Garner Window & Door Sales, Inc., Florida’s Fifth District Court of Appeal rejected a novel attempt to circumvent Florida’s well-established four-year statute of limitations for all actions founded on the construction of an improvement to real property. Plaintiff filed a lawsuit alleging breach of contract as a result of water intrusion damage following the installation of windows. It was undisputed that Plaintiff commenced the litigation more than four years following the discovery of the allegedly latent defect in the window installation. Plaintiff’s counsel argued that the window contractor could not rely on the four-year statute of limitations because the window subcontractor was not a licensed contractor and, therefore, the five-year statute of limitations for actions founded on written contracts should apply.
By way of background, the established four-year statute of limitations found in section 95.11(3)(c), Florida Statutes, provides that the limitations period begins to run upon the occurrence of the latter of four potential events: (1) the date of actual possession by the owner; (2) the date of the issuance of a certificate of occupancy; (3) the date of abandonment of construction if not completed; or—most noteworthy here—(4) the date of completion or termination of the contract between the . . . licensed contractor and its employer. However, when the defect is latent, the time begins to run when the defect is discovered or should have been discovered. Continue Reading
David Salazar, Esq., a partner in Cole, Scott & Kissane’s (“CSK’s”) Construction Group, recently filed and argued a Motion for Judgment on the Pleadings (the “Motion”) on behalf of a threshold inspector in a complex, multi-party construction lawsuit. The general contractor on the project sued CSK’s client for, among other things, professional negligence. The claimed damages exceeded $28,000,000.00. The Circuit Court in and for Miami-Dade County (the “Court”) granted the Motion and entered judgment on the pleadings as to the general contractor’s professional negligence claim against the threshold inspector.
The crux of the Motion was based on the rule that design professionals generally do not owe duties to protect parties with whom they are not in privity of contract from purely economic losses. The authority relied upon centered around AR Moyer, Inc. v. Graham, 285 So. 2d 397, 402 (Fla. 1973) and Spancrete, Inc. v. Ronald E. Frazier & Associates, P.A., 630 So. 2d 1197 (Fla. 3d DCA 1994). In AR Moyer, Florida’s Supreme Court carved out an exception to this general rule in situations where the design professional has supervisory authority over the general contractor tantamount to the power of life and death over the project. In Spancrete, Florida’s Third District Court of Appeals held that an architect’s power to inspect and reject work does not constitute the supervisory control sufficient to satisfy the AR Moyer exception. Continue Reading
Cole, Scott & Kissane, P.A. (“CSK”), is pleased to announce another significant win after a three and one-half week jury trial in Key West, Florida, where George Truitt, Esq., and Daniel Levin, Esq., defended a general contractor (the “Contractor”) in a suit filed by a condominium association (the “Association”). In 2007 and 2008, the Contractor replaced the oceanside balconies for two of the buildings at the condominium. Less than four years later, the Association removed and replaced the balconies again. In the suit, the Association claimed that the design and construction of the balconies was defective, and that as a result, the Association sustained the following damages: loss of rental revenue; loss of use; repair costs; and additional living expenses. The trial was bifurcated, and only liability for causing the alleged damages was tried. In discovery, the Association claimed more than $4.5 million dollars in compensatory and special damages, attorneys’ fees, costs, and interest.
The theme of the Association’s case was that the Contractor, which was experienced with concrete restoration, had “the keys to the car,” was in control of the engineers who were hired to define, inspect, and accept its work, and was cozy with the local building official who, therefore, did not inspect the construction as closely as he would have otherwise. According to the Association’s theme, given these “fishy” circumstances, the Contractor was able to replace the balconies so defectively that the balconies were a life safety danger when completed.
CSK’s theme of the case was that that two project managers and a superintendent, two sets of engineers, and the building official had to be wrong in order for the Association’s expert to be right. CSK attacked the expert’s credibility by: (1) showing that his firm misunderstood the structural balcony design, then covered up the mistake by misleading the building official; (2) identifying supposed life safety cracks in the units that were anywhere from three and one-half to thirteen and one-half years old that the expert had not directed to be shored up; (3) failing to identify any deflection cracks on the balconies; and (4) having a financial interest in exaggerating his forensic opinions to make more money on the remedial design and construction and as an expert witness. Continue Reading
The United States District Court for the Middle District of Florida recently rendered a decision in Auto-Owners Insurance Company v. Elite Homes, Inc. addressing the duty to defend when a “your work” exclusion exists in Commercial General Liability (CGL) policy. In Elite Homes, Joseph and Emily Crozier sued Elite Homes, Inc. (“Elite”) in state court for damages arising out of window leaks in their home. Elite tendered the defense of the claim to Auto-Owners Insurance Company (“AOIC”) seeking coverage for liability and damages. AOIC disclaimed coverage under the policy it issued to Elite (“Policy”) on the grounds that the window leaks only implicated issues with Elite’s scope of work; therefore, any claims were subject to the your work exclusion in the Policy. AOIC filed a declaratory judgment action in federal court, and moved for summary judgment on the issue of its duty to defend.
AOIC’s Motion relied on the Policy’s definition of “your work,” which excluded claims for damage to (1) work or operations performed by the insured or on its behalf; and (2) materials, parts, or equipment furnished in connection with such work or operations. The term “your work” also included (1) warranties or representations made at any time with respect to the fitness, quality, durability, performance, or use of “your work”; and (2) the providing of or failure to provide instructions. AOIC took the position that because Elite was the contractor who built the entire home, any damage to components of the home would constitute damage to its scope of work and would fall under the “Damage To Your Work.” Continue Reading
When entering into a consent judgment that purports to assign rights under an insurance policy, both the assignee and insurer should be cautious of various issues that could preclude coverage. Some of these issues include whether the insured was an additional insured under the policy, whether the judgment is for damage/loss covered under the policy, and, if not, whether it allocates between covered and non-covered loss, and whether the judgment was reasonable in light of the facts that existed at the time of settlement. These issues were discussed in Bradfield v. Mid-Continent Casualty Company and resolved in favor of the insurer.
In Bradfield, the Bradfields brought suit against the insurer as a result of a Coblentz Agreement entered into in an underlying state court case. The underlying state court case (the “Underlying Lawsuit”) was brought by the Bradfields against two construction companies, Horgo Signature Homes, Inc. (“Horgo Signature”) and Winfree Homes, Inc. (“Winfree”). The Underlying Lawsuit alleged that the Bradfields’ home was constructed by Horgo Signature and Winfree with latent defects that materially affected the structural integrity of the home. The defendants requested defense and indemnity from their insurer, Mid-Continent Casualty Company (“Mid-Continent”), but the insurer denied coverage for the Underlying Lawsuit. As a result, an agreement, known as a Coblentz Agreement, was reached between the Bradfields and the defendants, whereby the defendants entered into a consent judgment with Bradfields and assigned their rights under the Mid-Continent policy to the Bradfields. Pursuant to the terms of the agreement, the Bradfields brought a federal action against Mid-Continent for breach of contract and declaratory judgment.
Failing to plead damage to other property, even in the face of record evidence supporting damage to other property, can result in a ruling that there is no duty to defend.
In Florida, a commercial general liability (“CGL”) insurer’s duty to defend its insured is determined by examining whether the allegations in the complaint against the insured allege conduct and resulting damage contemplated in the subject policy. This is so even if the allegations in the complaint against the insured are factually incorrect or without merit. Generally, post-1986 CGL policies do not provide coverage to insureds in construction defect matters unless the complaint states: 1) the insured neither intended, nor expected, the damage; and 2) the contractor’s faulty work caused damage to completed, otherwise non-defective work. Recently, in Core Construction Services, Inc. v. Crum & Forster Specialty Insurance Company, the United States District Court for the Middle District of Florida addressed the issue of whether an insurer has a duty to defend its insured when there is record evidence of damage to other property, but when the operative pleading failed to set forth an allegation of such damages.
In Mid-Continent Casualty Company v. James T. Treace, 41 Fla. L. Weekly D60c (Fla. 5th DCA Dec. 31, 2015), Florida’s Fifth District Court of Appeal recently held that attorney’s fees awarded to a Plaintiff in a construction defect action against an insured contractor were covered under a supplementary payment provision in a commercial general liability (“CGL”) policy. In an underlying construction defect suit, homeowners, James and Angelina Treace (the “Treaces”), successfully sued the contractor that built their home and obtained a judgment “for the cost to access and repair water damage caused by faulty construction.” In addition to these compensatory damages, the trial court also awarded attorney’s fees and costs in favor of the Treaces. Continue Reading
Keith Lambdin and Dean Meyers successfully obtained an order granting a motion to dismiss, with prejudice, in federal court on behalf of a design professional and consulting services client.
Our client was hired by a municipality located in Broward County, Florida to perform inspection and code enforcement activities throughout the municipality. In the course of performing its contractual duties, our client’s employees cited the Plaintiff with several violations of the municipality’s code. The Plaintiff filed suit against the municipality and our client in the United States District Court for the Southern District of Florida, claiming that the code violation enforcement activity was retaliatory in nature in violation of the Plaintiff’s civil rights under 42 U.S.C. §1983. Keith and Dean filed a motion to dismiss in response to the Plaintiff’s complaint. Upon review of the motion to dismiss, the District Court ordered a full dismissal with prejudice of all counts against our client and the municipality. In addition, Keith and Dean successfully secured an award of attorney’s fees and costs to our client pursuant to 42 U.S.C. §1988 and Local Rule 7.3(a).
As Florida’s 2016 Legislative Session approaches, two companion bills have been introduced – Senate Bill (“SB”) 316 and House Bill (“HB”) 297. These bills seek to address the interpretation and application of the statute of repose set forth in § 95.11(3)(c), Florida Statutes. Intended to impose finality on the availability of claims for latent defects, the statute of repose imposes a ten-year expiration date on actions founded upon the design, planning, or construction of improvements to real property. Per the statute, the ten-year expiration date begins to run from the latter of the following events:
- Actual possession of the improvement by the owner;
- Issuance of a Certificate of Occupancy;
- Abandonment of the construction, if not completed; or
- Completion or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer.
SB 316 and HB 297 were introduced as a direct response to the Fifth District Court of Appeal’s decision in Cypress Fairway Condominium Association, Inc. v. Bergeron Construction Co., Inc., 164 So. 3d 706 (Fla. 5th DCA 2015).