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Florida Construction Law Update

Complex Business Litigation Court Upholds Design Professional’s Duty Defense under AR Moyer, Post-Tiara

Posted in Condominiums, Construction, Design Professionals, Engineers, Negligence, Professional Liability

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

CSK Construction Group Prevails in Another Jury Trial

Posted in Code Enforcement, Condominiums, Construction, Construction Contracts, Contractors

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

Federal Court Recently Finds No Coverage Under “Your Work” Exclusion

Posted in Construction, Contractors, Insurance, Subcontractors

The United States District Court for the Middle District of Florida recently rendered a decision in Auto-Owners Insurance Company v. Elite Homes, Inc.[1] 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.[2]Continue Reading

Risks to Consider When Entering into a Coblentz Agreement

Posted in Construction, Construction Contracts, Contractors, Insurance

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.[1]

In Bradfield, the Bradfields brought suit against the insurer as a result of a Coblentz Agreement entered into in an underlying state court case.[2] 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”).[3] 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.[4] 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.[5]
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Don’t Plead Your Pass-Through CD Claims Out of Coverage

Posted in Construction, Coverage, Duty to Defend, Indemnification, Insurance

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.[1] This is so even if the allegations in the complaint against the insured are factually incorrect or without merit.[2] 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.[3] Recently, in Core Construction Services, Inc. v. Crum & Forster Specialty Insurance Company,[4] 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.

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Attorney’s Fees Constitute Covered “Court Costs”

Posted in Construction, Coverage, General, Indemnification, Insurance

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

CSK Successfully Defends Design and Consulting Services Firm against Civil Rights Claim

Posted in §1983, Civil Rights, Code Enforcement, Design Professionals, General

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).

 

Proposed Legislation on Statute of Repose: Clarifying that the Statute Runs from Completion of Performance

Posted in Condominiums, Construction Contracts, Contractors, Design Professionals, Engineers, Florida Legislation, Statute of Repose

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:

  1. Actual possession of the improvement by the owner;
  2. Issuance of a Certificate of Occupancy;
  3. Abandonment of the construction, if not completed; or
  4. 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).

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CSK Successfully Defends Contractor in High Stakes Trial

Posted in Contractors, Traffic

After a 30 day trial, Mike Brand and David Salazar secured a complete defense verdict in Monroe County (the Florida Keys). Mike and David represented a general contractor who replaced 6 miles of a water pipeline on the median of the Overseas Highway. Plaintiff allegedly went into the median as part of an emergency maneuver because the FDOT defines this area as a “clear zone” (designed to be a safe refuge for the motoring public) and suffered a traumatic brain injury as a result. He claims our client built a concrete pad that wasn’t flush to grade per the plans and specifications (as well as the FDOT Greenbook and Utility Accommodations Manual) causing him to fly off his motorcycle 14 feet in the air and land on his face.

Plaintiff, himself a former FDOT employee, claimed he was aware this was a clear zone. He suffered a traumatic brain injury, stopped breathing at the scene, was air lifted to Jackson, and was in a coma thereafter.

Plaintiff’s counsel asked the jury for $14.5 Million. The jury was out 33 minutes.

Amendments to Chapter 558 Become Effective on October 1, 2015

Posted in Construction, Contractors, Design Professionals, Developers, Florida Legislation, Subrogation, Uncategorized

On June 16, 2015, Governor Rick Scott signed into law House Bill 87, which amends Chapter 558 of the Florida Statutes.  The amendment takes effect October 1, 2015.

The intent of Chapter 558 is to avoid the commencement of an action by providing a mechanism for the parties to enter into discussions with one another through pre-suit notices of claim.  Prior to the amendment, Chapter 558 notices of claim were often ambiguous and were inadequately supported and documented.  Further, these notices failed to provide the locations of the alleged defects, and were subject to change.  Recipients of the notices were often forced to incur significant expense to determine the specific nature and locations of the claimed construction defects, some of which might not exist or were not in the scope of work of the party who received the notice.  These circumstances were not conducive to settlement negotiations. Accordingly, an amendment was proposed to streamline alternative dispute resolution in for construction defect disputes.

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