February 9, 2021
Florida Court Holds HDD Is Not An Abnormally Dangerous Activity; Alleged Damage to Bridge 90 Feet From HDD Bore Held Not Foreseeable As A Matter of Law
A Florida circuit court has rejected a claim by a property owner that HDD is an abnormally dangerous activity, and that the HDD contractor cannot be subjected to strict liability for damage alleged to bridge. In an earlier ruling, the court held that alleged damage to a bridge 90 feet away from the bore path was legally unforeseeable and the HDD contractor was not liable. On September 22, 2020, Judge Edward Nicholas in Manatee County granted a summary judgment in favor of the HDD contractor, T.B. Landmark Construction Co., after 4 ½ years of litigation. In October 2014, T.B. Landmark had carried out a directional bore for a 16” waterline under Longboat Pass for the Town of Longboat Key. The bore path ran approximately 90 feet east of and roughly parallel to the Longboat Pass bridge, approximately 74 feet below the surface. The two-lane drawbridge bridge was built in the 1950s. During the first reamer pass, pulling back to the rig, the drawbridge operator reporter difficulty closing the leaf on the bridge. Florida Department of Transportation engineers and the bridge maintenance company concluded that the bridge had moved, and authorized an emergency repair to install a new crutch bent on piles driven to 105 feet. When SPT bores in the seabed near the bridge were done during the design phase, FDOT’s consultants reported a gray material the claimed was drilling fluid coming up under pressure from the drill casing. Some of the engineers theorized that drilling fluid had escaped from the HDD bore, under pressure, traveled through limestone fissures, and heaved the rest pier onto which the leaf would lower. FDOT’s management contractor, ICA, presented a demand letter to sued T.B. Landmark, the Town of Longboat Key, and others in 2016, alleging that the construction and engineering team had been negligent in conducting the HDD bore. Another count of the complaint alleged all of the construction team were strictly liable to ICA, because HDD was an “abnormally dangerous activity,” and should be treated by the law like using dynamite or pile driving. ICA’s engineer theorized that drilling fluid and gradually escaped into the limestone, travelled through a channel or fissures under pressure, then traveled up through the limestone until it reached an impervious clay bed under the bridge’s rest pier. The pressurized fluid would have created a bubble, lifting the clay layer above it and heaving the rest pier upward so the bridge leaf would not align properly. When the claim was received, T.B. Landmark and its legal team consulted with engineers and professionals. No one had ever heard of an HDD frack out causing a structure of the mass of a bridge to heave, 90 feet away from the bore. The legal team undertook a defense that because there was no history of this type of event ever happening, it was unforeseeable as a matter of law and the court should dismiss the case. T.B. Landmark denied that there had been any negligence or any anomalies in what was a successful bore. The strict liability claim presented particular risk to the HDD industry. Strict liability means the defendant can be held liable for damages it causes, even if it is operating with reasonable or the utmost care. If strict liability is applied, the HDD operator would essentially become an insurer for all damages that anyone could plausibly claim were caused by the HDD work. This ruling would have significantly increased legal risk and cost to the HDD industry and its customers. T.B. Landmark and its insurer, Zurich, called Dr. David Bennett as an expert witness on HDD safety. Dr. Bennett is one of the principal authors of HDD Good Practices Guidelines, an industry accepted standard for safe drilling. Dr. Bennett and his colleagues had conducted a pioneering study in the 90s of the effects of drilling fluid escaping from the bore hole and impact on nearby structures, and how the impact varies by distance. T.B. Landmark presented Dr. Bennett’s testimony that HDD is not abnormally dangerous, and that it was highly improbable that drilling fluid under pressure could have traveled the distance to the bridge and retained the pressure necessary to lift the clay layer carrying the bridge section, estimated to weigh 600 tons. T.B. Landmark’s structural engineer, Sean Burlingham, spend 4 days continuously monitoring the movement of the bridge. He opined that the bridge lock up was the result of an unusual confluence of thermal expansion and contraction on a chilly October morning, at the same time as a full moon flood tide, which acted together to temporarily through the leaf’s lock pins out of alignment with the receivers in the rest pier. He also cited records showing failure to maintain the moveable bearings, which should have better accommodated thermal expansion. During the four years of the litigation, T.B. Landmark’s defense team questioned 13 engineers and bridge maintenance specialists. All testified they had never heard of a structure of the mass of a bridge having been heaved by a frack out, and none would testify that HDD met any of the six legal criteria under the Restatement (Second) of Torts Sec. 519 that lead the courts to impose strict liability because an activity is abnormally dangerous. The material that came up under pressure during the SPT boring was captured in a bottle and sent to a lab, but never tested. The lawyers litigated for access to test the sample, only to discover than the geotech firm had thrown out the sample. Witnesses on the scene and experts disagreed in depositions whether the material was bentonite slurry, or liquefied clay native to the seabed and carried up under pressure. In December 2019, the court granted T.B. Landmark’s motion for summary judgment, finding that because there was no evidence of a structure of this mass having ever been heaved by an HDD bore at this distance, the event was unforeseeable as a matter of law. No one could reasonably foresee drilling fluid travelling under pressure through limestone. It dismissed the negligence count against T.B. Landmark. However, the strict liability claim remained. Only one other court had ever considered whether HDD was abnormally dangerous. In Tri-County Metro v Time Warner Telecommunications, 2008 WL 4572519 (D. Ore. 2008), the Federal district court in Oregon had rejected the transit district ’s claim that the HDD team should be held strictly liable for HDD placement of fiber optic lines under its rail lines during an extensive project. In July 2020, the court heard final arguments on the abnormal danger claim. Judge Nicholas gave credence to Dr. Bennett’s affidavit and deposition testimony, and held that the HDD operation did not satisfy the six part test for imposition of strict liability. ICA has appealed the summary judgments in the case. T.B. Landmark was represented by Andrew Showen, a board certified construction lawyer who was a Zurich staff attorney, and is now with Hill Rugh Keller & Main P.L. in Orlando, Florida.
April 3, 2020
Beginning April 1, FFCRA Requires Employers Of 500 Persons Or Less To Provide Paid Medical Leave To Certain Employees Affected By Covid-19 — But Only If The Employee Can’t “Telework”
The Families First Coronavirus Response Act (“FFCRA”) was passed by Congress and signed by the President on March 18, 2020. (The law in question is technically titled “Emergency Paid Sick Leave Act” see H.R. 6201 §5101. We’ll call it FFCRA here to avoid confusion). The U.S. Department of Labor has advised the public that the law took effect until April 1, 2020. However, in a March 24 bulletin, DOL stated it would not take enforcement action for violations occurring before April 17, 2020, if the business was making reasonable, good faith efforts to comply with the act. (See https://www.dol.gov/agencies/whd/field-assistance-bulletins/2020-1). However the bulletin makes clear “willful” violations will not receive this grace period. The challenge here is that not DOL is not the only enforcer of the FFCRA. Dissatisfied employees have a right to sue under the Fair Labor Standards Act, 29 USC §216. This would impose double damages on the employer, plus attorneys’ fees to the prevailing employee. FFCRA is directed to employers who employ under 500 people – small and medium sized business. There is a hardship exception for businesses who employ less than 50 people, if criteria we discuss below are met. Very notably, however, the law does not require leave for employees who can “telework”. See § 5102: An employer shall provide to each employee employed by the employer paid sick time to the extent that the employee is unable to work (or telework) due to a need for leave. We discuss what “telework” is in Sec. 2 below. What Employees Are Covered and What Are They Entitled To? Those employees eligible for the paid leave, and who the employer must pay, are those 1) under a “quarantine or isolation order” or 2) infected and “seeking a diagnosis”, or 3) who must care for a family member and cannot “telework”. To summarize the Department of Labor’s guidance, the following persons are eligible: a. Full Pay: Employees in quarantine, or having COVID-19. These employees must be paid up to 80 hours of sick leave at their regular rate of pay, or $551 per day or $5,110 for two weeks, whichever is less. (An employee is considered “quarantined” if there is a Federal or state quarantine or isolation order or receives “advice of a health care provider”. Whether communitywide “lock down” orders constitute a “quarantine or isolation order”, as have occurred throughout U.S cities and counties, is an unanswered question.) b. Two/Thirds Pay: The Two/Thirds pay rule covers 3 different classes of workers. Employees “[a] unable to work because of a bona fide need to care for an individual subject to quarantine …. or [b] to care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or [c] is experiencing a substantially similar condition as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor.” (from DOL website, https://www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave). These employees are entitled to, and the employer must pay, 2/3 of their usual pay, or up to $200 per day and $2,000, whichever is less. c. Ten Weeks’ Additional Leave. Employees who have been on payroll more than 30 days, and who must care for children whose schools are closed or whose day care providers are unavailable, are entitled to an additional ten weeks of family medical leave at two/thirds their usual rate of pay, or up to $200 per day and $2,000, whichever is less. (Note that because of the “or” between “school closed” and “no day care provider,” it appears the employee is eligible if either of those occur; both do not have to occur.) The employee may invoke the paid leave under FFCRA before having to use any other sick leave, and the employer may not require the employee to use any other sick leave first. For part time employees, the benefit available is limited to “the number of hours that such employee works, on average, over a 2-week period.” The “Telework” Exception. The “telework” exception presents a path for employers to rearrange their work structures and limit their costs under FFCRA. FFCRA contains no definition of “telework.” However, another Federal statute does, and “telework” there means something much broader than “working over the phone”. In 5 U.S.C.A. § 6501, “telework” means working anywhere the employer approves, other than the “location from which the employee would otherwise work” The term “telework” or “teleworking” refers to a work flexibility arrangement under which an employee performs the duties and responsibilities of such employee’s position, and other authorized activities, from an approved worksite other than the location from which the employee would otherwise work. This definition really has only one meaningful element – that the employer approves of the location. This definition suggest an employer may have a lot of options to create a “telework” position for the employee that would require the employee seeking leave to continue to “telework,” and thereby exempt the employee for eligibility for paid leave under FFCRA. A situation where the employee continues to have something useful to contribute to an economy in slowdown, while providing some, perhaps different, value to the employer, may be a win-win for both. Employers with existing telework policies should be cautious to consider whether those policies limit their ability to make changes. In addition, creating new telework job descriptions in the present emergency may be viewed as precedent setting for what accommodations may be required (such for employees with disabilities) in the future. Specific changes and their legality are outside our ability to discuss in this article, and the employer or employee should consult with a qualified employment law attorney on the specifics. Posting Notice of Employee Leave Rights Employers are required to post “conspicuously” a notice “in a form approved by the Department of Labor,” a notice of employee rights under the FFCRA. Here is a link to the approved poster: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf Employers must also notify off premise or teleworking employees. DOL guidance suggests emailing the notice to those employees. Possible Exemption For Employers With Less Than 50 Employees: While § 5111 of the statute authorizes the Secretary of Labor to exempt businesses under 50 employees “when the imposition of such requirements would jeopardize the viability of the business as a going concern”, as of April 3, there are no forms for securing an exemption. Realistically, it is hard to expect the DOL could review, approve and evaluate exemption requests in time to give any small business an exemption before the April 1 effective date. The commentary on FFCRA from the bar suggests employers preserve evidence that would support an exemption. As discussed above, while DOL may refrain from enforcement, employers also face a risk of civil claims by employees. Consequently a business with under 50 employees operating without an “official” DOJ exemption risks litigation after the fact to recover double damages and attorneys’ fees. On March 29, DOl issued a “Q&A” concerning how to qualify fore the exemption. See https://www.dol.gov/agencies/whd/pandemic/ffcra-questions) (Questions 58 and 59, quoted here in full.) “58. When does the small business exemption apply to exclude a small business from the provisions of the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act? An employer, including a religious or nonprofit organization, with fewer than 50 employees (small business) is exempt from providing (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons when doing so would jeopardize the viability of the small business as a going concern. A small business may claim this exemption if an authorized officer of the business has determined that: *The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity; *The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or *There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.” “59. …A small business is exempt from certain paid sick leave and expanded family and medical leave requirements if providing an employee such leave would jeopardize the viability of the business as a going concern. This means a small business is exempt from mandated paid sick leave or expanded family and medical leave requirements only if the: employer employs fewer than 50 employees; leave is requested because the child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; and an authorized officer of the business has determined that at least one of the three conditions described in Question 58 is satisfied. The Department encourages employers and employees to collaborate to reach the best solution for maintaining the business and ensuring employee safety. “ The key here is for an “authorized officer” to promptly apply in writing to DOL for the exemption. It would be important to promptly seek an exemption specifically requesting that the exemption be retroactive to the date the business was first affected. The exemption request should present documentation supporting that the conditions are met. Payroll, profit and loss and similar records showing that the business could not stay open and keep paying other employees anything, if it had to pay the FFCRA paid leave to employees requesting it, would seem essential. Employers should also consider applying for emergency loans to demonstrate efforts to go above and beyond normal cash flow during the COVID-19 emergency. Note the exemption for 50 employees or less is available only from leave for child care, not leave requested because of a COVI-19 diagnosis or and quarantine order. The End of the Benefit FFCRA currently expires by its terms on December 30, 2020. In addition, this is not paid medical leave for any purpose; it is paid medical leave that is necessary because of COVID-19. § 5102(c) suggests this paid leave is a one time benefit that the employee is not entitled to for a second COVID-19 related event after returning to work: Paid sick time provided to an employee under this Act shall cease beginning with the employee’s next scheduled workshift immediately following the termination of the need for paid sick time under subsection (a). Interaction with Family Medical Leave Act FFCRA also amended the Family Medical Leave Act to provide leave for caregivers of children out of school or with no day care (amending § 2611(a) to extend leave to an “employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.” The amendment to FMLA in §3102 of FFCRA preserves family medical leave for care for a sick or out-of-school child as without pay for the first ten days: “(b) Relationship To Paid Leave.—“(1) UNPAID LEAVE FOR INITIAL 10 DAYS.— “(A) IN GENERAL.—The first 10 days for which an employee takes leave under section 102(a)(1)(F) may consist of unpaid leave.” This appears to conflict with § 5102(a)(5), which requires two/thirds pay from day one of leave to care for “a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID–19 precautions.” The Story Continues. DOL continues to issue guidance online. Please contact us if you have questions.
March 17, 2020
Florida Department of Economic Opportunity Is Pushing Out Emergency Bridge Loans to Small Business at 0% Interest For One Year
To assist small businesses to stay open and pay employees during the COVID-19 slowdown, Governor DeSantis has authorized the Florida Department of Economic Opportunity to extend 0% interest emergency bridge loans to small businesses. The loans are for up to $50,000 and are at 0% interest for 1 year, escalating to 12% after the first year. The application deadline is May 8, 2020. Hill Rugh Keller & Main is offering small businesses help free of charge, to help in developing their loan applications. More information from the State of Florida is available at https://floridadisasterloan.org/ or you can email the State of Florida at Disaster@FloridaSBDC.org or call via phone toll‐free to (866) 737‐7232. According to the State of Florida’s website, eligible businesses must: (1) be a for‐profit, privately held small business that maintains a place of business in the state of Florida; (2) be located in a designated disaster area; eligible Florida counties per Executive Order 20‐52 are all counties statewide; (3) be established prior to March 9, 2020, the date of the designated disaster; (4) be able to demonstrate economic injury as a result of the designated disaster, and the need for the loan and use of proceeds must be directly related to the economic injury caused by the designated disaster; and (5) be eligible for assistance based on the types of activities the business conducts according to State of Florida guidelines. Here is a link to the application form: https://floridadisasterloan.org/a/w/wp-content/uploads/2020/03/20200316-COVID-19-Florida-Emergency-Bridge-Loan-Application3.pdf (This link is updated from our previous post). If you have questions, please direct them to Andy Showen at HRKM at 407-808-8357 or firstname.lastname@example.org.
January 10, 2020
HRKM Wins Directed Verdict in Auto Repair Professional Liability Case
An often overlooked consideration during most initial case evaluations, is the applicability of the Statute of Limitations. A prime purpose of the statute of limitations is to protect defendants from facing surprise and stale claims which position them at a strategic and technical disadvantage because of an inordinate passage of time. Fla. Dep’t of Health & Rehab. Servs. v. S.A.P, 835 So. 2d 1091 (Fla. 2002). Our firm recently defended a client mechanic shop which had been sued by a customer for car repair work that occurred eight years before. Plaintiff alleged that defective repair work performed by our client resulted in catastrophic engine damages and Plaintiff was seeking damages equivalent to the approximate replacement value of his now 14 year old motor vehicle. On its face, eight years and 40,000 + miles later seems like seems a long time to a bring an auto repair claim, however, Florida Statute 95.11 contains a provision in section (4)(a) which could theoretically form the basis for Plaintiff’s potential recovery even with a claim so remote. Specifically, Florida Statute 95.11(4)(a) provides that for cases of professional liability the statute of limitations would start to run only after “time the cause of action is discovered or should have been discovered with the exercise of due diligence” and run for two years. (Fla. Stat. Ann. § 95.11(4)(a). In this case, the key question for purposes of applying the Statute of Limitations was whether a mechanic, in Florida, fits within the statutory definition of a “professional” as provided in FSA 95.11. Florida Statute 621.03 defines professional services as follows: Fla. Stat. Ann. § 621.03 (West) “As used in this act the following words shall have the meaning indicated: (1) The term “professional service” means any type of personal service to the public which requires as a condition precedent to the rendering of such service the obtaining of a license or other legal authorization. By way of example and without limiting the generality thereof, the personal services which come within the provisions of this act are the personal services rendered by certified public accountants, public accountants, chiropractic physicians, dentists, osteopathic physicians, physicians and surgeons, doctors of medicine, doctors of dentistry, podiatric physicians, chiropodists, architects, veterinarians, attorneys at law, and life insurance agents.”(emphasis added) To be considered a professional, for purposes of professional negligence, the occupation must require a license. However, in Florida, mechanics are not required to have a license to practice1 (citation website: (https://asecertificationtraining.com/mechanics-license-requirements-state-florida/) As a result, mechanics do not fall under the provision of Florida Statute 95.11(4)(a), thereby rendering Plaintiff’s dubious claim time-barred by the Statute of Limitations. Attention to detail turned out to be the difference in this case. Instead of having to hash out time antiquated facts that may or may not have disadvantaged our client, the case resolved in our favor with a defense verdict at a bench trial. For an evaluation of your case by legal professionals, contact our office at [Site::phoneNumber].
July 24, 2019
HRKM Collaborates with ABC Student Chapter
Hill, Rugh, Keller & Main is proud to be a member of the largest commercial construction trade association, Associated Builders and Contractors (ABC), Central Florida Chapter. According to ABC’s website, “the Central Florida Chapter of ABC is a community of common interest, and the association helps its members win work and deliver that work safely, ethically and profitably for the betterment of the communities in which ABC and its members work.” One of the benefits ABC offers to its members’ is easy access to other members’ expertise. ABC Central Florida staff helped direct the firm to ABC’s Student Chapter at the University of Central Florida as our firm was looking for help with a large task reviewing tens of thousands of project photographs to identify allegedly showing damages in dispute in a case. ABC UCF Student Chapter member, Ed Sellian, collaborated with HRKM to assist in trial preparation for a major condominium case that recently settled before trial. Ed, a construction student and an experienced superintendent, worked with HRKM attorney, Andy Showen, a board-certified construction lawyer, to seek out evidence of damage and repairs in the thousands of photographs and turn them into a manageable compilation. HRKM continues to work with the pool of talent ABC’s Student Chapter offers on other projects. It hopes this collaboration will provide real world case lessons on avoiding the problems on projects that lead to claims.
July 8, 2019
Statute of Limitations for Roof Defect Claim Runs from Time of Notice of Roof Leak Not Knowledge of the Specific Defect
The Third District Court of Appeal in Covenant Baptist Church, Inc. v. Vasallo Construction, Inc. in an opinion filed on May 22, 2019, held that an owner was barred by the statute of limitations from filing a lawsuit for a defective roof when the owner knew of roof leaks more than 4 years prior to filing suit even if the owner did not have knowledge of the specific defect. In the Vasallo Construction case, the evidence showed that the owner had knowledge of roof leaks in 2006 but did not file suit until 2011. As such, the court affirmed the final judgment on appeal. In reaching this holding, the appellate court cited a string of cases which found that the 4-year statue of limitations run from the time that the owner first notices roof leaks regardless of whether the owner knew of the specific defect that caused the leaks. The holdings of the Vasallo Construction case and the cited cases are significant as the owner’s knowledge of a defect is usually a factual issue to be determined by the jury. However, the cases specifically hold that as a matter of law an owner’s knowledge of a roof leak puts the owner on notice of a defect. Further, to avoid the statute of limitations most plaintiffs claim that a defect was latent and therefore they had no notice of the defect prior to the expiration of the 4-year statute of limitations. The “latent” defect argument is clearly irrelevant under the Vasallo Construction case and cited cases when an owner had knowledge of a roof leak. As such, it is important to direct early discovery tailored to an owner’s knowledge of roof leaks to posture a case for a motion for summary judgment. This includes non-party subpoenas to the homeowner’s insurance company for roof leak claims, the seller’s real estate agent for a seller disclosure and buyer’s inspection report (if plaintiff is subsequent purchaser), and a property management company (if Association is involved).
March 12, 2019
Proposed amendment to ch. 558 would require nonbinding arbitration and allocation of damages to “own work”
During the first week of March, a bill (SB 1246/HB911) to modify the chapter 558 process by adding nonbinding arbitration was filed in the Florida House. Proposed Sec. 558.045 would require nonbinding arbitration in any construction defect lawsuit, within 180 days after all “proper parties” are joined: “(2) In any action involving construction defects, the courtshall require that the parties take part in nonbindingarbitration. Such arbitration must be conducted in accordancewith chapter 682, except as otherwise provided in this section.The mandatory arbitration must take place once all properparties have been joined in the action, but not later than 180days after the action is brought.” It would seem the goal here is an early, neutral “ballpark” assessment of defects and damages, before the parties spend substantial amounts on defense. The critique is that the defendant is necessarily at a disadvantage on this schedule, as developing a realistic defect and repair cost assessment that quickly, with no discovery, is difficult. Conversely, the 180 day arbitration deadline could be susceptible to multiple delays, because experience shows even in good faith and with due diligence, it is common to find, serve and join additional “proper parties” years into a multiparty lawsuit. Section 3, which might be referred to as the “Own Work Exclusion” Proviso, directs the arbitrator to identify damage components which are the defendant’s “own defective work”, as distinct from damage caused by the work. “3) If the arbitrator finds in favor of a claimant as toone or more parties on the construction defect claim, the awardmust include a detailed description of the nature of the defectand of the monetary amount awarded against each separate party,including the monetary amount of the award attributable to eachof the following:(a) Repairing or replacing the party’s own defective work.(b) Repairing or replacing other nondefective property damaged by that party’s defective work.(c) Other damages being awarded against the party.” The parties may agree in writing to accept the nonbinding arb award as binding and have it reduced to an enforceable judgment. For those who do not accept the arb award, subsection 6 purports to require the court to provide a verdict form and final judgment which: “must include a detaileddescription of the nature of the defect and of the monetaryamount awarded against each separate party, including themonetary amount of the award attributable to each of thefollowing:(a) Repairing or replacing the party’s own defective work.(b) Repairing or replacing other nondefective propertydamaged by that party’s defective work.” Given the Florida Supreme Court’s recent reaffirmation in DeLisle v. Crane Co. that it is prepared to strike down statutes which purport to impose requirements on litigants and courts which it deems procedural, it is hard to see how subsection 6 would survive a challenge on appeal. Even without the constitutional limitation on legislative regulation of court procedure, one wonders how a nonparty to the arbitration or the lawsuit – such as the insurer — is afforded due process in this determination. As a matter of strategy, who at the arbitration, or at the trial, will care to offer evidence as to the repair cost of the defendant’s “own work,” which is likely not to be covered by insurance? Neither the plaintiff nor the defendant would benefit from such a ruling. However, subsection 5 contains language which suggests that any finding concerning what is the defendant’s “own work” is not binding on the defendant or its insurer: (7) This section does not affect the rights and duties ofinsureds and insurance carriers under their policies. Whether this is intended to mean that the “own work” ruling by the arbitrator is not binding in a coverage dispute between the insured, its judgment creditor and the carrier is not crystal clear. If that is the intent, it seems unclear why the arbitrator is expressly required to do the work make this finding (except perhaps to assist with a neutral advisory opinion). Another unanswered question is whether this proposed nonbinding arb process is deemed a “court ordered nonbinding arbitration” under Sec. 44.103, Fla. Stat. That section awards attorneys’ fees to parties who do not accept the arbitral award, and then fail to do at least 25% “better” than the award at trial. While the bills state that the arb shall take place under ch. 682, the general arbitration practice statute, the process is nevertheless a “court ordered nonbinding arbitration” which would fit within the mandate of Sec. 44.103. The amendment has its heart in the right place — containing litigation costs — but there are problems with the path it takes to that goal. The full bill text is at https://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx?FileName=_s1246__.DOCX&DocumentType=Bill&BillNumber=1246&Session=2019
October 17, 2018
The Repose That Wasn’t: Florida Extends The Statute of Repose For Construction Claims By A Year (Or Maybe More)
Folklore in the construction business is that you can safely throw out your records after seven years because the IRS will only chase you for that long. Effective July 1, 2018, people in the business need to basically double that period, because of the Florida Legislature has extended the ten year statute of repose for construction claims, through its 2018 amendment to Sec. 95.11(3)(c), Fla. Stat. Until about 2013, we all “knew” that a plaintiff with claiming a construction effect had to sue within 10 years of completion of “the work”, even as to latent defects. The Legislature conferred this absolute bar on claims, regardless of whether they could be discovered by the building owner, to provide financial protection to the construction industry against stale claims. Much was made in the case law and scholarly articles about the unfairness of defending claims after files were thrown out, employees moved on, and insurance policies expired. “[I]n 1980, the legislature reenacted the statute stating an overwhelming public need…” after the Florida supreme court in Overland Constr. Co. v. Sirmons, 369 So. 2d 572 (Fla. 1979) had struck down a previous statute of repose. Sabal Chase Homeowners Ass’n v. Walt Disney World Co., 726 So. 2d 796, 799 (Fla. 3d DCA 1999) After 1980, a contractor (or sub) could diligently calendar ten years from project completion before tossing its project files in the shredder. (This was never really true, but it’s what many people believed). The misunderstanding was because the repose period had four possible trigger dates to start it running, including the “completion of the contract.” This post won’t go into the legal controversy over the last several years over what the term “completion of the contract” means. What is clear is the Fifth DCA decided in 2015 that it meant “the making of final payment by the owner to the general contractor or architect”, and not the physical completion of the construction work. Cypress Fairway Condo. v. Bergeron Constr. Co., 164 So. 3d 706 (Fla. 5th DCA 2015). After Cypress Fairways was decided in 2015, there was clearly no longer a ten year bright line repose period. The Legislature tried to address this problem in 2017 by adding the following definition of completion: “Completion of the contract means the later of the date of final performance of all the contracted services or the date that final payment for such services becomes due without regard to the date final payment is made.” In theory, under this amendment, the parties could look to the contract for the date performance would be due, and have a bright line rule again. Of course, the date final payment is legally due is a matter people disagree about often. In reality, final payment comes due to the general contractor not on the 1st of the month like the rent under a lease, but (usually) 30 days after it submits a payment application for retainage, and then, only if the application is correct and complete, and then, the owner may dispute whether money should be withheld for unsatisfactory work. Entire chapters of construction law books are written around this issue. This is no country for bright lines. Effective July 1, 2018, the Legislature has opened another extension to the ten year repose period. A defendant may avoid the statute of repose when filing a third party claim or crossclaim against another person in the chain of construction: “However, counterclaims, cross-claims, and third-party claims that arise out of the conduct, transaction, or occurrence set out or attempted to be set out in a pleading may be commenced up to 1 year after the pleading to which such claims relate is served, even if such claims would otherwise be time barred. “ The scenario this contemplates is common: a developer may be sued by a condominium association, and then attempts to bring claims against its general contractor or design team. Or a general contractor may be sued, and it may attempt to third party in its subcontractors. The concern this amendment addresses is that the defendant may be sued late in the repose period (say, nine years and 364 days after the contract was completed — yes, it has really happened), and not have time to pass the claim through to subtrades who did the work, because of the difficulty evaluating the claim, finding the subcontracts, formulating the pleading and the like. On its face, and perhaps in intent, this extends the repose period to 11 years, and only for potential third party defendants like subcontractors or subconsultants. In practice, the ten years plus one year equals eleven years is not the real repose period. A few examples illustrate this: Plaintiff condominium association sues general contractor nine years and 364 days after completion (call it ten years for simplicity). Defendant general contractor identifies the responsible subs and sues them at the end of year eleven. Then, plaintiff amends its complaint in year 12 after completion, to add new defects or clarify allegations. It’s unlikely the court will not hold that the amendment “relates back” to the original filing. If new subcontractors are implicated in the amended complaint, filed after eleven years, the defendant general contractor may have another year – year 12 or 13 – to sue these subs.A subcontractor who is served with a third party complaint may itself have hired a subsub or a materialman. The third party defendant subcontractor, joined in the case, say, at the end of year eleven, arguably has another year to bring its own third party claims against its subsubs or vendors. They would have no repose until as late as 12 years after “completion”. If so, they would remain at risk that the defendant general contractor could amend its third party claim against the subcontractor, and that in turn triggers a new set of issues and parties being implicated, in year 12 to 13.Some may object that a claim by a subcontractor against its subsubcontractor is a “fourth party complaint,” and the amendment to 95.11 only reopens the repose period for a “third party complaint”.. A careful reading of Fla. R. Civ. P. 1.180 shows there is no such terminology as a “fourth party complaint,” and Sec. 95.11(3)(c) does not define a “third party complaint”. To the contrary, Rule 1.180, entitled “Third Party Practice”, specifically authorizes a third party defendant to “proceed under this rule [called “Third Party Practice”] against any person… who is or may be liable…” While colloquially we might call this a “fourth party complaint”, Rule 1.180 calls this process part of “Third Party Practice”. “Third party” seems to mean “somebody other than the plaintiff (first party) or defendant (second party)”, and not “the guy under the second “vs.” in the case style, but not under any subsequent “vs.”” in the case style.” Our point is that the idea of a ten year repose period from the time a contractor or sub did “the work” was never quite correct (for reasons outside the scope of this post). The 2018 amendment makes it absolutely clear that persons in the chain of construction are at risk for at least eleven, and probably thirteen, or more, years. Even that assumes there is a bright line date for “completion of the contract,” and that’s a questionable assumption. The point of the statute of repose was to create such a readily discernible safe harbor date, that people in the industry and plaintiffs could understand and guide their conduct by. Ever since the Second DCA opened the door (in this lawyer’s opinion) in 2013 in Clearwater Hous. Auth. v. Future Cap. Holding Corp., 126 So. 3d 410 (Fla. 2d DCA 2013) to a legalistic and highly technical concept of “completion of the contract,” the benefit of a bright line rule has been an illusion. Here’s the disconnect: a subcontractor who thinks he understands the “ten year” rule knows he last did work on a job on, say, June 1, 2007, and on June 1, 2017, he can no longer be sued. In reality, after Clearwater Housing and Cypress Fairway Condo. v. Bergeron Constr. Co., 164 So. 3d 706 (Fla. 5th DCA 2015), the repose period ran from events such as the delivery of submittals and the making of final payment, between the owner and the general contractor. These are events the typical subcontractor would not know about, and would not be able to prove out of his own records. If the Legislature’s goal was to enable a small business to walk into court, hold up a job log entry or check for payment and shut down a lawsuit on a ten year old job, the 2017 and 2018 amendments to Sec. 95.11(3)(c) have not restored that refuge against stale claims. Those in the construction and insurance industries and those who represent them should adjust their expectations, and record retention, accordingly. Sec. 95.11(3)(c) , as of July 1, 2018, now reads: (3) WITHIN FOUR YEARS.— …. (b) An action relating to the determination of paternity, with the time running from the date the child reaches the age of majority. 1(c) An action founded on the design, planning, or construction of an improvement to real property, with the time running from 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 of the contract or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest; except that, when the action involves a latent defect, the time runs from the time the defect is discovered or should have been discovered with the exercise of due diligence. In any event, the action must be commenced within 10 years after 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 of the contract or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest. However, counterclaims, cross-claims, and third-party claims that arise out of the conduct, transaction, or occurrence set out or attempted to be set out in a pleading may be commenced up to 1 year after the pleading to which such claims relate is served, even if such claims would otherwise be time barred. With respect to actions founded on the design, planning, or construction of an improvement to real property, if such construction is performed pursuant to a duly issued building permit and if a local enforcement agency, state enforcement agency, or special inspector, as those terms are defined in s. 553.71, has issued a final certificate of occupancy or certificate of completion, then as to the construction which is within the scope of such building permit and certificate, the correction of defects to completed work or repair of completed work, whether performed under warranty or otherwise, does not extend the period of time within which an action must be commenced. Completion of the contract means the later of the date of final performance of all the contracted services or the date that final payment for such services becomes due without regard to the date final payment is made.
March 1, 2018
Protecting Your Business Domain Begins When You Select It
Check out the link below to read HRKM Owner and Partner, Chris Hill’s, Forbes magazine article. https://www.forbes.com/sites/groupthink/2018/02/25/protecting-your-business-domain-begins-when-you-select-it/#3c6da553130e