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April 01, 2005 | Publication| New Amendments to Florida Law For Making Claims Against Contractors For Construction Defects

Scott S. Katz, Matthew W. Peaire

This article was originally published in the Subrogator, a publication by the National Association of Subrogation Professionals, Spring/Summer 2005, Page 102. © Copyright 2005 by NASP. All rights reserved. Republished by Butler with permission from NASP.  

Florida's Construction Defect Statute, F.S. § 558.001 et seq. ("Construction Defect Statute"),[1] first became effective on May 27, 2003. This law drastically changed how claims for construction defects are to be made by homeowners against contractors in Florida.

An article written by this law firm was published in the Subrogator, February 2004 edition, entitled New Florida Law Changes Procedure For Making Claims Against Contractors for Construction Defects, which outlined the new procedures for making homeowner's construction defect claims in Florida. However, only one year after the Construction Defect Statute became effective, Florida's Legislature drastically amended the statute in an effort to make compliance more practical. The amendments are many, necessitating this update to the previous article. 
 

I.  FLORIDA STATUTE § 558.001 et seq.

The Construction Defect Statute sets forth the requirements for making a claim for damages to a dwelling associated with a construction defect. The Construction Defect Statute requires strict compliance:

A claimant may not file an action subject to this chapter without first complying with the requirements of this chapter. If a claimant files an action alleging a construction defect without first complying with the requirements of this chapter, on timely motion by a party to the action the court shall abate the action, without prejudice, and the action may not proceed until the claimant has complied with such requirements.[2]

As such, without following these requirements, the action will not survive in court. Significantly, if repairs have begun before the contractor is afforded an opportunity to inspect the loss, pursuant to the Statute, the claim will likely have been waived, because it is no longer possible to comply with the statutory requirements. Below is a discussion of changes to the Construction Defect Statute since the drafting of last year's article, New Florida Law Changes Procedure For Making Claims Against Contractors for Construction Defects.
 

A.  The 2004 Amendments Extend The Time Limits That Are Required To Comply With The Statute

The 2004 Amendments extend the time limits for filing litigation, conducting inspections, offering to perform work, paying money, and disputing the claim. The 2004 edition of the statute also adds separate time periods for claims related to dwellings of 20 or more units. This relates to buildings such as condominiums and townhouses where there is the potential to have a problem with many units, requiring more time for the discovery of the problems and more time for the contractor to inspect.

The 2004 Amendments also allow the contractor 30 days after he has been notified to inspect a dwelling with less than 20 units, whereas the 2004 statute only allowed the contractor five business days to inspect the dwelling after he received notice of a defect. The 2004 Amendments also increased the amount of time to 15 days for the subcontractor to serve a written response to the person who forwarded the notice of claim to them for a dwelling with less than 20 units. The original statute only allowed for five business days. Finally the new statute allows a contractor 45 days to serve a response to the person who signed the notice of claim regarding the defect, as opposed to 25 days allowed by the old statute.

These changes to the statute have made the process of bringing construction defect claims against contractors much more practical. The previous deadlines were very hard to meet and impractical for the average homeowner or claimant to comply with. The new deadlines, while still very difficult to meet in many circumstances, give at least some chance for compliance. It is still extremely important to remember that notice must go out before any repairs are made, or the homeowner or claimant risks waiving its potential claim for the damages incurred. Also, it is strongly advised that every notice letter be sent certified mail, return receipt, so that a record exists should notice become an issue.
 

B.  2004 Amendments Require That The Parties Exchange Expert Reports And Other Discoverable Evidence Pre-Suit

The 2004 Amendments state that:

Upon request, the claimant and the person receiving notice shall have a mutual duty to exchange all available discoverable evidence relating to the construction defects, including, but not limited to, expert reports, photographs, information received pursuant to subcontractors written report, and videotapes, if any. In the event of subsequent litigation, any party who failed to provide such evidence shall be subject to such sanctions as the court may impose for a discovery violation. Expert reports exchanged between the parties may not be used in any subsequent litigation for any purpose, unless the expert, or a person affiliated with the expert, testifies as a witness or the report is used or relied upon by an expert who testifies on behalf of the party for whom the report was prepared.[3]

Claimants and contractors are now required to disclose all discoverable evidence upon request. As drafted, the new statutory requirement includes requests made prior to the beginning of litigation. A burden is now placed upon the homeowner or claimant to determine what is, or is not, discoverable before a lawsuit is even filed. Clearly, this is a dangerous situation if counsel is not involved. 
 

C.  2004 Amendments Allow A Contractor To Inspect All Affected Units In Multifamily Buildings

The 2004 Amendments require the claimant to provide the contractor reasonable access to the dwelling, or to each unit subject to the claim, during normal working hours. This is to allow the contractor an opportunity to inspect the dwelling to determine the nature and cause of each alleged construction defect, as well as the nature and extent of any repairs or replacements necessary to remedy each defect. If the defect is alleged to be present in multiple units of a condominium, apartment or townhouse, then the claimant is required to make each individual unit available for inspection per the 2004 amendments. 
 

D.  2004 Amendments Permit Destructive Testing On The Affected Unit

Pursuant to § 558.004, Notice and Opportunity to Repair:

The person receiving notice shall reasonably coordinate the timing and manner of any and all inspections with the claimant to minimize the number of inspections. The inspection may include destructive testing by mutual agreement under the following reasonable terms and conditions:

  1. If the person receiving notice determines that destructive testing is necessary to determine the nature and cause of the alleged defects, such person shall notify the claimant in writing.

b.     The notice shall describe the destructive testing to be performed, the person selected to do the testing, the estimated anticipated damage and repairs to the dwelling resulting from the testing, the estimated amount of time necessary for the testing and to complete the repairs, and the financial responsibility offered for covering the costs of repairs.

c.     If the claimant promptly objects to the person selected to perform the destructive testing, the person receiving notice shall provide the claimant with a list of three qualified persons, from which the claimant may select one such person to perform the testing. The person selected to perform the testing shall operate as an agent or subcontractor of the person receiving notice and shall communicate with, submit any reports to and be solely responsible to the person receiving notice.

d.     The testing shall be done at a mutually agreeable time.

e.     The claimant or a representative of the claimant may be present to observe the destructive testing.

f.      The destructive testing shall not render the dwelling uninhabitable.

g.     In the event the claimant fails or refuses to agree to destructive testing, the claimant shall have no claim for damages which could have been avoided or mitigated had destructive testing been allowed when requested and had a feasible remedy been promptly implemented.[4] 

This provision of the Construction Defect Statute, Section 558.004, highlights how important the Florida Legislature determined inspection and destructive testing to be for claims involving construction defects. Failure to allow destructive testing means that the "claimant shall have no claim for damages which could have been avoided or mitigated had destructive testing been allowed when requested and had a feasible remedy been promptly implemented." Again, not following the Statute can jeopardize the homeowner's construction defect claim. 
 

E.  2004 Amendments Lessen The Penalty For Failure To Comply With Construction Defect Statute

The 2003 Statute provided that a claimant's failure to respond to a contractor's written proposal to rectify a defect within 15 days resulted in the offer being deemed accepted, thereby releasing the contractor from any further liability. However, the 2004 Amendment requires that the claimant accept or reject the offer by serving written notice of such acceptance or rejection on the person making the offer within 45 days after receiving the settlement offer. If a claimant initiates an action without first accepting or rejecting the offer, the court shall abate the action upon timely motion until the claimant complies.[5] Therefore, failure to timely accept or reject the contractor's written proposal to rectify a defect within 45 days does not bar the claim pursuant to the 2004 Amendments. Acceptance or rejection is required, however, before the court will not allow a lawsuit to be instituted. Recall that the previous version of the statute deemed a non-response to a contractor's offer to be an automatic acceptance.
 

F.  2004 Amendments Add Language Requirement For Construction Contracts

Florida's Legislature now mandates that effective July 1, 2004, the following language be included in all construction contracts:

(1) Except as otherwise provided in subsections (3) and (4), the provisions of this chapter shall control every contract for the design, construction, or remodeling of a dwelling entered into on or after July 1, 2004, which contains the notice as set forth in subsection (2) and is conspicuously set forth in capitalized letters.

(2) The notice required by subsection (1) must be in substantially the following form:

CHAPTER 558 NOTICE OF CLAIM

CHAPTER 558, FLORIDA STATUTES CONTAINS IMPORTANT REQUIREMENTS YOU MUST FOLLOW BEFORE YOU MAY BRING ANY LEGAL ACTION FOR AN ALLEGED CONSTRUCTION DEFECT IN YOUR HOME. SIXTY DAYS BEFORE YOU BRING ANY LEGAL ACTION, YOU MUST DELIVER TO THE OTHER PARTY TO THIS CONTRACT A WRITTEN NOTICE REFERRING TO CHAPTER 558 OF ANY CONSTRUCTION CONDITIONS YOU ALLEGE ARE DEFECTIVE AND PROVIDE SUCH PERSON THE OPPORTUNITY TO INSPECT THE ALLEGED CONSTRUCTION DEFECTS AND TO CONSIDER MAKING AN OFFER TO REPAIR OR PAY FOR THE ALLEGED CONSTRUCTION DEFECTS. YOU ARE NOT OBLIGATED TO ACCEPT ANY OFFER WHICH MAY BE MADE. THERE ARE STRICT DEADLINES AND PROCEDURES UNDER THIS FLORIDA LAW WHICH MUST BE MET AND FOLLOWED TO PROTECT YOUR INTERESTS.

(3) After receipt of the initial notice of claim, a claimant and the person receiving notice under § 558.004(1) may, by written mutual agreement, alter the procedure for the notice of claim process described in this chapter.

(4) This chapter applies to all actions accruing on or after July 1, 2004, and all actions commenced on or after such date, regardless of the date of sale, issuance of a certificate of occupancy or its equivalent, or substantial completion of the dwelling. Notwithstanding the notice requirements of this section for contracts entered into on or after July 1, 2004, this chapter applies to all actions accruing before July 1, 2004, but not yet commenced as of July 1, 2004, and failure to include the notice requirements of this section in a contract entered into prior to July 1, 2004, does not operate to bar the procedures of this chapter from applying to all such actions.[6]

This language inserted into the contract is clearly intended to place both the contractor and homeowner on notice of the Construction Defect Statute and the requirements associated therewith.
 

II.  CONCLUSION

Florida's Construction Defect Statute has become more practical by the 2004 Amendments set forth by the Florida Legislature. However, there is still a great deal of guidance needed with regard to the statute's application. As of the drafting of this article, no case law has been published addressing any aspect of the Construction Defect Statute. Notice is essential to complying with the Statute, and it is recommended that a copy of the Statute or its language be enclosed with each notice of potential claim letter related to a construction defect claim. Furthermore, with each new claim involving a construction defect, we recommend that you review the Construction Defect Statute in its entirety to ensure compliance.


 

Endnotes

1.  Florida Statute § 558.001-558.005 (2003)

2.  Florida Statute § 558.003 (2003)

3.  Florida Statute § 558.004(15) (2003)

4.  Florida Statute § 558.004(2) (2003)

5.  Florida Statute § 558.004 (2003)

6.  Florida Statute § 558.005 (2003)

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May 01, 2006 PublicationAlternative Ways To Use Evidence Of "Other Conduct" That Would Otherwise Not Be Admitted

In developing your case, as plaintiff or defendant, it is important to appreciate the various alternative ways for opening the door to "other conduct" evidence to prove relevant facts at issue. Below is a synopsis of strategic methods and insights for proffering evidence of character for a non-propensity purpose, habit, subsequent remedial measures and prior occurrences/failures.

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April 01, 2006 PublicationRecent Change in Florida's Spoliation Law

Until 2003, Florida courts recognized an independent tort of spoliation for both first and third party claims. However, that all began to change with the Fourth District Court of Appeal's decision in Martino v. Wal-Mart Stores, Inc., 835 So. 2d 1251 (Fla. 4th DCA 2003). In Martino, the plaintiffs filed a premises liability action against Wal-Mart, alleging that Mrs. Martino was injured while shopping at a Wal-Mart store when her shopping cart collapsed. Later, when Wal-Mart could not produce the shopping cart nor the security video that may have recorded the incident, the plaintiffs added a claim against Wal-Mart for spoliation of evidence. Wal-Mart filed a motion to dismiss the plaintiff's spoliation claim, which the trial court granted.

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October 01, 2005 PublicationFire Department Negligence Not Considered Intervening Cause in Franklin County, Ohio

This case involves a subrogation action following payments made by a commercial property carrier to its insured as a result of a fire that occurred at an insured apartment complex located in Franklin County, Ohio. The fire occurred on January 28, 2003, after one of the tenants in the apartment complex placed hot ashes from his fireplace into a cardboard box, and then left the box unattended inside of his unit. Approximately 30 minutes later, a fire ignited. The tenant quickly called the fire department, who responded and extinguished the fire. The fire damage was confined to the tenant's unit which suffered approximately $10,000 worth of damage.

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May 03, 2005 PublicationHow "What We Learned in Little League" Paves the Way for Winning Litigation!"

As in baseball, whether being the batter, pitcher, or outfielder, successful litigation requires a strong belief and conviction that one has the power to shape reality. Certainly, without the batter's confidence that he or she will hit the ball, irrespective of its speed, twists or turns, few home runs would be made, let alone "singles or doubles"

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April 01, 2005 PublicationFlorida's "Made Whole" Doctrine: Returning A Portion of the Insured's Deductible Is Permissible – For Now!

Per Florida's Made Whole Doctrine, insurers need only reimburse their insureds to the extent of their insured's legally recoverable loss. In the recent case of Monte De Oca v. State Farm Fire & Casualty Co., ---So.2d---, 2004 WL 2955008 (Fla. 3d DCA 2004), the Third District Court of Appeal supported the partial return of a deductible to an insured based on the insured's comparative negligence. This case is significant because it clarifies that an insurer, in Florida, does not violate the Made Whole Doctrine when the insurer returns only a prorated portion of the deductible to the insured due to the insured's comparative negligence.

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April 01, 2005 PublicationFlorida's Supreme Court Finally Brings Clarity to the Economic Loss Rule

After years of confusing and contradictory rulings, Florida's Supreme Court finally reigned in the scope of the Economic Loss Rule. In Indemnity Ins. Co. v. American Aviation, Inc., 891 So. 2d 532 (Fla. 2004), the Florida Supreme Court cogently limited the Economic Loss Rule. It held that the Economic Loss Rule does not bar a negligence action to recover solely economic damages where the defendant is not a product manufacturer or distributor. The Court also held that the Economic Loss Rule simply does not apply to any situation where there is no privity between the litigants.

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April 01, 2005 PublicationLive . . . From The House Of Subrogation!

 The Hilton Hotel in Austin, Texas will truly be "The House of Subrogation" from November 13 through 16, when over 1,200 subrogation professionals from around the globe assemble for the NASP Annual Conference. And this year's conference is expected to be even bigger, better and more alive than ever before!

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January 01, 2005 PublicationSpoliation of Evidence - Limiting the Duty to Preserve

A summary of Killings v. Enterprise Leasing Company, Inc., 2008 WL 4967412 (Ala. 2008). A recent case from the Supreme Court of Alabama.  In Killings v. Enterprise Leasing Company, Inc.,1 the Alabama Supreme Court recently held that a Plaintiff may proceed with a claim of spoliation against a third party responsible for negligently discarding necessary evidence in an underlying case.

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October 01, 2004 PublicationForcing the Issue: Virginia Courts Begin to Expand Recoveries in Tort Between Parties to a Contract

When subrogating against an adverse party having a contractual relationship with your insured, it is routine to face the argument that your damages are barred by the economic loss rule. Most jurisdictions have carved out an exception to the sometimes harsh results that can flow from the operation of this rule. One such exception is the “other property” exception, which typically allows for tort recovery when the damaged “other property” is not a subject of the contract.
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February 01, 2004 PublicationNew Florida Law Changes Procedure For Making Claims Against Contractors For Construction Defects

Florida Governor Jeb Bush approved Senate Bill No. 1286 (“Bill 1286”), which drastically changes the method for presenting a claim for construction defects. Effective May 27, 2003, Florida homeowners and their subrogees cannot file a construction defect lawsuit without fully complying with new pre-suit requirements.

In Section 1 of Bill 1286, the Florida Legislature states the intent of the new law.

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January 06, 2004 PublicationGoing Toe-to-Toe With Your Opposing Expert

Experts oftentimes make or break cases.  As knowledge and science have grown, so has the range of experts that parties call upon to advocate their cause.  Not only must a party always look to bolster one's own expert case, a party must simultaneously be mindful of the need to undercut your adversary's expert.  As the client, you want to ensure that your assigned counsel appreciates the following practical ways for tackling the opposing expert during the discovery process

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