In late March of this year, Florida’s governor signed a bill into law that will greatly impact construction defect lawsuits. See, e.g., Spencer Mallard & Miguel J. Chamarro, “Legislature Changes Critical Deadlines In Construction Defect Litigation,” Law.com, May 9, 2018, at https://www.law.com/dailybusinessreview/2018/05/09/legislature-changes-critical-deadlines-in-construction-defect-litigation/?slreturn=20180910140853 (last visited Oct. 12, 2018). As several attorneys claim, the new legislation “will prevent developers and contractors from being left holding the bag when they face construction defect lawsuits filed shortly before the…deadline for such claims.” Id. This article discusses Florida’s newly-enacted construction legislation and examines how that policy may play out in court.
On March 23, House Bill (HB) 875 became law in Florida. See id. HB 875 amended existing statutes to extend “the Statute of Repose (the ultimate deadline to assert claims) for latent construction defect claims.” Adam P. Handfinger & Nathalie Vergoulias, “Statute of Repose for Latent Construction Defects Extension Creates Increased Risk,” Law.com, Sep. 24, 2018, at https://www.law.com/dailybusinessreview/2018/09/24/statute-of-repose-for-latent-construction-defects-extension-creates-increased-risk/ (last visited Oct. 10, 2018). Florida Statute Section 95.11(3)(c) was amended by HB 875 so that “parties faced with a construction or design defect lawsuit” will now have “up to one year to file pass-through claims (counterclaims, cross-claim[s,] or third-party claims) regardless of the application of the statute of repose that would otherwise serve as an absolute bar to presenting the pass-through claim. The legislation will apply to actions commenced after July 1. For lawsuits already in existence, the legislation would require [pass-through claims] to be filed before July 1, 2019.” Spencer Mallard & Miguel J. Chamarro, supra. Many legal analysts believe the new legislation will have far-reaching implications on construction litigation and the industry in general. See, e.g., id.
One change the recently-passed bill makes is to clarify the deadline for parties to bring suits alleging construction defects and provide a firm time frame for related claims. See, e.g., id. For example, the general statute of limitations for Florida litigants to sue over construction flaws was previously four years and typically began to run “when a party knew or should have known about an alleged defect.” Id. In contrast, the new law provides for a ten-year deadline, and it “begins to run from the latest of the following: the date an owner takes actual possession; the issuance of a certificate of occupancy; the date construction is abandoned; or the date when a contract between an engineer, architect, or contractor and its employer is completed.” Id.
The way the statutory amendment will affect Florida residents and businesses is perhaps best explained by example. Under the previous policy, “if a property owner [filed] suit against a developer or general contractor for defects in a 2008 building, the developer or…contractor would have only a few months, if not less, to identify all relevant design parties, subcontractors, suppliers [,]and manufacturers that are directly responsible for the alleged defects and sue them before their claims [became] time barred.” Id. Under HB 875, defendants who face new litigation on a 2008 project will have a year to implead or otherwise legally involve any pertinent “parties and file pass-through claims. Likewise, a subcontractor that receives one of those new pass-through claims would have a year of its own pass-through claims against its sub-subcontractors, suppliers or product manufacturers.” Id.
The effect of the revised law is one that attorneys and their clients should carefully contemplate. Functionally, the amendment may mean that lawsuits alleging construction defects will be “extended in length” because the new law dispenses with an absolute ten-year bar on filing claims against new parties. See id. In response, Floridians may see state courts enacting their own protocols to preclude these lawsuits from going on for interminable periods. See, e.g., id.
One essential consideration is how the new deadline will affect impleader and third-party (or pass-through) complaints. See, e.g., Adam P. Handfinger & Nathalie Vergoulias, supra. Under HB 875, “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 one year after the pleading to which such claims relate is served, even if such claims would otherwise be time barred.” Id., citing the statutory language.
The legal community appears to agree on the plain language of the latest version of Florida Statute Section 95.11(3)(c) extends the period in which parties can file suit. See, e.g., id. Some attorneys have expressed their belief that although this situation “was likely not the intent of the drafters, the language makes this a potential, and perhaps likely, scenario.” Id. The legislative goal, according to many construction law analysts, was simply to help contractors who are sued towards the end of the ten-year limitations period. See, e.g., Cole Copertino, “A New Trigger for Florida’s Statute of Repose?,” Florida Construction Law News, Jun. 2, 2018, at http://floridaconstructionupdate.com/a-new-trigger-for-floridas-statute-of-repose/ (last visited Oct. 10, 2018). An initial reading of the revised statute indicates that “the Amendment serves to resolve a common issue encountered by general contractors. … A defendant…served with a [c]omplaint at or near the [filing deadline] will be granted additional time beyond the traditional 10-year Statute of Repose to transfer risk by filing necessary cross-claims, counter-claims, and third-party claims.” Id.
It seems HB 875’s statutory intent may be up for debate, and certainly how to best interpret it is in dispute. See, e.g., id.; See Adam P. Handfinger & Nathalie Vergoulias, supra. So, what do the changes to Florida’s construction defect law mean for litigants and their lawyers, and how will courts decide to determine the meaning and applicability of updated language? That may be an issue for expert witnesses to address.
Experts in construction law can help sort these matters out for parties on both sides. In particular, attorneys and experts should pay close attention to the intent of statutes of repose, versus statutes of limitations. A statute of limitations typically precludes the ability of a plaintiff to bring suit after a certain period has expired. See, e.g., Cornell Law School Legal Information Institute-1, “Statute of Limitations,” at https://www.law.cornell.edu/wex/statute_of_limitations, no date given, (last visited Oct 10, 2018). Statutes of limitations prohibit claims from being brought after a particular length of time. See, e.g., id. In contrast, a statute of repose “bars claims after some action by the defendant, even if the plaintiff has not yet been injured. Since the time period begins to run from the date of the defendant’s action even if the injury is yet to occur, a statute of repose is generally more favorable to defendants than a statute of limitations.” Cornell Law School Legal Information Institute-2, “Statue of Repose,” at https://www.law.cornell.edu/wex/statute_of_repose, no date given, (last visited Oct. 10, 2018). The two are distinct in that “[w]hile a statute of limitations sets a lawsuit-filing time limit based on when the potential plaintiff suffered harm, a statute of repose sets a deadline based on the mere passage of time or the occurrence of a certain event that doesn’t itself cause harm or give rise to a potential lawsuit.” David Goguen, “What is the Difference between a Statute of Limitations and a Statute of Repose?,” Lawyers.com, 2018, at https://www.lawyers.com/legal-info/personal-injury/resolving-a-personal-injury-claim/difference-between-statute-of-limitations-and-statute-of-repose.html (last visited Oct. 10, 2018).
Because the one-year extension in the Florida statutory amendment concerns the statute of repose, its impact may be the most significant on initially named defendants and related third parties (such as sub-contractors and their employees, contractors, and assignees). The extension will heavily affect developers and contractors who get sued and wish to file pass-through complaints against third parties. See, e.g., Michael Bittner, “Statue of Limitations and Statue of Repose in Florida Construction Defect Litigation,” MarksGray,PA, May, 17, 2018, at http://www.marksgray.com/statute-limitations-statute-repose-florida-construction-defect-litigation/ (last visited Oct. 10, 2018). Many analysts are deeply concerned about the lengthened intervals the law allows for pass-through claims. A number of construction lawyers have argued that the longer filing period may adversely impact many commercial entities and fields. See, e.g., Adam P. Handfinger & Nathalie Vergoulias, supra. They allege that the extension will result in much “risk for the entire development, construction, and real estate industries, and should result in significantly higher insurance premiums.” Id.
Regardless of the new statutory language, interpreting the legislature’s intent and analyzing how to apply the law to further just outcomes is anything but clear. Many attorneys and experts in the field have reviewed HB 875 and believe the legislature may have inadvertently allowed for time extensions that were not contemplated when the law was written and passed. See, e.g, id.; See Michael Bittner, supra. Florida construction litigators should retain experts to explain to courts how the statute should be construed and why a particular construction would best facilitate fairness and public policy.
There are several conflicting interests at stake: compensating aggrieved parties injured by construction defects, defendants who assigned projects to third parties and did not personally cause a problem, and whether it is proper to make parties vulnerable to lawsuits indefinitely. Each of these interests has merit and a public policy reason for advancing their interpretation of the new law. In addressing these matters, expert witnesses will help litigants, attorneys, and adjudicators determine how to resolve competing concerns and decide the intent, meaning, and best way to implement the legislative edict.
Construction law attorneys should follow the legal developments pertaining to HB 875. Because its changes appear to be substantial, litigators in every state can learn how to evaluate how the Florida amendment or similar policies may affect parties to construction disputes. If lawyers find the new legislation to be favorable, they may wish to argue for such policies in their jurisdictions. However, attorneys who believe the new statute is undesirable or take issue with its interpretation may ask courts to reject such approaches. In any event, expert witnesses can advise legal practitioners and offer authoritative evidence to bolster claims, and expert evidence may persuade courts to make advantageous decisions.