Construction Statute of Repose - Is It Really Meant To Work?

Florida - Construction Litigation

Key Points:

• Statutes of repose, unlike statutes of limitations, impose even more stringent and concrete time limitations for a claimant to bring a cause of action against the defendant.
• A claimant's right to bring a cause of action may be deemed completely extinguished by the statute of repose after a specified time period.
• Third-party plaintiffs may argue around the statute of repose defense by contending that their complaint should relate back to the filing of the underlying complaint.

A claimant's right to bring a cause of action does not extend into perpetuity. It is well known that an aggrieved party generally has a specified amount of time to bring its suit against the defendant. What may not be as well known is that in some instances a claimant's right to bring a lawsuit may be terminated before the claimant's cause of action ever accrued. Certain statutory provisions, known as statutes of repose, apply even more stringent and concrete time frames for a claimant to bring a lawsuit.

A statute of repose is a very different mechanism than a statute of limitations, by which a defendant can defeat a plaintiff's claim well before the merits of the action are even addressed. The Florida Supreme Court has stated that a statute of repose runs "from the date of a discrete act on the part of the defendant without regard to when the cause of action accrued." Kush v. Lloyd, 616 So. 2d 415, 418 (Fla. 1992). This is unlike the statute of limitations period, which starts to run from the accrual of a cause of action and may grant the plaintiff a longer period of time to commence a lawsuit.

For cases involving construction litigation, the time limitations for bringing an action are detailed in §95.11(3)(c), Florida Statutes. Section 95.11 states that a party has four years to bring a lawsuit after a project is completed or upon discovery of any latent (hidden) defects. The statute goes on to require that, at the very latest, the action be brought within ten years from specified events. Thus, the statutory repose clock will start ticking from the latest of: (a) the date of actual possession by the owner; (b) the date the certificate of occupancy was issued; (c) the date of abandonment of construction, if the project was not completed; or (d) the date of completion of the contract for the engineer, architect or licensed contractor. If for some reason the claimant did not discover the construction defects until 12 years after the project was completed, it would already be past the statute of repose period and the claim should be barred.

One nuance that has not yet been fully developed by the courts involves cases with third- and fourth-party claims. The statute of repose period should be the same for all parties involved. That is because the statute of repose uses a specific set of events to measure the time in which to bring the lawsuit, such as when a certificate of occupancy was issued. Therefore, both the original plaintiff and third-party plaintiff must file their respective complaints before the ten-year period expires.

Naturally, where third-party claims are involved, there is an intervening time span between the plaintiff's lawsuit against the primary defendant and the defendant's third-party action against new parties. This duration may be just a few short months, a year, or more. Imagine a scenario where the statute of repose period ended in January 2005. The plaintiff brings its action in December 2004, just barely filing within the allowable time period. After service is made upon the defendant, it later discovers that other subcontractors and suppliers should be joined in the action due to their involvement in constructing the plaintiff's residence. The defendant then sues the subcontractors and suppliers by way of a third-party complaint in May 2005. According to the statute, the defendant/third-party plaintiff's action should be barred as untimely since it filed its own action several months after the repose period had already ended.

While seemingly harsh to an unsuspecting claimant, there is no way for them to get around the statute if their suit is filed late. Upon conclusion of the repose period, a claimant's right to bring any lawsuit on that construction project will be deemed completely extinguished. Allan and Conrad, Inc. v. Univ. of Central Florida, 961 So. 2d 1083 (Fla. 5th DCA 2007).

As a tactical matter, a third-party plaintiff may attempt to argue that its action should be deemed filed as of the same date that the underlying complaint was filed. This unique issue has not been addressed by any Florida court. While other jurisdictions have tackled this issue, no reported cases have spoken to this in depth. In U.S. v. NL Industries, Inc., 2005 U.S. Dist. LEXIS 10713 *14, n. 1 (S.D. Ill. 2005), the court summarily held that the third-party complaint could not be deemed filed as of the date of the underlying complaint since there was no amendment of the original complaint, but adding completely new parties. Similarly, in Perry v. Pioneer Wholesale Supply Co., 681 P.2d 214, 216-17 (Utah 1984), the third-party plaintiff advanced an argument that its third-party complaint should relate back to the filing date of the original complaint to avoid the statute of limitations defense. Perry, 681 P.2d at 216. The Perry Court found the third-party plaintiff's argument to be without merit since relation back of pleadings could not apply where new parties are added to an entirely new pleading.

The lack of a Florida decision squarely on point means that local courts could rule either way and possibly allow a third-party plaintiff's action to remain, notwithstanding the untimely filing. Facially, it appears that such a ruling would violate the plain language of the statute. However, it is possible that a court could rule in favor of allowing the untimely pleading on public policy or other equitable grounds. It is helpful to note the case law from other jurisdictions since Florida law also precludes one pleading from relating back to an original pleading if new parties or causes of actions are being added. See Floyd v. State of Florida ex rel. Haines City Police Dept., 47 So. 3d 344, 346 (Fla. 2d DCA 2010); Arnwine v. Huntington Nat'l Bank, 818 So. 2d 621, 625 (Fla. 2d DCA 2002).

*Esther is an associate in our Jacksonville, Florida, office who can be reached at 904.358.4225 or ekerkan@mdwcg.com.

Defense Digest, Vol. 17, No. 3, September 2011