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Legal Updates For Construction Litigation

June 15, 2017
Presented by the Architectural, Engineering & Construction Defect Litigation Practice Group

Governor Scott Signs HB 377

Closing the Loophole in the Statute of Repose

 

Florida's 2017 legislative session resulted in good news for contractors and insurers alike.  Thanks in large part to the lobbying efforts of the Associated Builders and Contractors, House Bill 377 passed both the House and Senate and was signed into law on June 14, 2017, by Governor Rick Scott. 

HB 377 is in direct response to the 2015 case Cypress Fairway Condominium, etc. et al. v. Bergeron Construction Co., Inc., et al., 164 So.3d 706 (2015).  As outlined in Cypress Fairway, Section 95.11(3)(c), Florida Statutes, provides that actions "[f]ounded on the design, planning, or construction of an improvement to real property" have a Statute of Limitations of four years.  That Statute of Limitations begins to run when the latest of four things occur:

1.      Date of actual possession by the owner;

2.      Date of issuance of a Certificate of Occupancy;

3.      Date of abandonment of construction, if not completed; or

4.      Date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor.

However, in situations involving a latent defect, the Statute of Limitations does not begin to run until "[t]he defect is discovered or should have been discovered with the exercise of due diligence."  That being said, the Statute of Repose provides that even with a latent defect, all  actions must be commenced within ten years.

Unfortunately, Section 95.11(3)(c) was silent as to the definition of "completion of the contract."  As a result, the Court in Cypress Fairway ruled the "completion of the contract" did not occur until the owner issued final payment.  This left contractors open to a Statute of Repose well beyond 10 years, as owners could toll the Statute of Limitations and Statute of Repose by delaying final payment.

Seeing the need to correct this, the Associated Builders and Contractors, along with others in the construction community, lobbied hard to pass HB 377, which defines "completion of the contract" as the later of two dates:

1.      The date of final performance of all contract services; or

2.      The date final payment is due.

This revision provides a cut off of liability on construction projects, allowing contractors to properly protect against their risks.

 

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