Legal Updates for Construction Litigation
Big Changes to the Statute of Repose in Florida
A recent case out of the Ninth Judicial Circuit, Orange County, Florida, found that the trigger date for the Statute of Repose of construction defect claims against a stucco subcontractor must be determined for each townhouse individually, reducing the viable claims by 84 percent.
In Spring Isle Community Association v. Pulte Home Corp., et al., the Association sued the general contractor for construction defects on March 2, 2017. In turn, the GC served a notice of defect, pursuant to Ch. 558, Florida Statutes, upon its subcontractors on March 10, 2017. On March 24, 2017, the GC filed a third party complaint against its subcontractors, alleging pass-through claims. Each of the 390 townhouses had individual certificates of occupancy.
The stucco subcontractors filed a motion for partial summary judgment against the GC, alleging that as the certificates of occupancy for 329 of the townhouses were issued before March 24, 2007, the ten-year Statute of Repose had expired prior to the filing of the third party complaint on March 24, 2017, and those claims should be barred pursuant to § 95.11(3)(c), Florida Statutes.
The Statute of Repose as outlined in § 95.11(3)(c), Florida Statutes, holds that an “action” founded on construction of or improvement to real property must be commenced within ten years of (whichever is latest):
(1) The date of actual possession by the owner;
(2) The date of completion of the contract; or
(3) The date of the issuance of a certificate of occupancy.
There has been case law in recent years clarifying how to identify each of these dates, which the court noted as providing instruction.
As the townhouses were owned during and after construction by the developer/GC and not the end user, “actual possession by the Owner” was not the applicable trigger in this instance.
The GC argued the proper trigger for the Statute of Repose was the date of completion of the contract. However, the court found that as the stucco subcontractors performed their work under a Master Subcontractor Agreement, and additional projects could be added to the subcontract at any time, it would never be “complete” for the purposes of this analysis. The court did note that under recent case law defining the completion of a contract as the time final payment is due, that date did trigger the Statute of Repose. However, those payment dates occurred before the certificates of occupancy were issued and, therefore, were not the “latest” date as required to trigger the Statute of Repose.
Ultimately, the court ruled the issuance of the certificates of occupancy triggered the Statute of Repose in this matter as those were the latest of the three options in the statute. As each townhouse had an individual certificate of occupancy, the trigger date under the Statute of Repose had to be evaluated on an individual basis. Therefore, any townhouse whose certificate of occupancy was issued ten years or more before the GC commenced its “Action” against the stucco subcontractors was barred.
The court further clarified its ruling, noting that under Gindel v. Centex Homes, 267 So. 3d 403 (Fla. 4th DCA 2018), an “action” for the purposes of § 95.11(3)(c), Florida Statute, includes a Ch. 558 Notice. Therefore, the Statute of Repose was triggered on March 10, 2017, when the GC issued its Ch. 558 notice to the stucco subcontractors. Thus, all townhouses with a certificate of occupancy before March 10, 2007, were barred by the Statute of Repose, resulting in the GC’s claims against the stucco subcontractors on 329 out of 390 townhouses being barred.
This case will have a great impact on construction defect cases in Florida. It is expected the GC will appeal the trial court’s ruling, and we will provide further updates as the appeal progresses.
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