HB 501 to reduce the statute of repose in construction cases was heard by the House Civil Justice subcommittee. There was an amendment to the bill to allow any claims that are currently over 7 years, but less than 10 years, to have until July 1, 2016, to file suit. This “savings clause” is similar to the one used in 2006 when the statute of repose was then reduced from 15 years to 10 years. The bill passed the subcommittee on a vote by 8-6. For those interested in watching the hearing you can do so here beginning at the 7:18 mark. Special recognition to Ronald Woods, P.E. of Woods Engineering and Tom Miller, P.E. of Structural Engineering and Inspections, Inc. for appearing and speaking out against the bill.
In addition to the proposed legislation to substantially change Chapter 558, link here, the Legislature is considering other legislation that will materially impact owners and taxpayers. HB501 proposes to reduce the time owners have to pursue construction defect claims from 10 after completion to 7 years after completion. Specifically, the proposed legislation reduces the time frame within which a claim can be brought for latent defects (a defect you did not know about or had no reason to know about) in the design, planning or construction of improvements to real property from the current 10 years to 7 years. This reduction of time to pursue claims apply to claims where the building code was violated. Why should Florida provide less protection to owners when historically, and now again, the biggest building booms have been occurring in Florida. Even the AIA Form Agreements, not always owner friendly, provide for a 10 year statute of repose. More time should be provided because significant defects cannot often be discovered earlier.
In the Firm’s practice some of the most frequent defects which evidence themselves more than 7 years after completion:
- the failure to properly treat post tension cables in high rise projects. The ends are not capped or treated with grout and waterproofing;
- improper concrete cover over reinforcing steel on balconies;
- stucco delamination;
- bursting condenser sensor water pipes behind walls that have seams or improper fitting that fail;
- roof membranes improperly installed and leaking into structural deck and trusses causing structural damage;
- roof tiles improperly fastened and not compliant with wind codes;
- a roof that appears new yet it is discovered it covers and old existing roof and has not adhered;
- window frames with a useful life in excess of 20 years fail in year 10 by pitting and blistering;
- sink hole issues that all should be familiar with in Florida;
- poorly compacted soil;
- concrete that is of less than the required compressive strength starts to crumble impacting structural members;
- columns and beams with insufficient steel that is not apparent until a failure occurs ;
The attempt to reduce the time frame for the Statute of Repose for latent defects affects owners in existing buildings as the clock is running on those buildings already. It is important that every condominium owner realize that this bill is a further stripping away of the rights of condominium unit owners and deserves to be soundly defeated. Repair of significant defects will be solely on the owners rather than the parties that created the defective situation. However, not only are condominiums impacted but public construction such as schools, hospitals, roadways and public facilities such as stadiums. If deficiencies exist where the statute has expired, the public will pay for the corrective work as opposed to those that created the condition through faulty workmanship and design. The burden to pay should be borne by those accountable for the issue.
Why in this climate is legislation helping shoddy construction being pushed? The only beneficiaries are construction professionals that perform lousy work that can avoid liability for their poor performance by waiting out the clock. The bottom line is that it is the consumer and taxpayer that are impacted by this legislation designed to help contractors, design professionals, subcontractors and suppliers.
The Legislature will be considering legislation this year to change Chapter 558, Florida Statutes. Chapter 558 is required process for any party seeking to pursue claims for construction defects. The original goal of Chapter 558 was to provide an opportunity to settle defect claims without litigation or arbitration, and not to create another source of dispute or litigation. This bill is contrary to that original intent. The proposed bill would create new rights and defeats any realistic hope to amicably resolve claims as more fully explained below. These changes, if enacted, will negatively impact all owners of construction improvements including hospitals, doctor’s offices, school buildings, condominiums, single family homes and commercial buildings. The proposed legislation can be found here and the specific problems are noted below.
Requiring the notice to specify the location of each alleged defect is impossible relative to any structure of any size. To require a claimant to inspect all buildings (20, 30, 40 or 50+) and identify with specificity every instance where a specific defect (e.g. crack in the stucco) appears would be prohibitively expensive, and not necessary at this stage. The parties to whom a notice of claim would be sent are the construction professionals – they should be able to locate the defects if the Notice of Claim describes “in reasonable detail sufficient to determine the general nature of each construction defect.” The last sentence, which provides that the failure to provide the information is prima facie evidence of a defective notice, invites disputes over the sufficiency of a notice of claim. Once the nature of the defect is identified, the notified parties can inspect and draw their own conclusions just as easily as the claimant can. The only thing this will accomplish is to create a “gotcha” for claimants.
Overall, the proposed procedure will increase the burden on owners (residential and commercial) to go beyond what a court would require to prove a case at trial. It will also have a chilling effect because the cost to do so would be exorbitant and many would simply not be able to get it done and afford it. Chapter 558 was created to lower expense as opposed to increasing the cost to reach a resolution. This will effectively stop homeowners and owners from being able to make a claim when legitimate defects exist in residential and commercial construction.
All of these issues were addressed in 2003 when Chapter 558 was originally enacted and then later revised to clarify and resolve some early inequities in the process. Why is this being revisited now? This will place the burden of defective construction on claimants as opposed to shifting responsibility to the party that created the problem.
Further, requiring the notice to specify the specific provisions of the Building Code that are violated would again impose prohibitive costs on claimants, who would have to pay consultants for hours of analysis and report preparation which, again, is not necessary at this stage. The intent of Chapter 558 is to require notice and give an opportunity to inspect and allow a cooling-off period for the parties to talk before suit is filed. The purpose of Chapter 558 and the notice procedure is to not have trial specific proof but enough information to allow the parties to discuss the defects and achieve a possible remediation or settlement.
Collectively, these changes are not designed to facilitate resolution, but are instead punitive toward claimants.
There is no need for another statutory provision allowing fees for “frivolous” claims. Section 57.105 already exists for that purpose. Further, the courts already have inherent jurisdiction to sanction parties for bad faith or egregious conduct. See Bitterman v. Bitterman, 714 So. 2d 356 (Fla. 1998) .
Requiring claimants to produce maintenance records and “other documents” pre-suit imposes costs on claimants but is not helpful at this stage. The statute already allows for visual inspections and destructive investigation. An inspection, destructive or otherwise, will allow the notified party to form an opinion about whether the alleged defect is truly a defect or merely the result of a lack of maintenance. Producing records will be neither helpful nor relevant unless and until suit is filed as they are matters of proof. Having these records does not assist a party in responding to the notice of claim as the recipients will either agree to fix the problem, make a monetary offer or not. Once again, the point of Chapter 558 is to allow the inexpensive and efficient resolution of disputes, not create obstacles to filing suit.
Lines 166 – 181:
This section creates a mini-litigation process of its own. The whole point of creating Chapter 558 was that it was to be an alternative to litigation. Chapter 558 does not currently require a notified party to do anything. A notified party is not required to retain consultants, review documents, provide a remediation or do anything at all under the existing statute. In fact, a notified party can simply not respond to a notice of claim and no punishment is afforded under current law. The idea that contractors must spend substantial sums investigating and defending against Chapter 558 claims is not true. There is no purpose to be gained by adding subsection (16) except to create a club with which to threaten claimants.
At the end of the day, these changes will make pursuing real construction defects more difficult and will pass along the liability for those defects to the owners and purchasers rather than those that constructed the improvements.
When submitting a bid to perform public work, pay attention to the solicitation requirements for the bidding entity. Must the bidding entity possess a particular license? Can any of the work be subcontracted? Do subcontractors have to be listed in the bid? These are all important questions that should be evaluated well in advance of bid submission. Failure to adhere to these requirements may result in disqualification.
Similarly, bidders oftentimes rely on the qualifications of parent or affiliated companies to fulfill experience components of a solicitation. Here too, bidders should carefully review whether such reliance will be considered responsive or if the bidding entity itself must directly possess all of the requisite experience.
For example, Florida Statutes defines “Responsive bid,” “responsive proposal,” or “responsive reply” to mean a bid, or proposal, or reply submitted by a responsive and responsible vendor which conforms in all material respects to the solicitation. What if the solicitation terms require that a bidder possess two years of comparable experience and the bidder relies on a parent or affiliate company to satisfy the requirement? Depending upon the specific terms of the solicitation, the bid may be non-responsive and rejected.
That is exactly what happened in one case. In reviewing an intended award by the Florida Department of Transportation, the Administrative Law Judge for the Division of Administrative Hearings concluded that an ITB contained a requirement that the bidder set forth its experience under penalty of being determined non-responsive if the bidder failed to do so. The low bidder stated that it and its predecessor had been in business for more that two years. The Administrative Law Judge concluded that, on its face, this statement was not responsive, and entered an order finding that an award to the low bidder would therefore be arbitrary and capricious. (See, Statewide Process Service of Florida, Inc. v. Department of Transportation, Fla. Div.Admin.Hrgs, Case No. 95-5035BID).
So even though principals of the bidder may have the requisite experience by and through another entity, if the entity that actually submits the bid does not directly possess the experience, the bid may be rejected. If the solicitation documents are unclear as to whether affiliated entity experience may be considered, there may be a process to seek clarification. If the agency agrees that clarification is needed, it may issue an addendum. Putting in the time to review the terms and conditions of the solicitation and bidding through an appropriately qualified entity may be the difference between an award and loss of a business opportunity.
Becker & Poliakoff Shareholder Bill Cea discusses the basics of acquiring government contacts in Florida through the public bidding process.
You have a construction contract for work to be done on a project in Florida. Although hoping that all goes well, it’s your belief that if any legal issues arise, Florida law would apply. That may be correct, since Florida law would generally apply to issues concerning the performance of such a contract. However, that may not be correct.
What if your construction contract has a choice of law provision that specifies the law of a state other than Florida applies? That will likely require a further analysis regarding issues that could include but are not necessarily limited to what legal, equitable, contractual, and tort-type matters are at issue, are those matters encompassed within the particular choice of law provision, are there procedural and substantive issues to be considered, will the enforcement of the choice of law provision violate Florida public policy, what do Florida’s choice of law rules indicate will apply, what does the other state’s law provide, and how does that law compare to or contrast with Florida law.
What if your construction contract does not have a choice of law provision but refers to or incorporates another document that does have such a provision? In this context additional issues may arise as to what terms and provisions are and are not actually incorporated through these other documents and how that may or may not bind the parties to the law of any particular forum.
Additionally, with Florida’s present judicial limitation of the economic loss rule to product liability matters, Florida litigants may also find themselves litigating non-contractual claims, despite the existence of a contract between the parties. In such situations, a legal and factual analysis of the particular claims asserted should also include consideration of what jurisdiction’s law applies, even in the absence of a contractual choice of law provision.
So, when analyzing your construction contract, be mindful of the foregoing as some of the factors to consider in determining what law applies.
MORRISTOWN, NJ, September 3, 2014 — Becker & Poliakoff has expanded its construction litigation practice in New Jersey with the addition of attorney Matthew Meyers to its Morristown office.
Mr. Meyers specializes in commercial litigation, with an emphasis on complex construction defects and real estate disputes. In such cases, he has recovered nearly $50 million in claims on behalf of New Jersey condominium associations in the last five years, including the successful settlement of a contentious waterfront controversy in Northern New Jersey.
Mr. Meyers has been recognized numerous times by Thompson Reuters’ SuperLawyers, which lists lawyers who have achieved a high degree of professional achievement. He was honored in the 2012, 2013 and 2014 editions with “Top Lawyers in New Jersey” in the area of construction litigation.
He also frequently lectures on construction defect litigation issues to various organizations, including the New Jersey Institute for Continuing Legal Education, the Associations of Owners and Developers, the National Business Institute, and the Community Associations Institute – New Jersey Chapter.
“This is an exciting move for me,” said Mr. Meyers. “I was attracted to Becker by the firm’s depth of construction litigation talent and the additional resources available for these claims. My new firm will not only enhance my practice but will elevate the level of services I provide to clients, which has always been my top priority. “
“Matthew brings a wealth of talent and experience to our expanding Community Association practice in New Jersey,” stated J. David Ramsey, director of Becker & Poliakoff’s New Jersey Community Association practice. “He is a proven talent with a track record of successfully representing claimants confronting potentially ruinous construction claims, a major issue for many of our community associations. We now have added resources to further develop this practice.”
Becker & Poliakoff already boasts one of the nation’s most respected construction litigation teams, headed by Steven B. Lesser, who is also the Chair of the ABA Forum on the Construction Industry. Mr. Lesser’s group has a reputation for excellence in residential and commercial construction matters, with a concentration on the representation of condominium associations in construction defect claims.
Mr. Lesser commented, “Matthew’s background and experience measures up to the rigorous standards we have set for our construction attorneys, and we intend to support the prosecution of these construction claims to the fullest extent possible. Matthew’s addition to the team is a part of our plan to expand the construction practice regionally while maintaining the high level of expertise and service our clients have enjoyed for over 40 years.”
Mr. Meyers is a graduate of Rutgers University where he received his B.A. in Economics. He received his J.D. from the New York School of Law and is admitted to practice before and is a member of the New Jersey Bar.
About Becker & Poliakoff
Becker & Poliakoff is a diverse commercial law firm with more than 170 attorneys, lobbyists and other professionals in 20 domestic and international offices. The firm has eight primary areas of practice: Real Estate, Construction Law and Litigation, Community Association, Customs and International Trade, Business Litigation, Corporate & Securities, Government Law and Lobbying, and the Intellectual Property & Emerging Technologies practice. For more about the firm, visit: www.bplegal.com or www.bplegal.com/blogs.aspx to access forums on the latest ideas and opinions on legal matters hosted by Becker & Poliakoff attorneys.
Concrete generally consists of three components: (a) water, (b) an aggregate material such as sand, gravel, or stone, and (c) cement. In condominiums, concrete is often used in the formation of the shell of the building, with further support and strength being provided by reinforcing steel located within a condominium’s concrete slabs, balconies, and columns. Over time, exposure to atmospheric conditions, including but not limited to, items such as chloride ions or carbon dioxide (through a process known as carbonation), may cause or contribute to the corrosion of reinforcing steel located within concrete. Other factors may also contribute to this corrosion process. When this reinforcing steel corrodes rust can form, with a resultant volume that is greater than the volume of the original reinforcing steel. Rust can also adversely affect the bonding between the reinforcing steel and the surrounding concrete, with the potential for cracking, spalling, rupturing, and delamination of the concrete itself.
If potential concrete-related problems are observed, it would be helpful to engage the necessary technical and construction personnel to evaluate and remediate such conditions. A licensed competent structural engineer with experience in concrete repair work can ideally assist in several ways; including but not limited to, (1) identifying the cause(s) of the problem, (2) determining the projected scope and extent of remedial work, (3) preparing the necessary plans, specifications, and project manual(s), (4) assisting in soliciting and evaluating bids / proposals from contractors for such repair work, and (5) supervising and/or overseeing the contractor that is engaged to perform such remedial work. The engineer’s responsibilities should be established beforehand, typically in and as part of the terms of a contract between the engineer and the condominium.
Hiring a licensed competent concrete restoration contractor and establishing the contract that is to be used with this contractor for such concrete repair work is also important. Among the types of contracts that have been used for concrete repair work are (a) lump sum or stipulated sum contracts, (b) guaranteed maximum price contracts, and (c) unit price contracts. With respect to “unit price” contracts, the actual contract price is generally based upon the amount of linear, square, or cubic feet of work done. Notwithstanding an engineer’s (prior) estimate, once the damaged concrete is chipped away and one can see what specifically needs to be done, an entity, such as a condominium association that has entered into a unit price contract may, at times, find itself incurring costs that exceed the estimated cost of such work. With respect to “lump sum” or “stipulated sum” contracts the contract price is typically stated in the contract. Nevertheless consideration should be given as to what is and what is not included in this stipulated contract price, and if there are any other provisions (caveats / exceptions) that could nonetheless change this price. A “guaranteed maximum price” contract is, as the name suggests, one in which the price will typically not exceed a certain amount (again presuming no caveats or exceptions apply). Irrespective of the type of contract that is used, the contracting parties should evaluate all of the terms and conditions of such contract, and be aware of how it affects their respective rights, obligations, and responsibilities.
If you intend to provide a service to a public agency, be sure to consider the impact of long term contractual issues on the cost and profitibility when preparing the proposal. The agency’s contractual requirements are typically incorporated into the solitication. If they are not, you may have to inquire as to what they will include prior to submitting a proposal. It is imperative to know whether performance of the contract is doable and sustainable.
For example, are there upfront costs that will be incurred? What if the contract has a termination for convenience clause? Will you lose your investment? Are there insurance and bonding requirements? How much will these items cost? Is there a mechanism to seek price adjustments in the event your costs increase? If so, what is the likelihood that the agency will actually approve cost increases over the lifetime of the contract?
These are the types of questions that should be asked prior to submitting a proposal to provide the public agency with services. On the one hand, service providers routinely seek to competitively price their proposals in an effort to gain contract awards. On the other hand, the question that must be asked is whether that pricing structure will be sustainable over the duration of the contract, and considering the contractual terms.
If there are questions, the agency may have a procedure to seek clarification, and get answers by way of addenda. You may also want to consider consulting with legal counsel if interpretation of the contract terms are an issue.
If you want to challenge the terms of a solicitation or intended award decision and Chapter 120, Florida Statutes applies, then watch the clock. Chapter 120, which is referred to as the Administrative Procedure Act, generally applies to state agencies and departments. Local governments, including counties and cities, typically have their own codes and policies regarding bid protests. Where Chapter 120 applies, there are strict deadlines that must be adhered to.
Section 120.57(3), Florida Statutes, in pertinent part, states:
“Any person who is adversely affected by the agency decision or intended decision shall file with the agency a notice of protest in writing within 72 hours after the posting of the notice of decision or intended decision. With respect to a protest of the terms, conditions, and specifications contained in a solicitation, including any provisions governing the methods for ranking bids, proposals, or replies, awarding contracts, reserving rights of further negotiation, or modifying or amending any contract, the notice of protest shall be filed in writing within 72 hours after the posting of the solicitation. The formal written protest shall be filed within 10 days after the date the notice of protest is filed. Failure to file a notice of protest or failure to file a formal written protest shall constitute a waiver of proceedings under this chapter. The formal written protest shall state with particularity the facts and law upon which the protest is based. Saturdays, Sundays, and state holidays shall be excluded in the computation of the 72-hour time periods provided by this paragraph.” [Emphasis added]
Note that the initial filing deadline for the notice of protest is within 72 hours and not days. Further, the failure properly file the notice shall constitute a waiver of the right to the protest procedure. Accordingly, best practice will be to note the exact time of day of the posting of the decision that you intend to protest and calculate 72 hours from that time.