Florida Construction Law Authority : Florida Construction Lawyer & Attorney: Becker & Poliakoff Law Firm: Construction Law

Florida’s lien law specifically prohibits a lienor from improperly increasing the amount of its lien beyond the amount owed or including amounts for work not performed. See Section 713.31, Florida Statutes. The lien law even imposes penalties against a lienor for recording such a "fraudulent lien." At the same time, however, the lien law provides that a lien will not be found "fraudulent" if the lienor’s actions in recording it were in good faith. It is important for a lienor to be aware, though, that "good faith" will only go so far in avoiding a finding that its lien is fraudulent.

The lien that a consultant recorded against Mr. and Mrs. Medellin’s home provides an example of how good faith will not always prevent a court from finding a lien is fraudulent. Medellin v. MLA Consulting, Inc., 69 So. 3d 372 (Fla. 5th DCA 2011). While the trial court found that the consultant’s lien was not fraudulent, because the consultant believed in good faith that the amount was due, the appellate court disagreed. The appellate court clarified the good faith exception to be limited to preventing a lien from being deemed fraudulent when the issue is whether the amount included in the lien was due, and there was a good faith dispute over whether it was due. The appellate court found that the Medellins’ consultant’s good faith was irrelevant because the issue was whether the amount included in the consultant’s lien was for work that entitled the consultant to record a lien against the Medellins’ house. Because the work underlying the disputed amount in the consultant’s lien was not lienable, the appellate court found that the consultant’s lien was fraudulent.

With the Medellin court’s holding, it is now even more important that a lienor be sure the amounts it is including in its lien are for work that will properly support a lien.

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Mediation is increasingly being used as an alternative dispute resolution method. As the time and expense of litigation increase, parties often turn to mediation as a means to resolve disputes. Additionally, parties are generally required to participate in mediation prior to trial. Prior to proceeding to mediation, however, parties should make sure that they are positioned to make final decisions regarding their case.

For example, if you are a plaintiff in a construction defects case, have you determined the cost to correct the defects? Do you have the opinion of a qualified independent expert who is prepared to testify that the constructed improvement is defective, and that the defendant is liable for the condition?

On the other hand, if you are a defendant, have you investigated the conditions that are subject of the plaintiff's claim? Do you know what the cost to repair would be? Have you decided what you would be willing to do in order to resolve the claim?

Although mediation serves as a cost effective and useful means to resolve claims; and also can serve to avoid the time, expense and uncertainties of a trial, parties need to make sure that they are ready to enter into settlement negotiations. The mediation experience may prove frustrating and unsuccessful if the parties are not fully prepared to resolve their dispute. Thus, parties are encouraged to keep these points in mind as they consider when to request or participate in mediation.

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No one likes admitting that they have a problem. That holds true even with regard to construction-related problems. However, as Mr. and Mrs. Hochberg found out the hard way, if an owner is able to see the symptoms of a construction defect but does not promptly investigate the cause, determine the entities responsible and file a lawsuit to hold the responsible entities accountable, the owner risks losing his or her claim. Hochberg v. Thomas Carter Painting, Inc., 63 So. 3d 861 (Fla. 3d DCA 2011).

While the Florida Legislature tried to protect owners from losing their claims for construction defects that are not easily seen or obvious (are “latent”) by specifically addressing latent defects in Section 95.11(3)(c), Florida Statutes, the protection provided by the language is limited. Generally, owners have four years in which to file a lawsuit based on a construction defect claim. The latent defect language in Section 95.11(3)(c) delays the start of the four years until a latent defect is either discovered or should have been discovered.  

When the Hochbergs moved into their new home they could smell mold and found damp carpeting in their master bedroom. The Hochbergs hired a mold remediation company and an engineer to investigate the problems, but based on the results of that investigation, only filed an action against the general contractor. Eventually, the Hochbergs were able to identify the specific subcontractor that performed the defective work which allowed water to enter their home and they filed a lawsuit against it as well.

By that time, though, the Court found that too much time had passed since the Hochbergs were on notice of the problem and they could no longer pursue the subcontractor. The Court held that “Florida law is clear that ‘where there is an obvious manifestation of a defect, notice will be inferred at the time of manifestation regardless of whether the [owner] has knowledge of the exact nature of the defect.’” (emphasis added). Based on the Court’s holding, if an owner fails to promptly investigate symptoms of a construction defect (as examples, smells, wet carpet, cracks in walls), the owner not only runs the risk of a small problem becoming bigger and more expensive to fix, but also runs the risk of losing his or her right to hold the responsible entities accountable. The Hochbergs learned that lesson the hard way. Other owners can avoid losing their claims by learning from the Hochbergs’ experience, admitting that they have a problem, promptly investigating it and timely filing lawsuits against the responsible entities.

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People sometimes assume the law is a certain way because they believe it would be “unfair” for it to be any other way. Well, the law is not always “fair.” 

To make sure you do not make an incorrect assumption regarding the recoverability of home office overhead damages from a government entity, you should be aware of Martin County v. Polivka Paving. In that case, Polivka constructed soccer fields for Martin County. Because of undisclosed soil conditions, the project took much longer and cost much more than expected. Polivka was successful at the trial court level, with the jury awarding Polivka its contract balance, its additional costs incurred as a result of the challenging soil conditions and a portion of its home office overhead for the amount of time the project took to complete beyond what was expected.   

The appeals court held firm to the letter of the law, however, and struck the jury’s award of home office overhead damages. The appeals court held that the law says a contractor may not recover home office overhead costs from the government unless the government fully suspends the contractor, the government required the contractor to stand by during the suspension and the contractor was unable to take on additional work that would have absorbed the home office overhead otherwise paid for by the suspended project. Despite Polivka’s damages expert explaining how he determined the amount of Polivka’s unabsorbed home office overhead attributable to the impact of the undisclosed soil conditions, the appeals court said the damages are not recoverable because Polivka was not completely idle during the extended period. Given the court’s ruling, Polivka (and contractors like it in the future) will not be allowed to recover any of its home office overhead, no matter how great the impact was or how high of a percentage the project was of its overall business.

The moral of the story is, never assume what the law is. It might not always be what you think would be “fair” and sometimes the courts are unwilling to be swayed from the letter of the law by arguments about what would be equitable in a given situation.

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Here’s an easy to use checklist of various construction related statutes of limitation. Save this blog post for future reference whenever you have a dispute so you don’t get caught without any legal rights. You need to sue to enforce your rights before any of these listed deadlines expire:

1) Any lawsuit, other than the ones listed below, involving the design or construction of a project must be brought within four years of the later of completion or abandonment of construction, certificate of occupancy or actual possession by the owner. The exception is for latent defects, suits for which must be brought within four years of first learning of a claim or symptoms that put you on notice of a claim. However, in no event may a claim for latent defects be brought more than ten years after the later of completion or abandonment of construction, certificate of occupancy or possession by the owner. §95.11 of the Florida Statutes.

2) Claims against a performance bond must be brought within five years of completion of construction.

3) Claims against public or private payment bonds must be brought within one year from the claimant’s last furnishing of labor, materials or services. §§713.23 and 255.05 of the Florida Statutes. Public private bond claims for retainage are extended to 120 days after a) the owner has paid the claimant’s retainage to the contractor, b) 70 days have passed since the contractor submitted its final pay application to the owner, c) 160 days have passed since substantial completion or beneficial occupancy of the project, or d) the claimant has asked the contractor in writing about any of the prior three conditions and the contractor failed to respond within ten days. §255.05

4) Claims for equitable lien must be brought within one year. §95.11

5) Claims for foreclosure of a claim of lien must be brought within one year of recording the lien. §713.22

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