Florida Construction Law

I will be presenting a one hour seminar on Florida construction lien law for ABC at their Tampa office at 8:00 a.m.  Attendees will receive one hour of CILB continuing education credit. Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

In Rodriguez v. Builders Firstsource , 26 So.3d 679 (Fla. 4th DCA 2010), the Court held that arbitration provisions in construction contracts that specifically reference the arbitration of issues pertaining to construction were broad enough to allow for the arbitration of mold claims.  This case contradicts other cases holding that mold claims are not arbitrable. Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

If the scope of work an unlicensed contractor provides an owner does not require a license and that the contract does not specifically require that a licensed contractor perform the work, the owner cannot use Section 489.128 to nullify a contract because the contractor is unlicensed.  A-1 Quality Corp. v. Oak Park Terrace, Inc ., 32 So.3d 166 (Fla. 4th DCA 2010).   Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

In order for a contractor to justify venue outside its principal place of business based on payments received, the payments must be "lengthy and uninterrupted."  A contractor must provide evidence to challenge venue by showing that payments were routinely received at a location other than the home office for an extended period of time.  Tomac of Florida, Inc. v. Gunn's Quality Glass & Mirror, Inc ., 2009 WL 1766692 (Fla. 4th DCA 2009). Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

In Stein v. Paradigm Mirasol , LLC, 2009 WL 3110819 (11th Cir. 2009), the Court held that a force majeure clause (a/k/a Acts of God clause) did not nullify the use of the two-year completion exemption in the Interstate Land Sales Act (ILSA).   Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

Section 713.21(4), Fla. Stat. requires that you counterclaim for foreclosure of your claim of lien on or before 20 days after receipt of a summons on an order to show cause proceeding.  Failure to file the counterclaim in that time frame results in the loss of your lien rights.  Unnerstall v. Designerick, Inc., 2009 WL 2971869 (Fla. 2d DCA 2009).   Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

Generally, Chapter 558 provides contractors with the right to receive notice and an opportunity to cure prior to being sued.  In order to use Chapter 558, you must be considered a "claimant" as defined in Section 558.002, Fla. Stat., which states in pertinent part: "Claimant" means a property owner, including a subsequent purchaser or association, who asserts a claim for damages against a contractor, subcontractor, supplier, or design professional concerning a construction defect or a subsequent owner who asserts a claim for indemnification for such damages. The term does not include a contractor, subcontractor, supplier, or design professional. Therefore, if you are not a property owner, subsequent purchaser or association who acts as agent for property owners then you will not be able to utilize Chapter 558. Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (81

In Auto-Owners Ins. Co. v. Ace Elec. Service, Inc. , 2009 WL 2602566 (M.D. Fla. 2009), the Court held that an owner could maintain a cause of action against an architect for professional malpractice so long as it was based in contract and not negligence. Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

An unlicensed subcontractor cannot use Section 489.128, Fla. Stat. as an affirmative defense even if the general contractor knew the subcontractor was unlicensed.  Earth Trades, Inc. v. T&G Corp ., 42 So.3d 929 (Fla. 5th DCA 2010). Trenton H. Cotney Florida Bar Certified in Construction Law Glenn Rasmussen Fogarty & Hooker, P.A. 100 S. Ashley Dr., Suite 1300 Tampa, FL 33602 (813) 229-3333 http://www.glennrasmussen.com

In Piper v. DBPR/ECLB, 50 So.3d 109 (Fla. 1st DCA 2010), the Court stated: "Although Appellant raises three issues on appeal, this opinion only addresses whether the final order incorrectly listed Appellant's unfavorable credit history as a ground for denial of his application. It is clear from the transcript of the hearing the Board was satisfied with Appellant's explanation regarding his finances and, thus, Appellant's credit history was not a basis for denial of the application. Because the error is apparent from the record, we remand for the Board to correct the error by amended final order." Although the opinion is not lengthy, there is some suggestion that an adequate justification may help applicants for licensure avoid rejection based on unfavorable credit history. Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

The Court in Southern Pan Services Co. v. S.B. Ballard Construction Co ., 2009 WL 1885113 (M.D. Fla. 2009) held that the use of the "advice of counsel" defense to fraudulent liens does not act to globally waive the attorney-client privilege.  However, the Court noted that when advice of counsel is used as a formal defense, attorney-client privileged would be waived with regard to communications pertaining to the preparation of the claim of lien. Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

According to the Department of Labor's Producer Price Index (PPI), the cost of construction materials increased by 1.4% in April resulting in a 7.1% increasing from this time last year.  Contractors should examine their contracts to determine if they contain a price acceleration provision. Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

The measure of damages for an unjust enrichment claim in the construction context is the value of the improvements that enhanced the property.  Levine v. Fieni McFarlane, Inc ., 690 So.2d 712 (Fla. 4th DCA 1997).  Therefore, a contractor that sues an owner for unjust enrichment would be entitled to seek damages for the benefit conferred on the owner by way of the improvements provided by the contractor to the property. Trenton H. Cotney Florida Bar Certified in Construction Law Glenn Rasmussen Fogarty & Hooker, P.A. 100 S. Ashley Dr., Suite 1300 Tampa, FL 33602 (813) 229-3333 http://www.glennrasmussen.com

Chapter 489 requires that a separate entity such as a joint venture must be independently qualified even if both members of the joint venture are licensed.  The forms can be downloaded from www.myfloridalicense.com . Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

In Miera v. National City Mortgage , 2009 WL 2495757 (M.D. Fla. 2009), the Court held that an owner stated a case against a lender who failed to make proper payments under the lien law to all potential lienors.  In this case, the lender had sole authority to make payments from the construction loans and failed to make proper payments pursuant to Section 713.06(2)(d), Fla. Stat. Trenton H. Cotney Florida Bar Certified in Construction Law Glenn Rasmussen Fogarty & Hooker, P.A. 100 S. Ashley Dr., Suite 1300 Tampa, FL 33602 (813) 229-3333 http://www.glennrasmussen.com

No damages for delay clauses are generally upheld in court.  However, Florida case law provides that there are certain circumstances that may allow a contractor or subcontractor to pursue delay damages despite the existence of a no damages for delay clause in the construction contract.  See Triple R. Paving v. Broward County , 774 So.2d 50 ( Fla. 4th DCA 2000); Southern Gulf Utilities, Inc. v. Boca Ciega Sanitary District , 238 So.2d 458 (Fla. 2d DCA 1970).  For example, if an owner has acted in bad faith, defrauded the contractor, or actively interfered with the contractor’s ability to construct a project, then a no damages for delay provision will be deemed ineffective.  Newberry Square Dev. Corp. v. Southern Landmark, Inc., 578 So.2d 750 (Fla. 1 st DCA 1991).   Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

An argument that has succeeded in avoiding an otherwise valid liquidated damages clause is where the liquidated damages amount “shocks the conscience” of the court.   In other words, if the stipulated sum is simply too great in comparison to the contract value itself, then the liquidated damages will not be enforced.   This analysis compares the stipulated sum with the contract value.   For example, in Hook v. Bomar , 320 F.2d 536 (5th Cir. 1968), the loss of a $30,000 deposit on a $95,000 contract was found unconscionable, and the liquidated damages provision was not enforced. Trenton H. Cotney Florida Bar Certified in Construction Law Glenn Rasmussen Fogarty & Hooker, P.A. 100 S. Ashley Dr., Suite 1300 Tampa, FL 33602 (813) 229-3333 http://www.glennrasmussen.com

Section 713.21(4), Florida Statutes provides:   "By an order of the circuit court of the county where the property is located, as provided in this subsection. Upon filing a complaint therefor by any interested party the clerk shall issue a summons to the lienor to show cause within 20 days why his or her lien should not be enforced by action or vacated and canceled of record. Upon failure of the lienor to show cause why his or her lien should not be enforced or the lienor's failure to commence such action before the return date of the summons the court shall forthwith order cancellation of the lien." This statute allows owners to accelerate the lien process and seek the discharge of claims of lien. Trenton H. Cotney Florida Bar Certified in Construction Law Glenn Rasmussen Fogarty & Hooker, P.A. 100 S. Ashley Dr., Suite 1300 Tampa, FL 33602 (813) 229-3333 http://www.glennrasmussen.com

A contractor was entitled to a mechanic’s lien even though he failed to complete punch list work, where he otherwise substantially performed.  Casa Linda Tile & Marble Installers, Inc. v. Highlands Place , 1981, Ltd ., 642 So.2d 766, 767-768 (Fla. 4th DCA 1994).   Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

A claim for unjust enrichment may be brought against a contractor or owner as an equitable claim to address unexecuted change orders.  As the Court stated in Della Ratta v. Della Ratta , 927 So.2d 1055 (Fla. 4th DCA 2006), "t o state a claim for unjust enrichment, a plaintiff must plead the following elements:   1) the plaintiff has conferred a benefit on the defendant;   2) the defendant has knowledge of the benefit;   3) the defendant has accepted or retained the benefit conferred;   and 4) the circumstances are such that it would be inequitable for the defendant to retain the benefit without paying fair value for it."   Trenton H. Cotney Florida Bar Certified in Construction Law Glenn Rasmussen Fogarty & Hooker, P.A. 100 S. Ashley Dr., Suite 1300 Tampa, FL 33602 (813) 229-3333 http://www.glennrasmussen.com

OSHA has also altered the way it combines or bundles violations. By assessing violations as individual citations, OSHA can assess more penalties per inspection.  Previously, OSHA typically only issued a single citation for each standard that it alleges an employer violated regardless of how many employees are affected by the alleged violation.  The Secretary of Labor, however, recently revised thirty-four different OSHA standards to permit OSHA to cite employers with a separate violation for each affected employee.  In one recent case, an employer was cited 11 times for failure to provide 11 employees with respirators while removing asbestos from a building.  See e.g.   Clarification of Employer Duty to Provide Personal Protective Equipment and Train Each Employee, 73 Fed. Reg. 75,568, 75,583-89 (Dec. 12, 2008).  Although the new rules authorize employee-by-employee citations, the Secretary’s Field Operations Manual states that generally only a single citation will issue for each stand

Section 83.60, Florida Statutes provides that a tenant must provide written notice no later than 7 days prior to withholding rent on the basis of a material non-compliance with the lease agreement.  Construction defects fall within this category.  Accordingly, if a landlord has a tenant that refuses to pay rent because of alleged construction deficiencies, Section 83.60 requires that tenant to tender written notice of the defects prior to withholding rent.  Failure to provide the notice results in the tenant being unable to use non-compliance as a defense to possession of the premises by the evicting landlord. Trenton H. Cotney Florida Bar Certified in Construction Law Glenn Rasmussen Fogarty & Hooker, P.A. 100 S. Ashley Dr., Suite 1300 Tampa, FL 33602 (813) 229-3333 http://www.glennrasmussen.com

In Spectrum Interiors, Inc. v. Exterior Walls, Inc., 2009 WL 347745 (Fla. 5th DCA 2009), the Court held that the language contained in an executed waiver and lien release limited a sub-subcontractors damages.  The Court held that the sub-sub waived damages for payments received in response to executed lien waivers and could not seek damages prior to the executed lien releases. Potential lienors should carefully review all lien waiver documents prior to execution to insure that they are not waiving claims for potential extras, unexecuted change orders or other compensation. Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

In Zupnick Haverland, LLC v. Current Builders of Florida, Inc. , 2009 WL 605394, the Court held that a "good faith dispute as to the amount due does not constitute a willful exaggeration that operates to defeat an otherwise valid lien."   The Court further articulated that this type of good faith dispute does not convert a lien to a fraudulent lien. Trenton H. Cotney Florida Bar Certified in Construction Law Glenn Rasmussen Fogarty & Hooker, P.A. 100 S. Ashley Dr., Suite 1300 Tampa, FL 33602 (813) 229-3333 http://www.glennrasmussen.com

In Hebden v. Roy A. Kunnemann Const., Inc. , 2009 WL 383570 (Fla. 4th DCA 2009), the Court held that an owner does not lose the right seek damages against a contractor for construction defects even if the owner rejected a settlement offer under Chapter, 558, Fla. Stat.  The Court noted that failure to comply with Chapter 558 does not result in the loss of claims or defenses that a party may have in an action. Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

In WPC Industrial Contractors, Ltd. v. Amerisure Mut. Ins. Co ., 2009 WL 2992569 (S.D. Fla. 2009), the Court held that the insurer had a duty to defend the contractor from a homeowner general liability claim.  The claim was based on damage caused to the home by sewage contamination.  Amerisure argued that the Pollution Exclusion applied thereby negating coverage and defense requirements.  The Court found that the Pollution Exclusion did not specifically address this fact scenario and held that the insurer was required to defend the contractor against the homeowner's claims. Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

In Peacock Construction Company, Inc. v. Modern Air Conditions, Inc. , 353 So.2d 840, the Florida Supreme Court looked at the issue of pay when paid clauses and their validity.  The Court reviewed a contract provision which provided that the subcontract would be paid: “within 30 days after the completion of the work included in this sub-contract, written acceptance by the Architect and full payment by the Owner.”  The Court held that this provision was ambiguous because it can be construed as pay within a reasonable time or that payment was contingent upon the prime contractor’s receipt of payment from the owner.  Because of the ambiguity, the Court held that the payment clause required payment within a reasonable time regardless of whether the prime contractor received payment.     The Court held that because this provision was a risk-shifting provision, the clause must contain specific language in order for it to be enforceable.  The clause must expressly state that payme

In Auto-Owners Ins. Co. v. Classic Carpet & Tile, Inc ., 2009 WL 350750 (S.D. Fla. 2009), a surety sued indemnitors under an indemnity agreement for losses resulting from the issuance of a payment and performance bond.  The indemnitors, in their individual capacity, argued that the company had been sold to a third party and that they did not request the bond.  The Court held that the indemnity agreement bound the indemnitors and that they were liable for the debts incurred by the company.  Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

OSHA has issued new enforcement guidelines for determining whether employers have complied with OSHA personal protective equipment (PPE) standards. The standards now require employers to provide (at no cost to employees) protective equipment that includes face shields, goggles, earplugs, earmuffs and respirators. For more information, visit OSHA’s website, www.osha.gov . Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

In Heine v. Parent Construction, Inc. , 2009 WL 763534 (Fla. 4th DCA 2009), the Court held that a homeowner was entitled to damages in the form of diminution in the value of the property due to construction defects rather than the cost to repair the defects.  The defects consisted of improper elevation and potential exposure to flood damage.  The cost to repair would have required rebuilding the house and would have resulted in economic waste meaning that rebuilding the home would have been exorbitantly expensive given the error.  Accordingly, the Court held that the homeowner was entitled to the difference between the house if it had been built correctly and the house as-built. Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

Here is the final chapter of the Construction Contract Formation video series.  It discusses negotiation of contract terms and scope of work issues.  The direct link is here:   http://www.youtube.com/watch?v=rqnvNV_bqsA . Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com

In Palm Developments, Inc. v. Ridgdill & Sons, Inc ., 2009 WL 513027 (M.D. Fla. 2009), the Court held that an owner could pursue an action under Section 713.31, Florida Statutes for a fraudulent lien even if the lien had been released.  Damages under a fraudlent lien theory may include punitive damages. Trenton H. Cotney Board Certified in Construction Law Trent Cotney, P.A. 1207 N Franklin St, Ste 222 Tampa, FL 33602 (813) 579-3278 www.trentcotney.com