Florida Construction Law

Even if it appears that the liquidated damages are proper, the prudent contractor will not accept the assessment at face value because there are many ways to defeat a liquidated damages clause. Liquidated damages are a fact of life in modern construction contracting. However, even if your contract contains this provision and the owner has assessed liquidated damages that does not mean the assessment is valid or enforceable. There are a number of ways you might be able to prevent an owner from keeping contract proceeds that are rightfully yours. This article will provide the reader with an idea or two that will help keep hard-earned contract proceeds in the contractor’s pocket. In a breach of contract situation, liquidated damages are designed to provide a means to compensate the non-breaching party when the actual damages are not readily ascertainable. In other words, when the non-breaching party’s actual damages will be difficult to determine in the event of a breach, then t...

A guaranteed energy savings contract should have special provisions governing the timing and scope of audits and reviews. Trenton H. Cotney Florida Bar Certified in Construction Law www.trentcotney.com

Rain delays are common on construction projects.  Generally, the construction contract addresses the steps needed for time extensions due to inclement weather.  Failure to provide sufficient notice of rain delays may result in the owner disallowing requests for additional time. 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

Not all states allow contingent payment clauses.   For example, New York has banned such provisions.   However, in the State of Florida, a prime contractor can use a pay when paid clause to avoid paying a subcontractor if it is specifically worded.   The pay when paid clause must make it absolutely clear that payment to the subcontractor is conditioned upon receipt of payment by the prime contractor from the owner.   If it does not unequivocally state that the promised receipt of payment is a condition precedent, then courts will find the provision ambiguous and hold that payment must be received within a reasonable time period. 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

Case law defines a cardinal change as a change sought by the owner which is so excessive that it exceeds the original scope of the contract.  The seminal case on cardinal change is Saddler v. U.S ., 287 F.2d 411 (Ct. Cl. 1961).  In Saddler , a construction contract between the contractor and the federal government required the contractor to build a levee embankment.  A change in the design by the owner required the contractor to double the embankment’s length and more than double the volume of fill required to complete the project.  The contractor filed suit against the owner claiming that the excessive changes demanded by the owner constituted a breach of the contract.  The court held in favor of the contractor and stated “that the nature of this particular contract was so changed by the added work… as to amount to a cardinal alteration falling outside the scope of the contract.”  Id. at 414-15. Trenton H. Cotney Board Certified in Construction Law...

Even though a contractor failed to sign a subcontractor's proposal, the Court held that the contractor accepted the subcontractor's final proposal through its actions.  In particular, the contractor paid the initial deposit and two subsequent invoices.  L&H Construction Co., Inc. v. Circle Redmont, Inc ., 55 So.3d 630 (Fla. 5th DCA 2011).   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

When a contract says time is of the essence, that provision can be waived by the party seeking to enforce it by acting contrary to that provision.  Adrian Developers Corp. v. Fuente , 905 So.2d 155 (Fla. 3d DCA 2004).      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

Denial of a motion to compel arbitration was upheld because seller failed to attach terms and conditions which contained arbitration provision.  Incorporated documents must be attached or specifically identified to form part of the contract terms.  BGT Group, Inc. v. Tradewinds Engine Services, LLC , 2011 WL 2200800 (Fla. 4th DCA 2011). 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

Construction contract interpretation is an issue for the courts to decide as a matter of law and is not an issue to be decided by a jury.  Peacock Const. Co., Inc. v. Modern Air Conditioning, Inc ., 353 So.2d 840 (Fla. 1977). 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

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

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 clau...

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

This is the latest video on construction contract formation.  The video discusses the basics of contract formation and the use of incorporation of other documents by reference.  The direct link is here: http://www.youtube.com/watch?v=Bia39iodPaU 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

Gregory Pill, et. al. v. Merco Group of the Palm Beaches, Inc., et. al. , Case No. 4D10-2537, filed March 16, 2011: Trial court’s transfer of venue from Palm Beach County to Miami-Dade County was reversed pursuant to the general venue set forth in s. 47.011 in a suit for return of deposits on pre-construction contracts where all defendants resided in Miami-Dade County but the property in litigation was located in Palm Beach County, the appellate court holding that the “joint residency” venue privilege granted by s. 46.01 is not an exception to the general venue statute. 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 second part of a four part series on construction contract formation.  The video discusses offer, acceptance and consideration.  The direct link is here: http://www.youtube.com/watch?v=ERYIjhvBx1Y 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

As part of the Basic Construction Law educational series, I have prepared a 4 part series on the basics of construction contract formation.  Here is a direct link to the video:  http://www.youtube.com/watch?v=OxiYOd0M9V0 . Here is part I: 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 Pohlman v. Aqua Condominium Developers , 44 So.3d 645 (Fla. 1st DCA 2010) which followed Aikin v. WCI Communities , 26 So. 3d 691 (Fla. 2d DCA 2010), but conflicted with Plaza Court v. Baker-Chaput , 17 So. 3d 720 (Fla. 5th DCA 2009), the Court affirmed the dismissal of the contract purchasers’ action seeking rescission based on the developer’s failure to comply with the ILSA exemption regarding the seller’s obligation to complete construction within 2 years where such obligation is excused under applicable Florida contract law.  A contract provisions allowing for additional time in the event of construction delays did not make the obligation to complete construction in two years illusory. 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

Florida Hurricane Protection and Awning v. Patina , 35 Fla. L. Weekly D2024a (September 8, 2010). The “mutuality” of attorney fees pursuant to section 57.105(7) was used by the trial court to award fees to the homeowner where the contract provided: “Purchaser is responsible for all costs of collection including Attorney’s fees. And 1.5 % of contract amount.” The original contractor did not complete the performance, so the homeowner brought an action for breach of contract for the cost to complete, some consequential damages for subsequent hurricane damages as well as attorney’s fees based on section reciprocity provision of the statute. The appellate court reversed and remanded the case to vacate the attorney’s fees judgment since there was no action by the contractor to collect the contract balance. Trenton H. Cotney Florida Bar Board Certified in Construction Law Glenn Rasmussen Fogarty & Hooker, P.A. 100 S Ashley Dr, Suite 1300 Tampa, FL 33602 (813) 229-3333 http://www.glennrasm...

L & H Construction Company, Inc., v. Circle Redmont, Inc., Case No. 5D-09-3450, filed February 4, 2011: Final judgment finding contractor in breach of its subcontract with stairs manufacturer was reversed. While appellate court agreed that the contract terms were ambiguous regarding subcontractor’s duty to perform installation of the stairs, and parole evidence of the parties’ intent was properly admitted, it found the trial court’s exclusion of evidence of what transpired after the dispute arose resulted in insufficient evidence to support the finding that the contractor had breached the contract. 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