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Monthly Archives: May 2012

29MAY 2012

The construction industry is not only riddled with a web of technical rules, regulations, and contractual scenarios, the lawyers in this industry often rely on such technicalities to prevail in litigation on behalf of their clients – occasionally contrary to what appears just and fair.  However, from time to time, the courts step up and say “enough! We must be governed by the spirit, not just the letter, of the law.”  This brief article discusses the United States District Court for the Middle District of Florida’s (Tampa Division) recent application of the futility doctrine in the context of a Miller Act claim in U.S. f/u/o Cemex v. EPB, 2012 WL 831610 (M.D. Fla. March 12, 2012).

In EPB, subcontractor, EPB, sub-subcontracted with John Carlo, Inc., to complete a portion of a government project for the United States Air Force.  John Carlo purchased materials from Cemex in connection with its sub-subcontract.  EPB and John Carlo’s contract provided that John Carlo was to supply EPB “with sworn statement(s), lien waiver(s), guarantee(s) and other reasonably requested documents,” as a condition precedent to final payment.  “EPB withheld Carlo’s payment because Carlo had not provided the lien waivers and all of the releases required” per their contract.  However, Cemex (John Carlo’s assignee) argued it had met the conditions precedent because it provided John Carlo with a lien waiver, conditioned upon EPB’s payment.  EPB argued the letter of the law; that John Carlo and other sub-subcontractors of John Carlo had not provided the required documentation and therefore John Carlo (and by extension)
Cemex were not entitled to payment.

Cemex argued it was entitled to summary judgment because the “lien” period had expired under the Miller Act and therefore providing lien waivers would be futile.  The Middle District noted that “[u]nder the doctrine of futility, a party may be excused from performing a condition precedent to enforcement of the contract, if performance of the condition would be futile.” Alvarez v. Rendon, 953 So. 2d 702, 708-709 (Fla. 5th DCA 2007).  However, the court held that genuine issues of material fact remained as to “whether there were other effectual purposes for the [subject] documents.”  The court further held that EPB could require John Carlo and its other sub-subs to provide general releases of liability.

While the Middle District denied Cemex’s motion for summary judgment, it recognized the futility doctrine in the Miller Act context and implicitly held that the futility issues could be addressed by the trier of fact and, ultimately, prove dispositive at trial.  Thus, the futility doctrine in this context is seemingly not futile.

25MAY 2012

The case of Joel and Marcia Hochberg v. Thomas Carter Painting, Inc., 36 Fla.L. Weekly D1200f, addresses the point of time at which the statute of limitations begins to run in latent defects cases.  In 2000, homeowners, Joel and Marcia Hochberg, hired a general contractor to construct a new home for them, and the general contractor employed a number of subcontractors to perform certain aspects of the work.  In 2003, the Hochbergs took possession of the home, but weren’t able to move in because the homeowners immediately noticed mold in the home.

The homeowner then hired an engineer to investigate the extent of the mold problem, and the engineer presented a report to the homeowners which identified water intrusion throughout the home.  The homeowners demanded arbitration with the general contractor in 2004 in which they alleged water intrusion resulting from deficient work performed by the general contractor and its laborers, but the homeowners did not file suit against any of the subcontractors involved in the construction of the residence until 2008.

The subcontractors moved for summary judgment due to the expiration of the applicable four year statute of limitations, and the trial court granted summary judgment in the subcontractors’ favor.  Under section 95.11(3)(c), Florida Statutes, (2010) “an action founded on the design, planning or construction of an improvement to real property” must be brought within four years of the later date of the owner’s actual possession, the issuance of a certificate of occupancy, or the date of completion or termination of the contract.  The statute also provides that: “[W]hen the action involves a latent defect, the time runs from the time the defect is discovered or should have been discovered with the exercise of due diligence.”

On appeal, the homeowners argued that while they acknowledged that they were aware of the water intrusion and other construction defects since 2003 , under the latent defect provision of Section 95.11(3)(c), the statute of limitations only started to run once the homeowner discovered the precise nature of the defects, or more specifically, once the homeowner discovered that it was the negligence of the subcontractors which caused the defects.  The appellate court disagreed, noting that the 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 plaintiff has knowledge of the exact nature of the defect.”  The appellate court held that the extent of the homeowners’ knowledge of the defects by, at the very latest in 2004, was sufficient to trigger running of the statute of limitations.  Because the homeowners alleged that there were water intrusion issues in its arbitration demand to the general contractor in 2004, the court determined that the homeowners had sufficient general knowledge of the defect issues at that time, making the date of the arbitration demand the latest conceivable date on which the statute of limitations began to toll, and therefore could not assert claims against the subcontractors.

Plaintiffs must take note of this decision and act diligently with respect to claims of which they become aware. The statute of limitations serves as an absolute bar on claims asserted untimely and claimants do not want to end up in the same position as Mr. and Mrs. Hochberg.

13MAY 2012

The United States Court of Appeals for the Eleventh Circuit recently issued an opinion which has, in essence, confirmed the steps necessary in establishing a negligence action against a roofer in Florida.  While the standard of care necessary to prove whether a roof was negligent is a seemingly simple, everyday legal concept, proving it up is an altogether more challenging idea.

In 2007, Hawaiian Inn Beach Resort (“Hawaiian”), a Florida condominium, contracted with Island Dream Homes (“IDH”) for roof repair.  While IDH was conducting the repairs, a large stone veneer wall fell, causing $231,467.41 in property damage.  After paying Hawaiian for the damage under its property insurance policy, Hawaiian’s insurer, Insurance Company of the West (“ICW”), brought a subrogation action against IDH for negligence.  At the close of ICW’s case, the district court granted IDH’s motion for judgment as a matter of law, holding that no reasonable jury could find that IDH was negligent because ICW failed to present any evidence on the standard of care in the roofing industry.

IDH, in an effort to stop the roof leak at the south side of the reception area, began to install certain flashing to redirect water off the roof.  IDH presented evidence that, pursuant to roofing guidelines and the Florida Building Code, it was required to cut through the exterior veneer of of the building to reach a structural wall.  Prior to performing this cut of a several decades old, four (4) to six (6) inch wall, IDH failed to test the thickness of the veneer, perform tests on the structural integrity of the wall, review the building’s original plans, or consult with an engineer.  ICW took the position that IDH was negligent in failing to take these steps, however, ICW did not present evidence that these steps are customary or standard in the roofing industry.

At the close of ICW’s case, the district court granted IDH’s judgment as a matter of law, holding that ICW failed to present evidence that IDH breached the standard of care “that a roofer would exercise under the circumstances.”  ICW contends that the court erred by applying a “professional” standard of care in [the] case.”  Specifically, ICW argued that roofers are not “professionals” under Florida law, and, thus, IDH should be held only to the standard of an ordinary person, rather than to the standard of a professional.

The Eleventh Circuit opined that the problem with ICW’s argument is that roofers are not ordinary people who happened to be working on a roof – they are trained roofers. Accordingly, ICW was required to put forth some evidence of the standard of care in the roofing industry in order to meet its burden.  The Court further pointed out that ICW’s interpretation of Moransais v. Heathman, 744 So. 2d 973 (Fla. 1999) was misplaced.  Ultimately, the Court opined that Morainsais does not stand for the proposition that only persons engaging in vocations that require a four-year college degree may be held to a “standard of care used by similar professionals in the community under similar circumstances.” But the Court ruled that “regardless of whether roofers are considered ‘professionals’ in Florida, however, ICW was required to present evidence on the standard of care in the roofing industry – either by expert testimony or by presenting testimony of roofing custom.” If at trial, and the Plaintiff fails to introduce evidence of the standard of care for a roofer, judgment as a matter of law, as is the case here, may be appropriate.

07MAY 2012

Building green is the practice of reducing the negative effects construction has on the environment by increasing the efficiency with which buildings use and consume resources (energy, water, and materials). In addition to reducing the impact the building has on the environment, green building is also intended to reduce the project’s impact on human health throughout the complete building life cycle, by utilizing better design, construction, operation, maintenance, and removal techniques. This is accomplished, in part, by using sustainable materials, by covering the floors with tile instead of carpet to reduce the existence of allergens and other airborne toxins, building in a manner that does not waste space, using renewable energy sources, utilizing larger windows to allow more natural light, building in a manner that takes advantage of the site (i.e., shade from trees), using LED lighting products and thoroughly insulating the project.

However, it has recently been discovered that there is a dark side to building green. For example, the very methods intended to enhance a building’s performance, such as building solid airtight structures, prevents a building from breathing and can actually make a building highly susceptible to moisture and/or mold problems during its first few years of operation. This is because if no air goes in the building, no air goes out. While this is easily treated and/or prevented, it requires residents and other occupants of green buildings to do their part in reducing the chances of mold growing in the units by opening windows on a regular basis and in some rare instances bringing in dehumidifiers.

In addition, the cost to build in a green manner may increase the cost of construction by 10%-20%; while these initial costs are intended to be offset by the human health benefits and reduced cost to operate the completed project (i.e., using less energy and water) that is not always the case and the cost to construct is not offset by the desired efficiency savings.

In conclusion, it is critical that well established maintenance plans are established, desired efficiency ratings are properly defined, budgeted, and contracted for and an overall “green plan” is in effect prior to the commencement of the project.