All posts by CSK Construction Group

Cole, Scott & Kissane, P.A. represents major construction interests in cost-effective investigation, defense and disposition of commercial and residential building construction-related risks and civil claims. CSK routinely handles issues involving personal injury, property damage, project delay, contractual indemnity, defects, engineering aspects and OSHA penalty proceedings, both directly and through their insurers. Additionally, CSK represents litigants in surety disputes that often arise during the course of both public and private construction projects. Building a successful project requires cooperation and teamwork among architects, engineers, contractors, subcontractors and many others. We also understand the industry from finance, development and design through implementation, construction and close-out.
11JUN 2013

Liens are a useful tool for contractors or subcontractors to obtain payment from the owners of construction projects in the event they are not paid for the work that has been performed.   Under Florida Statute § 713.06, if the contractor is not in privity with the owner, the contractor must give notice to the owner of the property of the non-privity contractor’s ability to file a lien against the property.  Privity, as used in the lien statute, requires “both knowledge by an owner that a particular subcontractor is supplying service or materials to the job site and an express or implied assumption by the owner of the contractual obligation to pay for those services or materials.”  C.L. Whiteside & Assocs. Constr. Co. v. Landings Joint Venture, 626 So. 2d 1051, 1052-1053 (Fla. 4th DCA 1993).

Now, it has long been established in Florida Law that in instances where there is a common identity between an owner and contractor (such that one entity is serving in the dual capacity as an owner and a general contractor whom contracts with the subcontractors) that the lienor is not required to serve a notice to the owner.  Fla. Woods Servs., Inc. v. Osprey Links Joint Venture 720 So. 2d 591, 593 (Fla. 5th DCA 1998).  The purpose of the notice requirement is to protect the owner of the possibility of either double-paying for the work to be performed or being unable to determine if the subcontractors are unpaid by the general contractor.  In an instance where a common identity exists between the owner and the contractor, Florida Law has held that privity exists, as it can be presumed that the entity knows of the contractual obligation to pay the subcontractor.

A question that had remained unanswered, is “does a successor owner automatically have knowledge of the contractual obligation of its assumed duty to pay for the services of the contractor?”  One such instance where this question arises has recently been answered by a recent Florida 4th DCA decision concerning a successor owner that is a related company, or subsidiary, to the original owner.

In Marble Unlimited, Inc. v. Weston Real Estate Investment Corporation, et al., Case No. 4D11-3113 (Fla. 4th DCA 2013), Marble, the contractor, entered into an agreement with Weston Real Estate Investment Corporation (“Weston Investment”) to perform renovations.  At some point during the property, Weston Investment transferred control of the property to Weston Real Estate Development, LLC (“Weston Development”).  The two Weston entities were related, but not the same.  At a minimum, the same individual filed notices of contest on behalf of both corporations against the lien.  At trial, the circuit court judge dismissed the lien claims against Weston Development, citing that, Weston Development was not in privity with Marble. However, on appeal, the 4th DCA held that the close relationship between Weston Investment and Weston Development makes it clear that Weston Development knew about its obligation to Marble, and it would be adverse to public policy to release Weston Development of its lien obligation due to an improperly applied technicality.  Thus, the Court reversed the trial court’s decision and directed the trial court to enforce the lien against Weston Development.

The public policy argument to the Court’s holding is rootly founded in the concept that allowing owners the ability to transfer their ownership interest to a related entity and requiring a lienor to give notice to the new owner may lead other owners to attempt a similar move to avoid the risk of a lien being filed.  In this decision, the Court was reinforcing longstanding policy that it is in the public’s best interest that contractual obligations be respected and enforced as well as protecting contractors and subcontractors by preventing owners from circumventing the lien statute by creating additional hurdles for the lienor to overcome in order to obtain payment for their work.

 

 

16MAY 2013

It has long been the law in Florida that a Plaintiff alleging faulty design or construction is entitled only to the reasonable cost of bringing the structure back to its “original condition,” plus costs of business interruption and/or loss of use – i.e. “delay damages.”  See e.g. Grossman v. Sea Air Towers, Ltd., 513 So. 2d 686, 688 (Fla. 3d DCA 1987); Grossman Holdings Limited v. Hourihan, 414 So.2d 1037, 1039 (Fla. 1982).  This doctrine, which is closely related to the basic precept of contract law that a person should be entitled to the benefit of their bargain – no more, no less – essentially holds that a construction Plaintiff may not view litigation as an opportunity to obtain a “free upgrade” over and above the quality of the construction for which they originally contracted.  This issue was recently revisited by the Florida 4th District Court of Appeals in Kritikos v. Anderen, et al., 38 Fla. Law. Weekly D931a (Fla. 4th DCA 2013).

In Kritikos, the 4th District Court undertook the review of a trial court order granting a partial directed verdict on the issue of damages against a property owner and in favor of a construction superintendent, reasoning that because the property owner had failed to introduce evidence of “actual costs of repairs,” but rather relied upon estimates, then the property owner Plaintiff had failed to prove damages.  See id.  The 4th District Court reversed the trial court, holding that the use of estimates of costs to repair were perfectly acceptable evidence and could be used to support a jury verdict for this measure of damages.  See id.  Accordingly, a Defendant in cases such as these cannot rely solely upon the fact that a Plaintiff has not gone “out of pocket” to anticipatorily make repairs in order to avoid damages measured by the costs of bringing a structure back to its original – or perhaps more accurately, its originally designed – condition.

However, the 4th District Court also discussed in detail the application of the “betterment” defense.  As noted initially above, the Courts of Florida have repeatedly recognized that a construction Plaintiff is entitled to that for which they bargained, and not an upgraded version, so long as the costs of bringing the property back up to its originally designed and contemplated condition does not involve “unreasonable economic waste.”  See Grossman Holdings, 414 So.2d at 1039.  In Kritikos, the 4th District Court reinforces this position and incorporates the 2nd District Court decision in Temple Beth Shalom v. Thyne Construction Corp., holding that:

The proper measure of damages for construction defects is the cost of correcting the defects, except in certain instances where the corrections involved an unreasonable destruction of the structure and a cost which is grossly disproportionate with the results to be obtained.  If in the course of making repairs the owner elects to adopt a more expensive design, the recovery should be limited to what would have been the reasonable cost of repair according to the original design.  38 Fla. Law. Weekly D931a, quoting Temple Beth Shalom, 399 So.2d 525, 526 (Fla. 2d DCA 1981).

This holding, coupled with the relatively well developed case law in this area, should provide a construction Defendant with a ready defense, should a Plaintiff seek compensation for costs incurred in designing and/or “repairing” a structure which purports to “correct” deficiencies, but rather provides an upgraded structure or design.  Counsel should be vigilant to recognize when a construction Plaintiff seeks to essentially obtain a “free improvement” to their property, and demonstrate to the court that such an effort is inappropriate and contrary to well-established doctrine in this body of law.

12APR 2013

SCHOOL OF CLAIMS SEMINAR

April 25 – 26, 2013

JW Marriott Orlando Grande Lakes Resorts

MARK YOUR CALENDAR! Cole, Scott & Kissane is pleased to announce that on April 26, 2013, we will be once again hosting a complimentary Claims Management Seminar at the beautiful JW Marriott Orlando Grande Lakes Resort, 4040 Central Florida Parkway, Orlando, Florida 32837, with keynote speaker: FLORIDA GOVERNOR RICK SCOTT.

This seminar is our firm’s way of thanking you for all your hard work throughout the year and is our completely complimentary gift just for you. For those who will be staying over night, we kick off the Seminar with a cocktail reception and light dinner on April 25th, also at the JW Marriott from 5:30 p.m. to 9:30 p.m. Seminar materials will be available and sign-in begins at 7:00 a.m. on April 26th. A continental breakfast will be served from 7:00 a.m. to 9:00 a.m. at the sign-in location. We invite all guests to attend a complimentary luncheon at noon. We have some great raffle prizes and special gifts for each attendee. State approval pending for CE and CLE credits. Please note that CE and CLE credits will differ contingent upon your selection from each of the four breakout sessions. 

You MUST pre-register to attend this event, which can be done by clicking here. For your convenience there are other registration options: fax, mail, phone and email. Instructions for registration and class schedule for each break out session are outlined in the online registration packet.

If you have any questions, please do not hesitate to contact Samantha Webster at 321-972-0006 (samantha.webster@csklegal.com) or Janeena Lluy at 305-350-5319 (janeena.lluy@csklegal.com).

We look forward to seeing you in Orlando!

09APR 2013

The Florida Supreme Court has finally taken the Economic Loss Rule head-on and has attempted to address an issue that has created much litigation.   On March 7, 2013, the Court released its opinion in the case of Tiara Condominium Association, Inc. v. Marsh & McLennan Companies, Inc. , 2013 WL 828003, significantly narrowing the application of the Economic Loss Rule in Florida.

By way of background, the Economic Loss Rule is a judicially created doctrine that sets forth the circumstances under which a tort action is prohibited if the only damages suffered are economic losses.  Although the roots of the Economic Loss Rule are primarily found in the products liability arena, it has been expanded over the years to include circumstances where there is contractual privity and one party seeks to recover damages in tort arising from a contract.  The purpose of the expansion of the Rule was to prevent parties to a contract from circumventing the provisions of the contract by suing under a cause of action in tort.  In Tiara, the Court has now reverted to the original interpretation of the Economic Loss Rule holding that the “application of the economic loss rule is limited to products liability cases [receding] from prior case law to the extent that it is inconsistent with this holding.”  Tiara at 1.

The facts of the case are fairly straightforward:  Tiara Condominium Association retained Marsh & McLennan as its insurance broker. One of Marsh’s responsibilities was to secure condominium insurance coverage and secured windstorm coverage through Citizens Property Insurance Corporation with a loss limit of $50 million.  In September 2004, Tiara sustained significant hurricane damage related to two storms. Tiara began the process of an expensive loss remediation with the belief that they would be entitled to coverage for each storm.   However, when Tiara sought payment from Citizens, it was informed that the loss limit was $50 million in the aggregate, not per occurrence. Although, Tiara and Citizens settled for approximately $89 million, that amount was less than the more than $100 million spent by Tiara.  Tiara then sued Marsh and the trial court granted summary judgment in favor of Marsh on all claims.  The appeals court certified a question to Florida Supreme Court seeking a determination of whether the Economic Loss Rule bars an insured’s suit against an insurance broker where the parties are in contractual privity with one another and the damages sought are solely for economic losses.

After a lengthy discussion on the history and application of the Economic Loss Rule, the Florida Supreme Court never even addressed the original question being posed to them, as they ultimately decided, without exception, that the Economic Loss Rule applies only in the products liability context, receding from all of its prior rulings to the extent that they have applied the economic loss rule to cases other than products liability, including the Tiara case.

While the underlying facts of Tiara are not related to the construction defect litigation, the holding will likely create significant ripples in that arena and how it might be applied to construction defect cases.   Specifically, in the seminal case of Casa Clara Condominium Association v. Charlie Toppino And Sons, Inc., 620 So.2d 1244 (Fla. 1993), the Court made a determination that a cause of action against manufacturer of defective concrete was barred by the Economic Loss Rule where there was no personal injury or damage to property other than the product itself, notwithstanding absence of privity. The Court looked at the subject home in Casa Clara as a single product, as opposed to a group of disparate components, stating that “[g]enerally, house buyers have little or no interest in how or where the individual components of a house are obtained. They are content to let the builder produce the finished product, i.e., a house. These homeowners bought finished products—dwellings—not the individual components of those dwellings. They bargained for the finished products, not their various components.”

This would appear to indicate that a home or building is a product that would fall under the Florida Supreme Court’s new interpretation of the Economic Loss Rule.  Of course, only time will tell how this will all shake out, but it will likely lead to future litigation as Plaintiff attorneys likely attempt to re-broaden the scope of the newly narrowed Economic Loss Rule.

 

19FEB 2013

The failure to have a proper license as a contractor, where a license is required, may have adverse consequences to the party performing the work. Work done by an unlicensed contractor may result in the inability to collect, loss of lien rights, prosecution for a crime, and treble damages resulting from injury arising out of the work performed. Florida Statute § 768.0425, authorizes recovery by a consumer of three times the actual compensatory damages for injuries sustained from an unlicensed contractor’s negligence, misfeasance, or malfeasances, plus costs and attorney fees.

Florida Statute § 768.0425, titled “Damages in actions against contractors for injuries sustained from negligence, malfeasance, or misfeasance” states:

(1) For purposes of this section only, the term “contractor” means any person who contracts to perform any construction or building service which is regulated by any state or local law, including, but not limited to, chapters 489 and 633; and the term “consumer” means a person who contracts for the performance of any construction or building service which is regulated by any state or local law, including, but not limited to, chapters 489 and 633.

 (2) In any action against a contractor for injuries sustained resulting from the contractor’s negligence, malfeasance, or misfeasance, the consumer shall be entitled to three times the actual compensatory damages sustained in addition to costs and attorney’s fees if the contractor is neither certified as a contractor by the state nor licensed as a contractor pursuant to the laws of the municipality or county within which she or he is conducting business.

Emphasis added.

While the public policy behind the statute is to protect a consumer, a recent decision from the Fourth District Court of Appeal evidences how the courts are balancing consumer protection and punitive damages in their statutory interpretations. In Home Const. Management, LLC v. Comet, Inc., 2013 WL 440101 (Feb. 6, 2013), the Plaintiffs, Home Construction Management, LLC (“HCM”) and Abraham “AVI” Omer (“Omer”), were contacted by Comet, LLC (“Comet”) for construction management services to assist with the construction of a single family residence in Florida. Comet and HCM entered into a written contract for completion of the project. Omer was an agent of HCM and was the agent involved in the construction management of the project. Eventually, HCM and Comet had a dispute which resulted in the termination of their relationship. Comet filed suit against HCM and Omer for disgorgement of contract payments and treble damages pursuant to Florida Statute § 768.0425, as neither HCM nor Omer were licensed contractors. The trial court found that HCM entered into a contract with Comet, and breached that contract. It did not find that Omer entered into any contract with Comet, but found that both HCM and Omer engaged in contracting without being properly licensed. Therefore, the trial court entered treble damages against both HCM and Omer, pursuant to Florida Statute 768.0425, and held them jointly and severally liable for the damages.

The issue on appeal was whether Omer could be jointly and severably liable for treble damages, as he did not personally enter into a contract with Comet. See Florida Statute § 768.0425(1). HCM and Omer argued that Omer was not a contractor, as defined by Florida Statute § 768.0425, and thus the damages the trial court awarded against him for contracting without a license under Florida Statute 489.128 could not be trebled. HCM and Omer further argued, that even if the appellate court upholds the trial court’s finding that Omer performed contracting services without a license, it is un-rebutted that Omer did not “contract to perform” those services. Comet argued that Omer directly negotiated with and retained subcontractors, received subcontractor’s invoices, supervised subcontractors, and paid the subcontractors. Comet further argued that Omer and HCM engaged in contracting, and Omer acted alone and personally participated in the actions at issue before the court. Therefore, Omer’s direct and personal participation subjected Omer to individual liability under Florida Statute 768.0425 at the trial court level.

On appeal, the Fourth District Court narrowly interpreted Florida Statute § 768.0425, and stated that since Omer was not a party to the written contract, he did not “contract[] to perform” within the meaning of Florida Statute § 768.0425(1).  The appellate court was silent as to whether Omer was considered a “contractor” pursuant to the Statute. The Court reasoned that  since treble damages are punitive in nature, they must be construed strictly in favor of the one against whom the penalty is imposed.

On the other hand, the Third District Court of Appeal previously refused to limit the application of Florida Statute § 768.0425 in Hancock-Gannon v. McNully, 800 So. 2d 294 (Fla. 3d DCA 2001). In this case, a homeowner sued an unlicensed roofing contractor and construction company that pulled project permits for substandard roof repairs. The Plaintiffs sought treble damages “for injuries sustained resulting from the contractor’s negligence…”, as per Florida Statute § 768.0425(2). The Defendants argued that the court should limit the statute’s application to “personal injuries”, as Florida Statute § 768.0425 is part of Chapter 768, entitled  “Negligence” and sections 768.041 through 768.31 discuss personal injuries and death, not damage to property. The Third District Court stated that the Defendant’s presented a “flimsy argument” and thus did not limit their interpretation of injuries to personal injuries.

Extensive case law in the area of unlicensed construction activities exemplify the serious nature of the consequences arising from unlicensed contractor activities. While consumer protection is paramount in the realm of unlicensed contractor activities, these cases seem to present a tug-of-war between the districts of the public policy behind imposing punitive damages and protecting a consumer.

10DEC 2012

After a spirited election season and as we wind down toward the end of the year, the elected officials in Washington D.C. are in the midst of a strong debate regarding the tax increases and budget cuts that will begin in 2013.  Although the impact is largely debatable, discussions about the “fiscal cliff” are rampant and relevant.  What is the “fiscal cliff” and what does it mean to you – the construction industry?

The fiscal cliff arises from tax increases due to the expiration of President Bush’s tax cuts and spending cuts under the Budget Control Act of 2011.  Lawmakers must choose whether to leave some or all of these cuts in place, replace them, postpone them or cancel them entirely. The decision will certainly impact the economy, the country’s credit rating and the U.S. debt burden.  If left in place, the fiscal cliff could lead to the biggest single-year drop in the annual deficit as a percent of the economy since 1969. However, because it would be so abrupt, it also could throw the United States back into a recession next year, when more than $500 billion will be taken out of the economy – or, off the “fiscal cliff.”

According to a recent study by the AIA, the annual rate of federal construction totaled $25.2 billion. However, this will be greatly impacted by 48 separate budget accounts that will be reduced which directly fund the design, construction and rehabilitation of buildings and other vertical infrastructure. These cuts are expected to result in a 9.4 percent reduction in non-exempt defense discretionary funding and an 8.2 percent reduction in non-exempt nondefense discretionary funding – more than $2 billion dollars.

Although this is only an estimate, less spending inevitably means less jobs relating to government projects. A July 2012 study by the George Mason University Center for Regional Analysis estimated that the total employment impact in architecture and engineering occupations would be over 61,000. This number does not include the employment loss from government contractors, or from construction workers, which could make the number significantly higher.

In order to minimize the impact on the construction industry, the AIA recently wrote to President Obama and Congressional leaders in order to express the importance of avoiding the “fiscal cliff.” The AIA stressed the fact that a large portion of agency facility budgets are devoted to repairs, maintenance and retrofits. If those funds are cut, the need for such repairs still exists and may result in costing taxpayers additional money in the long run. The AIA urged the President to address the fiscal cliff in ways that do not disproportionately impact the already struggling design and construction industry.

Although the AIA did not offer any particular suggestions on how to properly address the fiscal cliff’s impact on the construction industry, it properly alerted congressional leaders of the crippling impact it may have on a vital industry to the US economy. We will continue to keep a watch on Congress’s reaction to the spending cuts for federal construction projects. However, as a precautionary measure, contractors, engineers and architects should keep abreast of these impending cuts and plan accordingly for the upcoming year. It appears that federal construction funds will be inevitably reduced, so contractors must expand their project portfolio to counteract these cuts.

21NOV 2012

Due to the use of Chinese drywall in construction projects, there has been an advent of class action litigation against contractors and suppliers of Chinese drywall for personal injuries and property damage.  Recently, insurers have started the process to deny coverage for the contractors who installed Chinese drywall.

Since the mid‐1980s virtually all Commercial General Liability (CGL) policies have contained some form of the total or absolute pollution exclusion.  The Total Pollution Exclusion endorsement eliminates virtually all coverage for pollution incidents, including those retained in the standard commercial general liability (CGL) policy despite its “absolute” pollution exclusion.

For example, the three Insurance Services Office, Inc. total pollution exclusion endorsements remove coverage for bodily injury or property damage that “would not have occurred in whole or part but for” a pollution incident.  The Insurance Service Office introduced the “total” pollution exclusion endorsement in 1988.

Generally, a “total” pollution exclusion can be characterized as any post‐“sudden and accidental” pollution exclusion which does not limit the exclusion to certain enumerated circumstances and, instead, precludes coverage for any and all exposure to pollutants.  The case law has defined “pollutants” to include carbon monoxide, lead paint, asbestos, biological pollutants, odor from compost, chemical fumes, welding rods, dirt and rocks, salt water, and gasoline.

With the recent advent of Chinese Drywall litigation, insurers are now looking to the Total Pollution Exclusion endorsement to deny coverage, both as to the duty to defend, and to indemnify.

In the recent case of First Specialty Insurance Corp. v. Milton Construction Company, [1] the U.S. District Court for the Southern District of Florida held that the insurer had no duty to defend its insured in a putative class action in the Eastern District of Louisiana for property damage and personal injuries allegedly caused by defective Chinese drywall.[2]  All of the allegations against Milton in the Louisiana action arose out of the allegedly defective, and unreasonably dangerous, drywall and the harmful effects of the sulfur compounds that allegedly exited the drywall, causing property damage and personal injuries.[3]

The United States District Court held that Florida law applied over the Louisiana law cited by the homeowner.  The United States District Court based its opinion on the Florida Supreme Court case of Deni Associates of Florida, Inc. v. State Farm Fire & Casualty Insurance Co., 711 So. 2d 1135 (Fla. 1998).  In this seminal case, the Florida Supreme Court addressed whether a pollution exclusion applied to two separate incidents, one involving indoor air contamination caused by an accidental ammonia spill inside a commercial building, and another involving two bystanders who were accidentally sprayed with insecticide near a citrus grove.

In considering this pollution exclusion, the Florida Supreme Court rejected the suggestion that it was ambiguous.  The court also rejected the argument that the provision should apply only to environmental or industrial pollution, because nowhere in the policies did such a limitation appear.

This result, while following the majority rule, is contrary to the law of some jurisdictions, including Louisiana.  In applying the pollution exclusion to the facts of the case, the Florida Supreme Court found it “clear that the incidents at issue were excluded from coverage under the respective insurance policies.”  The court reasoned that both ammonia fumes and insecticides were “irritants” or “contaminants” and, as such, “pollutants” under the policies.

The District Court, following Deni Associates, noted that other courts in the Southern District of Florida have found allegations pertaining to the release of sulfur gases from defective Chinese drywall clearly within pollution exclusions virtually identical to the one in this case.

Therefore, the District Court held that the sulfur compounds constitute “pollutants” and the Total Pollution Exclusion applies.  The Court further noted that the homeowner’s attempt to manufacture ambiguity by relying on Louisiana law fails.

The impact of this decision will likely mean that insurers will continue to pursue declaratory actions to enforce Total Pollution Exclusion endorsements and to deny insurance coverage for defense and indemnity for those whose policies contain such endorsements.  The upcoming coverage decisions at the forefront of these court opinions will be interesting to observe for those with an interest in Chinese drywall litigation.


 

 

 

[1] First Specialty Insurance Corp. v. Milton Construction Company, U.S. District Court, Southern District of Florida, Case No. 12,20116-Civ-Scola, July 16, 2012, Robert N. Scola, Jr. Judge, 23 Fla. L. Weekly Fed. D366a

 

[2] See Block v. Gebrueder Knauf Verwatungsgesellschaft, K.G., et al., Case No. 11-1363 (E.D. La., filed June 8, 2008).

 

[3] Specifically, the plaintiffs alleged that sulfur compounds exited the Chinese drywall, causing “rapid sulfidation and damage to personal property (such as air conditioning and refrigerator coils, faucets, utensils, electrical wiring, copper, electronic appliances and other metal surfaces and property.” La. Compl. ¶¶ 25, 26. The release of the sulfur compounds also allegedly “caused personal injury resulting in eye problems, sore throat and cough, nausea, fatigue, shortness of breath, fluid in the lungs, and/or neurological harm.” Id. ¶¶ 27, 30.

 

 

28SEP 2012

George Truitt and Daniel Levin recently defended an architect and his firm against a claim by a homeowner relating to the design of the HVAC system in an 8,000 square foot, custom home on the Intracoastal Waterway in Miami, Florida.  The owner claimed that the system was deficiently designed so that it was not able to cool the home to a reasonable temperature, and, therefore, the home was uninhabitable.

The owner and his family refused to move in for a period of 20 months after the Certificate of Occupancy was issued, nearly as long as it took to build the home.  During that period, the owner commissioned multiple engineers and contractors to diagnose and modify the system to increase the tonnage and redistribute the air to satisfy the family’s comfort requirements.  During the same period, the owners made partial use of the home, including allowing their son to live in the home intermittently, storing collector cars in the detached garage, storing furniture in the home, and docking their 50’ cabin cruiser out back.

The Plaintiff demanded more than $400,000 dollars in damages, $300,000 of which was for loss of use measured by the alleged fair market rental value of the home during the delay period.  On cross examination, the Plaintiff’s real estate appraiser admitted that, as requested by Plaintiff’s counsel, he assumed that that use of the property during the retrospective rental period was unrestricted so that renters would have unfettered use of the property.  When asked to assume the restrictions on use of the property to which Plaintiff conceded in his case, the appraiser testified that he could not offer an opinion that there was any rental market for the property or, if there was, what adjustments should be made to account for the reduced rental value.

The court specifically denied any recovery for loss of use, noting that the Plaintiff could have proved an alternate measure of damages for his actual expenses incurred in carrying the home or could have presented evidence of adjustments to the rental value of the home based on the use restrictions.

All offers to settle the case for an amount within the policy limits were rejected by Plaintiff, including an offer made immediately before the court announced its ruling.

Congratulations to George Truitt and Dan Levin on a great result in a difficult case.

 

13AUG 2012

The vast majority of construction disputes do not begin with the filing of formal litigation.  In fact, Florida Statute § 558.004 protects against any “first-notice” lawsuits by requiring that notice and an opportunity to cure any alleged defect be given prior to the pursuit of formal litigation.  Of course, as part of any pre-suit investigation, a conscientious insurance carrier or claims handler will generate material for inclusion within a formal claims file, including impressions of the validity of the claim, possible liability and damages exposure, and resolution strategy.

In Zirkelback Construction, Inc. v. Rajan, 37 Fla. L. Weekly D1793a, Florida’s Second District Court of Appeals has again expressed that such claims file materials, so long as litigation was “foreseeable” when they were prepared – are generally protected by the “work product” privilege, and that this represents the “majority view” within this State.  In Zirkelback, an insurance carrier’s multi-year inspection and evaluation of a design/construction defect claim was held to be protected by this privilege, and that the production of the claims file could not be compelled by the trial court, absent a specific evidentiary showing of need by the claimant.  Ostensibly, this would allow a carrier to validly claim privilege over all file material prepared after notice of a claim or potential claim was submitted.

However, the court also recognized that Florida’s Fourth District Court of Appeals – covering Palm Beach, Broward, St. Lucie, Martin, Indian River, and Okeechobee counties – follows a substantially different standard.  Specifically, the Fourth DCA holds that, in order for claims file materials to be considered privileged work-product, the threat of litigation must be “substantial and imminent.”  See e.g. Liberty Mut. Fire Ins. Co. v. Bennett, 883 So.2d 373, 374 (Fla. 4th DCA 2004).  While the Fourth DCA does not require that actual litigation be pending in order to protect materials as “work-product,” it does require an actual, present and imminent threat of litigation.  See id.  While not lending itself to a bright-line rule, this is clearly less protection than offered throughout the rest ofFlorida.  Accordingly, a carrier investigating a pre-suit claim within the Fourth DCA does run a somewhat greater risk of having a portion of its claims file forcibly produced.

Luckily, a relatively simple solution does present itself.  If counsel is retained at an early stage and serves as the coordinator of investigative activity and as a conduit of information, the separate (and more stringent) attorney-client privilege can be used to protect communications made even before the likelihood of litigation is “substantial and imminent.”  Accordingly, it would behoove any carrier that wishes to ensure maximum protection of its pre-suit investigative material – in construction or any other type of claim – to timely identify and retain counsel to evaluate that claim.  The alternative can be the forced disclosure of highly sensitive and prejudicial documents.

01AUG 2012

Cole, Scott and Kissane (“CSK”) recently won two very significant personal injury cases arising from construction projects on behalf of design professionals based on the Slavin Doctrine.  The Slavin doctrine prevents an injured Plaintiff from holding a contractor liable for injuries caused by a patent, or obvious, defect in construction after control of the property has been turned over to the owner – that is, after completion and acceptance of construction. See Slavin v. Kay, 108 So. 2d 462 (Fla. 1958).

Though the doctrine initially applied only to contractors, the Florida Supreme Court extended it to design professionals in 1988. See Easterday v. Masiello, 518 So. 2d 260 (Fla. 1988).  There are two rationales for the doctrine.  The first rationale is that by accepting the defective condition, the owner in possession and control of the property, is charged with knowledge of the defect and responsibility for rendering the condition safe and warning of the dangerous condition until it is rendered safe.  Because the design professional or contractor can no longer control the property, they have no opportunity to fix the condition or warn third parties of its existence.  The second, related rationale is that the acts of the design professional or contractor are no longer the legal cause of the accident.  The cause, instead, is the owner’s failure to render the condition safe.

Our firm is very proud to announce that it recently obtained a complete defense verdict in a wrongful death case following a three-week trial based on the Slavin doctrine. In that case, our firm defended a traffic engineer who designed an intersection in which a fatal accident occurred weeks after it became operational.  At trial, we argued that even if the intersection was negligently designed, the engineer should not be held liable because 1) the defects were obvious, 2) the FDOT engaged in significant review of the engineering plans, and 3) the FDOT approved the plans prior to the construction of the intersection.  In other words, the design was completed and accepted by FDOT prior to the accident.  The jury returned its verdict and initially awarded damages of $7.7 million dollars but found that the engineer was not liable based on the Slavin doctrine.  CSK’s client prevailed!

Last week, our firm obtained a complete defense final summary judgment in a motorcycle accident on behalf of a civil engineer who designed the roadway improvements where the accident occurred. The motorcyclist hit a curb that appeared to extend into the roadway.  The curb was constructed per the engineer’s design.

The Plaintiff suffered severe closed-head injuries and several skull fractures, which allegedly causing impaired cognitive functioning.  He was diagnosed with a traumatic brain injury and post traumatic stress disorder.  The Plaintiff, who himself owned a construction company, also claimed significant lost wages and several hundred thousand dollars in past and future medical expenses. In defense of the engineer, we argued that, based on the Slavin doctrine, any dangerous condition related to the design was above ground, not concealed, and readily observable to the City before it accepted the engineer’s design and was constructed in accordance with the design. The court agreed and granted a final summary judgment in favor of our client.

It is clear that the Slavin doctrine is alive and well. Fortunately, Florida case law continues to be favorable to contractors and design professionals in personal injury cases arising from construction projects when the alleged defect and its dangerous character is readily observable by the owner or his or her agents. CSK firm will continue to aggressively utilize the Slavin doctrine to defend these claims against the contractors and design professionals we are so fortunate to represent.