All posts by Rochelle B. Chiocca, Esq.

Rochelle B. Chiocca in a Partner in CSK’s Construction Group and practices in the West Palm Beach office. Ms. Chiocca has represented private entities throughout Florida at the trial level in commercial and insurance disputes. She also has experience in interpreting insurance policies and in rendering opinions on coverage, duty to defend, duty to indemnify, and other insurance contract related issues, particularly in the areas of property, automobile, and construction law. 
16OCT 2017

Due to the damage caused by Hurricane Irma, and as directed by Governor Rick Scott’s Executive Order 17-245, the Florida Department of Business and Professional Regulation (“DBPR”) issued an Emergency Order, Order 2017-07396, on September 15, 2017, relaxing certain regulations in the thirty-seven Florida counties that are listed in FEMA’s Disaster Declaration DR-4337.  DBPR’s secretary, John Zachem, found “that timely execution of the mitigation, response, and recovery aspects of the State’s emergency management plan, as it related to Hurricane Irma, is negatively impacted by the application of certain regulatory statutes related to the Department of Business and Professional Regulation.”  He thereby temporarily suspended certain regulations that he viewed as burdensome in light of the need to quickly repair and rebuild in Florida.  The Emergency Order corresponds with the effective date of Governor Scott’s Executive Order 17-245 and any extensions thereof.

Pursuant to this Emergency Order, the requirements of section 489.113(3), Florida Statutes, were suspended.  This means that roofing work does not need to be subcontracted out to a roofer; a certified or registered, general, building, or residential contractor may perform repairs or installations of any flat roofs and roofs made of wood shakes, asphalt or fiberglass shingles, tiles, or metal. This should help expedite the completion of repairs throughout the state.

Likewise, the provisions of section 489.117, Florida Statutes, were also suspended.  Therefore, local jurisdictions are presently authorized to issue local specialty licenses for the repair and installations of the roof types referenced above, conditioned upon the requirement that all applicants for specialty roof licenses provide an affidavit of competency from their original jurisdiction. This enables individuals and companies that are already licensed elsewhere in Florida to work on roofs in impacted areas.

The final item addressed by DBPR’s Emergency Order relates to departmental fees that are typically charged.  DBPR has waived all fees associated with relocating or reopening businesses that were closed from damage by Hurricane Irma.

The Florida Department of Business and Professional Regulation has taken positive steps to enable contractors to get to work repairing our state.  Despite the relaxed regulations under this Emergency Order, contractors must remain cognizant of the fact that building standards and safety requirements remain unchanged.

If you have any questions about the regulations applicable to your business, either following Hurricane Irma or in general, please contact a member of CSK’s Construction Group.

03AUG 2016

The First District Court of Appeal recently addressed the standard to apply in calculating prejudgment interest.  In Arizona Chemical Company, LLC. v. Mohawk Industries, Inc., 41 Fla. L. Weekly D1662 (Fla. 1st DCA July 18, 2016), the First District found that the trial court erred in awarding prejudgment interest for periods earlier than the dates the Plaintiff “suffered the pecuniary losses for which the jury awarded damages.”

Arizona Chemical supplied Mohawk Industries with a resin designed for use as a component of carpet that Mohawk began manufacturing in 2000.  Five years into this contractual relationship, Arizona Chemical changed its resin formula without informing Mohawk of the change.  A few years later, in 2008, Mohawk began receiving an unusually high number of warranty claims, and eventually discontinued using Arizona Chemical’s resin.  Upon discovering the defect, Mohawk sold some of the remaining carpet at a discount and discarded some.

After prevailing under theories of breach of contract and breach of warranty, the trial court accepted Mohawk’s argument that it was entitled to interest on all past damages from the date of Arizona Chemical’s breach, “meaning the date Arizona delivered defective resin.”  When that date could not be determined, the court used the date that Mohawk applied the resin to each roll of carpet that was later found to be defective.

Arizona Chemical argued that prejudgment interest does not begin to accrue until: (1) the defendant had notice of plaintiff’s claim, and (2) the plaintiff sustained the actual pecuniary loss for which it was awarded damages.  The First District ruled as follows:

Arizona is partially correct: there is no bright-line rule establishing that prejudgment interest begins to accrue only after the date the plaintiff has notice of a claim, but Florida law does link the date prejudgment interest begins to accrue to the date the plaintiff suffered the pecuniary loss for which the plaintiff is being compensated.

The First District cited Argonaut Ins. Co. v. May Plumbing Co., 474 So. 2d 212, 214-15 (Fla. 1985), to explain that prejudgment awards in Florida are governed by the “loss theory.”  Under the loss theory set forth in Argonaut, the purpose of awarding prejudgment interest is to make the plaintiff whole.  “[A]n award of prejudgment interest is not an opportunity for the plaintiff to obtain a windfall or for the court to penalize the defendant.” Arizona Chemical, 41 Fla. L. Weekly D1662.  The First District reiterated the rule from Argonaut that “when a verdict liquidates damages on a plaintiff’s out-of-pocket, pecuniary losses, plaintiff is entitled, as a matter of law, to prejudgment interest at the statutory rate from the date of that loss.” Argonaut, 474 So. 2d at 215.

While recognizing that using the date of breach is appropriate when damages occur simultaneously, the First District explicitly rejected the argument that prejudgment interest automatically accrues from the date of breach rather than the date the plaintiff sustains a pecuniary loss.  The Court concluded:

In sum, our review of all recent controlling precedent leads us to the conclusion that the beginning date for the accrual of prejudgment interest depends on the timing of the pecuniary loss for which damages have been awarded, not the type of action the plaintiff has brought. Whether the case sounds in tort or contract, when prejudgment interest is proper, it is to be awarded from the date of the plaintiff’s actual loss, be that loss a diminution in the value of the plaintiff’s property, a payment the plaintiff has made to a third party, or some other form of pecuniary loss for which prejudgment interest is authorized.

Arizona Chemical, 41 Fla. L. Weekly D1662.  Applying that rule to the case before it, the First District held, “Mohawk was not entitled to recover prejudgment interest from the date the defective resin was delivered or applied to the carpet. Rather, Mohawk was entitled to recover prejudgment interest from the date it realized each loss in dollars.” Id.

In reaching the decision, the First District noted two Fourth District opinions that seemingly reach a different conclusion.  Most noteworthy is Pine Ridge at Haverhill Condo. Ass’n, Inc. v. Hovnanian of Palm Beach II, Inc., 629 So. 2d 151 (Fla. 4th DCA 1993).  In that brief opinion, the Fourth District ruled that a jury award for construction defects, including the failure to install adequate lighting and windows resulting in water intrusion, “had the effect of fixing the damages at no later than the turnover date of the condominium . . . .” Id.  As a result, “prejudgment interest should have been awarded on those claims from that date.” Id.  Relying on Pine Ridge at Haverhill, it is typical for owners to claim prejudgment interest dating back to the alleged breach or the date of turnover of a condominium, rather than the date that pecuniary losses are incurred.

The First District Court’s decision in Arizona Chemical, along with cases like CH2M Hill Southeast, Inc. v. Pinellas County, 698 So. 2d 1238 (Fla. 2d DCA 1997), should assist in defending claims for improper prejudgment interest in construction defect cases.  Conceptually, the key to distinguishing Pine Ridge at Haverhill is to note the court’s ruling that the jury verdict “had the effect of fixing the damages” as of a date certain.  It is the “fixing of damages” to a particular date that matters. To avoid improper prejudgment interest awards, the defense must make efforts to establish that a plaintiff had not suffered any economic loss at the time of the alleged breach.  It is critical to develop and present evidence to show that any pecuniary loss, whether that loss is a diminution in value or a payment to a third party, occurred at a time later than the breach or the date of turnover of a project.