All posts by Stephen W. Stukey, Esq.

Stephen W. Stukey is a Partner in CSK’s Construction Group and practices in the Tampa office. Mr. Stukey concentrates is practice on construction and insurance defense litigation. He graduated from the University of Florida with a Bachelors of Design in Architecture, and worked with a national architectural firm in Boca Raton, Florida, before attending law school.
07APR 2017

It is a fairly common fact pattern in construction defect claims:  A design professional, such as an architect or engineer, is contracted by a client to provide a design, and perhaps perform construction administration for, an improvement to real property. Construction is completed, and everything seems fine for four or more years until the client asserts defects and deficiencies that implicate the services of the design professional.  Upon further investigation, it appears the client knew of the alleged defects and deficiencies for at least two years before filing suit for professional negligence.  The question invariably arises, “are the claims barred by the statute of limitations?”

There is, of course, the four-year statute of limitations set forth in Section 95.11(3)(c), Florida Statutes, which applies to actions “founded on the design, planning, or construction of an improvement to real property.” In the case of patent defects, the date of commencement of the limitations period can vary, running from the latest of the four possible trigger dates. If the defect is “latent,” however, it runs “from the time the defect is discovered or should have been discovered with the exercise of due diligence.”[1]

However, Section 95.11(4)(a), Florida Statutes, contains a second, shorter statute of limitations, applicable to claims involving professionals, which Florida law defines as including architects and engineers. This two-year statute of limitations is applicable to an “action for professional malpractice, other than medical malpractice, whether founded on contract or tort,” which, runs, “from the time the cause of action is discovered or should have been discovered with the exercise of due diligence,” but is limited to actions against “persons in privity with the professional.”[2]

There is no Florida case law directly addressing the potential conflict between these two statutes.  The two oft-cited rules of statutory construction proffered to support application of the longer, four-year statute of limitations to design professional claims, despite contractual privity, are set forth in Dubin v. Dow Corning Corporation, 478 So. 2d 71 (Fla. 2d DCA 1985), and Baskerville-Donovan Engineers, Inc. v. Pensacola Executive House Condominium Association, 581 So. 2d 1301 (Fla. 1991), respectively.

In Dubin, the issue was whether to apply the four-year statute of limitation set forth in Section 95.11(3)(c) or the five-year statute of limitations for breach of contract claims set forth in Section 95.11(2)(b). The Dubin court concluded that when the breach of contract is founded on a contract for construction of improvements to real property, Section 95.11(3)(c) applies. It based its decision on the language used by the legislature, which it construed to be inclusive of “all actions, whether in tort or contract,” and a well-established doctrine of statutory construction which provides, “a special statute of limitations which addresses itself to specific matters takes precedence over a general statute.”[3]

Baskerville-Donovan, on the other hand, dealt with how broadly the term “privity” in Section 95.11(4)(a) is to be construed. The Baskerville-Donovan court held that Section 95.11(4)(a) is to be strictly construed as requiring “direct privity,” thereby excluding ““intended and known beneficiaries.”[4] The Baskerville-Donovan court referenced a second well-established principle of statutory construction which provides, “[w]here a statute of limitations shortens the existing period of time the statute is generally construed strictly, and where there is reasonable doubt as to legislative intent, the preference is to allow the longer period of time.”[5]

Read together, Dubin and Baskerville-Donovan seem to suggest that, to the extent there is a conflict, a court might deem Section 95.11(3)(c) “more specific” than Section 95.11(4)(a), or find that there is reasonable doubt as to the legislature’s intent to have Section 95.11(4)(a) apply to construction defect claims where a design professional is in privity with a claimant (as opposed to actions, such as those in Baskerville-Donovan, which are not clearly “founded the design, planning, or construction of an improvement to real property”).

However, at least one federal court has applied the shorter two-year statute of limitations in Section 95.11(4)(a) to an owner’s claims for construction defects against design professional with whom it was in privity. In Baker County Medical Services v. Summit Smith L.L.C., 2008 U.S. Dist. LEXIS 44154 (M.D. Fla. May 29, 2008), the operator of a hospital facility filed suit against its design-build contractor for alleged HVAC design defects, three years after “contract completion.”[6] In reaching its determination that the causes of action arising from design of the HVAC system were barred by the two-year statute of limitations set forth in Section 95.11(4)(a), the Baker County court expressly rejected the argument that Section 95.11(3)(c) was “more specific” than Section 95.11(4)(a), and actually held, to the contrary, that Section 95.11(4)(a) was more specific, stating, “the two year statute of limitations for actions of professional malpractice is the more specific statute, since it applies to a very specific class of a cause of action, as opposed to Section 95.11(3), which covers actions dealing with a broad class of claims dealing generally with improvements to real property.”[7]

A survey of the cases setting forth these seemingly incompatible constructions suggests that the analysis a court chooses to employ depends on whether the court is being asked to interpret the legislative intent of a statute to shorten a statute of limitations or “harmonize” two clear, but competing, statutes.[8]. In sum, for construction defect claims against design professionals, Florida law is surprisingly unsettled, and the four-year statute of limitations may not always be correct.

[1] § 95.11(3)(c), Fla. Stat.

[2] § 95.11(4)(a), Fla. Stat.

[3] Dubin, 478 So. 2d at 72, 73.

[4] Baskerville-Donovan, 581 So. 2d at 1304 (disapproving the holding in Cristich v. Allen Engineering Inc., 458 So. 2d76 (Fla. 5th DCA 1984)).

[5] Id. at 1303.

[6] Baker Cnty., 2008 U.S. Dist. LEXIS 44154, at *45-46.

[7] Id.

[8] See Haney v. Holmes, 364 So. 2d 81 (Fla. 2d DCA 1978), appeal dismissed, 367 So.2d 1124 (Fla. 1979); Rebich v. Burdine’s, 417 So. 2d 284, 285 (Fla. 1st DCA 1982); Cf. Beck v. Barnett Nat’l Bank, Fla., 142 So. 2d 329 (Fla. 1st DCA 1962); Palmquist v. Johnson, 41 So. 2d 313 (Fla. 1949) (en banc); State ex rel. Ashby v. Haddock, 149 So. 2d 552 (Fla. 1962); Perry v. Reichert, 151 So. 403 (Fla. 1933); see also Grissom v. N. Am. Aviation, Inc., 326 F. Supp. 465 (M. D. Fla. 1971) (in action by astronaut’s widow against engineers for death of astronaut in “ground test”, applying two-year statute of limitations for wrongful death to shorten the twelve-year statute of limitations proscribed by the  predecessor statute to section 95.11(3)(c), Florida Statutes).

31MAY 2013

Earlier this month, the Florida Legislature wrapped up its 2013 Regular Session. With its close on May 3, 2013, came the demise of legislation intended to make changes to Florida’s construction lien laws.  The legislation sought to:

  • Revise the mandatory notice provision in contracts between owners and contractors [F.S. § 713.015 (1)];
  • Revise notice requirements relating to liens of persons not in privity [F.S. § 713.06 (2)(a)];
  • Delete a provision classifying certain payments as improper payments [F.S. § 713.13 (1)(c)]; and
  • Revise the notice of commencement form and building permit card and application to conform to changes made by act and to provide additional warning [F.S. § 713.13 (1)(d) and F.S. § 713.135 (1)(a)].

The proposed changes were first introduced on the House side in the form of HB 0889 by State Representative Mike Fasano (R) of District 36 (in Pasco County). An identical bill, SB 1136, was introduced days later on the Senate side by State Senator Arthenia Joyner (D) of District 19 (comprising parts of Pinellas, Hillsborough, and Manatee counties). Both bills were referred to their respective judiciary subcommittees where they remained through the close of the Regular Session.

The changes contemplated by the now-deceased bills were small but significant. Currently contracts for construction of 1 to 4 residential units and over $2,500.00, are required to contain a notice provision that states, among other things, that an Owner should, as part of the contract, stipulate that, “before any payment is made [the] Contractor is required to provide [Owner] with a written release of lien from any person or company that has provided a ‘Notice to Owner’” as contemplated by F.S. 713.06(2)(a). The proposed legislation would have revised the notice provision to advise an owner to stipulate that the Contractor provide the Owner and Owner’s Lender with a written release prior to each payment along with a notarized list of persons or companies owed money for the payment being made, along with their respective addresses and phone

F.S. § 713.06 (2)(a) requires all lienors, except laborers to serve a notice on the owner with certain basic information about the lienor and the work it being performed. In the case of sub-subcontractors and materialman to a subcontractors or sub-subcontractors the notice must also be served upon the contractor. In addition, for the lien to be perfected, F.S. § 713.06 (2)(a) currently requires the notice be served “before commencing [work] or not later than 45 days after commencing [work], and … before the date of the owner’s disbursement of the final payment after the contractor has furnished his [final payment affidavit demonstrating that all lienors have either been paid or identifying those who have not]”. The proposed revisions would have altered the deadline for service on the notice to before commencing work or before the date on which payment is due to the materialman for his services and/or materials.  Interestingly, the proposed change by its terms, would have apparently tied the deadline for service all notices to the date payments become due to the materialman, regardless of the identity of the ultimate lienor or the services which would be the subject of the lien.

Perhaps the most significant proposed change is the deletion of the provision within F.S. § 713.13 (1)(c) which currently classifies payments made by an owner on a direct contract after expiration of the notice of commencement as “improper payments.” The effect of such a change, had it become law, would have likely been the expansion of the “proper payments defense” which allows the owner to escape liability in excess of the contract price as properly paid, even though the lieonor had properly followed the lien procedure.

The final set of proposed changes in F.S. § 713.13 (1)(d) and F.S. § 713.135 (1)(a) would have altered the notice to the owner within the Notice of Commencement form and Permit form to eliminate all reference to the potential for an Owner to “pay twice” due to improper payments. This change was necessitated as a result of the changes to F.S. § 713.13 (1)(c) eliminating “improper payments.”  The proposed revisions also added language to the notice so as to advise Owners of their continuing responsibility to record the Notice of Commencement and any amendments thereto, insure the Notice of Commencement has correct contact information for all parties, and, in the case of a change of contractor to record a new Notice of Commencement.

The proposed changes would have been favorable to an Owner seeking to make improvements to real property. The changes, had they been adopted into law would have given Owners (assuming the notice was followed) additional tool to prevent overpayment to an unscrupulous contractor that fails to pay subs and suppliers, and potentially limit the amounts a subcontractor or materialman can recover if an Owner makes payment on the direct contract. However, to accomplish it would place an additional administrative burden on a contractor to affirmatively demonstrate that potential lienors are being satisfied, introduce ambiguity into the deadlines for service of the notice for liens not involving a materialman, and could leave subcontractors and materialmen holding the bag for unpaid materials and services.

27AUG 2012

The situation is a familiar one. An Owner of a completed construction project notifies the Architect and/or General Contractor of alleged construction deficiencies at a Project. Review by the Architect reveals that the alleged deficiencies, if true, relate to the work of its sub-consultants (or in the case of a General Contractor his subcontractors). The Owner ultimately files suit within the four (4) year statute of limitations set forth in Fla. Stat. § 95.11(3)(c), but only against the General Contractor and/or Architect (“Direct Defendants”), leaving the Direct Defendants, who may be only vicariously liable, to defend a claims for a multitude of defects while pursuing the actively negligent parties as third party defendants.

Especially in actions involving large, complex construction projects, an Owner might view this as an effective cost-shifting mechanism designed to maximize recovery while minimizing costs. Until recently, if the direct defendant became “uncollectable,” Owner could amend his complaint to add third party defendants as direct defendants, even after the statute of limitations applicable to those direct claims had expired, by asserting that pursuant to Florida’s Rule of Civil Procedure, Rule 1.190(c), the amended pleading, “related back” to the date of filing of the original complaint.

The pivotal Florida case interpreting Fla. R. C. P., Rule 1.190(c), to allow this circumvention of the statute of limitations was by the Fifth District Court of Appeals[1] in Gatins v. Sebastian Inlet Tax Dist., 453 So.2d 871 (Fla. 5th DCA 1984). In Gatins,the plaintiff was the father of girl who died when she fell through the guardrail at a pier owned and operated by the Tax District. The Tax District had filed its third party complaint against the engineering firm that constructed the pier on the day before the applicable statute of limitations expired. Following expiration of the statute of limitations, the Plaintiff filed a direct claim against the engineering firm.

After a survey of the law in other jurisdictions, the Gatins court adopted a minority view allowing the relation back of the new direct claims against the third party defendant despite the expiration of the statute of limitations. It reasoned that such amendments relate back as they “merely adjust the status of an existing party,” which not inconsistent with the purpose underlying the statute of limitations – to protect against long delays in filing suits and prevent stale claims since the third party defendant is automatically made aware that it could be held liable for the plaintiff’s claims by virtue of the timely third party complaint. Gatins, 453 So.2d 871 at 875.

However, a recent decision by the First District Court of Appeals[2] to the contrary has resulted in a direct and express conflict with Gatins.  In, Graney v. Caduceus Properties, LLC, 91 So.3d 220 (Fla. 1st DCA 2012) the First District held that a plaintiff property owner with notice of latent defects attributable to third party defendant sub-consultants, but elects not plead direct claims against those third party defendants within the applicable statute of limitations, cannot, after its expiration, amend the complaint to add those direct claims and assert that they “relate back” to the date of filing of the original complaint. The underlying facts in Graney differ markedly from those in Gatins, and hold particular import for construction cases involving latent defects, as it highlights the risk that a property owner may run by failing to maintain direct claims against third party defendants, when a direct defendant becomes “uncollectable” after expiration of the statute of limitations applicable to the third party defendants.

In Graney, the lessee (“TNC”) of a property entered an agreement with an architect (“Architect”) for design improvements to the building in which TNC leased space.  The Architect hired KTD Consulting Engineers (“KTD”), an engineering firm whose principal was William G. Graney (“Graney”), to design the HVAC system for the clinic. TNC hired a mechanical subcontractor separately to install the HVAC system.

The certificate of completion for the HVAC work was issued on August 5, 2005.  By September 2005, TNC and Caduceus Properties, LLC, the property owner (“Caduceus”) became aware of problems with the HVAC.  After approximately ten (10) months of unsuccessful efforts by the parties to determine the cause of the failure, TNC retained another contractor to design and replace the HVAC system at the clinic. Thereafter, on July 24 2006, Caduceus sued the Architect to recover damages due the failed HVAC system, but did not include as direct defendants, either KTD or Graney, though the Architect joined KTD and Graney as third party defendants. It wasn’t until June 3, 2010, more than four years after the HVAC problems became known to Caduceus, that it amended its Complaint to add KTD and Graney as direct defendants.

KTD and Graney answered and asserted that Fla. Stat. § 95.11(3)(c), Florida’s four-year statute of limitations applicable to actions, “founded on design, planning or construction of improvements to real property” barred Caduceus’s direct claims against them.  At trial, the court granted KTD and Graney’s motion for involuntary dismissal of Caduceus’s claims on the grounds that they were time barred. Notably, during trial, the Architect filed for bankruptcy resulting in a stay of those claims involving the Architect.

In affirming the trial court’s decision in Graney, the First District Court of Appeals declined to follow the Gatins court’s interpretation of the relation back doctrine, concluding that the a third party complaint does not necessarily give a third party defendant reason to know that a plaintiff would assert a direct action against them. Graney, 91 So.3d 220 at 227.  Instead, the First District construed “relation back” more conservatively to allow the addition of new parties after expiration of the statute of limitations only in circumstances of mistaken identification or misnomer, and not in cases where the failure to add the party was one of choice. Id at 277, 228.

The designation by the First District in Graney of an “express and direct conflict” with Gatins means that the Florida Supreme Court has discretionary jurisdiction. Unless and until the Florida Supreme Court takes up the issue, attorneys handling matters in the First District and the Fifth District can only take note of the difference and litigate accordingly. However, given that the issue remains undecided in the remaining Districts[3], an owner who elects to proceed without filing direct actions against third party sub-consultants and subcontractors does so at his own risk.


[3]  The remaining, undecided districts cover the following counties:   Pasco, Pinellas, Hardee,  Highlands, Polk, De Soto, Manatee, Sarasota, Hillsborough, Charlotte, Glades, Collier, Hendry, and Lee (Second); Miami-Dade and Monroe (Third); and Palm Beach, Broward, St. Lucie, Martin,Indian River, and Okeechobee (Fourth).

 


[2] The First District covers Alachua, Baker, Bay, Bradford, Calhoun, Clay,Columbia, Dixie, Duval, Escambia,Franklin,Gadsden, Gilchrist, Gulf,Hamilton, Holmes,Jackson, Jefferson,Lafayette,Leon, Levy,Liberty,Madison,Nassau, Okaloosa,Santa Rosa, Suwannee,Taylor, Union, Wakulla, Walton andWashington counties.


[1] The Fifth District covers Orange (Orlando), Osceola, Volusia, Flagler, Putnam,St. Johns,Lake, Marion, Sumter, Citrus,  Hernando, Brevard and Seminole counties.