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Florida Construction Law News

05MAY 2014

The Florida Supreme Court Limits the Statute of Limitations: Caduceus Properties v. William Graney

by Ryan M. Charlson, Esq.

The Florida Supreme Court’s recent decision in Caduceus Properties v. William Graney, et al.[1] limits the applicability of the Statute of Limitations to a primary Plaintiff attempting to file a direct claim against a previously named Third-Party Defendant. The case addressed the timeliness of an Amended Complaint with a direct claim against a Third-Party Defendant that was filed after the Statute of Limitations had run. William Graney, principal of an engineering firm, was sued by the Plaintiff after the Third-Party Complaint against him and his firm was dismissed and the Statute of Limitations had run. In resolving a certified conflict between the First and Fifth Districts, the Florida Supreme Court held that an Amended Complaint is deemed timely filed, even if it is filed after the expiration of the Statute of Limitations, as long as the following two (2) conditions are satisfied:

  1. The original Third-Party Complaint was filed before the Statute of Limitations had run; and
  2. The issue in the newly filed claim arises out of the same conduct, transaction, or occurrence as the Third-Party Complaint.

Addressing the Conflict between the First and Fifth District Courts of Appeal

The Florida Supreme Court quashed the First District’s decision in Graney v. Caduceus Properties, LLC[2] holding that leave to amend should only be granted for errors in naming parties and not for failure to name a party defendant. Instead, the Court adopted the Fifth District’s decision in Gatins v. Sebastian Inlet Tax District[3] as the standard governing relation back of claims. Citing to the purposes of third-party practice and the preference for claims being resolved on the merits, the Court held that an Amended Complaint adding a Third-Party Defendant as a primary Defendant relates back to the filing of the Third-Party Complaint. If a Third-Party Complaint was filed before the running of the Statute of Limitations, as was the case here, then the Amended Complaint was also timely filed.

What does Graney mean for Complex Construction Litigation?

The Court’s holding in Caduceus Properties v. Graney et al. creates additional obstacles for Third-Party Defendants attempting to assert the Statute of Limitations as a defense and for the settlement of Third-Party Claims. By its very nature, a Third-Party Complaint requires a relationship between its facts and allegations and those of the underlying Complaint. It is unlikely that courts will find that an Amended Complaint naming a Third-Party Defendant as a primary Defendant does not arise from the same conduct, transaction, or occurrence as a timely filed Third-Party Complaint. Therefore, Amended Complaints meeting Graney’s conditions will be considered timely filed, regardless of whether the Statute of Limitations has run.

The Graney decision has important consequences for the settlement of Third-Party Claims. Often times in construction defect litigation, a Third-Party Defendant is either a subcontractor or subconsultant hired by the Third-Party Plaintiff (usually a general contractor, developer, or design professional) to complete a specific aspect of a construction project. The Third-Party Plaintiff files its Third-Party Complaint in an effort to limit its liability to the primary Plaintiff (usually a property owner, condominium association, or homeowners association), for work the Third-Party Plaintiff’s subcontractors or subconsultants completed. When possible, a Third-Party Plaintiff will settle its claims against a Third-Party Defendant in exchange for monetary compensation or assistance in remedying the defects or deficiencies alleged by the Plaintiff. These settlement agreements usually contain releases of liability, which discharge any potential claim the Third-Party Plaintiff may have against the Third-Party Defendant named in the release. Historically, and as asserted by Graney, later claims by primary Plaintiffs against Third-Party Defendants were subject to the Statute of Limitations. If a primary Plaintiff sought to add a Third-Party Defendant not previously named as a primary Defendant, the Amended Complaint needed to be filed before the Statute of Limitations had run. However, in light of the Court’s holding in Graney, the Statute of Limitations defense is not available to a Third-Party Defendant properly named in a timely filed Third-Party Complaint. Now, in order to truly close a case, Third-Party Defendants must also secure a release of liability from the primary Plaintiff, otherwise they run the risk of being sued by a primary Plaintiff after settling the Third-Party Claims.

[1]: Caduceus Properties, LLC, et al. v. William G. Graney, P.E., et al., No. SC12-1474 (Fla. Feb. 27, 2014) (note: the final opinion has not been released for publication in the permanent law reports and until release it is subject to revision or withdrawal).
[2]: Graney v. Caduceus Properties, LLC, 91 So. 3d 200 (Fla. 1st DCA 2012).
[3]: Gatin v. Sebastian Inlet Tax District, 453 So. 2d 871 (Fla. 5th DCA 1984).

Posted By Ryan M. Charlson, Esq.

Ryan M. Charlson is a Partner in CSK’s Construction Group and practices in the Fort Lauderdale and Miami offices. Mr. Charlson focuses his practice on construction, products liability, real estate, and insurance coverage disputes. Prior to joining CSK, Mr. Charlson practiced at a national firm that specializes in construction litigation, and more recently, he worked as in-house counsel for one of the nation’s largest real estate developers.