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Florida Construction Law News

26APR 2012

Time’s up!: Florida Supreme Court may Consider Statute of Limitations Dispute in Multi-Party Construction Defect Claim

by Alejandro Perez

Time’s up! That’s never a phrase we want to hear. It evinces memories of school tests and entrance exams. Well, in the legal arena, deadlines are all the more critical. Litigants often fight over filing deadlines for cases, or statutes of limitation, in the prosecution and defense of claims. Most recently, the First District Court of Appeal issued an April 17, 2012 opinion in a matter addressing this very issue in William G. Graney, P.E. v. Caduceus Properties, LLC, 1D11-2700, 2012 WL 1290841 (Fla. 1st DCA 2012).

The case involved an appeal of a judgment entered in favor of Caduceus Properties (“Caduceus”) and Tallahassee Neurological Clinic (“TNC”) for claims arising out of the design, construction, and installation of a heating, ventilation, and air conditioning (“HVAC”) system. In 2003, TNC and Gordon (a professional architect) contracted to design improvements to the subject building. Gordon subcontracted with KTD (an engineering design consulting firm) and Graney (a professional engineer and principal of KTD) to design the HVAC system for the TNC clinic in the same building. TNC separately contracted with Kelly Brothers Sheet Metal to install the HVAC system.

The building’s HVAC system began to fail soon after a certificate of occupancy was issued. In 2006, Caduceus sued Gordon to recover damages for the malfunctioning HVAC system. On March 7, 2007, Gordon filed a third-party complaint against Graney and KTD. Four years later in 2010, Caduceus and TNC initiated a direct action against third-party defendants Graney and KTD. Graney and KTD moved for involuntary dismissal prior to trial based upon a statute of limitations defense. The trial court denied the motion, and ultimately entered judgment in favor of Caduceus and TNC.

The First District, however, reversed this decision, reasoning that a four-year limitations period applied because the claims against Graney and KTD were “founded on the design, planning or construction of an improvement to real property” and are, therefore, governed by section 95.11(3)(c), Florida Statutes, and thus, began to run “from the date of actual possession by the owner, the date of issuance of the certificate of occupancy . . . or the date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor . . . whichever is latest.” Id. The Court reasoned that the parties knew about the problems with the HVAC system by September 2005, one month after the certificate of occupancy was issued. Thus, the limitations period ran in September 2009. But Caduceus and TNC initiated their direct action against KTD and Graney on June 3, 2010, almost nine months after the statute of limitations had expired.

The Court then considered whether the direct action related back to the original complaint and third party action. The Court held that it did not because Caduceus and TNC were aware of the roles Graney and KTD served in the design and approval of the HVAC system from the time the system began to fail in September 2005. Further, the Court noted that another party, Gordon, filed a third party complaint against KTD and Graney, which shows that Caduceus and TNC should have known how KTD and Graney’s conduct impacted on the case.

In rejecting Caduceus and TNC’s relation back argument, the First District expressly rejected, and certified conflict, with the Fifth District’s holding in Gatins v. Sebastian Inlet Tax Dist., 453 So. 2d 871 (Fla. 5th DCA 1984), a case that held that if a third party complaint is filed within the applicable limitation period, the party may amend or file a direct action to make third party defendants formal defendants pursuant to the relation back doctrine as long as the new action raises the same issues that are raised in the third party complaint. The First District also commented that permitting relation back in this context would circumvent the purpose of a statute of limitations, which it identified as protecting defendants from unfair surprise and stale claims.”

By certifying direct conflict with Gatins, the Florida Supreme Court now has the option to accept or reject jurisdiction over this matter. If the Supreme Court denies jurisdiction, then the current District split will remain unresolved. However, if the Supreme Court accepts jurisdiction, litigants may have a clearer idea of precisely when time’s up in multi-party construction claims.

Posted By Alejandro Perez