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Florida Construction Law News

27AUG 2012

A Tale of Two Districts: Florida Courts Split on the Application of Relation Back To Add Third Party Defendants As Direct Defendants After Expiration of the Statute of Limitations


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.