Recently my law partner Stephanie Preston and I generated this primer based on some frequent questions & common issues which often arise in construction defect and construction PD cases. The following primer is on The Statute of Repose for Construction Defect Cases, which affects both construction companies and their insurance companies that insure for property and casualty. It's important to understand the purpose and the limitations of this statute.
A. STATUTE OF REPOSE - FLORIDA STATUTE §95.11(3)(C)
Pursuant to Florida Statute §95.11(3)(c), actions "founded on a deficiency in the design, planning, or construction of an improvement to real property," are subject to the following four year statute of limitations and a ten year statute of repose:
Actions other than for recovery of real property shall be commenced as follows:
* * *
WITHIN FOUR YEARS.--
* * *
An action founded on the design, planning, or construction of an improvement to real property1, with the time running from the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion of the contract or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest; except that, when the action involves a latent defect, the time runs from the time the defect is discovered or should have been discovered with the exercise of due diligence2.
Section 95.11(3) continues:
In any event, the action must be commenced within 10 years after the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion of the contract or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest. However, counterclaims, cross-claims, and third-party claims that arise out of the conduct, transaction, or occurrence set out or attempted to be set out in a pleading may be commenced up to 1 year after the pleading to which such claims relate is served, even if such claims would otherwise be time barred. With respect to actions founded on the design, planning, or construction of an improvement to real property, if such construction is performed pursuant to a duly issued building permit and if a local enforcement agency, state enforcement agency, or special inspector, as those terms are defined ins. 553.71, has issued a final certificate of occupancy or certificate of completion, then as to the construction which is within the scope of such building permit and certificate, the correction of defects to completed work or repair of completed work, whether performed under warranty or otherwise, does not extend the period of time within which an action must be commenced. Completion of the contract means the later of the date of final performance of all the contracted services or the date that final payment for such services becomes due without regard to the date final payment is made.
§95.11(3)(c), Fla. Stat.(emphasis added). Accordingly, based on the foregoing statute, the ten (10) year statute of repose runs from the latest date of:
- Actual possession by the owner;3
- Issuance of a certificate of occupancy;
- Abandonment of construction project if not completed; or
- Completion of the contract or termination of the contract between the engineer, architect, or contractor and his or her employer.
Additionally, as of July 1, 2018, counterclaims, cross-claims and third party claims may be commenced up to one year after service of the pleading to which those claims relate, even if they would otherwise be time-barred.
B. PURPOSE OF STATUTE OF REPOSE
"The purpose of a statute of repose is to cut off the right of action after a specified time measured from the delivery of a product or the completion of work, regardless of the time of the accrual of the cause of action or the notice of the invasion of a legal right. " Allan & Conrad, Inc. v. University of Central Fla., 961 So. 2d 1083, 1086 (Fla. 5th DCA 2007).
C. LIMITATION DEFENSES ARE NOT FAVORED
In Florida, limitations defenses are not favored; consequently, when there is a reasonable doubt as to legislative intent, the preference is to allow the longer period of time. Allan & Conrad, Inc. v. University of Central Fla., 961 So. 2d1083, 1087(Fla. 5th DCA 2007). See also Clearwater Housing Auth. v. Future Capital Holding Corp., 126 So. 3d 410, 411 (Fla. 2d DCA 2013).
D. HISTORY OF CONSTRUCTION DEFECT STATUTE OF REPOSE
Prior to 1980, Florida had a twelve (12) year statute of repose for latent construction defects, which was found to be unconstitutional by the Florida Supreme Court in Overland Constr. Co., Inc. v. Sirmons, 369 So. 2d 572 (Fla. 1979). The Court based its decision on the fact there had been no specific finding by the Florida Legislature of a public necessity for abolishing cases where the cause of action did not even accrue until after the expiration of the twelve year time period.
In 1980, a fifteen (15) year statute of repose was passed by the Florida Legislature. This time, the Legislature determined an overwhelming public need existed for the limitation on construction defect actions in order to avoid unreasonable liability exposure for contractors, architects, and engineers. Due in large part to the unavailability of insurance coverage for such a long period of risk, the Florida Legislature reduced the statute of repose to ten (10) years effective July 1, 2006.
Effective July 1, 2017,the Florida Legislature amended the statute to include the definition of "completion of the contract" which is found in the last sentence of §95.11(3)(c).
Effective July 1, 2018, the Florida Legislature amended the statute to allow up to one year after the expiration of the 10 year statute of repose period for the defendant to file counterclaims, cross-claims, and third party claims arising out of the same conduct, transaction, or occurrence as the primary claims. Florida session laws address the application of this new rule as follows:
2018 Fla. Sess. Law Serv. Ch. 2018-97 (C.S.C.S.H.B. 875).Section 2.The amendments to s. 95.11(3)(c), Florida Statutes, made by this act shall apply to any action commenced on or after July 1, 2018, regardless of when the cause of action accrued, except that any action that would not have been barred under s. 95.11(3)(c), Florida Statutes, prior to the amendments made by this act may be commenced before July 1, 2019, and if it is not commenced by that date and is barred by the amendments to s. 95.11(3)(c), Florida Statutes, made by this act, it shall be barred.
E. PRESUIT NOTICE OF CLAIM UNDER FLORIDA STATUTE §558.004CONSTITUTES "ACTION"FOR PURPOSES OF STATUTE OF REPOSE
In Gindel v. Centex Homes, 267 So. 3d 403 (Fla. 4th DCA 2018), homeowners closed on and took possession of their newly constructed townhomes on March 31, 2004. From this date, the ten year statute of repose began to run as to any construction defect. The homeowners discovered defects and, on February 6, 2014 (before the ten year statute of repose period expired), provided the requisite pre-suit notice to the general contractor pursuant to Chapter 558 of the Florida Statutes. At the completion of the mandatory pre-suit period, the general contractor notified the homeowners it would not cure the alleged defect. On May 2, 2014 (after the ten year statute of repose period had expired), the homeowners filed suit against the general contractor. The trial court granted the general contractor's motion for summary judgment on the grounds the action originated after the ten year statute of repose had expired. This decision was reversed on appeal, however, given the homeowners' filing of the Chapter 558 Notice of Claim prior to the expiration of the ten year period. The appellate court concluded the homeowners' compliance with the pre-suit notification requirements of Chapter 558 constituted an "action" for purposes of the statute of repose; thus, the action was not time-barred. The Florida Supreme Court denied review of this decision. See Centex Homes v. Gindel, 2019 WL 6248289 (Fla. Nov. 22, 2019).
F. STATUTE OF REPOSE VIEWED IN LIGHT OF ENTIRE PROJECT-NOT MERELY ONE CONTRACTOR
The 2017 amendment to the statute of repose, which added the definition of "completion of the contract" specifically states "completion of the contract" means the later of the following two dates:
(1) Date of final performance of all contracted services; or,
(2) Date final payment for all contracted services becomes due (whether or not payment is made).
§95.11(3)(c) (emphasis added).
This amendment is consistent with prior Florida cases which have held the application of the statute of repose requires the analysis of the entirety of the particular improvement to real property and not simply one out of many entities' involvement on the project. For example, in Allan & Conrad, Inc. v. University of Central Florida, 961 So. 2d 1083 (Fla. 5th DCA 2007), the court addressed latent construction defects in a building constructed on the University of Central Florida's campus. Defendant Robert Conrad was employed by Allan & Conrad and served as the engineer of record for the project. Defendant Richard Barcant was employed by Allan & Conrad and served as the threshold inspector for the construction project. The project was completed in 1989, and the building was used by UCF for classrooms and offices for its College of Business Administration. UCF alleged that, in 2002, it discovered the brick veneer of the building had not been properly installed. UCF filed a lawsuit against Allan & Conrad based on these defects on June 10, 2004. The defendants contended the architect for whom they were providing services completed its contract with UCF on April 24, 1989, and UCF took actual possession of the building on May 15, 1989. No certificate of occupancy was issued as it was not required. Additionally, there was no abandonment of construction. Accordingly, the defendants argued the 15 year statute of repose ended on May 15, 2004, prior to the filing of the lawsuit. UCF, on the other hand, contended the statutory repose period did not begin until December 21, 1989, the date on which the contractor completed its contract. The trial court concluded the correct "measuring point for the commencement of the repose period "under the statute's fourth prong is the latest date that any of the following entities completed or terminated their contract -the professional engineer, registered architect, or licensed contractor. Because the contractor completed its contract after the architect, the later date of the contractor's completion governed the statute of repose. Accordingly, the trial court determined, as a matter of law, that UCF's action was not barred by the statute of repose. On appeal, the Fifth District Court of Appeal found no error in the trial court's interpretation of §95.11(3)(c).The appellate court further noted that, in the preamble to the statute, the Florida Legislature referred to the date when the "improvement" to the real property has been completed and not to the date when a particular party's participation in a project has been completed. Id.at 1087.
Likewise, in Downs v. United States, 2011 WL 688739 (S.D. Fla. Feb. 18, 2011), the court considered a situation where there was an original contract between the United States and Dade County regarding the renourishment of a Dade County beach, and then there was a subsequent contract entered into between the United States Army Corp of Engineers and a private contractor relating to the dredge and fill work on the second phase of this project. The issue in that case was which contract had to be completed before the statute of repose commenced to run. The court found the original contract was the operative contract for purposes of calculating the repose period. The 1972 original contract was ongoing in nature and required the government's participation in continuing maintenance efforts such that it still had not been completed when Downs filed suit in 2006. According to the court, since the Army Corps of Engineers and others, such as Dade County, had continued to engage in work on the project through the 2000's, the statute of repose period had not even begun yet. The court held its conclusion comported with Allan & Conrad, Inc. v. University of Central Fla., which found §95.11(3)(c) must be calculated based on the entirety of a project involving an improvement to real property and not a subpart of such a project.
See too generally, Clearwater Housing Authority v. Future Capital Holding Corp., 126 So. 3d 410 (Fla. 2d DCA 2013)(holding genuine issues of material fact existed as to when the construction project at issue was completed for purposes of applying the statute of repose, thus precluding summary judgment -it was not clear whether the engineer's preparation of the final plat three years after certificates of occupancy had been issued and the owner was in possession of the property was part of the original contract / project or whether those specific actions were separate and apart from the original construction work).
G. COMPLETION OF CONTRACT REFERS TO BOTH SIDES OF CONTRACT -OWNER AND CONTRACTOR
By defining "completion of the contract" to be the later of final performance of contracted services or the date final payment is due, the Legislature clearly indicated the statute of repose contemplates the completion of performance by both sides of the contract (i.e., property owner and contractor)and not merely completion of the contractor's work.
While many cases preceding this amendment seem to follow this rule, it is important to note older cases conflict with the amendment to the extent they suggest actual final payment by the owner is relevant. See, e.g., Cypress Fairway Condo. v. Bergeron Constr. Co., Inc., 164 So. 3d 706 (Fla. 5th DCA 2015)(concluding the statute of repose commenced running not on the earlier date when final application for payment was made but on the date on which final payment was actually made (which is no longer the test, unless the date of final payment coincides with the date on which final payment is due)). Under the amendment, the relevant times are as follows: final performance of contracted services and final payment due date(whether or not final payment is made).
Finally, when the latest and, thus, pertinent date, is the date of final performance of contracted services, it is important to ensure all of the work has actually been completed by the contractor. In Busch v. Lennar Homes, LLC, 219 So. 3d 93 (Fla. 5th DCA 2017), a homeowner brought a construction defect action against a home builder more than ten years after closing. Relying on Florida's ten year statute of repose, the builder filed a motion to dismiss the complaint. The trial court granted the dismissal of the complaint, but the appellate court reversed. According to the appellate court, a contract is not complete until "both sides of the contract" have been performed. Id. at 95. The contract attached to the complaint expressly contemplated closing could occur even if work required by the contract remained incomplete. The complaint failed to allege no work was completed after closing. Accordingly, the appellate court held the complaint did not conclusively establish the contract was completed upon closing, and the trial court erred in dismissing the complaint. Id. at 95-96.4
H. FLORIDA CASES WHERE STATUTE OF REPOSE BARRED CLAIM
Despite the fact limitations periods are not favored, there exist a few cases where the statute of repose has been found to bar a construction defect action.
- In Harrell v. The Ryland Group, 277 So. 3d 292 (Fla. 1st DCA 2019), Plaintiff filed a lawsuit in June 2016 against the builder of his home, seeking damages for injuries he allegedly sustained when an attic ladder he was climbing at his residence collapsed underneath him. The builder filed a motion for summary judgment, arguing the ten year statute of repose expired on May 7, 2014 at the latest and, thus, barred the claim based on the following facts: (1) In July 2003, the builder entered into an agreement with the original owners to construct and sell the house to them; (2) In April 2004, the construction of the home was completed and a certificate of occupancy was issued and, as of that date, final performance had occurred and final payment had become due; (3) On or around May 7, 2004, the builder executed a warranty deed conveying title to the original owners, who took actual possession of the home. The plaintiff's primary argument was based on his assertion the act of fastening a pre-assembled attic ladder does not qualify as the "design, planning, or construction of an improvement to real property." The court disagreed, held §95.11(3)(c) consequently applied and, thus, found the claim was barred by the statute of repose.
- The case State of Florida, Dep't of Transp. v. Echeverri, 736 So. 2d 791 (Fla. 3d DCA 1999), involved construction on a roadway which began in the early 1960's and was completed in 1966. In 1995, an accident on the exit ramp resulted in the death of Carlos Echeverri, whose personal representative brought a wrongful death action against the DOT in 1996 based on allegations the exit ramp had been negligently constructed. The DOT asserted crossclaims for indemnity and contribution against the contractor and architect based on claims they negligently performed their respective work on the project. The trial court dismissed the complaint as to those defendants on the grounds they were barred by the fifteen (15) year statute of repose. This decision was affirmed by the Third District Court of Appeal.5
- In Wambles v. Amrep S.E., Inc., 568 So. 2d 125 (Fla. 5th DCA 1990), Mrs. Wambles was injured while working in a commercial building built by Amrep Construction Corporation and owned by Amrep S.E., Inc. After the building had been completed, it was leased to Philips Industries, which took possession prior to June 1, 1970. The defendants moved for summary judgment on the basis of the statute of repose (which, at that time, was 15 years). The defendants submitted an affidavit in support of their motions stating the building was completed, leased and occupied prior to June 1, 1970, and a certificate of occupancy had been issued prior to that time. The plaintiffs filed a counter-affidavit by an employee of the County Building and Zoning Department stating that, after a search of the records, he could find no evidence a certificate of occupancy was ever issued. The trial court entered summary judgment against the plaintiffs. On appeal, this decision was affirmed. The appellate court held that, because the affidavit submitted by the plaintiffs failed to state the certificate of occupancy records would normally be kept and maintained for over 15 years, the affidavit was insufficient to overcome the positive testimony by the defendant that "on personal knowledge" the certificate of occupancy was issued prior to June 1, 1970. Moreover, according to the court, if a certificate is never issued, it does not extend indefinitely the statute of repose; rather, the latest date of the statutorily listed incidents which did, in fact, occur would control. Id. at 126.
- In Sabal Chase Homeowners Ass'n, Inc. v. Walt Disney World Co., 726 So. 2d 796 (Fla. 3d DCA 1999), Arvida was the owner and developer of a community of condos and town homes. Construction on the condos began in 1973 and was completed on September 6, 1978 when the last certificate of occupancy was issued. After Hurricane Andrew severely damaged the community in 1992, the insurer paid nearly $4.5 million in claims to the association. In August 1994, the association, on behalf of the insurer/subrogee, sued Arvida claiming latent construction defects caused the damage. A second amended complaint was filed in August 1996 against additional defendants based on their manufacture, design, and installation of trusses used in the condo buildings. Arvida and others moved for summary judgment based on the (then) fifteen year statute of repose. They argued more than fifteen years had passed since the date of issuance of the last certificate of occupancy in 1978; thus, the cause of action could not be maintained. As proof it had been more than fifteen years since the date of actual possession by the owner, the defendants presented the testimony of a representative of the City's Department of Planning, Development and Regulation, who stated certificates of occupancy were issued only to the owner in possession of the property. Because the record established all certificates of occupancy were issued by September 1978 and because testimony established these certificates were not issued until after the original owner had actual possession of the property, the trial court held the commencement period for the statute of repose was in 1978 and granted the defendants' motion for summary judgment. This decision was affirmed by the Third District Court of Appeal.
I. FRAUDCLAIM'S EFFECT ONSTATUTE OF REPOSE
Finally, Florida courts have held the statute of repose will not bar a claim for fraud or negligent misrepresentation even if related to construction defects. In Snyder v. Wernecke, 813 So. 2d 213 (Fla. 4th DCA 2002), the purchasers of a home brought an action, fourteen (14)years after the purchase of the home, against the builder/seller after discovering the foundation beneath the house was poor quality. The court held the fraud claim against the builder was still viable even if the defect claim against the builder could be barred by the statute of repose. Id. at 216.
In Rosada v. John Wieland Homes and Neighborhoods, Inc., 2010 WL 11507806 (M.D. Fla. Jan. 20, 2010), the plaintiff homeowners alleged the builder/seller observed problems with the home and agreed it was the builder/seller's responsibility to repair the problems. The plaintiffs also alleged the builder/seller was aware of a pending change to the statute of repose which would reduce the statute of repose from 15 to 10 years. The plaintiff alleged the builder/seller intentionally delayed the repairs on the plaintiff's home to take advantage of the change in the law. The court held these allegations were sufficient to withstand the motion to dismiss based on the statute of repose.
Authored by: Joe Amos and Stephanie Preston.
1 It is not always entirely clear whether the action deals with an "improvement to real property" for purposes of applying this statute. Most cases applying §95.11(3)(c) deal with claims based on problems with items which are an integral part of the structure of the building itself (e.g., the roof, foundation or walls), but there may be situations which are not as clear (e.g., installation of a furnace, items welded to the building, electrical circuit panel boxes, fire alarm systems, sprinkler systems, etc.).
2 As an example, Florida courts have held where a cause of action is based on a leaking roof (whereby it is obvious someone is as fault), the four year statute of limitations begins to run when an owner has notice of the first roof leak. Covenant Baptist Church, Inc. v. Vasallo Construction, Inc., 273 So. 3d 236 (Fla. 3d DCA 2019). See also Conquistador Condo. VIII Ass'n v. Conquistador Corp., 500 So. 2d 346, 347 (Fla. 4th DCA 1987); Dubin v. Dow Corning Corp., 478 So.2d 71, 73 (Fla. 2d DCA 1985); Havatampa Corp. v. McElvy, Jennewein, Stefany & Howard, Architects / Planners, Inc., 417 So. 2d 703, 704 (Fla. 2d DCA 1982); K/F Dev. & Inv. Corp. v. Williamson Crane & Dozer Corp., 367 So. 2d 1078, 1079 (Fla. 3d DCA 1979).
3 One Florida case suggests the possession referred to by §95.11(3)(c) is possession by the first or original owner. See Sabal Chase Homeowners Association v. Walt Disney World Co., 726 So. 2d 796 (Fla. 3d DCA 1999)(determining commencement date of statute of repose and referring to actual possession by "original" owner in doing so).
4 Interestingly, in Busch, the homeowner actually served a Chapter 558 Notice on the builder prior to the expiration of the ten year period. As was described earlier herein, the Fourth District Court of Appeal later held the service of a Chapter 558 Notice tolls the running of the ten year period. See Gindel v. Centex Homes, 267 So. 3d 403 (Fla. 3d DCA 2018).
5 The 2018 amendments to §95.11(3)(c), which govern counterclaims, cross-claims, and third party claims, might have changed this outcome, depending on when the crossclaims were asserted by the DOT.
