Statutory Pre-Suit Notice Constitutes an “Action” Under Florida’s Statute of Repose
Construction and Procurement Law News, Q3 2018
Most states have statutes of repose, which define the date certain for parties to assert any and all claims for construction and design related issues, and provide a final cut-off for liability with respect to a project. For example, Florida’s statute of repose (Fla. Stat. § 95.11(c)(3)) provides that a claimant must initiate an “action” for a construction-related issue/claim within ten (10) years of the latest of “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…” An “action” under Florida’s statute of repose is further defined under Fla. Stat. § 95.011 as a “civil action or proceeding.” A parties’ failure to timely and properly assert a claim prior to the expiration of the statute of repose will result in a complete bar to recovery.
Some states also have pre-suit inspection and repair procedures that a party must follow before initiating a construction-related claim in either arbitration or litigation. Florida’s pre-suit procedure is specifically outlined in Chapter 558 of the Florida Statutes, and requires an owner (unless the parties contractually opt out) to provide the general contractor with notice of a construction defect, and an opportunity to inspect and cure the defect prior to initiating an action. But what happens in Florida if the statute of repose expires while the Chapter 558 pre-suit inspection/repair process is still ongoing and before a lawsuit or arbitration is actually filed? Is the owner statutorily barred from ever recovering on the claim in such a circumstance? The Florida Fourth District Court of Appeal recently answered this very question in the case of Gindel v. Centex Homes.
In Gindel, Centex Homes (“Centex”) constructed a townhome development in Palm Beach County, Florida, and the homeowners closed on and took possession of the project on March 31, 2004. The homeowners discovered water intrusion issues several years later, and served Centex with the requisite pre-suit Chapter 558 notice on February 6, 2014. At the conclusion of the Chapter 558 procedure several weeks later, Centex advised the homeowners that it would not repair the purported defects. The homeowners filed suit on May 2, 2014 – more than ten years after the statute of repose first began to run on March 31, 2004, asserting various claims against Centex and its subcontractor Reliable Roofing and Gutters, Inc. (“Reliable”). Centex and Reliable moved for summary judgment, arguing that all of the homeowners’ claims were statutorily barred because they did not file the “action” (the lawsuit) on or before March 31, 2014. The trial court agreed and awarded judgment in favor of Centex and Reliable on the homeowners’ claims.
On appeal, the Florida Fourth District reversed the trial court’s award of summary judgment in favor of Centex and Reliable, finding that “Chapter 558 lays out a series of mandatory steps that must be complied with before judicial action is taken, and therefore, the pre-suit notice constitutes an ‘action’ for purposes of the statute of repose.” The court reasoned that the Chapter 558 procedure constitutes a “proceeding” under the definition of “action” in Florida Stat. § 95.011, and that the homeowners therefore commenced their “action” prior to the expiration of the statute of repose when they sent their 558 pre-suit notice on February 6, 2014. The Fourth District further noted that that the homeowners should not be penalized for complying with Chapter 558, as the pre-suit procedure “was not intended as a stalling device in order to bar claims.” The homeowners’ claims against Centex and Reliable were thus deemed timely, and the case was remanded back to the trial court.
The Gindel case is important to contractors, subcontractors, and design professionals, because their potential liability for construction and design errors does not necessarily end at the expiration of the ten-year statute of repose if the Chapter 558 process is still ongoing. This decision is also important to developers and subsequent owners, as it ensures that their potential claims will not be prejudiced when properly complying with the 558 process, and will dissuade parties from potentially attempting to delay the 558 process in the hopes of running out Florida’s statute of repose.