A New Trigger for Florida’s Statute of Repose?

A new amendment to §95.11, Florida Statutes, may impact Construction Law in Florida.  The revision to §95.11(3)(c) was approved by Governor Rick Scott on March 23, 2018 upon the signing 2018 Fla. HB 875.  The amendment again aims to modify the Statute of Repose period for latent defect actions.  The Statute of Repose specifically time bars any action for latent defect arising out of the design, planning or construction of an improvement to real property based on a fixed time period.  Section 95.11(3)(c) provides, in pertinent part, that unlike the 4-year statute of limitations period, “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 diligence. 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.”

The newest amendment under HB 875 does not strike or delete any language related to the Repose period, but rather sets forth additional criteria related specifically to counter-claims, cross-claims, and third-party claims arising out of the latent defect action.

The amendment to §95.11(3)(c shall apply to any action commenced on or after July 1, 2018 and sets forth the following new criteria;

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 in s. 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.”

Specifically, it would appear that the Amendment serves to resolve a common issue encountered by general contractors seeking to bring a third party complaint.  A defendant that has been served with a Complaint at or near the Repose period will be granted additional time beyond the traditional 10-year Statute of Repose to transfer risk by filing necessary cross-claims, counter-claims and third-party claims.

A quick reading of the amendment suggests that there is a blanket extension of the Repose period to 11 years for subcontractors that are traditionally subject to third-party claims.  However, a closer reading of the plain language of the Amendment appears to trigger a new Repose period for such claims.  The revised language included in the first sentence would have the effect of creating a new Repose period that is triggered by the underlying latent defect action.  In essence, the revised language would serve to create an extension of up to one year following the service of a pleading giving rise to the third party complaint.

In light of the apparent shift pertaining to the trigger for the Statute of Repose period, §95.11(3)(c) provides a clear delineation as to warranty work and completion of the contract.  The Statute provides in part;

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 in s. 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.

Interpretation of the plain language noted above, distinguishes warranty work from work in furtherance of the completion of the contract and will therefore not impact or extend the Repose period.

As such this amendment will have substantial impacts on latent defect actions, placing additional burdens on those parties involved in any initial latent defect actions to ensure that they act expeditiously to ensure that all viable counterclaims, cross-claims and third-party actions are properly served prior to the expiration of the newly triggered Statute of Repose period.

CSK will continue to monitor the impact of this new legislation and provide updates with any news or potential implications that result.  In the meantime, if you have any questions about this amendment or how it may impact particular claims, please contact Ryan Charlson, Esq., at 954-343-3919 or ryan.charlson@csklegal.com.