The Fifth District Court of Appeal of the State of Florida recently issued an opinion in Cypress Fairway Condominium Association, Inc. v. Bergeron Construction Co., Inc., No. 5D13-4102, 2015 WL 2129473 (Fla. 5th DCA May 8, 2015), directly addressing the issue of when a construction contract is complete for purposes of determining if a lawsuit was barred by the Statute of Repose. In Cypress Fairway, the Court evaluated whether the contract was completed on the date the final application for payment was submitted or the date the final payment was actually made. Although the contested period in Cypress Fairway was only three days, this decision is important in clarifying when the contract between the owner and an engineer, registered architect or a licensed contractor is complete. In Cypress Fairway, the Court determined a contract is complete when final payment is made.
The underlying dispute in Cypress Fairway centered around section 95.11(3)(c), Florida Statutes, more commonly referred to as the Statute of Repose.
Generally, the Statute of Repose allows an action, founded on the design, planning or construction of an improvement to real property, to be commenced within ten years. This ten year time frame is premised upon the alleged defect being latent, meaning, the defect was not discoverable in the exercise of reasonable diligence by persons possessing customary knowledge in the type of construction which was the subject of the agreement. Specifically, the Statute of Repose states:
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 or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest.
In Cypress Fairway the parties stipulated that the triggering date at issue was the “date of completion or termination of the contract.”
In reaching its determination, the Court reasoned that completion of the contract means completion of performance by both sides to the contract, not merely completion of the work by the contractor. In its succinct evaluation of this matter, the Court analyzed the statutory words “completion . . . of the contract” and concluded that courts must give unambiguous language its plain and ordinary meaning. Therefore, when analyzing whether a contract is complete, both the work and payment for the work must be complete.
The Cypress Fairway decision may be used by parties to substantiate the contract completion date by engineers, registered architects and contractors in many areas. For example, where contracts contain a retainage provision, it is distinctly possible that the completion of these contracts may be extended until all retainage is requested and paid. If the courts construe completion to be when retainage is paid, then this likely will serve to extend the Statute of Repose even further beyond the actual date of completion of construction. Thus, in defending causes of action against engineers, registered architects and contractors, verifying the contract completion date utilizing the Cypress Fairway reasoning may assist in establishing or eliminating statutory defenses as a matter of law.
If you have any questions about Cypress Fairway or would like to discuss how it may apply to a particular set of facts, please contact David Salazar at david.salazar@csklegal.com or (305-350-5363), or George Truitt at george.truitt@csklegal.com or (305-350-5331).
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