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Florida Construction Defect Litigation

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Gary Brown


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Construction defect claims cover a wide spectrum of issues and can involve multiple parties responsible for both construction and design errors.

Florida Construction Defect Litigation covers a variety of topics and issues, including the legal frame-work within which construction defect claims are addressed, typical claims and defenses, contractual considerations, standards of care for contractors and design professionals, the applicability of insurance and surety bonds, the role of experts, arbitration of claims, and finally meditation of construction claims.

For:
  • Architects and engineers
  • Developers, owners, and contractors
  • Real estate and construction attorneys
  • Personal injury attorneys
  • Mediators
  • Insurance defense firms
  • Insurance and surety companies
  • Libraries (both legal and public)

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  • Brand: Daily Business Review (FL)
  • Product Type: Books
  • Edition: 2019
  • Page Count: 460
  • ISBN: 978-1-62881-590-0
  • Pub#/SKU#: FLCDL19
  • Pub Date: 03/28/2019

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  • Gary Brown

Gary Brown is a partner in the Fort Lauderdale office of Saul Ewing Arnstein & Lehr LLP and is a member of the firm’s Construction Practice Group. He is Board Certified by The Florida Bar in Construction Law. He practices in general commercial and business litigation, handling both complex and routine matters for clients with special expertise in construction-related matters.

Gary has practiced law since 1995 in state and federal trial and appellate courts throughout Florida, where he has gained extensive experience in both trial and arbitration proceedings.

Gary’s construction litigation experience is primarily on the general contractor and subcontractor side, and includes representing owners with defect, lien, non-payment or other claims involving contractors and lower-tiered subcontractors. His owner-side representation also includes assisting municipalities and local governments in all aspects of public work projects, from writing invitations for bids, requests for proposals, requests for qualifications, construction and design contracts, to carefully navigating through often difficult ongoing project disputes that jeopardize the proper and timely completion of the work to successful project close-out.

Gary’s construction litigation experience has involved the successful representation of large institutional owners, municipalities, general contractors and major subcontractors in the prosecution and defense of multi-million dollar wrongful termination, construction defect, and insurance coverage claims, as well as bid protests on multi-million dollar public works projects. His commercial litigation experience has involved the successful representation of privately held companies in shareholder derivative suits over corporate restructuring and sale of company shares; and a local title company in the defense of multi-million dollar claims by a national institutional lender for an alleged loan-kiting scheme.


Chapter 1: The Usual Suspects: Typical Construction Claims and Defenses ....................................1

1-1 APPLICABLE LAW ..................................................................1

1-2 EXPRESS WARRANTY CLAIMS..................................................................1

1-3 STATUTORY IMPLIED WARRANTY CLAIMS..................................................................4

1-3:1 Magnuson-Moss..................................................................4

1-3:2 Florida’s Uniform Commercial Code..................................................................6

1-3:2.1 Predominant Factor Test..................................................................7

1-3:2.2 Waiver of Implied Warranties..................................................................9

1-3:3 Florida’s Condominium Act ..................................................................10

1-4 OTHER STATUTORY REMEDIES..................................................................14

1-4:1 Florida Building Code Violation..................................................................14

1-4:2 Florida Deceptive and Unfair Trade Practices Act..................................................................15

1-4:3 Home Warranty Associations..................................................................20

1-5 COMMON LAW CLAIMS..................................................................22

1-5:1 Implied Warranty Claims..................................................................22

1-5:2 Tort Claims..................................................................24

1-5:2.1 Strict Liability..................................................................24

1-5:2.2 Negligence..................................................................25

1-5:2.3 Misrepresentation and Nondisclosure..................................................................29

1-5:2.3a Fraud..................................................................30

1-5:2.3b Negligent Misrepresentation..................................................................32

1-5:2.3c Nondisclosure ..................................................................33

1-5:3 Express Contractual Claims..................................................................35

1-6 COMMON LAW DEFENSES..................................................................38

1-6:1 The Economic Loss Rule..................................................................38

1-6:2 The Slavin Doctrine..................................................................44

1-6:3 The Spearin Doctrine..................................................................46

1-6:4 Indemnification and Contribution ..................................................................48

1-6:4.1 Common Law Indemnification ..................................................................48

1-6:4.2 Contractual Indemnification..................................................................49

1-6:4.3 Contribution..................................................................58

1-6:5 Waiver, Estoppel and Variation..................................................................58

1-6:5.1 Waiver..................................................................58

1-6:5.2 Estoppel..................................................................59

1-6:5.3 Variation..................................................................60

1-6:6 Failure to Mitigate..................................................................61

1-6:7 Lack or Failure of Consideration..................................................................65

1-6:8 Prior Material Breach..................................................................66

1-6:9 Statute of Frauds..................................................................70

1-6:10 Laches..................................................................74

1-6:11 “First Costs”/Betterment..................................................................76

1-7 STATUTES OF LIMITATIONS..................................................................78

1-7:1 Applicable Statutes..................................................................78

1-7:2 Agreements Affecting Limitations Period..................................................................82

1-8 PRE-SUIT NOTICE AND OPPORTUNITY TO REPAIR: FLORIDA’S CONSTRUCTION DEFECT STATUTE (FLORIDA STATUTES CHAPTER 558)..................................................................83


Chapter 2: Key Contractual Provisions..................................................................87

2-1 DEFINING THE CONTRACTOR’S SCOPE OF WORK .......................................................87

2-2 INDEMNIFICATION ..................................................................88

2-3 DUTY TO DEFEND..................................................................90

2-4 INSURANCE REQUIREMENTS..................................................................93

2-5 UNCOVERING AND CORRECTION OF WORK..................................................................98

2-6 WAIVER OF CONSEQUENTIAL DAMAGES..................................................................98


Chapter 3: Standards of Care..................................................................101

3-1 CONTRACTORS..................................................................101

3-2 DESIGN PROFESSIONALS..................................................................101

3-2:1 Contract..................................................................101

3-2:2 Common Law..................................................................102

3-2:3 Statutes..................................................................105


Chapter 4: Finding the Money: Insurance and Surety Bond Considerations...................................107

4-1 INTRODUCTION..................................................................107

4-2 COMMERCIAL AND PROFESSIONAL LIABILITY POLICIES................................................108

4-2:1 Coverages..................................................................108

4-2:1.1 “Claims Made” vs. “Occurrence”..................................................................116

4-2:1.2 Triggers of Coverage..................................................................118

4-2:2 “Business Risk” and Other Exclusions ..................................................................122

4-2:2.1 CGL Exclusions..................................................................122

4-2:2.2 Professional Liability Exclusions..................................................................130

4-2:3 Duties of the Insurer..................................................................133

4-2:4 Duties of the Insured..................................................................135

4-2:4.1 Duty to Notify..................................................................136

4-2:4.2 Duty to Cooperate..................................................................137

4-2:5 The Role of “Additional Insured” ..................................................................137

4-3 PERFORMANCE BONDS..................................................................138

4-3:1 Coverages..................................................................138

4-3:2 Surety Rights and Defenses..................................................................142

4-3:2.1 Extent of Surety Liability..................................................................142

4-3:2.2 Recovery for Surety Losses..................................................................144

4-4 BAD FAITH CLAIMS..................................................................151

4-4:1 Common Law Claims..................................................................153

4-4:2 Statutory Claims..................................................................157


Chapter 5: The Role of Experts..................................................................161

5-1 RETAINING AN EXPERT..................................................................161

5-2 MANAGING COMMUNICATIONS WITH AN EXPERT..................................................................165

5-3 DISCLOSURE OF THE EXPERT AND ADMISSIBILITY OF OPINIONS..................................................................166

5-3:1 Admissibility Under Federal Law..................................................................167

5-3:2 Admissibility Under State Law..................................................................172

5-3:2.1 Frye Standard..................................................................172

5-3:2.2 Daubert Standard..................................................................176


Chapter 6: Arbitration of Claims..................................................................181

6-1 INTRODUCTION..................................................................181

6-2 FLORIDA’S ARBITRATION ACT..................................................................183

6-2:1 Enforcement of Arbitration Agreements..................................................................184

6-2:2 Initiation and Consolidation of Arbitration Proceedings .....................................................188

6-2:3 Appointment, Duties, and Powers of an Arbitrator ..............................................................189

6-2:4 The Arbitration Hearing..................................................................191

6-2:5 Arbitration Award, Remedies, and Prevailing Party Fees and Expenses..................................................................192

6-2:6 Change, Modification, Confirmation, and Vacation of an Award...........................................194

6-2:7 Appeals..................................................................198

6-3 FEDERAL ARBITRATION ACT..................................................................199


Chapter 7: Mediation of Construction Claims: A Mediator’s Perspective..................................................................207

7-1 INTRODUCTION..................................................................207

7-2 THE KEYS TO A SUCCESSFUL MEDIATION..................................................................208

7-2:1 Altering the Attorney’s Perspective About Preparation for the Mediation ..................................................................208

7-2:2 Finding Coverage Under Applicable Insurance Policies........................................................209

7-2:3 Knowing Applicable Insurance Trigger Dates Is Essential to Knowing Which Parties Have Coverage ..................................................................210

7-2:4 Evaluate Occurrences, Carriers and Parties..................................................................211

7-2:5 Understanding the Project Insurance Program..................................................................211

7-2:6 Ongoing vs. Completed Operations and Duty to Defend Additional Insured..................................................................213

7-2:7 Ensure Claimants Fully Understand Allocation of Damages Between the Parties..................................................................214

7-2:8 Understand Each Party’s Scope and Percentage of Work on the Project..................................................................215

7-2:9 Pre-Mediation Demands Within Policy Limits May Trigger Potential Bad Faith Claims..................................................................217

7-2:10 Educate Your Clients About the Mediation Process and the Mediator’s Role..................................................................217

7-2:11 No Surprises on Mediation Day..................................................................219

7-2:12 Manage Client Expectations in Advance of Mediation Day................................................219

7-2:13 Prepare Your Client About Attorney’s Fees, Litigation Costs and Settlement Proposals..................................................................220

7-3 RECENT MEDIATION TRENDS..................................................................222


Chapter 8: Damages..................................................................225

8-1 INTRODUCTION..................................................................225

8-2 MEASURE OF DAMAGES..................................................................225

8-2:1 Owner’s Damages..................................................................226

8-2:1.1 Correction and Completion Costs..................................................................226

8-2:1.2 Delay Damages..................................................................228

8-2:1.3 Stigma Damages..................................................................230

8-2:1.4 “First Costs”/Betterment (Limitation on Damages).................................................232

8-2:2 Contractor’s Damages..................................................................232

8-2:2.1 Contract Balance/Lost Profits..................................................................232

8-2:2.2 Delay Damages ..................................................................234

8-2:2.2a Introduction..................................................................234

8-2:2.2b Methods of Proving Contractor Delay Claims..............................................235

8-2:2.2c Methods of Proving Delay Damages...........................................................236

8-3 CONSEQUENTIAL DAMAGES..................................................................238


Appendix A: Amendments to FLA. STAT. § 558..................................................................241

Appendix B: Contract Provision Excerpts..................................................................249

Appendix C: American Arbitration Association Construction Industry Arbitration Rules and Mediation Procedures (effective July 1, 2015) ..................................................................265

Appendix D-1: JAMS Engineering and Construction Arbitration Rules & Procedures (effective November 15, 2014) ..................................................................321

Appendix D-2: JAMS Engineering and Construction Arbitration Rules & Procedures for Expedited Arbitration (effective February 2015)..................................................................351

Appendix E: The Continued Applicability of Daubert in Florida in Light of In re Amendments to Florida Evidence Code, 210 So. 3d 1231, 1239 (Fla. 2017).............................................................383

Table of Cases.............................................................................395

Index............................................................................................433