On June 14, 2017, Governor Scott signed CS/CS/HB 377 into law. The bill amends the statute of limitations and the statute of repose for actions founded on the design, planning, or construction of an improvement to real property. This includes lawsuits involving a construction defect.
Under the prior version of the statute, the 4-year statute of limitations and 10-year statute of repose for bringing an action alleging a construction defect may begin on the “date of completion . . . of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer.” Completion of the contract, according to the Fifth District Court of Appeal’s decision in Cypress Fairway Condominium v. Bergeron Construction Co, Inc., occurs when final payment is actually made to the contractor. Under this decision, a customer could extend a contractor’s liability for construction defects by delaying final payment.
In direct response to this appellate decision, the bill signed by Governor Scott specifically defines the term “completion of the contract” as 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.” This new definition will prevent a customer’s delay in making final payment from extending a contractor’s potential exposure for construction defects.
For builders and contractors, the bill provides greater certainty regarding the expiration of the statute of limitations and the statute of repose for construction defect claims. Although the bill could have been more specific about what constitutes “final performance” and when payment “becomes due,” it is still considerably more favorable to builders and contractors than the prior version of the statute. Even with these changes, we still recommend that builders and contractors and their counsel carefully review their construction contracts to ensure that they contain clear and specific provisions regarding completion and payment, and also document the date on which completion occurs.
About the Authors:
Michael Furbush is Board Certified in Business Litigation by The Florida Bar. He is a member of the Litigation department in Dean Mead’s Orlando office. He focuses his practice on resolving complex, commercial matters in state and federal courts throughout the country. He has represented large public corporations, small companies, and individuals from a wide range of industries, including entertainers, real estate developers, general contractors, retailers, physicians, and manufacturers.
Mr. Furbush has obtained multi-million dollar settlements on behalf of his clients and is highly experienced in arbitration, mediation and other forms of out-of-court dispute resolution. In addition, he has litigated and resolved cases involving covenants not to compete, trade secrets, trademark and copyright infringement, breach of contract, construction litigation and lien disputes, corporate dissolutions and shareholder disputes, employment discrimination, and antitrust matters. He may be reached at firstname.lastname@example.org.
Thomas P. Wert is Board Certified in Construction Law by The Florida Bar and has practiced in the area of business litigation, with an emphasis in construction law since 1993. He is also a Circuit Civil Court Mediator certified by the Florida Supreme Court, who has mediated numerous business disputes. He has represented numerous businesses and individuals in cases involving construction defects, delay claims, lien law, design liability, dispute resolution, licensing issues, procurement, condominium and home owner associations, credit agreements, contract disputes, business torts, government bid protests, intellectual property rights and bankruptcy. He has also counseled clients in the drafting of customized construction contracts. He may be reached at email@example.com.