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Pre-Suit Notice of Defect Is An “Action” for Purposes of Statute of Repose

Published: September 21st, 2018

By: Michael J. Furbush Thomas P. Wert

In a case of first impression, Florida’s Fourth District Court of Appeal ruled last week that a construction defect action against a homebuilder was timely because the mandatory pre-suit notice of defect was sent to the builder before the ten-year statute of repose lapsed, even though the lawsuit was filed outside the ten-year period.   The Fourth District found that service of the mandatory pre-suit notice commences an “action” for purposes of the statute of repose.

In Gindel v. Centex Homes, the plaintiffs were a group of homeowners who purchased townhomes from Centex Homes in March 2004.  In February 2014, the homeowners served Centex with a pre-suit notice of alleged construction defects pursuant to Chapter 558, Florida Statutes.  Centex refused to cure the alleged defects, and the homeowners filed suit in May 2014.

The trial court granted summary judgment for Centex, finding that the action was barred by the statute of repose because the complaint was filed more than ten years after the homeowners took possession of their townhomes.  The trial court rejected the homeowners’ argument that the action commenced when they served their mandatory pre-suit notice of defect, which occurred before the statute of repose expired, rather than when they filed their complaint.

In a unanimous decision, the Fourth District rejected the trial court’s conclusion that the action commenced when the homeowners filed their complaint.  Instead, the Fourth District agreed with the homeowners’ argument that the action commenced when they served their pre-suit notice of defect under Chapter 558.

The Fourth District reasoned that the mandatory pre-suit notice requirement falls within Chapter 95’s broad definition of “action” as a “civil action or proceeding.”  Citing to the Supreme Court’s opinion in Raymond James Financial Services, Inc. v. Phillips, the Fourth District reasoned that the term “proceeding” was not limited to judicial proceedings, and by definition includes any step or series of steps in the enforcement of rights or remedies.

“We agree with Homeowners that Chapter 558 lays out a series of mandatory steps that must be complied with before judicial action is to be taken, and therefore, the pre-suit notice constitutes an ‘action’ for purposes of the statute of repose,” the Fourth District wrote.  It found that the trial court’s interpretation concentrated exclusively on the words “civil action” and turned the words “or proceeding” into “meaningless surplusage.”

Noting that Florida courts had not directly addressed the issue, the Fourth District relied on the Florida Supreme Court’s 1999 decision in Musculoskeletal Institute Chartered v. Parham, which held that compliance with the pre-suit notice and investigation requirements for medical malpractice cases constituted commencement of an action for purposes of the statute of repose.  The Florida Supreme Court’s concern that “it would be an unconstitutional impediment to access to the courts if compliance with the statutory requirements…resulted in a potential claimant’s suit being forever barred by the associated statute of repose,” was equally true in construction defect cases, noted the Fourth District.

The Fourth District also distinguished Busch v. Lennar Homes, LLC, a Fifth District case which said in dicta that access to courts is not infringed in construction defect cases because Chapter 558 provides for a stay of a lawsuit filed before the statutory pre-suit requirements are met.  The Fourth District found that the stay provision “has no bearing on whether an action was commenced before the statute of repose period lapsed” and should not be used as a sword against the homeowners.  “Homeowners should not be penalized for rightly complying with the mandates of the statute…Chapter 558 was not intended as a stalling device in order to bar claims,” said the Fourth District.

The Fourth District’s concern about Chapter 558 being used as a “sword” to limit access to courts seems overstated.  Chapter 558 already includes several built-in protections for claimants, including automatic tolling of the statute of limitations and the ability to request a stay without prejudice of cases that are filed prematurely.  Claimants who are on the brink of the statute of repose period can, and often do, file a complaint to preserve their rights and then leave it up to the builder either to waive compliance with the pre-suit requirements or request a stay pending compliance.  There is no real penalty for non-compliance with Chapter 558.  If Chapter 558 is a sword, it’s not an especially sharp one.

Equating compliance with Chapter 558 to a “proceeding” that constitutes an “action” also seems to be stretching the meaning of the term “proceeding.”  In Raymond James, the Florida Supreme Court considered whether an arbitration proceeding is an “action” for statute of limitations purposes, and it focused heavily on the fact that arbitration is an adjudicatory process to seek redress for a legal harm.  Unlike an arbitration or a judicial action, Chapter 558 does not entail an adjudication by any tribunal.  Instead it is a form of alternative dispute resolution that is meant to avoid the need for a tribunal to adjudicate a construction defect claim. The Fourth District did not make that distinction, however.

Finally, the decision in Gindel seems to be at odds with the purpose of a statute of repose. Statutes of repose are intended to provide a substantive right to be free from liability after a specified time period elapses. In construction defect cases, the Legislature has determined that builders should be free from liability after ten years. But if sending a pre-suit notice is an “action” that satisfies the statute of repose, then an actual lawsuit conceivably could be filed at any time after the notice is sent, making the deadline to sue almost unlimited. When put into practice, the holding in Gindel may have the undesirable effect of extending a builder’s potential liability for construction defects for a much longer period of time than the Legislature envisioned.