Florida Continues to Evolve the Statute of Repose

 

The trend of Florida courts eroding the statute of repose for construction and design claims is being countered by a statutory amendment that makes the date of a pre-suit notice irrelevant to the 10-year time bar for defect claims.  This is the third time in 3 years that legislation has bolstered the statute of repose in response to judicial rulings.  However, the Florida Supreme Court is currently considering whether this statutory amendment has any effect due to a potential conflict with another statute.

In the latest judicial limitation to the statute of repose, a Florida appellate Court held in 2018 that the service of a Chapter 558 notice of claim was enough to satisfy the statute of repose even when a lawsuit is not filed within the repose period.  The Legislature responded by introducing Florida Statute Section 558.004(1)(d) that became effective on July 1, 2019 and states that Chapter 558 notices of claim “shall not toll any statute of repose” applicable to construction and design claims.

Florida’s statute of repose for construction and design claims has been under attack in recent years in Florida courts.  The two areas at issue have been: 1) the definition of “completion of contract” for purposes of triggering the running of the statute of repose; and 2) the act required to initiate an action within the statute of repose period. (READ MORE)

The first issue has already gone through the cycle of judicial erosion and legislative bolstering.  In 2015, a Florida appellate court held that “completion of contract” for purposes of starting the running of the statue of repose means the “date on which payment was made.”  See Cypress Fairway Condo. v. Bergeron Const. Co. Inc., 164 So. 3d 706, 707 (Fla. 5th DCA 2015).  Given that construction projects often include payment disputes after the conclusion of work, this ruling had the potential effect of delaying the statute of repose from running for several years.  In 2017, the Legislature amended the statute of repose to define “completion of construction” as the “date that final payment for such services becomes due without regard to the date final payment is made.”  See Fla. Stat. 95.11(3)(c).  In 2018, the Legislature eliminated an unresolved issue following the 2017 amendment by clarifying that “completion of contract” does not include warranty or post certificate of occupancy repair work. See Id.

The latest issue that is now the subject of new legislation is the act required to initiate an action before the expiration of the statute of repose.  In September 2018, Florida’s Fourth District Court of Appeal held in Gindel v. Centex Homes, et al., that compliance with the pre-suit requirements of Chapter 558 constitutes an action for purposes of the 10-year construction defect statute of repose. In Gindel, the plaintiff homeowners took possession of their townhomes on March 31, 2004 and filed suit on May 2, 2014.  The defendants argued that the statute of repose began to run on March 31, 2004 and had run prior to the filing of the plaintiffs’ lawsuit.  However, the plaintiffs argued that their Chapter 558 notice of claim served on February 6, 2014, was within the 10-year repose period and constituted an action for purposes of the statute of repose.  The trial court and appellate court agreed with the plaintiffs that a Chapter 558 notice of claim served as a statutory pre-requisite to a lawsuit constituted an “action” and brought the plaintiffs’ claims within the statute of repose.

This decision provided no favor to Florida’s construction industry. It could be used for the proposition that a property owner can eliminate the statute of repose by serving a Chapter 558 notice any time within 10 years after the completion of construction.  However, the Legislature quickly responded in amending Section 558.004(1) of the Florida Statutes to expressly state that a Chapter 558 notice of claim does not toll the statute of repose.  The bill that led to the statutory amendment expressly addressed the implication of Gindel v. Centex Homes as the basis for the amendment.

While this latest legislation might end the dispute about the impact of Chapter 558 notices served after the effective date of the statutory amendment on July 1, 2019, there remains an unresolved question about the impact of Chapter 558 notices served prior to that date.  A two-prong test exists to determine whether newly enacted statutes apply retroactively: 1) whether the legislation clearly expresses an intent that it should be applied retroactively; and 2) whether retroactive application would violate any constitutional principles.  See Metro. Dade Cty. v. Chase Fed. Hous. Corp., 737 So. 2d 494, 499 (Fla. 1999). As it relates to the second prong, it has been held that procedural and remedial measures are presumed to apply retroactively and that substantive measures do not apply retroactively. See Basel v. McFarland & Sons, Inc., 815 So. 2d 687, 692 (Fla. 5th DCA 2002).  This issue has not been tested in any published opinion, but the new statute does not specifically state it is retroactive in nature, which raises the likelihood that it will not be applied retroactively.  In addition, a statute impacting whether a party has a right to bring a lawsuit is arguably substantive in nature, which also raises the likelihood this statute will not be applied retroactively.

Importantly, the issue of whether this new statute has any impact moving forward remains the subject of briefing at the Florida Supreme Court in the Gindel case.  After the approval of the new statute, Gindel filed a brief arguing that the statutory amendment rendered Centex’s appeal moot.  Centex responded with a brief stating that the new statute does not remedy the issue caused by the Gindel opinion because the Fourth District Court of Appeals held that service of the pre-suit notice of claim was an action as that term is used in Florida Statutes Section 95.11(3)(c).  As a result, Centex asserted that the statement in the new Section 558.004(1)(d) that a Chapter 558 notice of claim does not toll the statute of repose is essentially meaningless because it does not address the definition of “action” under Section 95.11(3)(c).  The Florida Supreme Court has not yet rendered any decision on this issue.

Based on these circumstances, it seems likely Florida’s Statute of Repose for construction and design claims will continue to evolve through legislation and decisional case law.  Until the issue is clarified further through the legislature and/or judiciary, it is likely that plaintiffs and defendants will take opposing views on whether a Chapter 558 notice can constitute an action for purposes of the statute of repose.

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