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Unlicensed Contractors

Can unlicensed contractors defend against homeowner's claims? Yes, an unlicensed contractor can defend claims according to the Fifth District Court of Appeal in Brock v. Garner Window & Door Sales, Inc., 187 So. 3d 294 (Fla. 5th DCA 2016). In Brock, the homeowners sued a window installation contractor alleging that the contractor defectively installed windows which caused water intrusion.  Garner Windows, the contractor, was not licensed.  Garner Windows raised the statute of limitations defense. The homeowners argued that Garner Windows could not rely on the statute of limitations because the four year statute of limitations in section 95.11(3)(c), Florida Statutes, states that the limitations period begins to run on the date of completion or termination of the contract between the . . . licensed contractor and his employer.  In this case, since Garner Windows was not licensed, the homeowner argued that the 4 year statute of limitations did not...
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Statute of Limitations for Breach of a Construction Contract

What is the Statute of Limitations for Breach of a Construction Contract? In Florida, section 95.11(3)(c), Florida Statutes, requires actions brought within four years  if it is "founded on the design, planning, or construction of an improvement to real property, with the time running from 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 . . . " There is also also a discovery rule which extends this limitations period for latent defects. In the recent case of Brock v. Garner Window & Door Sales, Inc., 2016 WL 830452 (Fla. 5thd CA March 4, 2016), Brock hired Garner Window...
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Damages for Defective Construction

What are a property owner's damages for defective construction? In Gray v. Mark Hall Homes, Inc. Florida's Second District Court of Appeal held that the proper measure of damages for a defective construction contract is "all unavoidable harm that the builder had reason to foresee when the contract was made, less such part of the contract price that has not been paid and is not still payable."  2016 WL 459436 (Fla. 2d DCA 2016). A property owner can recover the following for defective or unfinished construction:
  1. the reasonable cost of construction and completion in accordance with the contract, if possible and does not involve unreasonable economic waste; or
  2. the difference between the value that the product contracted for would have had and the value of the performance that has been received by the owner, if construction and completion would involve unreasonable economic waste.
In Gray, the owner and contractor entered into...
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Is This Construction Contract’s Venue Provision Enforceable?

Is this construction contract's venue provision enforceable? It is important to review your venue provisions in your construction contracts to make sure they are enforceable.  Pursuant to section 47.025, Florida Statutes, "[a]ny venue provision in a contract for improvement to real property which requires legal action involving a resident contractor, subcontractor, sub-subcontractor, or materialman, . . .to be brought outside [of Florida] is void."  Where the provision is void, venue shall be brought where the property is located, where the defendant resides, or where the cause of action accrues. So here is what the statutes says:
  • If one party to a construction contract is a resident of Florida; and
  • If the construction contract has a venue provision outside of Florida;
  • Then that provision is void.
Does it matter if the contract also has a choice of law provision - applying the law of another state? No.  In Kerr Construction, Inc. v. Peters Contracting, Inc., 767...
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When are construction contractors considered joint ventures?

When are construction contractors considered joint ventures? In A&A Electric Services, Inc. v. Jurado, the Second District Court of Appeal held that a joint venture is created when two or more persons combine their property and/or their time to conduct a particular line or trade or business deal.  2015 WL 5023126 (Fla. 2d DCA Aug. 26, 2015).  The party alleging the existence of a joint venture must prove: (1) a community of interest in the performance of the common purpose; (2) joint control or right of control; (3) a joint proprietary interest in the subject matter; (4) a right to share in the profits; and (5) a duty to share in any losses. In A&A Electric, Jurado was the owner of an electrical contractor named Electric Machinery Enterprises ("EME") and DeLaParte owned A&A Electric.  EME and A&A Electric had a working relationship where EME would obtain work and...
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Venue Selection Provisions in Construction Contracts

What kind of claims are subject to venue selection provisions in construction contracts? In Fairbank Contracting and Remodeling v. Hopcroft, the Fourth District Court of Appeal, held that all claims that have "a significant relationship and clear nexus with the contract" are subject to a venue selection provision.  40 Fla. L. Weekly D1637a (Fla. 4th DCA July 15, 2015). In this case, Fairbanks Contracting entered into a construction contract with Hopcroft to remodel a bathroom.  The construction contract stated that Marion County would serve as the venue for "any proceeding relating to the contract".  Hopcroft sued Fairbanks for violation of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), and not for breach of contract.  Hopcroft alleged that through conduct, Fairbanks violated FDUTPA in its work on the project. The trial court denied Fairbanks motion to dismiss or transfer venue pursuant to the venue selection provision in the construction contract.  On...
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Contractor’s Notice of Defect – Does it Trigger Insurance Coverage?

Contractor's Notice of Defect - Does it Trigger Insurance Coverage? One court in Florida has said "No". In Florida, Chapter 558 of the Florida Statutes provides pre-suit procedures for a property owner to assert construction defect claims against a contractor.  The statutes provide  a mechanism giving notice to the contractor and providing the contractor with an opportunity to cure the alleged defects prior to litigation. In Altman Contractors, Inc. v. Crum & Forster Specialty Insurance Company, the Sapphire Condominium Association sent Altman Contractors, the general contractor, a Notice of Claim pursuant to Chapter 558, Florida Statutes, alleging defective construction of the condominium. 2015 WL 3539755 (S.D. Fla. June 4, 2015).  Altman Contractor's sent this notice to its insurance company, Crum & Forster.  Crum & Forster denied that it had a duty to defend Altman Contractors because the case was "not in suit". Altman Contractors sued Crum & Forster seeking a declaration determining...
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General Contractor’s Insurance Claim

When is a General Contractor's Insurance Claim Against Subcontractor's Insurance Ripe? In Core Construction Services Southeast, Inc. v. Crum & Forster Specialty Insurance Company, Core sued Crum for breaches of commercial general liability (CGL) insurance policies and seeking a declaration as to whether the insurers must defend and indemnify Core under the terms of the contracts. 2015 WL 3929696 (M.D. Fla. June 25, 2015).  Core was the general contractor of a condominium.  After the condominium was built, construction defect litigation was commenced.  Core required its subcontractors to name it as an additional insured under their CGL policies. Core filed the above-referenced lawsuit seeking coverage on the subcontractor insurance policies.  The Insurer argues that the matter is not ripe for adjudication because the construction defect litigation has not concluded.  The United States District Court, Middle District of Florida held that the case was ripe.  An insurer's duty to defend arises out...
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Contractor’s Right to Insurance Benefits of Homeowner

Contractor's Right to Insurance Benefits of Homeowner Does a remediation or restoration contractor have the right to sue a homeowner's insurance company for nonpayment for construction work performed? Yes.  In the case of United Water Restoration Group, Inc. v. State Farm Florida Insurance Company, a homeowner, Mr. Walker, experienced water damage to his home. 2015 WL 4111662 (July 8, 2015).  Mr. Walker hired United Water to repair the damage.  In connection with the construction contract, Mr. Walker executed a written assignment of 'any and all insurance rights, benefits, and proceeds' from his State Farm Policy to United Water. State Farm refused to pay United Water's bill and United Water sued State Farm for breach of the insurance contract as assignee of Mr. Walker's rights and benefits.  State Farm moved to dismiss the case on the basis that it had inspected the home which showed that the damage was consistent with a...
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When Is a Contractor Unlicensed in Florida

When is a Contractor Unlicensed in Florida? Section 489.128, Florida Statutes, states that any contracts entered into by an unlicensed contractor are unenforceable in law or in equity by the unlicensed contractor.  A contractor is considered unlicensed only if the contractor was unlicensed on the effective date of the original contract for the work, if stated.  If no date is stated, the court will look at whether the contractor was licensed on the first date upon which the contractor provided labor, services, or materials under the contract. In Taylor Morrison Services, Inc. v. Ecos, the First District Court of Appeal analyzed whether a contractor is unlicensed where its qualifying agent does not obtain the permit or supervise the construction under the contract. 2015 WL 3407929 (Fla. 1st DCA 2015).  In Taylor Morrison, Ecos hired Taylor Morrison to construct a home.  After closing on the home, Ecos discovered defects...
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