What is the Measure of Damages for Breach of Construction Contract?
The measure of damages for breach of a construction contract is the reasonable cost of construction and completion in accordance with the contract. Magnum Constr. Mgmt. Corp. v. City of Miami Beach, No. 3D15-2239, 2016 WL 7232268, at *4 (Fla. 3d Dist. Ct. App. Dec. 14, 2016). Damages cannot be based upon speculation or guesswork, but must have some reasonable basis in fact.
In Magnum Constr. Mgmt. Corp. v. City of Miami Beach, Magnum Construction Management (“MCM”) appealed from a trial court ruling in favor of the City of Miami Beach, Florida (“City”). MCM contracted with the City to construct a new park (“the Project”). After completion, the City found several defects in the soil compaction and landscaping of the Project.
In fixing the landscaping issues, the City fundamentally changed the landscaping. The City sought 3 million dollars in damages against MCM,...
Blog
Ambiguities in Construction Contracts
How Does a Court Interpret Ambiguities in Construction Contracts?
In the recent case of Daake v. Decks N Such Marine, Inc., 201 So. 3d 179 (Fla. 1st DCA 2016), the First District Court of Appeal analyzed who were the correct parties to an ambiguous construction contract.
In this case, Decks N Such Marine ("DNS") entered into a contract to construct a seawall on real property owned by Daake Family Trust. The contract's first page stated that the agreement was between Thomas and Adele Drake as Owner and DNS as contractor. The first page did not mention the Family Trust. However, in the signature section, Thomas and Adele Drake executed in their corporate capacity as members of the Family Trust.
The Court held that the conflict between the drafted provision and the handwritten notation on the signature created an ambiguity as to who was a party to the seawall contract. The Court applied the...
Can Surety Enforce Venue Selection Provision From Construction Contract
Can Surety Enforce Venue Selection Provision From Construction Contract
Can a surety on a public project enforce a venue selection provision from the construction contract?
No, in disputes over a payment bond, a surety cannot enforce a venue selection provision from a construction contract. A viable forum selection clause is strongly controlling in all but exceptional circumstances. Dane Constr. & Co., Inc. v. Travelers Cas. & Sur. Co. of Am., 2016 WL 5724280, at *2 (S.D. Fla. Sept. 19, 2016). Section 255.05(1)(a), Florida Statues, prohibits the inclusion of language in any bond seeking to restrict the venue of any proceeding thereupon.
In Dane Construction , Tutor Perini, the general contractor, entered into a subcontract with Dane Construction for a public construction project in Broward County, Florida. Tutor Perini posted a payment bond for the project. This bond contained no provisions governing venue for any action under the bond. The...
Arbitration in Construction Contracts
Arbitration in Construction Contracts
Many construction contracts contain arbitration provisions, requiring that all disputes be decided by arbitration as opposed to in court. A court has a three-pronged test to determine whether a dispute is subject to arbitration: (1) whether there is a valid agreement between the parties to arbitrate; (2) whether the specific issue is subject to arbitration; and (3) whether the right to arbitration was waived.
The recent case of Am. Eagle Veteran Contracting, LLC v. Eiland highlights when a party waives its right to arbitration by actively participating in the lawsuit or by acting in a way that is inconsistent with the right to arbitrate. 2016 WL 6023934, at *1 (Fla. Dist. Ct. App. Oct. 14, 2016).
In American Eagle, American Eagle, the general contractor, subcontracted with Architectural Drywall for work on a construction project. The contract between American Eagle and Architectural Drywall contained an arbitration provision. A...
When Is A Construction Lien Fraudulent
When is a Construction Lien Fraudulent?
Section 713.31(2)(a), Florida Statutes, states that "[a]ny lien . . . in which the lienor has willfully exaggerated the amount for which such lien is claimed or in which the lienor has willfully included a claim for work not performed upon or materials not furnished for the property upon which he or she seeks to impress such lien or in which the lienor has compiled his or her claim with such willful and gross negligence as to amount to a willful exaggeration shall be deemed a fraudulent lien."
The recent case of Gator Boring v. Westra held that a claim of lien that overstates the amount claimed is not necessarily fraudulent, unless the exaggeration was made willfully. Gator Boring & Trenching, Inc. v. Westra Const. Corp., No. 2D15-5453, 2016 WL 5807805, at *5 (Fla. Dist. Ct. App. Oct....
General Contractor Duty of Good Faith and Fair Dealing
General Contractor Duty of Good Faith and Fair Dealing
A contractor can be barred from recovering for additional work performed if the contractor violates its duty of good faith and fair dealing.
In Underwater Engineering Services, Inc. v. Utility Bd. of City of Key West 194 So. 3d 437 (Fla. Dist. Ct. App. 2016), the Utility Board of Key West contracted Underwater Engineering Services, Inc. to perform maintenance on 57 pillars of the seven-mile bridge in the Florida Keys. The contract was based on unit pricing. The planned quantities of the work called for 200 square feet of Concrete Coating Repair at a price of $110 per square feet, for a total of $22,000. The contract also required that Underwater provide the Utility Board with 24 hours prior to completing the surface preparation and before the coatings were applies to the poles. The purpose of the notification was to allow...
Contractor Right to Repair Defective Construction Work
Contractor Right to Repair Defective Construction Work
Does a contractor have the right to cure defective construction work?
Where a contract requires notice of a defect and an opportunity to cure, an owner must give a contractor proper notice of their defective work and an opportunity to repair that defective work.
In Underwater Engineering Services, Inc. v. Utility Bd. of City of Key West 194 So. 3d 437, 441 (Fla. Dist. Ct. App. 2016), the Utility Board of Key West contracted Underwater Engineering Services, Inc. to perform maintenance on 57 pillars of the seven-mile bridge in the Florida Keys. The contract between the Utility Board and Underwater had a defect assessment provision, which required the Utility Board to give notice of any defects to Underwater and to give them an opportunity to cure. After completion of the project, the Utility Board discovered defects in the concrete coating of the pillars. Without...
Indemnification Between Contractor and Surety
Indemnification Between Contractor and Surety
Does Florida’s limitation on Indemnification in Construction Contracts apply to the general agreement of indemnity between a surety and principal on a bond?
No, Florida’s limitation on Indemnification in Construction Contracts (section 725.06, Florida Statutes) does not apply to the general agreement of indemnity between a surety and a principal on a bond.
This question was recently answered in the case of Great Am. Ins. Co. v. Brewer, No. 6:16-CV-63-ORL-37KRS, 2016 WL 3640395, at 2 (M.D. Fla. July 8, 2016). The court held that section 725.06 does not apply to this relationship because a surety is not an owner of real property, or an architect, engineer, general contractor, subcontractor or material supplier. Accordingly Florida statue §725.06 does not apply to indemnity agreements between a surety and a principal on a bond.
The Court in Brewer analyzed this question as follows: Florida statue §725.06 renders contracts...
Triggering a Subcontractor’s Performance Bond
Triggering a Subcontractor's Performance Bond
Does a Contractor Need to Provide Notice to Trigger Liability Under a Subcontractor's Performance Bond?
The answer depends on whether the performance bond and incorporated subcontracts include language explicitly requiring notice to be given. (International Fidelity Insurance Company and Allegheny Casualty Company v. Americaribe-Moriarty JV, 1 F.Supp. 3d 1 ( S.D. Fla 2016)). If no language is present under the terms of the performance bond explicitly requiring notice to be given, then the contractor may remedy the default itself and then later sue the surety to cover the shortfall.
In the recent case of International Fidelity Insurance Company and Allegheny Casualty Company v. Americaribe-Moriarty JV, AMJV, the general contractor, entered into a subcontract with Certified Pool Mechanics, Inc., to perform pool work for a project. International Fidelity Insurance Company (Surety) issued a performance bond in connection with the subcontract with Certified Pool, as principal. AMJV was not satisfied...
Deadline To File Action Against Lien Transfer Bond
Deadline to File Action Against Lien Transfer Bond
Section 713.24, Florida Statutes, provides a mechanism to transfer a construction lien from real property and place that lien on a surety bond or cash bond held with the clerk of court. The statute also states that a proceeding to enforce the transferred lien must be filed within the time required by section 713.22, Florida Statutes. Additionally, if a lien foreclosure action is pending at the time of the transfer, the action against the bond must be filed within 1 year after the transfer, unless otherwise shortened by operation of law.
In the recent case of Hiller v. Phoenix Associates of South Florida, Inc., Phoenix recorded a construction lien on Hiller's home due to nonpayment for construction work. 189 So. 3d 272 (Fla. 2d DCA 2016). Phoenix then filed a lawsuit to foreclose the lien. During litigation, Hiller transferred the lien to...