The Timeliness of Construction-Related Lawsuits – Recent Amendments to Fla. Stat. § 95.11(3)(c)

Morgan Foster | Shutts | September 20, 2018

In Florida, the allowed timeframe for bringing a lawsuit based either on a defect in the design, planning, or construction of a building or based on other improvements to real property is governed by Fla. Stat. § 95.11(3)(c).  The Florida Legislature recently passed House Bill 875, effectively amending Fla. Stat. § 95.11(3)(c).  Chapter 18-97, Florida Laws, provides that the amendments discussed herein became effective on July 1, 2018.

Notably, the year prior to the amendments discussed herein, the Florida Legislature amended Fla. Stat. § 95.11(3)(c) to define “completion of the contract” as “the later 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 was made.”   Fla. Stat. § 95.11(3)(c) (2017).  However, the 2017 amendments did not define “final performance.”

Therefore, Fla. Stat. § 95.11(3)(c) has been amended to include a provision that directly address the issues surrounding the interpretation of “final performance.”  Specifically, Fla. Stat. § 95.11(3)(c) now includes the following language:

With respect to actions founded on the design, planning, or construction of an improvement to real property, if such construction is performed pursuant to a duly issued building permit and if a local enforcement agency, state enforcement agency, or special inspector, as those terms are defined in s. 553.71, has issued a final certificate of occupancy or certificate of completion, then as to the construction which is within the scope of such  building permit and certificate, the correction of defects to completed work or repair of completed work, whether performed under warranty or otherwise, does not extend the period of time within which an action must be commenced.

Fla. Stat. § 95.11(3)(c) (2018).  This new language makes it clear that in relation to completed work, the correction of defects or deficiencies or completion of warranty obligations does not extend the time to bring a claim by tolling the limitations period.

The second 2018 amendment to Fla. Stat. § 95.11(3)(c) specifically relates to statute of repose.  The new language provides:

However, counterclaims, crossclaims, and third-party claims that arise out of the conduct, transaction or occurrence set out or attempted to be set out in a pleading may be commenced up to 1 year after the pleading to which such claims relate is served, even if such claims would otherwise be time barred.

Fla. Stat. § 95.11(3)(c) (2018).  This means, for example, that when a plaintiff brings an action on the eve of the expiration of the statute of repose, the defendant now has the benefit of a one-year extension of the statute of repose to investigate the need to bring claims against other parties.

Importantly, this extension runs from the time a party is served, not from when the action is filed.  Chapter 18-97, Florida Laws, provides that for actions instituted prior to July 1, 2018, any counter, cross, or third-party claim must be commenced before July 1, 2019 and any action that would not have been barred prior to the recent amendments may be commenced before July 1, 2019 or will otherwise be barred.

Time will tell if the 2018 amendments to Fla. Stat. § 95.11(3)(c) will provide more clarity regarding the timeliness of construction-related law suits and result in a decrease in litigation related thereto.

Avoiding ‘E-trouble’ in Construction Litigation

Judah Lifschitz | Construction Executive | August 14, 2018

During the 2016 presidential election, the FBI subpoenaed Hillary Clinton’s emails after she used a private email server during her time as Secretary of State. Separately, the more recent investigation into Donald Trump’s campaign policy adviser, George Papadopoulos, resulted in scrutiny over both his email and social media.

As shown the above examples, there are damaging effects of electronically stored information in politics, but how does it impact the construction industry?

If not used carefully and properly, emails will serve as “truth serum” in court. Attorneys can simply read an email to know employees’ thoughts or actions, meaning an impulsive email or social media post will most likely come back to haunt the company. Requests for ESI are inevitable in litigation today and the production of inappropriate emails and other ESI open the door for an opposing attorney to argue that a company fosters a culture of uncouth, unprofessional and unfocused project management.

REQUESTS FOR ESI ARE INEVITABLE IN LITIGATION TODAY

It is estimated that 90 percent of all information is now created digitally – the majority of which is never printed. A comparison of the ESI and hard-copy documents produced in a recent construction case revealed that only 25 percent of email communication had been printed to paper. A Duke University survey revealed that the ESI Discovery costs in typical cases range from approximately $600,000 to just less than $3 million. And in large cases, the costs average from $2.3 million to $9.7 million.

ESI is created and stored in a variety of places, including computers, fax machines or copiers’ internal hard drives, voicemail, web pages, smartphones, jump drives, memory cards and external hard drives. It is important to remember that all of the data and information created and stored in these various places is subject to being produced to a litigation adversary in discovery, granting them access to a significant volume of information – some of which is produced in a very informal setting.

Opposing attorneys acquire this information through the discovery process, which includes:

  • The obligation to preserve potentially relevant information. Even before litigation is filed, any time that a company has reason to anticipate that it will be involved in litigation it has an obligation to ensure that it takes reasonable steps to preserve potentially relevant documents and ESI.
  • Requests for the production of information. If litigation is filed, the adverse party will be entitled to request the production of relevant information, including documents and ESI, from the company.
  • The obligation to identify, collect and produce relevant information. After receiving requests for production of information, the company will be obligated to identify, collect and produce documents and ESI responsive to the requests received.

In order to produce responsive information, a company will first need to review the ESI and documents collected in order to identify any that may be protected by the attorney-client privilege, work product or another relevant evidentiary privilege. Those documents and ESI should be withheld from the company’s production, but all other responsive documents and ESI must be produced, and through this process the company’s adversary will receive access to a large volume of company documents and ESI. Opposing lawyers will then comb through these materials searching for “ammunition” to use in court or arbitration.

WHAT IS E-TROUBLE AND HOW TO AVOID IT

A company may find itself in E-trouble either because it fails to preserve and produce electronic documents during the discovery process or when ESI is discovered and used against it by an adverse party in litigation. But, E-trouble can be avoided. There are steps to help a company avoid E-Trouble and protect itself from damaging information being discovered and used against it in litigation. Always consult counsel with any questions about the discovery process.

Implement and enforce a document retention policy

Documents should be retained for the duration of their useful life – and no longer. A well-drafted document retention policy is not enough. Implementation and enforcement are critical to avoiding E-Trouble and reducing electronic discovery and document production costs. A recent study found that while two-thirds of the companies surveyed have a document retention policy in effect, almost half of them don’t actively enforce it.

When litigation is on the horizon, a company must suspend its routine document retention and destruction policy and put in place a “litigation hold” to ensure the preservation of relevant documents. In furtherance of the litigation hold, legal counsel must become familiar with the company’s document and information retention policies and data retention architecture.

Counsel must communicate with “the key players” in the litigation to understand how they stored information. Both the company and its counsel should monitor compliance with the litigation hold. This will guard against damaging and potentially expensive monetary sanctions.

Use email appropriately

Do not send “ammunition” that the other side can use against the company. If there are company inside jokes, lingo or nicknames for other staff members, clients or project personnel, do not use them in emails. Additionally, ensure employees are not using company email accounts for inappropriate personal business.

Do not email while angry. Avoid hitting send on an email if upset about something that occurred on a job. At trial, opposition may use an angry email to portray the sender as a bullheaded and unreasonable general contractor who put a project on the fast-track to attorneys and costly litigation.
When searching through ESI, opposing attorneys search for certain phrases in emails. Avoid using the following when emailing.

  • “I could get into trouble for telling you this, but …”
  • “Delete this email immediately.”
  • “I really shouldn’t put this in writing.”
  • “Don’t tell [So-and-So]” or “Don’t send this to [So-and-So].”
  • “She/He/They will never find out.”
  • “We’re going to do this differently than normal.”
  • “I don’t think I am supposed to know this, but …”
  • “I don’t want to discuss this in e-mail. Please give me a call.”
  • “Don’t ask. You don’t want to know.”
  • “Is this actually legal?”

Be mindful of social media

The digital age of communication and information technology has drastically increased the scope and volume of what is now discoverable to include more than just email communication. Today, even personal social media accounts can be used against a company in litigation.

An appellate court in New York ruled that social media posts, pictures and messages may become evidence regardless of the privacy settings status. The court compared Facebook to a diary, stating “the postings on the plaintiff’s online Facebook account, if relevant, are not shielded from discovery merely because plaintiff used the service’s privacy settings to restrict access, just as relevant matter from a personal diary is discoverable.”

There are several ways that attorneys for both plaintiffs and defendants gain access to social media posts for the parties they represent. Attorneys today search social media updates and posts for anything that may be useful in court. For example, the typical fact pattern in a personal injury case is as follows:

  • a plaintiff claims her permanent injuries kept her confined to her home and bed;
  • her public profile page on a social networking internet site shows her smiling and “out and about” outside of her home; and
  • the defendant gets a court order requiring the plaintiff to grant access to her accounts on social networking sites, including her current, archived and deleted information and pages.

Is My Bid Binding?

Brian Gaudet | International Law Offices | August 13, 2018

For those in the construction industry, you are probably familiar with the concept of negotiating contract terms, either in writing or just a discussion, and when the two parties agree to terms, either in writing or with a handshake, then a deal is a deal. This follows the legal concept of a contract, which requires an offer, acceptance, consideration and a meeting of the minds. What if you are a trade contractor and submit a bid that a general contractor relies on to win a contract. Is that bid a contract? Is it binding? Even if the bid does not meet the elements of a contract, it can still be binding. Courts apply the doctrine of promissory estoppel to hold parties to their bids in the absence of a contract.

The Restatement (First) of Contracts, Section 90 describes the legal premise: “A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promise and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” In the highly cited case of Drennan v. Star Paving Company 333 P.2d 757 (En Banc 1958), the Supreme Court of California explained “When [the contractor] used [the subcontractor’s] offer in computing his own bid, he bound himself to perform in reliance on [subcontractor’s] terms. Though [the subcontractor] did not bargain for this use of its bid neither did defendant make it idly, indifferent to whether it would be used or not. On the contrary, it is reasonable to suppose that [the subcontractor] submitted its bid to obtain the subcontract…[The Subcontractor] had reason not only to expect [the Contractor] to rely on its bid but to want him to. Given this interest and the fact that [the Contractor] is bound by his own bid, it is only fair that [the Contractor] should have at least an opportunity to accept [Subcontractor’s ] bid after the general contract has been awarded to him.”

As usual, there can be different treatment of this concept in various jurisdictions and differences in the facts of each case which may affect the outcome, but as a general rule, when you submit a bid, you should expect it to be binding.

The “Time Of Application” Rule Will Not Protect Developers Who Submit Incomplete Applications.

Carl A. Rizzo | Cole Schotz | August 28, 2018

Developers often employ the “time of application” rule (“TOA Rule”) to avoid having to comply with certain legal requirements enacted after an application has been submitted to a local planning or zoning board.  More specifically, the TOA Rule provides that “notwithstanding any provision of law to the contrary, those development regulations which are in effect on the date of submission of an application for development shall govern the review of that application….”  SeeN.J.S.A. 40:55D-10.5 (emphasis added).  Notwithstanding this statutory provision, developers must still comply with any new laws that specifically relate to health and public safety.

The TOA Rule replaced the “time of decision” rule, which allowed municipalities to apply new or amended ordinances to pending development applications.  As a result, applicants were often compelled to incur significant costs and delays associated with altering their applications in an effort to meet the new legal requirements.  The TOA Rule only applies, however, once a development application has been “submitted” to a municipality.  Until that time, a developer remains responsible for complying with all legal requirements regardless of when they took effect.

While the term “submission” is not expressly defined under the statute, the New Jersey Supreme Court squarely addressed the issue in Dunbar Homes, Inc. v. Zoning Board of Adjustment of Franklin Township, 233 N.J. 546 (2018).  In Dunbar Homes, the developer filed an application to construct 55 garden apartments on a site where garden apartments were considered a permitted conditional use.  The next day, the Township enacted an ordinance that prohibited garden apartments in the zone where the site was located. The zoning official subsequently determined that the developer had not submitted all documents required by the zoning board’s development application checklist.  The developer was then notified that the TOA Rule was inapplicable and that it would need to file a new application with the zoning board seeking a “use” variance pursuant to the more stringent standards implicated by N.J.S.A. 40:55D-70(d)(1).

The zoning board sided with the zoning official and the developer appealed to the Law Division.  The Law Division judge disagreed and concluded that the application was deemed “submitted” because it provided the board with “sufficient information to begin its review” and, therefore, the TOA Rule applied.  The Township appealed and the Appellate Division reversed that decision after finding that the relevant statute defining the term “application for development” included all documents prescribed by the board’s checklist for development.  Applying this bright-line rule, the Appellate Division concluded that the failure to submit even one of the items on the board’s checklist precluded application of the TOA rule.  The Supreme Court ultimately agreed with the Appellate Division, noting that N.J.S.A. 40:55D-3 expressly defined an “application for development” to include:  “the application form and all accompanying documents required by ordinance.”  Because it was undisputed that the developer failed to submit all required documentation and neither sought nor obtained a waiver regarding any requirements, the Court found that the application was never submitted and the TOA Rule did not apply.

Accordingly, developers must be certain to submit all documents identified in the municipal development application checklist or seek and obtain a waiver.  Only by vigorously complying with the requirements of the municipal checklist can a developer expect to avail itself of the protections afforded by the TOA Rule.

Ten Things Attorneys and Insurance Professionals Should Know About Using Drones in Insurance Claims

Justin Fine, Esq. | Pessin Katz Law | August 29, 2018

The commercial application of drones is increasing. Drones are being used to fight forest fires, for commercial agriculture, and to deliver medical supplies to remote areas.

Insurance companies are also increasingly using drones, which can be useful for capturing evidence during the claims process. However, there are plenty of pitfalls in using drones, including the admissibility of evidence during litigation. Further, the legal landscape for drones is changing all the time. The States and the Federal Aviation Administration (“FAA”) are rapidly issuing new laws and regulations.

In the likely event that you come across the use of a drone in an insurance claim, here are ten things to consider in order to anticipate and respond to potential issues.

  1. Drones are helpful for investigating accidents, mapping debris fields, and preserving evidence at the scene of a loss because of their ability to capture images from a birds-eye-view that are not readily visible from the ground.
  2. Drones can carry more than just cameras. They also carry sensors to measure distance, heat, radiation, sound, and light.
  3. Drones can be easily deployed in the field. Modern drones are compact enough that they can fit into a camera bag.
  4. Both personal and commercial drone use are regulated by the FAA.
  5. Evidence obtained from drones used in violation of FAA rules and regulations may not be admissible in court.
  6. Several states, including Maryland, Texas, Delaware, California, and Florida, have specific laws about the use and admissibility of evidence obtained by drones.
  7. When evaluating the admissibility of evidence, consider that there are greater restrictions on the commercial use of drones, including the regulations set out in 14 C.F.R. § 107 et seq.
  8. Even the incidental use of a drone for a commercial purpose, such as inspecting the roof of a business, can be subject to the commercial drone-use regulations.
  9. Some restrictions to keep in mind when considering the admissibility of evidence obtained from a drone is that drones cannot fly over people (including sporting events), must fly below 400 feet, cannot fly in restricted airspace, and must remain within the sight of the pilot.
  10. Additionally, commercial drone pilots must be licensed, although personal drone pilots generally do not have to be.