Insurance Claims
Navigating The Maze - Asserting And Defending Claims Arising From Renovations, Remodels And Repairs
Jared E. Smith | Rumberger, Kirk & Caldwell, P.A.
October 13, 2014
Store renovations and repairs can be a time-consuming and messy business, and they almost always bring with them layers of logistical and operational concerns. Managing daily business impact is unfortunately not the only challenge faced. Construction projects can also be a source of claims, and those claims can come in various shapes and sizes.
In addition to a rich supply of tourism, Florida is also a hotbed for construction and therefore has a complex system of statutes and case law governing all areas of construction law. This article will touch on some of the most common claims issues arising from renovation and repair projects.
In the same manner a customer can be injured by an unattended spill, a personal injury accident can also arise from renovation and repair work. One of the best ways to protect your business is to ensure any contractors used have the proper insurance. Insist on seeing their Certificate of Insurance (COI) and also insist on being added as an additional insured. As soon as practical, seek a full copy of the policy to ensure the COI accurately reflects the language in the bound policy. Completed operations coverage is an absolute must, especially considering that the injury claim may arise years after the work is completed.
A common defense raised by contractors is the Accepted Work Doctrine, also known as the "Slavin doctrine." It arises from a 1958 Florida Supreme Court Case (Slavin v. Kay). Briefly summarized, a contractor is not liable for injuries to third parties arising after the owner accepted the work unless the defective issue was latent and could not have been discovered by reasonable inspection. There are numerous other loopholes and nuances to the Slavin doctrine. Suffice it to say it highlights the importance of conducting a thorough inspection of a contractor's work to spot any reasonably observable defects before accepting performance.
There are also claims arising from renovation and repair that are purely property related. One of the most common is the construction lien. These are liens against the property filed by the contractor, subcontractors or material suppliers. As a preventative measure, always ensure you receive a lien waiver from your contractor with each progress payment made on a project (and that the contractor provides waivers to you for its subcontractors or suppliers used). While it may seem like a good idea to get your contractor to waive all liens up front, that is prohibited by Florida law. Lien waivers can only be obtained for labor already performed or materials supplied. Liens and lien enforcement actions should always be taken seriously as the lien not only creates a cloud on the title when filed, but attorney fees are also available in enforcement actions. Of note, a contractor has one year to commence a lawsuit foreclosing its lien after the lien is filed; failure to file suit within a year is a bar to lien enforcement (and the timeframe can be shortened to 60 days if an owner files and serves the contractor with a Notice of Contest of Lien). To immediately clear the title from a lien, an owner can also transfer the lien to what is called a Transfer Bond. Literally volumes have been written about Florida lien law as this area of law is quite complex. Consulting with legal counsel experienced in this area is always a good idea if you find yourself on the receiving end of a lien.
In any construction project, it is important to deal with licensed contractors. The Construction Industry Licensing Board (CILB) is fairly aggressive at policing the industry when complaints are brought to its attention. You can check the license status of a contractor online in Florida. In the event that you find yourself in a contract dispute with an unlicensed contractor, Florida law is weighted heavily against them. In addition to removing enforceability of liens, Florida law goes a step further by depriving unlicensed contractors of their right to raise any contractual defenses.
If you find yourself in a situation where you are dissatisfied with a contractor's work and expect litigation to be the only resolution, first ensure you check your contract for notice and opportunity to cure provisions as well as arbitration clauses. Even if there is no "notice" requirement built into the contract, all claims arising from construction defects that involve contracts entered into after October 1, 2009, fall under Fla. Stat. § 558.001 (et seq.), which is a statutory notice and opportunity to cure procedure. Any lawsuit is subject to dismissal if an owner fails to give the required notice to the contractor. Once the contractor receives the 558 notice, it has an opportunity to cure or settle the claim (or deny it altogether).
What if you are unable to locate a signed contract for the project? While a written contract is certainly the gold standard in memorializing agreements, there are causes of action available even in the absence of a signed contract. Oral contracts are generally enforceable, although as can be imagined, it is often difficult to prove the terms. Florida law also recognizes an action against any contractor (including subcontractors) for violation of the Florida Building Code, under Fla. Stat. §553.84. Finally, a simple claim for negligence may also be available.
If you have a potential claim for defective work on a project, you will want to ensure your claim is filed in a timely manner. Florida law recognizes a five-year statute of limitations (five years to file a claim) for actions arising from written agreements, however claims arising from construction of improvements are subject to a four-year statute of limitations (see Fla. Stat. § 95.11). Thus, a construction project involving an addition to the property or remodeling of the property (something beyond repairing construction that already exists) would likely fall within the four-year statute of limitations. While the four years do not begin to run on latent (hidden) defects until the defect is either discovered or could be discovered by reasonable inspection, no action regarding construction of improvements can commenced more than 10 years after construction is complete.
No doubt, in-store construction work can be a stressful time for all participants. Through careful preventative measures, and having an increased understanding of the law in this area, the claims risks involving remodels, renovations and repairs can be better managed and controlled.
The content of this article is intended to provide general information and as a guide to the subject matter only. Please contact an Advise & Consult, Inc. expert for advice on your specific circumstances.
SOURCE: www.mondaq.com