By Michael Furbush, Partner, Board Certified Specialist - Business Litigation and Thomas Wert, Partner, Board Certified Specialist - Construction Law
On December 9, 2014, the Florida House of Representatives introduced a bill that would substantially overhaul Florida’s Construction Defect Act, Chapter 558, requiring property owners to provide more detailed notice of the alleged defect and imposing sanctions on property owners who make frivolous claims.
The bill, sponsored by Representative Kathleen Passidomo, requires claimants to provide additional details about the alleged defect in the notice of claim, including the specific location of each alleged defect, and the specific provisions of the building code, plans, or specifications that serve as the basis of the defect claim. The failure to include this information in the notice of claim would be considered prima facie evidence of a defective notice.
The bill also revises the requirements for the response to the notice of claim. Under the proposed legislation, the responding party would be required to state whether he or she disputes the claim, and whether he or she is willing to attempt to settle all or a portion of the claim through a monetary settlement offer, including the amount of the offer and a timetable for payment. The bill specifies that settlement negotiations conducted under the Act will be confidential.
The bill imposes severe penalties on a claimant who proceeds with an action on any claim that was previously resolved by the payment of money or the making of repairs, or a combination of the two. That claim would be deemed frivolous and stricken from the action, and upon motion of the person served with the action, monetary sanctions would be awarded against the claimant for the costs incurred in defending the frivolous claim, including attorney’s fees.
The bill also revises provisions relating to the production of records. It specifically limits the exchange of expert reports to those that are “nonprivileged,” and requires the claimant to produce maintenance records and other documents related to the “discovery, investigation, causation, and extent of the alleged defect…and any damages resulting therefrom.”
Finally, the bill provides for monetary sanctions against a claimant who complains of a construction defect that was solely the fault of the claimant or his or her agents, including the costs of inspection, investigation, testing, and attorney’s fees, if the court finds that the claimant or the claimant’s attorney knew or should have known that the material facts or the existing law did not support the claim when it was initially presented. However, sanctions may not be awarded against the claimant’s attorney if he or she acted in good faith based on his or her client’s representations.
The bill is a substantial departure from the existing law. By imposing new reporting requirements and penalties for bringing frivolous claims, the proposed amendments would make it more difficult and riskier for property owners to bring claims for construction defects. Property owners will be forced to do a more thorough investigation of the potential defect and its causes before making a claim. This added burden on property owners should have the effect of reducing the number of doubtful construction defect claims. On the other hand, the proposed changes probably would encourage more property owners to retain counsel to pursue a claim, which could result in more difficulty negotiating pre-suit settlements.
Overall, the proposed amendments would promote the Act’s goal of reducing litigation by deterring the filing of questionable construction defect claims.
Please address any questions in regard to House Bill 87 to the listed Roetzel Construction Law attorneys.