March 12, 2024

There was an Easement Around Here Somewhere

Easements, what are they and how does Florida law categorize them? An easement generally provides the right to use another person’s land for a specific purpose. It is a nonpossessory interest, as it is only the “use” of the land, and not the ownership of the land. If the original purpose of the easement has been frustrated, it may not exist except for in name only. When determining if an easement exists, it is critical to review the language of the suspected easement and the purpose of that easement.

 

An easement can be an Express Easement, an Implied Easement, an Easement of Necessity, Easement in Gross, a Solar Easement, or a Prescriptive Easement. “An express easement must be interpreted by looking at what the original parties and their successors in title intended, which is manifested by both the circumstances and the actions and statements of those parties.”1 Florida courts treat easements as they do contracts, meaning the plain language should be applied if it is unambiguous. If the language is unambiguous, then the court looks no further than to the language to ascertain the intent of the parties. Express easements are sold or given to a neighboring estate. It is created by an easement agreement in writing between the two estate holders, typically contained within the warranty deed, or it can be created by a court order. A “Person granting easement may restrict easement in any way he [or she] wishes, and easement holder cannot expand easement beyond that contemplated at the time it was granted.”2

 

There are at least two parties to an easement, the Dominant Estate and the Servient Estate. The Dominant Estate is the beneficiary of the easement, the party that can use the easement and the Servient Estate is the estate that owns the easement or the party where the easement is being used. A unity of title between the Dominant and Servient Estates could frustrate the original purpose of the easement, and therefore, even though the language still exists on the face of the warranty deed, the easement is really just fiction.

 

Common-Law and Statutory Easements – Chapter §704.01

Florida Statue §704.01 describes a common-law easement that is created by a common grantor of property who grants a piece of land to another party so that it creates a landlocked parcel of land. The grantor, at one time, must have owned both the servient and the dominant properties. Accordingly, a party seeking to establish a common law way of necessity under subsection (1) must establish the following elements:

  1. That, at one time, both properties were once owned by the same party;
  2. That a common grantor conveyed the landlocked parcel, thereby causing the need for an easement; and
  3. That, at the time the landlocked parcel was conveyed, the grantor’s remaining land had access to a public road.3

“In Cirelli, the court explained that, “[b]ecause a common law way of necessity required a common source of title between the dominant and servient parcels, it became obvious that this requirement could not be met in all instances and many parcels of property would remain landlocked. Therefore, the legislature enacted §704.01(2) to provide relief in those instances in which a common law way of necessity could not be obtained.”

 

“A statutory way of necessity does not require a common source of title and is dependent upon the existence of numerous factors that are not necessary to the creation of a common law way of necessity. Moreover, public policy rather than legal fiction (the presumed intent of the parties) is the basic foundation for statutory ways of necessity.” Id. The court went also took note that “§704.01(2) serves the legitimate public purpose of allowing access to landlocked property so that it may be transformed from useless and unproductive land into valuable and productive property that provides a residence to the owner or produces valuable raw materials such as timber or agricultural products,” as well as the positive effects of development promotion and increased tax revenues. See id.

 

The Cirelli decision enumerated the following elements necessary to establish a statutory way of necessity under §704.01(2):

  1. The claimant’s property is landlocked by property belonging to others;
  2. There is not a practicable route of ingress or egress to the nearest public or private road;
  3. There is no common law way of necessity under §704.01(1) because there is no unity of title between the landlocked and adjoining tracts;
  4. The landlocked property is situated outside a municipality (which is no longer applicable under the current version of the statute);
  5. The landlocked property is being used or the owner desires to use the property as a dwelling or for agricultural, timber raising or cutting or stock raising purposes; and
  6. The statutory way of necessity sought over the adjoining parcel is the “nearest practicable route” of access.4

 

Additionally, §704.02, under statutory easements, requires compensation to the servient property holder, otherwise the taking would violate the State and Federal Constitution: “No private property shall be taken “except (i) for a public purpose and (ii) and with full compensation therefore paid to each owner. This is called eminent domain. The public purpose is to provide a lawful means by which to accomplish full utilization of the state’s natural resources, their development in the ordinary channels of commerce and industry.”5 The existence of the statutory easement would be judicially determined, and the amount of compensation awarded is determined by a jury pursuant to Florida statute.

 

You also can claim an easement if it is a public road. A road becomes dedicated to public use under either common law dedication or statutory dedication. Common law dedication requires proof of the following:

  1. An intention by the landowner to dedicate the property to public use and
  2. An acceptance by the public.6

 

Proof of the intention to dedicate and of the acceptance must be clear and unequivocal, and the burden of proof is on the party claiming the dedication.7 Requirements for a statutory dedication are contained in § 95.361(1), Fla. Stat. This section provides that if a road constructed by a municipality has been maintained or repaired continuously for four years by the municipality, the road shall be deemed dedicated to the public, and title to the road will vest in the municipality, “if it is a municipal street or road.”

 

Temporary Construction Easements

Sometimes an easement is needed on a temporary basis simply to allow contractors access to a piece of private property for a specific purpose. These are known as Temporary Construction Easements (“TCE”). An example of this is when a government entity requires access across private property due to a public road expanding. The private property owner is entitled to just compensation even though the taking is only temporary. If the government and the private property owner are not able to resolve the terms of the TCE, the governmental agency can file an eminent domain lawsuit in compliance with the State and Federal Constitution. The TCE only remains as long as is necessary for the project to be completed. It is critical to specifically identify the terms of the TCE so that all parties are aware of the following: 1. The amount and type of compensation, 2. The duration and scope of the TCE, and 3. The party’s obligations for restoration, damages, or violations of the original terms of the TCE.

 

When dealing with an easement issue, the most important thing to remember is that each easement is handled differently depending on the property and obtaining an opinion from an attorney who deals with easements on a daily basis should give you the peace of mind moving forward.

 


 

1 Condron v. Arey, 165 So.3d 51 (5th DCA, 2015).
2 Star Island Associates v. City of St. Petersburg Beach, 433 So.2d 998 (2nd DCA, 1983).
3 Matthews v. Quarles, 504 So. 2d 1246 (Fla. 1st DCA 1986).
4 Cirelli v. Ent, 885 So. 2d 423 (Fla. 5th DCA 2004), citing Boyd v. Walker, 776 So. 2d 370 (Fla. 5th DCA 2001), and Ganey v. Byrd, 393 So. 2d 652 (Fla 1st DCA 1980).
5 Stein v. Darby, 126 So.2d 313 (Fla. 1st DCA 1961).
6 Bishop v. Nussbaum, 175 So.2d 231 (Fla. 2d DCA 1965).
7 Roe v. Kendrick, 146 Fla. 119, 200 So. 394 (1941).

February 5, 2024

Implications of Senate Bill 154 on Milestone Inspections

On June 24, 2021, at about 1:20 a.m., a 12-story beachfront condominium in Surfside, FL, Champlain Tower South, partially collapsed. 98 souls perished. In response, lawmakers have since passed laws to try and stop it from happening again. Senate Bill 154 is an amendment to Florida Statute §553.899, which was enacted in response to the Champlain Tower South collapse. Senate Bill 154 – Condominium and Cooperative Associations became effective on June 9, 2023. It outlines specific dates as to when milestone inspections should be completed. A milestone inspection is a type of structural safety building inspection that focuses on the structural integrity of the building’s occupants and determines whether the structure is safe for continued use. Licensed architects and engineers are the only professionals that are qualified to conduct milestone inspections. It is the need to evaluate the structural condition, identify repair needs, assess any deferred maintenance, and search for substantial structural deterioration. The bill revises the milestone inspection requirements for condominiums and cooperative buildings that are three or more stories in height to the following:

 

  • Limit the milestone inspection requirements to buildings that include a residential condominium or cooperative;
  • Provide that the milestone inspection requirements apply to buildings that in whole or in part are subject to the condominium or cooperative forms of ownership, such as mixed-ownership buildings;
  • Clarify that all owners of a mixed ownership building in which portions of the building are subject to the condominium or cooperative form of ownership are responsible for ensuring compliance and must share the costs of the inspection;
  • Require a building that reaches 30 years of age before December 31, 2024, to have a milestone inspection before December 31, 2024;
  • Delete the 25-year milestone inspection requirements for buildings that are within three miles of the coastline;
  • Authorize the local enforcement agencies that are responsible with enforcing the milestone inspection requirements the option to set a 25-year inspection requirement if justified by local environmental conditions, including proximity to seawater;
  • Authorize the local enforcement agency to extend the inspection deadline for a building upon a petition showing good cause that the owner or owners of the building have entered into a contract with an architect or engineer to perform the milestone inspection and it cannot reasonably be completed before the deadline;
  • Permit local enforcement agencies to accept an inspection and report that was completed before July 1, 2022, if the inspection and report substantially comply with the milestone requirements; however, associations must still comply with the unit owner notice requirements, and if a local enforcement agency accepts a previous inspection as a milestone inspection, the deadline for a subsequent 10-year re-inspection is based on the date of a previous inspection;
  • Provide that the inspection services may be provided by a team of design professionals with an architect or engineer acting as a registered design professional in responsible charge;
  • Provide that the condominium or cooperative association is responsible for all costs associated with the inspection attributable to the portions of the building for which it is responsible under the governing documents of the association;
  • Require associations to give unit owners notice about the inspection deadlines, electronically or by posting on the association’s website, within 14 days after they receive the initial milestone inspection notice from local enforcement agency;
  • Require the milestone inspector to submit a phase two progress report to the local enforcement agency within 180 days of submitting the phase one inspection report; and
  • Clarify that an association must distribute a copy of the summary of the inspection reports to unit owners within 45 days of its receipt.

 

The following buildings are exempt from the inspection requirements:

  • Buildings less than three stories;
  • Single-family dwelling;
  • Two-family dwelling;
  • Three-family dwelling with three or fewer habitable stories;
  • Any portion component of a building not owned by the association; and
  • Any portion or component of a building that is maintained by another party.

 

Senate Bill 154 makes the following changes to Florida Statute §627.531:

  • It exempts unit owner policies from the requirement that all personal lines residential policies issued by Citizens Property Insurance Corporation must include flood coverage.

The bill brings big changes to Florida’s Condominium market. The new law requires condo associations to regularly assess the structural integrity of the building and fully fund reserves necessary for maintenance and repairs. However, it comes at a price to the condo owner, which not every condo owner is able to pay. Because of the new law, associations are raising monthly association fees so that they are able to comply with the new requirements. This can also lead to extremely high special assessments.

 

Florida Senate Bill 154 establishes a new movement of accountability and safety for condominium unit owners. The Bill implements responsibility and accountability upon condo associations to ensure structural integrity and safe occupancy of its buildings, taking the necessary steps to ensure another tragedy does not occur. SB 154 establishes liability for board members and officers who fail to abide by their responsibilities for milestone inspections. It requires a willful and knowing failure to obtain the required inspection report which would constitute a breach of fiduciary duty.

 

We expect a rise in lawsuits and newly formed case law should the associations fail to comply with SB 154, which has been enacted to prevent tragedies such as the Champlain Tower South from occurring again.

 


 

November 21, 2023

What is the Manfredo formula and when will it impact your claim?

Picture this – You’ve paid out a worker’s compensation claim with ongoing medical and indemnity benefits, provided continued notice to the injured employee’s counsel of the ongoing benefits paid and even had your counsel file a Notice of Lien related to these benefits. You now receive correspondence, or a copy of a Notice of Settlement recently filed in the injured employee’s lawsuit, that the case has settled – now what do you do? Can you receive a lien reimbursement if the worker’s compensation claim is still open? What about a credit towards future medical expenses and will you need court intervention? This is a brief rundown of how to obtain as much of your worker’s compensation lien back as possible by understanding both Fla. Stat. §440.39(3) and the Manfredo formula in the process.

 

Florida’s statute §449.39(3)(a) will set the tone for how a lien reimbursement must go. The statute provides two ways to recover: (1) the worker’s compensation carrier will receive 100% of their lien reimbursed if the injured employee recovered the full case value (what a case is worth without considering liability or other factors); or (2) the worker’s compensation carrier will receive a pro rata portion of their lien back if the injured employee does not receive the full case value.

 

But what about a carrier who is continuing to pay ongoing benefits to the injured employee? In this instance, the carrier will be entitled to receive a future credit, which the carrier can apply to medical benefits paid up to the net settlement that the injured employee received in their third-party settlement with the tortfeasors. However, if the first scenario laid out above is met, the carrier will not be entitled to receive any future credit because the entire lien is being reimbursed.

 

However, if the injured employee did not receive the full value of their case, how does the carrier determine what percentage of the lien is recoverable? Welcome to the Manfredo formula. In 1990, the Florida Supreme Court heard a case entitled Manfredo v. Employer’s Casualty Insurance Company, which determined the appropriate method of calculating a workers’ compensation carrier’s lien percentage from the third-party suit initiated by the injured employee.

 

When evaluating a third-party settlement and utilizing the Manfredo formula, the worker’s compensation carrier will need the following information –

 

(1) Settlement amount the injured employee received from the tortfeasors.
(2) The full value of the case.
(3) Breakdown of attorney’s costs and fees associated with the case.
(4) Documentation to evaluate the reasoning behind the full case value.
(5) The lien amount –
include medical/indemnity/settlement of the worker’s compensation claim.

 

The lien percentage is calculated by taking the net recovery (settlement proceeds and subtract attorney’s fees and costs) from the third-party settlement and dividing this by the full case value (“FCV”) to get the percentage of lien reimbursement. Once you have the percentage, take the full lien amount and multiply that by the percentage.

 

Example –
$300,000.00 (Net Recovery)/$2,000,000.00 (FCV) = 15% (percentage of lien reimbursement)
$150,000.00 (worker’s compensation lien) x 15% (percentage of lien reimbursement) = $22,500.00

 

If, in this example, the worker’s compensation claim was still open and paying benefits, the carrier would be entitled to receive a future credit of 15% for medical expenses up to the net recovery the injured employee received, in this case $300,000.00.

 

The only number that is not tangible in this calculation is the full case value. This number may be obtained by considering several factors, which include reviewing a Life Care Plan and Economist Report that was prepared for the third-party case, as well as the pain and suffering component of the injured employee, and potential future surgical interventions, to name a few.

 

When dealing with trying to understand why the injured employee’s counsel concludes a certain number for the full case value, the worker’s compensation carrier may need to hire a full case value expert, a person who has numerous years of experience in the personal injury field, to assist with establishing a full case value, if the one received by the injured employee seems “far-fetched.”

 

After reviewing the documents surrounding the case, evaluating the full case value, and utilizing the Manfredo formula, if the worker’s compensation carrier is nowhere closer to getting the lien resolved, court intervention may be the next step. Either party (the worker’s compensation carrier or injured employee) may file a Motion for an Equitable Distribution Hearing. At the hearing, both parties will present their evidence as to the full case value (remember this is the only number that is not concrete). The Judge will rule and provide the parties with what he/she determines the full case value to be, which will then provide the worker’s compensation carrier with their lien reimbursement figure.

 

Knowing what to expect early on when the injured employee’s third-party case is still in suit will assist with resolving your lien sooner once a settlement is reached. If you are an insurance company in need of assistance with filing lien notices and evaluating a lien reimbursement resolution, we are here to assist.

 

Cites –
Florida Statue §440.39 – http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0400-0499/0440/Sections/0440.39.html
Manfredo v. Employer’s Casualty Insurance Company, 560 So. 2d 1162 (Fla. 1990).

October 23, 2023

A Guide to Subrogation Pre-Suit Demand Packages

Purpose

A pre-suit demand package puts the tortfeasor and/or their carrier on notice of a subrogation claim. It serves as the first formal step in the process for an insurance carrier to inform the at-fault party of the claim and offers an opportunity to settle the claim without litigation. Moreover, it signifies the carrier’s readiness to proceed with litigation if there is no response to the demand or if the claim does not resolve.

 

Contents

The contents of a pre-suit demand package usually include a pre-suit demand letter and an accompanying damage package. Let’s take a look at each component in more detail.

    1. “Notice of Claim,” “Demand,” or “Pre-Suit” letter should include the following information:
      • Preliminary information: date of loss, loss location, claim number, insured’s name and insurer’s name.
        • If the demand letter is addressed to the tortfeasor’s carrier, include the tortfeasor’s name and
          their claim number and/or policy number so the adverse carrier can review the claim more
          efficiently.
      • Basis to pursue the at-fault party: Important identifying facts surrounding the loss and reasoning for
        pursuing the tortfeasor. Some examples include:

        • Automobile incident: Be sure to include the vehicle year, make, model and VIN so there is no
          confusion that the tortfeasor owned and/or operated the vehicle that caused the damage to your
          insured’s vehicle and/or property.
        • Product liability: Be sure to include identifying information about the product that is
          defective, for example, the model and serial number of the product.
      • Amount of damages that are being sought: this should include the deductible that is being pursued on
        behalf of the client insurance carrier.
      • Prejudgment interest – if you do not ask, you do not get!
        • Look into whether the subrogating insurer is entitled to prejudgment interest in the state where
          the loss occurred. If the insurance carrier is entitled to prejudgment interest in the specific
          jurisdiction where the loss occurred, this, at the very least, provides a higher starting number
          when discussing settlement negotiations. At the most, the insurance carrier may recover more
          than they paid out, which makes for a very happy subrogating insurance carrier!
      • Deadline for a response: Usually a pre-suit demand package provides a thirty-day deadline to respond and
        highlights that if no response is received within that time frame, litigation will be initiated. This
        puts pressure on the tortfeasor and/or their carrier to investigate the claim immediately and to timely
        respond to the demand.
      • Specific requests or notifications of examinations may be included in the demand letter.
        • A demand for preservation of evidence can be included in the initial demand package if the
          tortfeasor is in possession of any crucial evidence that may be the subject of potential
          litigation.
        • A notification of a site examination, joint destructive examination, or removal of the evidence
          may also be presented in the initial demand letter. This allows the claim to move faster without
          the need to wait for the deadline for the initial demand letter to lapse.
      • Delivery of demand letter: Another consideration when sending out a demand letter is proof of delivery,
        such as sending out the letter via certified mail or requesting a delivery/read receipt if the letter is
        sent out via e-mail. This is particularly helpful when the demand letter is a “condition precedent” to
        filing suit and when the case is up against an approaching statute of limitations deadline and to avoid
        any dispute that the demand letter was delivered and received.

 

  1. Damage Package: A damage package should at minimum include proof of payment/copies of check and supporting
    documentation for each payment made.

    • Proof of payments made by the insurance carrier;
    • Supporting documentation for each of the payments made;
    • Photographs of the damage;
    • Police report/fire report (if favorable);
    • Expert report (if favorable);
    • Any other documentation that could help support your subrogation case, for instance, a repair receipt
      showing the negligent work performed by the tortfeasor.

 

Review State Requirements for Pre-Suit Demand Packages

The specific requirements for a pre-suit demand package can vary depending on the jurisdiction and the specific circumstances of the case, so it is crucial to review state law prior to sending out a demand letter.

Some states allow a request for insurance information from the tortfeasor. For instance, Florida Statutes, Section 627.4137, requires the disclosure of the following information within 30 days of the written request:

  • The name of the insurer.
  • The name of each insured.
  • The limits of the liability coverage.
  • A statement of any policy or coverage defense which such insurer reasonably believes is available to such insurer at the time of filing such statement.
  • A copy of the policy.

This is useful to determine whether the client’s insured is an additional insured under the tortfeasor’s policy and establishing the tortfeasor’s policy limits.

 

Additionally, some states require a demand letter prior to filing suit depending on the type of loss. For instance, Georgia, Florida, and Idaho require a written notice of claim for a construction defect claim prior to commencing an action in litigation against a construction professional. It is therefore crucial that the pertinent state law is reviewed to determine how the notice of claim should be sent to the construction professional, the required contents for the notice of claim, and the deadlines associated with sending out and responding to a notice of claim.

 

It is also important to note that pre-suit requirements may vary depending on the tortfeasor you are pursuing. For instance, if you are pursuing a governmental entity there may be state specific requirements as to who you should send the notice of claim to and as to any notice deadlines.

 

Conclusion

A well-crafted pre-suit demand package can be a powerful tool in subrogation cases. It not only sets the stage for negotiations but can also expedite the settlement process and pave the way for a successful resolution in favor of your client.

October 9, 2023

The Applicability of Florida Statute 627.70152 after the Commencement of Litigation

In a recent hearing held on Defendant’s Motion for Entry Upon Land to allow for a re-inspection for an engineer by the Insurer, Plaintiff’s counsel argued that based on Florida Statute 627.70152(4)(a)(3), the Insurer waived its right to re-inspect the Insured’s property and due to this, said Motion should be denied. The Judge in this case failed to apply Florida Statute 627.70152(4)(a)(3) correctly and agreed with Plaintiff’s counsel’s interpretation of the statute and denied Defendant’s Motion for Entry Upon Land.

 

This article looks at Florida Statute 627.70152(4)(a)(3) and how it does not apply once a case is in the litigation phase. Florida Statute 627.70152(4)(a)(3) states the following:

4) INSURER DUTIES. — An insurer must have a procedure for the prompt investigation, review, and evaluation of the dispute stated in the notice and must investigate each claim contained in the notice in accordance with the Florida Insurance Code. An insurer must respond in writing within 10 business days after receiving the notice specified in subsection (3). The insurer must provide the response to the claimant by e-mail if the insured has designated an e-mail address in the notice.

 

(a) If an insurer is responding to a notice served on the insurer following a denial of coverage by the insurer, the insurer must respond by:

  1. Accepting coverage;
  2. Continuing to deny coverage; or
  3. Asserting the right to reinspect the damaged property. If the insurer responds by asserting the right to reinspect the damaged property, it has 14 business days after the response asserting that right to reinspect the property and accept or continue to deny coverage. The time limits provided in s. 95.11 are tolled during the reinspection period if such time limits expire before the end of the reinspection period. If the insurer continues to deny coverage, the claimant may file suit without providing additional notice to the insurer.

 

Pursuant to the statute, if the Insurer asserts the right to re-inspect the property, it has fourteen (14) days to do so otherwise it can be deemed as waived. At the hearing, Plaintiff’s counsel used this argument, but in the litigation phase, and stated that the Insurer waived its right to re-inspect by not asserting its right in the response to the Plaintiff’s Notice of Intent to Litigate prior to Plaintiff filing suit. Plaintiff’s counsel went further and argued that although the Insurer waived its right to re-inspect the property, the Insurer is not precluded from having an engineer provide its opinion by reviewing Insured’s documents and/or photographs of the alleged damages and property. Under Plaintiff’s argument, the Insurer would have to assert its right for re-inspection in all of its responses to the Notice of Intent to Litigate filed by the Insured, which would be unnecessary and/or reasonable since not all claims require a re-inspection and because issues that necessitate a re-inspection by an engineer may arise after a suit is filed and discovery is propounded and received.

 

Plaintiff’s counsel’s application of the statute is erroneous in that this Statute delineates the requirements and procedures for re-inspection prior to filing suit and not after the suit is filed. More importantly, if Plaintiff’s argument were valid, the Florida statute would be in direct conflict with Florida Rule of Civil Procedure 1.280, which discusses the general provisions governing discovery in Florida. Florida Rule of Civil Procedure 1.280 provides for discovery by various methods, including permission to enter upon land. For these reasons, the Judge failed to properly apply the statute and the basic rules of civil procedure, and this pre-suit statute should not be used to preclude the Insurer’s ability to re-inspect a property once a claim is in litigation.

August 31, 2023

The State of the Statute of Repose in the State of New York

New York is famous for not having a Statute of Repose of any sort. For the purposes of this discussion, a Statute of Repose bars a claim against design professionals and contractors after passage of a certain amount of time from project completion. This is different than a Statute of Limitations, which sets a deadline to commence a lawsuit measured from the time of the loss or injury. The rationale behind the Statute of Repose is to allow design professionals and contractors to put a project to rest, at some point. For example, if doors are jammed 25 years after construction, the owner should not be able to make a claim against those that did the design and construction of the entire building. New York and Vermont are the only two states remaining with no Statute of Repose.

 

Under the current law in New York, contractors and design professionals are exposed to claims for personal injury and property damage resulting from construction defects for an unlimited number of years after a project is completed. New York Civil Practice Law and Rules (“CPLR”) Section 214-d is sometimes referred to as the mini-Statute of Repose. Section 214-d requires wrongful death, personal injury, and property damage claimants to serve design professionals with a written notice of claim, at least ninety days prior to commencement of a lawsuit, when the design or construction work was completed more than ten years prior to the date of the claim. Failure to serve the notice sets the stage for a motion to dismiss pursuant to CPLR § 3211(h) or CPLR § 3212(i). If the defendant can show that more than ten years have passed since the project was completed, and no notice was served, the case will be dismissed. See, Dorst v. The Eggers Partnership, 265 A.D.2d 294, 696 N.Y.S.2d 478 (2 Dept. 1999). This mini “Statute of Repose” is something of a joke. Among other things, even if a claim is dismissed for failure to serve the ninety-day notice, all that the claimant needs to do is serve the notice and start a new action.

 

New York is revered to be the financial capital of the world, as well as a center of art, fashion, music, theater, media, innovation, and progress. As the law is currently written, design professionals and contractors in New York are subject to claims for an indefinite period of time. After 10 years a claimant must serve a notice, but this could be 20, 30, 50, or more years after the project is completed. This creates a lot of uncertainty for design professionals and contractors and their liability insurers. This must be balanced against the need and expectation by building owners and the public that buildings remain safe and usable structures beyond the 10 years or less that most other states have adopted for their statute of repose.1

 

The design and construction communities in New York have been lobbying for a Statute of Repose for many years, and now there are bills pending in the New York State Assembly and Senate to repeal CPLR § 214-d in its current form and replace it with a 10-year Statute of Repose for personal injury, wrongful death, and property damage claims asserted against design and construction professionals. In this regard, the Assembly’s Standing Committee on Higher Education and the Senate’s Judiciary Committee, each have been considering a bill (Assembly Bill A35952 and Senate Bill S412723) to impose a limitations period of ten years after the completion of improvements to real property. The bill has had no action for more than a year. A primary motivating factor for the bill, cited by the New York Legislature, is that the purpose of the bill is to curb the continuing rise in insurance premiums by bringing certainty to the scope of post-operational risk to which design professionals and contractors are exposed. In an effort to be fair, each bill provides for a one-year extension to serve a notice of claim, which accrues during the tenth year after the completion of the improvements.

 

In New York, and even more so in New York City, buildings are expected to last 50 or more years. We do not want the facades of 20-year-old buildings falling to the sidewalk with no recourse to the designers and builders responsible for the failure. We do not want a fire sprinkler main line to fail causing millions of dollars in property damage and endangering the lives of thousands of people.

 


 

1A table of the various statutes of repose in the 50 United States can be found here

2The text of the proposed Assembly Bill can be found here

3The text of the proposed Senate Bill can be found here

August 14, 2023

Waiving Consequential Damages – The Struggle Continues

Consequential damages waiver clauses are found in almost all standard construction industry contracts. Not surprisingly, parties want to avoid the economic impacts of unforeseen consequences. Yet all too often, we find ourselves litigating over the enforceability of consequential damages waivers because the confusion about these clauses is so widespread. Why are these boilerplate standard waivers so problematic? The two main reasons are: 1) nobody can agree on what consequential damages are; and 2) the consequential damages waivers are often ambiguous.

 

So, what exactly are consequential damages? The term seems pretty straight forward, but if you’ve been an attorney long enough, you know that very little is black and white. We are experts at navigating gray areas, and, as if to recognize the need for guidance, Florida courts provided us with a roadmap to assist us in analyzing damages by dividing them into 3 categories: general, special, and consequential.

 

General Damages

General damages are those which naturally flow or result from the injuries alleged. They are commonly defined as those damages that are the direct, natural, logical, and necessary consequences of the injury. For example, let’s say Bob hires Joe to repair his AC unit and pays Joe $3,000 in exchange for Joe’s performance of the repair. If Joe breaches the contract by failing to repair the AC unit, Joe owes $3,000 to Bob in general damages.

 

Special Damages

Special damages are monies that will compensate a plaintiff for damages that do not normally result from a breach. To recover special damages, the plaintiff must prove that when the parties made the contract, the defendant knew or reasonably should have known of the special circumstances leading up to such damages. They consist of items of loss that are peculiar to the party against whom the breach was committed and would not be expected to occur regularly to others in similar circumstances. Let’s take things a little further in our example above with Bob and Joe. Bob told Joe that he needed his AC unit to be repaired because his grandmother who lives out of state planned to visit him next week and could not stay at his home if the AC was not working. Joe told Bob the repair would be simple and could be completed in a few hours on Monday morning. Monday morning just so happened to be the day that Bob’s grandmother was to arrive. Joe breached the contract by failing to perform the repair, and Bob had to pay for his grandmother to stay in a hotel during her visit. The cost of Bob’s grandmother’s hotel stay would be considered special damages because the loss is peculiar to Bob and his circumstances.

 

Consequential Damages

The distinction between consequential damages and general damages lies in the loss incurred by the non-breaching party in its dealings with third parties. “Consequential damages do not arise within the scope of the parties’ transaction, but rather stem from foreseeable losses incurred by the non-breaching party in its dealings, often with third-parties, such as costs of repair.” In Keystone Airpark Authority v. Pipeline Contractors, Inc, 266 So.3d 1219 (Fla. 1st DCA 2019), the First District relied on several cases throughout the country that illustrated the differences between consequential damages and general damages. In Urling v. Helms Exterminators, Inc., 468 So.2d 451 (Fla. 1st DCA 1985), the First District found that the cost to repair extensive termite damage to a home purchased after a termite inspection company erroneously certified that the home was free of damage constituted consequential damages, whereas the cost of the termite inspection constituted actual damages. The Eastern District of Virginia found that a property owner’s cost to correct structural defects that resulted from defective plans prepared by an architect constituted consequential damages. The Eastern District of Virginia also found that the cost to repair a leaking roof caused by an architect’s defective plans constituted consequential damages. While the differences among the three categories of damages may not be clear cut, Keystone provides a general framework that serves as a helpful guide.

 

How can a consequential damages waiver clause be ambiguous? Florida Courts allow parties to limit their remedies, including their liability for consequential damages so long as the terms of the contract are clear and unambiguous. Courts have found consequential damages waiver clauses to be ambiguous and unenforceable when the clause’s language was unclear as to the circumstances to which it applied.

 

Take the following example:

“Owner releases, and agrees that Contractor will not be held liable for any damages to the premises, nor for loss or damage, consequential, incidental or direct, including but not limited to any: theft, vandalism, wind; storm, rain, fire, flood; lightning strikes, force majeures; owner’s moving, eating or rental expense or income; disruption of services including utilities. In the event that any work performed by Contractor is wholly or partially destroyed or damaged due to theft, vandalism; wind; storm; rain; fire; flood; lightning strikes; force majeure or any other causes not under Contractor’s control, the loss shall be sustained by Owner and shall not be the responsibility of the Contractor.”

 

The contractor will argue that this waiver clause deals with two aspects of damages; 1) damage to the premises; and 2) damages to the contractor’s work. The first sentence arguably means that the contractor is not liable for any damages to the premises, regardless of whether those damages are considered direct or consequential and regardless of the source. The second sentence deals with damage to the contractor’s work and provides that the Owner will be responsible for the loss if the work is damaged by circumstances outside the contractor’s control. The owner, however, will argue that the waiver is ambiguous and contradicts itself.

 

Owner on the other hand, will argue that there is a direct conflict between the first and second sentence because the first sentence absolves the contractor from liability for damages to the property, while the second only absolves the contractor from liability in the event the damages to the premises are outside of contractor’s control, and that the “premises” arguably includes the contractors’ work.

 

Another example is:

“The Consultant and Owner waive consequential damages for claims, disputes, or other matters in questing arising out of or relating got this Agreement. This mutual waiver is applicable, without limitation, to all consequential damages due to either party’s termination of This Agreement.”

 

While this clause from the outset may appear to bar the Owner’s consequential damages claims against the consultant in a potential breach of contract claim, the second sentence calls into question the applicability of the waiver. The second sentence could be interpreted to mean that the only consequential damages that are waived are those that arise following termination. The clause’s ambiguity runs the risk of rendering it unenforceable.

 

You can avoid the consequential damages waiver pitfalls by: 1) educating yourself on what consequential damages are; 2) drafting well written clauses that are not potentially self-contradictory nor open to multiple interpretations; and 3) listing out the damages that are being waived, i.e. lost profits, increased labor and material costs, rental expenses, loss of use, etc. Acquiring a deeper knowledge and understanding of what consequential damages are will allow you to better draft an enforceable consequential damages waiver clause for your client’s benefit.

 


[1] Hardwick Properties, Inc. v. Newbern, 711 So.2d 35, 39 (Fla. 1st DCA 1998) quoting Hutchinson v. Tompkins, 259 So.2d 129 (Fla. 1972)

[1] Keystone Airpark Authority v. Pipeline Contractors, Inc. 266 So.3d 1219 (Fla. 1st DCA 2019) citing to Fla. Power Corp v. Zenith Indus. Co 377 So.2d 203, 205 (Fla. 2d DCA 1979)

[1] Hardwick Properties, Inc. v. Newbern, 711 So.2d 35, 39 (Fla. 1st DCA 1998) citing to Jonson v. Monsanto Co, 303 N.W. 2d 86 (N.D. 1981)

[1] Keystone Airpark Authority v. Pipeline Contractors, Inc. 266 So.3d 1219 (Fla. 1st DCA 2019)

[1] Keystone Airpark Authority v. Pipeline Contractors, Inc. 266 So.3d 1219 (Fla. 1st DCA 2019) citing to Urling v. Helms Exterminators, Inc. 468 So.2d 451 (Fla. 1st DCA 1985) and to Bartram, LLC v. Landmark Am Insurance Co., 864 F. Supp. 2d. 1229, 1240 (N.D. Fla. 2012)

[1] Keystone Airpark Authority v. Pipeline Contractors, Inc. 266 So.3d 1219 (Fla. 1st DCA 2019) citing to Fed. Reserve Bank of Richmond v. Wright 392 F. Supp. 1126, 1131 (E.D. Va 1975)

[1] Keystone Airpark Authority v. Pipeline Contractors, Inc. 266 So.3d 1219 (Fla. 1st DCA 2019) citing to McCloskey & Co., Inc. v. Wright, 363 F. Supp. 223 (E.D. Va. 1973)

[1] Amoco Oil, Co. v. Gomez, 125 F. Supp. 2d 492 (S.D. Fla. 2000)

[1] Orkin v. Montango, 359 So.2d 512 (Fla. 4th DCA 1978).

July 31, 2023

Attention to the Details Makes or Breaks The Case

By now most lawyers have come to recognize that Florida’s summary judgment standard mirrors the Federal standard.  This generalized view, however, overlooks important and distinct procedural aspects of Florida Rule 1.510 (c)(5). Unlike its Federal counterpart, the Florida rule requires the nonmovant party serve a Response to a Summary Judgment Motion at least 20 days prior to the hearing.  The Response must include the nonmovant party’s supporting factual position backed by the record evidence.

 

Florida Courts have applied the mandatory requirements set forth in the Rule finding the failure to file a Response as detrimental to overcoming entry of Final Judgment. In Loyd S. Meisels, P.A. v. Dobrofsky, 341 So.3d 1131 (Fla. 4th DCA 2022), a dog owner sued an animal hospital and veterinarian to recover $6,355 in charges for a CT scan allegedly not performed.  In granting summary judgment in favor of the dog owner, Judge Hurley found the facts were undisputed based upon the filings and affidavit submitted by Dobrofsky. Because the nonmoving parties never responded to the motion, the evidence remained unrefuted. Judgment was entered accordingly.  The Fourth District affirmed observing that “Rule 1.510 (c)(5) states that the nonmovant must serve a Response; there is no wiggle room in the word ‘must.’  The mandatory requirement of a Response reduces gamesmanship and surprise to allow for more deliberative consideration of summary judgment motions.”

 

Case development along with knowledge and compliance with the Rules leads to positive results. Summary Judgment Motions prepared by the lawyers of DSBC are supported by strong record evidence and sound legal authorities.  Our attorneys pay attention to the details.  The mandates of the Rules are always the starting point to success.