Business and Legal Insights

The Dreaded Lawsuit Alleging Latent Defects.

A dozen years after the construction of a home, you are served with a lawsuit alleging significant defects in the home’s foundation.  The homeowner claims the defects were “latent,” which are construction defects that the homeowner alleges were hidden to the eye or that a reasonably careful inspection would not reveal.

The homeowner has named as a defendant every party whose scope of work, services, or materials could have contributed to the alleged latent defects in the foundation, including the contractor, engineer, architect, subcontractors, and homeowners association responsible to maintain the drainage system that allegedly contributed to the defects.

After struggling to recall the project on which you worked 12 years ago, your first thought is, “Can I be sued for something I worked on more than a decade ago?”  The answer to that question depends on who “you” are and what your role on the project was.

Statute of Limitations and Statute of Repose for Improvements to Real Property.

Section 95.11(3)(c), Florida Statutes, requires causes founded on the “design, planning, or construction of an improvement to real property” to be brought within 4 years of the construction, unless the defect is latent. For latent defects, “the time runs from the time the defect is discovered or should have been discovered with the exercise of due diligence.”  Id.

Even for a latent defect, however, § 95.11(3)(c) provides that the action must be commenced within 10 years of “the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest.”

The 4-year limit referenced in the beginning of § 95.11(3)(c) is referred to as the “statute of limitations.” The 10-year limit is called the “statute of repose.”

Since the homeowner in the above hypothetical lawsuit has sued numerous parties who could have contributed to the alleged defects, the question becomes: Who receives the protection of the statute of repose, and can therefore hopefully extricate himself from the lawsuit?  For that answer, we need to look a bit more closely at the history of the statute of repose and the specific language of the statute.[1]

Who Receives the Protection of the Statute of Repose?

While many defendants often claim the protection of the statute of repose, it is in fact limited to a select class: architects, engineers, and contractors.

As quoted above, § 95.11(3)(c) refers to architects, engineers, and contractors only, and does not mention any other potential defendant. While that provides some evidence of the Legislature’s intent, the language of the statute is not entirely conclusive that the statute of repose is limited to architects, engineers, and contractors.

So, for further evidence, we need to look at the Preamble of § 95.11(3)(c), which makes it clear the Legislature intended to limit the statute of repose to architects, engineers, and contractors.

The preamble, in part, states:

WHEREAS, architects, engineers, and contractors of an improvement to real property may find themselves named as defendants in a damage suit many years after the improvement was completed and occupied, and, . . .

WHEREAS, the availability of professional liability insurance for the engineer, architect, and contractor is more difficult to obtain if they are exposed to potential liability for an indefinite period of time after an improvement to real property has been completed and, . . .

WHEREAS, the best interests of the people of the state will be served by limiting the period of time an engineer, architect, or contractor may be exposed to potential liability after an improvement has been completed, . . .

Ch. 80-322, pmbl., Laws of Fla.  (Emphasis supplied.)

Importantly, the preamble to § 95.11(3)(c) only mentions architects, engineers, and contractors as the class of persons protected by that statute.

The issue was addressed by the First District Court of Appeal in Long v. First Federal Savings and Loan Association of Citrus County, 497 So. 2d 964 (Fla. 1st DCA 1986).  In Long, a vendor, or seller, of real property agreed and warranted in a contract with the purchaser that the vendor would make all repairs necessary to bring the building into compliance with new construction standards.  Id. at 965.  After the sale, the purchaser sued the vendor for breach of warranty and alleged that the vendor did not bring the building into compliance with current codes.  Id.  The vender defended the case on the basis of Section 95.11(3)(c), and argued that the 4-year statute of limitations applied because the contract related to the improvement of real property.  Id.  The purchasers argued that the 5-year statute of limitations for actions on a written contract should apply.  Id.

The First District Court of Appeal analyzed the preamble and held that Section 95.11(3)(c) only applied to architects, engineers, and contractors, and did not apply to a vendor who entered into a contract for the improvement of property.  In that regard, Long held as follows:

The appellee was merely the vendor in the sale of the property to the Longs, and is not within the class of persons sought to be protected by the shortened statute of limitations of § 95.11(3)(c). This provision was enacted by the legislature in 1980, and the preamble to the revised version makes it clear the legislature’s intent was to limit the amount of time an architect, engineer or contractor could be exposed to potential liability for the design or construction of an improvement to real property. Ch. 80-322, § 2 Laws of Florida.

Long, 497 So. 2d 964, 965 (Fla. 1st DCA 1986) (emphasis added).

While Long addressed the statute of limitations portion of § 95.11(3)(c), as opposed to the statute of repose, the entire statute falls under the same Preamble, and there is no language in the statute for the proposition that the statute of limitations applies to different parties than the statute of repose.

Conclusion

The statute of repose provides a strong defense in favor of contractors, architects, and engineers who are served with a lawsuit alleging latent defects for the improvement to real property more than 10-years after the trigger dates in § 95.11(3)(c).  If you fall within that class, and are named in a lawsuit for construction that concluded more than 10-years ago, you should immediately contact your construction litigation counsel to discuss the applicability of the statute of repose.

[1] There are many issues that arise when analyzing the application of the statute of repose, including whether the cause of action relates to an “improvement” or a “repair” to real property, and when the statute of repose actually begins to run.  Those are questions we will address another day, or which you should discuss with your construction litigation counsel.  The focus of this post will is on which defendants receive the protection of the statute of repose.