Business and Legal Insights

Lawsuits involving construction defects typically include numerous defendants and third-party defendants. These defendants are often the general contractor, sub-contractors, suppliers, engineers, and architects who performed work on a construction project. Each defendant may be partially responsible for the damages suffered by the plaintiff. More often than not, there are claims for indemnity between the defendants.

Indemnity means a “duty to make good any loss, damage, or liability incurred by another” and “the right of an injured party to claim reimbursement for its loss, damage, or liability from a person who has such a duty.” Black’s Law Dictionary (10^th ed. 2014). The duty to indemnify can arise contractually, statutorily, or equitably. Indemnification clauses are often included in construction contracts. Typically, in a construction defect lawsuit, there will be claims for indemnity by and between multiple parties. But when is it too late to bring such a claim?

There is a four year statute of limitations on indemnity actions related to construction claims. §95.11(3)(c), Florida Statutes. But the statute of limitations for an indemnity action “does not begin running until the litigation against the third-party plaintiff has ended or the liability, if any, has been settled or discharged by payment.” Castle Const. Co. v. Huttig Sash & Door Co., 425 So. 2d 573, 575 (Fla. 2d DCA 1982). Defendants can, however, bring contingent third-party claims. Gortz v. Lytal, Reiter, Clark, Sharpe, Roca, Fountain & Williams, 769 So. 2d 484, 487 (Fla. 4th DCA 2000). So if you have a potential claim for indemnity it is better to bring it sooner rather than later to avoid an argument that the Statute of Repose bars your claim.

The Statute of Repose is intended to protect parties from stale claims.  According to one Florida court, the Statute of Repose, which applies to all actions founded on the design, planning, or construction of an improvement to real property, also applies to construction related indemnification claims. Dept. of Transp. v. Echeverri, 736 So. 2d 791 (Fla. 3d DCA 1999); §95.11(3)(c), Florida Statutes. According to the Court in Echeverri, this means that a party must bring its indemnification claim within ten years “after 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.” Id. Just as parties are protected from stale construction claims, parties are protected from stale indemnification claims.

So the Echeverri case serves as a reminder to both potential indemnitees (typically general contractors) and alleged indemnitors (typically subcontractors, suppliers, engineers, or architects). If you are an indemnitee, consider bringing your indemnification claim early. Conversely, if you are an indemnitor, consider the statute of repose defense.

Relevant Resources:

• §95.11(3)(c), Florida Statutes.
• Castle Const. Co. v. Huttig Sash & Door Co., 425 So. 2d 573, 575 (Fla. 2d DCA 1982).
• Gortz v. Lytal, Reiter, Clark, Sharpe, Roca, Fountain & Williams, 769 So. 2d 484, 487 (Fla. 4th DCA 2000).
• Dept. of Transp. v. Echeverri, 736 So. 2d 791 (Fla. 3d DCA 1999).