cea_william_20170118Becker & Poliakoff attorneys, led by shareholder William Cea, have secured a significant court ruling in favor of their client, Premier Parks, ending this case and providing for open competition to bid on a future water park planned for 65 acres in Fort Lauderdale (Premier Parks v. City of Fort Lauderdale).

Premier Parks, the parent company of Rapids Water Park in Riviera Beach, filed suit in October 2015 after the City tried to allow Schlitterbahn, a waterpark operator, to build on a 65-acre property owned by the City, including the existing Ft. Lauderdale and Lockhart Stadium facilities. After buying out the Federal Government’s interest in the land in 2015, the City agreed to enter into a 30-year lease with Schlitterbahn. Premier Parks argued that the City should have been required to obtain competitive bids for the project and the court agreed.

Gary Rosen, managing shareholder of Becker & Poliakoff, said: “This was a challenging case and we believed in our client’s right to compete for an opportunity to develop the property. We are extremely pleased for our client and are very gratified that the court has agreed with our view that the city should have submitted this to public bid.”

Media inquiries should be directed to Andi Phillips, Media Director, andi@roarmedia.com, (305) 403-2080, Ext. 128.

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The green building industry is arguably more popular than ever. The number of certified green buildings grows every day across all sectors of the building industry. Unfortunately, the contracts for sustainable projects are sometimes behind the times. Standard construction contracts are often not tailored to address the numerous issues and nuances that may come up on sustainable projects. This potentially puts all contracting parties at greater risk of uncertainty if disputes arise on the job site. Preparation on the front end of a green building is usually the best way to alleviate problems later on, and it starts with the contract. This is true whether the project is one for new construction or for renovations or retro-fitting.

First, the contract should be as clear and specific as possible about what the green goal is. Simply using terms like “green building,” “sustainable building” or “high-performing building” are not enough, because it is unclear what the precise goal is. For example, the goal may be to reduce electricity costs, and the owner may have a specific energy saving cost or usage goal in mind. That should be identified in the contract. In addition, an owner may require a third-party green rating certification. That could mean LEED certification, but LEED alone has multiple levels. Or, it could mean Green Globes, the WELL Building Standard, or a handful of other third-party rating agencies. If so, then specificity is needed. If the goal is not achieved, there will be no confusion as to what the goal was. Related to this issue is which party will bear the costs for certification fees, inspections and tests that may be necessary to the green certification. Again, this is best addressed in the contract.

Second, the contract should reflect who is responsible for achieving the project’s green goals. That might be a design professional like the architect or an engineer. Or it may be general contractor, sub-contractors, suppliers, a sustainability coordinator or a combination of construction professionals. Each segment of the construction project should be aware of what responsibilities it is undertaking in the green building process. The person or entity that is responsible also may want to get paid more for taking on the added risk.

Making Guarantees

All contracting parties should be aware of what guarantees they are making or receiving in terms of sustainable performance or certification. For instance, if a contract requires LEED Gold certification, but the final product does not achieve that, the contract should be clear about what the repercussions are. Similarly, the contract can address what happens when a component such as a solar energy system or a HVAC unit does not achieve the level of performance a contractor or otherwise represented.

An alternative to a guaranty is a performance bonus or bonuses based on the certification or performance levels achieved. In other words, a contract will describe a base fee for services on the project and then allow for additional compensation depending on the level of certification the building gets or based on the level of performance of the building after occupancy. This is helpful because it can be difficult to guaranty these levels on certain projects. Green building warranties may also be provided, but carry greater obligation or risk to the warranty provider.

The parties can also tie final completion benchmarks to the achievement of the sustainable goal, depending on the type of project. Money may be held back on a project pending the receipt of the green rating. However, when a rating will be bestowed by the rating agency is not always certain, and cannot be entirely controlled by the contracting parties.

A contract can also address the types of damages that may be obtained if the project fails to achieve the agreed-upon sustainability goals. For example, if the purpose of building green was to achieve certain tax credits, and those credits

are not achieved, they may become the measure of damages. Damages may be more difficult to ascertain in other performance metrics. Contracting parties may also want to consider capping those damages, or setting forth a method to measure them.

When it comes to green building contracts, there is no one size that fits all. Goals, methods, specifications and components can greatly vary. However, all parties involved in a sustainable building project have added incentive to consider and address the unique issues that may appear. Reliance on the standard building contract may not suffice. If the issues are not properly addressed upfront, the chances for dispute and litigation will significantly increase. As the old saying goes, an ounce of prevention is worth a pound of cure.

Mark J. Stempler is a Florida shareholder with the law firm Becker & Poliakoff. He is board certified in construction law, is certified as a LEED Green Associate and focuses his practice in the areas of construction litigation, government law, and civil litigation. He may be reached at mstempler@bplegal.com.

Do you provide goods or services that public agencies purchase? Do you want to pursue public contract awards? Do you know how to get started? These are questions that you may have asked yourself. If you are looking to bid on public contracts, then there are some steps that you can take to put a plan into action.

First, you should identify public agencies that need your goods and services. Some agencies may have purchasing cycles for particular goods and services and knowing when those opportunities will be advertised is critical. Most agencies maintain websites with links to their purchasing departments and/or purchasing procedures. They may also have representatives that can provide guidance on doing business with the agency and whether there are any registration or pre-qualifications requirements. The websites may also list the pending advertisements and bidding deadlines. Prior to contacting an agency, however, be mindful that there may be cones of silence or other restrictions on who you may speak with to get information about a particular contract. There are also private companies that compile bidding opportunities that you may be able to subscribe to.

Once you have identified a public agency that is in need of your goods or services, then make sure that you can meet the agency’s standard contractual terms and conditions. These would include the types of licensure, insurance, bonding, and payment terms, for example, that the agency may require for its contracts and purchase orders. After you know what agencies need your services, and that you are prepared to meet their standard terms and conditions, you have to be prepared to submit a responsive bid by whatever submittal deadline is established by the advertisement. A responsive bid is generally defined as one that conforms in all material respects to the requirements of the solicitation. For example, it is important to provide all  of the required information, price terms and bid forms required by the agency. Dotting the i’s and crossing the t’s is critical when it comes to submitting a bid to a public agency.

Public procurement is a highly specialized area of the law and each contract advertisement and award must be reviewed on a case by case basis. To optimize your chances of success, it is important to carefully review each and every advertisement and to make sure that your bid conforms to the specific requirements. Clerical oversights may be the difference between landing a profitable contract and rejection. For specific questions and concerns with respect to bidding on a particular contract or award related challenges or “bid protests”, legal counsel should be consulted as early in the process as possible.

There was a recent article in Tampa Bay Online by Yvette Hammett, linked here, dealing with new dorms going up at the University of South Florida. Other than my normal interest in the goings on at my alma mater was the construction methodology for the project. Tampa-based CBG Building Co., plans to use a system developed by Denver-based Prescient Co., Inc., where segments of the building are designed and pre-constructed off site and then shipped to the site for installation.  The dormitory project consists of a 6 story parking garage and a 6 story dormitory with 500 apartment style units.

A quote from the article notes that this type of construction may be expandable to different types of projects:

What makes this building system so different is this: “We don’t construct our building,” said Prescient CEO Satyen Patel. “We assemble it.” The process involves three companies — one for software development, one that heads up the manufacturing technology and one that installs the products on site, Patel said.

“We deliver a post, a panel and a truss. Those are the three finished goods that come out of our manufacturing system and get assembled on site. We can go taller than timber and substantially less expensive than concrete.”

Patel said the Florida market will be big for his company for several reasons: the projects work well for senior living facilities, Prescient serves the higher density market and its system works well for in fill construction because it doesn’t require a large staging area like traditional construction does, Patel said.

The original intent in going to this system was to meet an August 2016 completion date. It will be interesting to see the progress on this project and if that schedule is met.

In this 2 part blog post I wanted to touch on some basics of the typical “multifamily” construction defect case. Whether the project is a condominium, apartment, assisted living facility or hotel they share many of the same issues.  There are six primary considerations in bringing these claims but each of those has many subparts which depend on specific facts of the project.  Considerations 1 to 3 are here.

The fourth consideration is the type of recovery available.  Generally the cost of repairing the defective condition is the damage that can be recovered.  In the event that such repair would be economically wasteful courts may consider diminution of value to be a valid damage.  In addition, depending on the type of property there may also be lost rents, lost profits claims for the time that the property was not able to be used for its intended purpose or for partial loss of use.  Attorney’s fees are often not recoverable in defect claims in most jurisdictions. The exception to the “American Rule” is where the fees are awarded to the prevailing party through contract or statute or what is called a “proposal for settlement” or “Offer of Judgment.”  The question of recovery is maybe the most important one for owners because no one wants to spend money on experts and lawyers where the damages do not warrant such claims.

The fifth consideration is the defenses available.  I have never handled a defect claim where there was no claimed defense by one of the parties identified above.  The typical defenses are that the owner failed to maintain the condition, that the damages were not mitigated, lack of notice of the condition, failure to comply with a statutory notice procedure, the repair is a betterment, the repaired items consist of first costs that the owner would have incurred anyways.  The determination as to the validity of a given defect claim or defense rests with the trier of fact, whether that be a judge, jury or arbitrator.  The applicability of a defense is based upon the specific facts of each case.

The sixth consideration is the cost in moving forward with such claims and the prospects of recovery. Given the complicated nature of these cases they often settle.  Driving settlement is the cost of moving forward in the litigation as well as likelihood of recovery from the named defendants or their sureties or insurance carriers. Not evaluating these items at each step of a case is a trap for the unwary client or counsel.

I have represented numerous owners, condominium associations, contractors and developers in these types of cases and I can guarantee that none of them wanted to be in this type of litigation.  However, sometimes construction projects go wrong and everyone bears some of that eventual cost.

In this 2 part blog post I wanted to touch on some basics of the typical “multifamily” construction defect case. Whether the project is a condominium, apartment, assisted living facility or hotel they share many of the same issues.  There are six primary considerations in bringing these claims but each of those has many subparts which depend on specific facts of the project.

The first consideration is who is the true owner and is that entity able to recover for the defective construction.  Is there a condominium association or building owner? Maybe it is the hotel or facility operator that is the aggrieved party or is the developer of the building?  Knowing who has the rights to make the defect claims is a critical first step.

The second consideration is to determine against whom any claims may be asserted.  Is there a claim against the developer of real property who designed, built and sold the units or buildings in questions? Or maybe there are claims against the general contractor and subcontractors who coordinated and performed the work?  What about the design professionals who designed the building improvements?  The reality is that all of these entities could be responsible for defects in the improvements.  How much each of them is responsible for is dependent upon the warranties, contracts and legal theories at play where the property is located as well as any contracts that may exist between the parties.

The third consideration is what types of claims available depend greatly on the jurisdiction you are in.  There may be contractual express warranties which would arise out of the contracts negotiated between parties. There are implied warranties pursuant to the common law that may be at play.  In some jurisdictions and depending on the type of property, Florida condominiums for example, statutory implied warranties may exist that protect the owner.  Most states still allow claims for negligence in the construction or design of the structures.  An important note is that not every claim can be made against every party. Careful consideration is needed as to what parties should be asserted against whom.

Part 2 next week.

As previously noted, House Bill 87 modified some of the requirements of Chapter 558, Florida Statutes.  The statute was recently signed by Governor Rick Scott and the changes will take effect Oct. 1.

The original intent of Chapter 558, enacted in 2003, was to require compliance with a mandatory pre-suit process before claims for construction defects could be brought in court.  Originally the claims subject to Chapter 558 were limited to residential defect claims but now include all residential and commercial project claims for defects.  All public projects are also included except for projects involving the Florida Department of Transportation.  In my experience the pre-suit process does not resolve many claims and add barriers and costs to owners and end-users.  A cynic might believe that the statute is working as intended.

Chapter 558 requires written notice from the claimant to the construction or design professionals believed to be responsible for defects or deficiencies and provide timeframes for the construction or design professionals to review the claims, inspect the property and respond. Responses from recipients of the claims could include an offer to repair the defects at no cost to the claimant, pay a monetary settlement, dispute the claim and decline to remedy or pay for some or all of the claimed defects, or a combination of these options.

Should the claim not be resolved then litigation may ensue. The defense remedy if a claimant does not comply with Chapter 558 is a stay of the lawsuit until compliance.

The amendments to Chapter 558 add a variety of requirements that, in my opinion, will make resolution pre-suit more difficult and continue to enact barriers to a claimant’s access to the courts.

  • Section 558.001, previously stated that the “contractor, subcontractor, supplier, or design professional” should have the opportunity to resolve the claim without further legal process but now includes “the insurer of the contractor, subcontractor, supplier, or design professional” as parties that should have such an opportunity.  However, there remains no requirement that notices of claim be served on insurers which from the claimants standpoint is appropriate as they often will not know who the insurers are.
  • Section 558.001 was further changed to add that such opportunity to resolve claim was “through confidential settlement negotiations” which is a point that may have been assumed previously.
  • Section 558.004(1)(b) had several changes made. The first is that the words “if known” were added to modify the requirement that claimant identify the damage or loss resulting from the defect.
  • The second change to 558.004(1)(b) is potentially more significant for all parties involved. The notice of claim must now “identify the location of each alleged construction defect sufficiently to enable the responding parties to locate the alleged defect without undue burden.”  Such identification must be based upon a visual inspection.  Such a requirement for identification may be easy for a single family home or an obvious defect.  However, such a requirement becomes exponentially more difficult in condominiums, hotels, schools and other end users with multiple units or rooms.  I expect there to be much argument, and litigation, about the quality of the notice of claim and what the terms “undue burden” mean.  This section will undoubtedly be used as a sword by recipients of notices not to resolve claims on the merits but on procedural grounds which is anathema to the alleged intent of the statute.  Further, this provision takes some of the “burden of proof” that a claimant may have at trial and attempts to force claimant to incur those costs up front.  Once again a cynic may view this as an attempt to set up barriers to claimants from pursuing claims.
  • The third change made to section 558.004(1)(b), is stating that the claimant has “no obligation to perform destructive or other testing for purposes of this notice.”  This change does make clear that the visual observation referenced previously is just that, a visual observation.  Given the costs for ASTM or other types of testing this provision does help owners.  However, given that there was no previous requirement for claimants to perform testing this provision clarifies the existing law.
  • Section 558.004(13) provides that a notice of claim does not constitute a claim for insurance purposes which was modified by “unless the terms of the policy specify otherwise.” I have yet to see a policy make the notices of claim a policy claim so this change may be of little impact.
  • Section 558.004(15) requires exchange of certain documents related to the alleged defects in the notice of claim. This section was revised to delete the requirement that “design drawings or specifications” be exchanged.  This change hurts owners who are less likely to be in possession of those documents than are the professionals hired to design and build.
  • Section 558.004(15) is further revised to require that maintenance records can be requested. Although the failure to maintain components may be a defense to some claims, the requirement to turn over maintenance records pre-suit, upon request of the claim recipients, is unnecessary and another cost for the owner.
  • Section 558.004(15) no also requires that, upon request, “documents related to the discovery, investigation, causation, and extent of the alleged defect” be produced. These documents would include many items protected by the attorney-work product or attorney-client privilege. Such documents would not be limited to those of the owner as designers and contractors who actually investigate the claims could be adversely impacted. Fortunately, the next change provides that a party may assert any privilege recognized under Florida law.  This latter portion may do away with the worst applications of the former.
  • Completion of a building has been modified to include temporary certificates of occupancy to reflect the actual practice of building departments in allowing occupancy of buildings.

As noted above, there are many changes and they do not make it easier for owners to make claims.  Also, it is likely that more amendments will be made in the next few years as some of the new changes prove unworkable.

Let me start with the caveat that I am not getting into the political or race issues at the heart of recent events in Baltimore. However, from the point-of-view of someone working in construction and insurance law, the insurance and rebuilding questions created by the protests/riots in these cities is of great interest. Although the specific article here references insurance issues and struggles to rebuild in Maryland, similar concerns and analyses would apply anywhere that such events take place.

As the article from Insurance Business America notes, many small businesses have been unable to reopen post damage as they are caught in a web of what is and is not covered under their applicable policies. Many questions loom: does the property insurance policy afford coverage; what about the Business Interruption policy; what are the applicable deductibles?

As is typical of any insurance coverage the devil is in the details of the specific policy at issue. Insurance policies can cover almost anything but the more a policy covers the more expensive it likely is and thus cost prohibitive to many small business owners. As a result many business owners reduce coverage, or increase deductibles, in order to afford the policy premium.

Unfortunately, many owners are now finding out that:
– They are underinsured;
– Older buildings need to be brought up to code and their policies do not include such “Law & Ordinance” coverage;
– The storefront glass is not a covered loss;
– Depending on the characterization of the event, “riot” as opposed to “rebellion”, may impact coverage;
– The deductible period for a business loss may cover the time frame when the majority of the damage occurred;

Unfortunately for these business owners it is too late and they are stuck with the insurance policy they bought or did not buy as the case may be. However, it is beneficial for all business and property owners to review their existing policies and sit down with the professionals to hammer out any changes that may need to be made. For those that believe that they are not “at risk” for such casualties such as in Baltimore, that is the narrow and short view of insurance. Reviewing the policies would be beneficial for all other risks including fire, flood, hurricanes, etc. In the long run that may be one of the best invested couple hours of a business or property owner’s life.

Thursday, the Florida Supreme Court issued its opinion in Citizens Property Insurance Corp., v. Perdido Sun Condominium Association, Inc., considering the issue as to whether Citizens Property Insurance could be liable for First Party Bad Faith Claims.  The Supreme Court determined that Citizens was not liable for such claims and that no exception for such claims existed from Citizens statutory immunity.  This places Citizens in a different position, in regard to insureds, than other insurance carriers who may be offering similar property policies.

The issue in was whether the Legislature intended CitizensProperty Insurance Corporation, a state-created entity that provides property insurance, to be liable for statutory first-party bad faith claims as an exception to its statutory immunity from suit.  The issue had come before the Supreme Court from the First District’s decision in Perdido Sun Condominium Ass’n v. Citizens Property Insurance Corp., 129 So. 3d 1210 (Fla. 1st DCA 2014), which had determined that the “willful tort” statutory exception to Citizens’ immunity applied to statutory first-party bad faith claims.  The First District opinion was at odds with the Fifth District’s opinion in Citizens Property Insurance Corp. v. Garfinkel, 25 So. 3d 62 (Fla. 5th DCA 2009) which held that Citizens was statutorily immune.  The First District certified a conflict between Districts and the Supreme Court took up the issue.

Additionally, the First District passed the following question, which it certified to be of great public importance, to the Supreme Court:

WHETHER THE IMMUNITY OF CITIZENS PROPERTY INSURANCE CORPORATION, AS PROVIDED IN SECTION 627.351(6)(s), FLORIDA STATUTES, SHIELDS THE CORPORATION FROM SUIT UNDER THE CAUSE OF ACTION CREATED BY SECTION 624.155(1)(b), FLORIDA STATUTES[,] FOR NOT ATTEMPTING IN GOOD FAITH TO SETTLE CLAIMS?

As noted above, the Supreme Court answered this question in the affirmative.  The basis for the opinion was a review of the statutory exceptions to Citizens’ immunity.  The Supreme Court found no support for the proposition “that the Legislature intended for Citizens to be liable for a breach of the duty to act in good faith by allowing its policyholders to bring a statutory first-party bad faith cause of action.”  The Supreme Court then reviewed the listed exceptions.  The Court noted that an exception to immunity was not provided and for  the contrary, “the Legislature chose to immunize Citizens for ‘any action taken by [it] in theperformance of [its] duties or responsibilities under . . . subsection [627.351(6)(s)],’ which necessarily includes a breach of the duty of good faith.”

The opinion is not yet final as there could be motions for rehearing.

The Atlantic hurricane season is defined as running from June 1 through November 30.  No one bothered to tell that to Tropical Storm Ana which hit South Carolina over the weekend.  The Ana had sustained winds of 45 mph at landfall and brought anywhere between 2″-6″ of rain depending on location.  The early start of the hurricane season does not mean that we will necessarily have more hurricanes or what the severity of those hurricanes will be.  However, it is always good to be prepared and plan ahead. The next few weeks will be important to finalize, or even start, our personal and business hurricane preparedness plans.  Even if you do not have one yet there is still time to prepare.

Below is a 12-point Hurricane Preparedness Checklist for condominium and homeowner associations to prepare for the 2015 hurricane season:

1. Disaster Plan – If you have a disaster plan be ready to implement it. At a minimum, designate a responsible community member as Disaster Plan Coordinator and another as Information Facilitator to field queries and respond to from community members. These individuals should be outside the impacted areas so that they can field and disseminate information.

2. Evacuation Routes – Establish clear building or community evacuation routes and be sure that all community members are provided with copies. It may be a good idea to conduct a building or community evacuation drills.

3. Emergency Generators & Supplies – Verify emergency generators are in working order and have adequate fuel supplies, stock a building or community emergency supplies storeroom with flashlights, batteries, water and other necessities for residents and employees in the aftermath.

4. Backup Computer Files – Be sure that computer files crucial to running the building and association, including the governing documents and original plans and specifications for the building, are backed up to CDs or Portable Storage Devices and keep a list of office computer hardware and software vendors and repairmen in case computers crash or systems fail.

5. Secure the Premises – Make preparations for routine lockdown of the building or other facilities so the building is secure during the storm and safe from vandalism or looting if a hurricane strikes.

6. List of Owners & Employees – Have on hand a current, hard-copy reference list complete with the names all property owners, emergency contact numbers and details of second residence addresses, as well as a list of all association employees, with full contact details.

7. Photograph or Video Premises – Keep a visual record through video or photographs of premises, facilities and buildings to facilitate damage assessment and speed damage claims in a storm aftermath.

8. Building and Facilities Plans – Make sure a complete set of building or community plans are readily available for consultation by first-responders, utilities workers and insurance adjusters following a storm.

9. Insurance Policies & Agent Details – It is too late to obtain new windstorm or flood insurance which would cover Hurricane Isaac, but secure copies of all current insurance policies along with contact details for insurance companies and agents.

10. Bank Account Details & Signatories – Keep handy a list of all bank account numbers, branch locations and authorized association signatories, and make contingency plans for back-up signatories in case evacuation or relocation becomes necessary.

11. Mitigation of Damages – In the immediate aftermath of a storm, take the necessary steps to mitigate damages — this includes “Drying- In,” which is the placement of tarps on openings in the roof and plywood over blown out doors and windows, and ” Drying –Out,” which is the removal of wet carpet and drywall to prevent the growth of mold.

12. Debris Removal – Have a plan for speedy removal of debris by maintenance staff, outside contractors or civic public works employees.

For more information, we have several pre-recorded webinars devoted to disaster planning, contracting and restoration of casualty damages. Please go to Becker & Poliakoff Webinars to view the webinars available for download.