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.