Proposed Legislation to change Chapter 558
The Legislature will be considering legislation this year to change Chapter 558, Florida Statutes. Chapter 558 is required process for any party seeking to pursue claims for construction defects. The original goal of Chapter 558 was to provide an opportunity to settle defect claims without litigation or arbitration, and not to create another source of dispute or litigation. This bill is contrary to that original intent. The proposed bill would create new rights and defeats any realistic hope to amicably resolve claims as more fully explained below. These changes, if enacted, will negatively impact all owners of construction improvements including hospitals, doctor’s offices, school buildings, condominiums, single family homes and commercial buildings. The proposed legislation can be found here and the specific problems are noted below.
Requiring the notice to specify the location of each alleged defect is impossible relative to any structure of any size. To require a claimant to inspect all buildings (20, 30, 40 or 50+) and identify with specificity every instance where a specific defect (e.g. crack in the stucco) appears would be prohibitively expensive, and not necessary at this stage. The parties to whom a notice of claim would be sent are the construction professionals – they should be able to locate the defects if the Notice of Claim describes “in reasonable detail sufficient to determine the general nature of each construction defect.” The last sentence, which provides that the failure to provide the information is prima facie evidence of a defective notice, invites disputes over the sufficiency of a notice of claim. Once the nature of the defect is identified, the notified parties can inspect and draw their own conclusions just as easily as the claimant can. The only thing this will accomplish is to create a “gotcha” for claimants.
Overall, the proposed procedure will increase the burden on owners (residential and commercial) to go beyond what a court would require to prove a case at trial. It will also have a chilling effect because the cost to do so would be exorbitant and many would simply not be able to get it done and afford it. Chapter 558 was created to lower expense as opposed to increasing the cost to reach a resolution. This will effectively stop homeowners and owners from being able to make a claim when legitimate defects exist in residential and commercial construction.
All of these issues were addressed in 2003 when Chapter 558 was originally enacted and then later revised to clarify and resolve some early inequities in the process. Why is this being revisited now? This will place the burden of defective construction on claimants as opposed to shifting responsibility to the party that created the problem.
Further, requiring the notice to specify the specific provisions of the Building Code that are violated would again impose prohibitive costs on claimants, who would have to pay consultants for hours of analysis and report preparation which, again, is not necessary at this stage. The intent of Chapter 558 is to require notice and give an opportunity to inspect and allow a cooling-off period for the parties to talk before suit is filed. The purpose of Chapter 558 and the notice procedure is to not have trial specific proof but enough information to allow the parties to discuss the defects and achieve a possible remediation or settlement.
Collectively, these changes are not designed to facilitate resolution, but are instead punitive toward claimants.
There is no need for another statutory provision allowing fees for “frivolous” claims. Section 57.105 already exists for that purpose. Further, the courts already have inherent jurisdiction to sanction parties for bad faith or egregious conduct. See Bitterman v. Bitterman, 714 So. 2d 356 (Fla. 1998) .
Requiring claimants to produce maintenance records and “other documents” pre-suit imposes costs on claimants but is not helpful at this stage. The statute already allows for visual inspections and destructive investigation. An inspection, destructive or otherwise, will allow the notified party to form an opinion about whether the alleged defect is truly a defect or merely the result of a lack of maintenance. Producing records will be neither helpful nor relevant unless and until suit is filed as they are matters of proof. Having these records does not assist a party in responding to the notice of claim as the recipients will either agree to fix the problem, make a monetary offer or not. Once again, the point of Chapter 558 is to allow the inexpensive and efficient resolution of disputes, not create obstacles to filing suit.
Lines 166 – 181:
This section creates a mini-litigation process of its own. The whole point of creating Chapter 558 was that it was to be an alternative to litigation. Chapter 558 does not currently require a notified party to do anything. A notified party is not required to retain consultants, review documents, provide a remediation or do anything at all under the existing statute. In fact, a notified party can simply not respond to a notice of claim and no punishment is afforded under current law. The idea that contractors must spend substantial sums investigating and defending against Chapter 558 claims is not true. There is no purpose to be gained by adding subsection (16) except to create a club with which to threaten claimants.
At the end of the day, these changes will make pursuing real construction defects more difficult and will pass along the liability for those defects to the owners and purchasers rather than those that constructed the improvements.