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Construction Law Authority / Posts tagged "liability"

The Bonus Value of Your Liability Insurance Policy: Litigation Defense

Your liability policy's value goes beyond its coverage of losses up to its stated policy limit. Especially if you find yourself in a complex lawsuit with numerous parties, your policy could provide significant value by obligating your insurance company to pay your attorneys' fees and costs. Therefore, when faced with a potentially-covered claim, it is important to not only give notice to your liability carrier, but also request that your carrier defend you against the claim, to make sure you get the full value out of your policy....

Design Professional Liability Legislation (Again)

For the third year in a row, the state legislature has introduced legislation to protect architects, engineers and other design professionals from claims for negligence in the performance of their professional services. In 2010 a bill passed both legislative houses but was vetoed by Governor Crist. Last year the bill did not get as far, but apparently proponents of the bill believe the third time may be the charm. Unfortunately, as in prior years this legislation is anti-consumer. Senate Bill 286, linked here, would provide that architects or engineers would no longer be personally liable for negligence arising out of their professional services. This would essentially limit people hiring these design professionals to breach of contract claims against the design professional’s business entity. This is a problem because most design contracts limit the design professional’s liability to some paltry amount that pales in comparison to the harm that comes from defective design. The steps that the...

Lender Liability to Contractors Extended by Court

A recent Florida appellate court decision extended a lender’s liability to contractors for failure to fully fund a construction loan on a project. §713.3471 of the Florida Statutes makes construction lenders liable to contractors and lienors who served a notice to owner if the lender ceases funding a construction loan without first notifying the contractor and lienors. In that situation, the lender could be liable for the actual construction costs incurred plus 15% for overhead and profit from the date on which the notice should have been provided until the date it actually is provided, if at all.

In an opinion not yet reported, Whitehead v. Tyndall Federal Credit Union, the court liberally interpreted this statute to make a lender liable to the original contractor when the lender failed to pay that contractor, but instead paid a replacement contractor. The lender denied liability, saying it fully funded the construction loan as required by the statute, even though the funding went to a subsequent contractor. The court held that, since the construction loan funds didn’t all go to the original contractor, the lender was required to provide statutory notice to the contractor that loan proceeds would no longer be funded to that contractor, even though they would later be paid to the subsequent contractor. The court reversed summary judgment in the lender’s favor, paving the way to the lender’s potential liability to the contractor for actual costs plus 15% overhead and profit.

Therefore, in this environment where non-payment of contractors has proliferated, consideration should be given to whether claims against the construction lender are available