QUICK NOTE: UNENFORCEABLE LANGUAGE IN ARBITRATION PROVISION

imagesAlthough arbitration is a dispute resolution provision provided for in a contract, the scope of judicial review of an arbitrator’s award is still governed by law.  There are limited circumstances in which an arbitrator’s award can be challenged under the law.  One of those circumstances is not because a party believes that an arbitrator applied the incorrect law.  

 

In a recent construction case, discussed in more detail here, an arbitration provision provided that a party can essentially appeal/challenge an arbitrator’s award to the circuit court if the arbitrator applied the incorrect law.  The appellate court held this language was unenforceable because it attempted to expand the legal scope of judicial review of an arbitration award.  The issue, here, became more than just the unenforceable language but whether the entire arbitration clause should be deemed unenforceable.  In other words, the issue became whether the unenforceable language that expanded the scope of judicial review of an arbitration award could be severed from the provision such that the parties would still be required to arbitrate (hence, the importance of a severability provision in a contract) OR the entire arbitration provision should be deemed unenforceable.  This is a HUGE difference because in one instance the parties still can arbitrate absent the expanded scope of judicial review and in the other instance the arbitration clause is unenforceable in entirety and the parties would be required to litigate. 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

SERVING THE 558 NOTICE OF CONSTRUCTION DEFECT LETTER IN LIGHT OF THE STATUTE OF REPOSE

shutterstock_683852965Florida Statutes Chapter 558 requires a Notice of Construction Defect letter (“558 Notice”) to be served before a construction defect lawsuit is commenced.  This is a statutory requirement unless contractually waived for a completed project when latent defects or post-completion construction or design defects are pursued.  

 

A recent Florida case held that this statutory requirement is NOT intended to bar a lawsuit based on Florida’s ten-year statute of repose for construction defects IF the 558 Notice is timely served within the statute of repose period.  After the expiration of the statute of repose period, a construction defect lawsuit can no longer be commenced.  

 

In Gindel v. Centex Homes, 43 Fla. L. Weekly D2112d (Fla. 4th DCA 2018), homeowners took possession of townhomes on March 31, 2004.  The homeowners discovered construction defects and on February 6, 2014 provided the 558 Notice to the homebuilder.  This notice was served before the expiration of the ten-year statute of repose period.  The homebuilder notified the homeowners it would not cure the defect and the homeowners initiated a construction defect lawsuit on May 2, 2014, more than ten years from when they took possession of their townhomes, and outside of the statute of repose period. 

 

The issue was the application of Florida’s ten-year statute of repose in Florida Statute 95.11(3)(c). 

 

The homeowners argued that its action commenced upon serving the statutorily required 558 Notice so that its lawsuit was timely filed.

 

The homebuilder argued that the homeowners commenced their action by filing the lawsuit after the ten-year statute of repose, irrespective of when the 558 Notice was served, meaning the construction defect lawsuit should be barred.  The trial court agreed with this argument.

 

On appeal, however, the appellate court agreed with the homeowners that the presuit notice requirements called for in Florida Statutes Chapter 558 constitute an action for purposes of the statute of repose.  In other words, by the homeowners serving the 558 Notice within the ten-year statute of repose period, the homeowners timely commenced their construction defect lawsuit.  To hold otherwise would be to view Florida Statute Chapter 558 as a device to potentially bar claims when the required 558 Notice was timely served.  This position makes sense considering a claimant cannot file a construction defect lawsuit without complying with Chapter 558.  See Fla.Stat. s. 558.003.

 

When it is coming close to the ten-year statute of repose (or statute of limitations) deadline, the safer approach is to file the lawsuit and move to stay or abate the lawsuit pending compliance with the Florida Statues Chapter 558.  This way this issue is fully avoided by the lawsuit already being initiated. This approach is also supported in Chapter 558 by stating the action shall be stayed pending compliance with the requirements of the statute.  See Fla.Stat. s. 558.003.  

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

NOTE ON FIRST-PARTY AND THIRD-PARTY SPOLIATION OF EVIDENCE CLAIMS

shutterstock_1033181662In an earlier posting, I talked about spoliation of evidence.  This posting discussed first-party spoliation of evidence which is where a party in a lawsuit has destroyed or lost potentially important documents or evidence.  This type of spoliation of evidence does not give rise to an affirmative claim, but could be addressed by the trial court imposing sanctions or giving the devastating adverse inference jury instruction. 

 

There is an affirmative claim for third-party spoliation of evidence.  This is where a third-party–not a party to the underlying lawsuit–negligently destroys evidence that is critical to the plaintiff’s lawsuit against a defendant.  This affirmative claim, however, does not accrue until the  plaintiff’s lawsuit against the other defendant is resolved.  For instance, in a recent case I discussed, a plaintiff was injured during his employment.  While he had a worker’s compensation claim underway, he filed a premise liability lawsuit.  During this case, he discovered that his employer and its worker’s compensation insurance carrier destroyed or lost a video of the accident that caused his injury.  The plaintiff believed this video would have supported his premise liability claim and pursued a third-party spoliation of evidence claim.  The appellate court held this third-party spoliation claim should be abated / stayed or dismissed until the plaintiff’s underlying premise liability claim is resolved

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

TERMINATING NOTICE OF COMMENCEMENT WITHOUT CONTRACTOR’S FINAL PAYMENT AFFIDAVIT

shutterstock_399902515Prior to construction work being performed on your property, a Notice of Commencement should be recorded.  Among other things, construction liens will relate back in time to an effective Notice of Commencement (meaning it has not expired).  For this reason, lenders or others will want the Notice of Commencement to be terminated when the job is complete by recording in the official records a Notice of Termination of the Notice of Commencement.  There is a statutory procedure to terminate a Notice of Commencement pursuant to Florida Statute 713.132.  

 

Frequently, a clerk will want the Notice of Termination of the Notice of Commencement to be accompanied with a Contractor’s Final Payment Affidavit because 713.132 says, in material part:

 

(2) An owner has the right to rely on a contractor’s affidavit given under s. 713.06(3)(d), except with respect to lienors who have already given notice, in connection with the execution, swearing to, and recording of a notice of termination. However, the notice of termination must be accompanied by the contractor’s affidavit.

 

Notwithstanding, the Fifth District in Lasalle Bank National Ass’n v. Blackton, Inc., 59 So.3d 329, 331 (Fla. 5th DCA 2011) in interpreting this subsection stated:

 

We interpret this subsection to grant an owner the right to rely on the a contractor’s affidavit as an alternative to giving a sworn statement in its notice of termination that “all tenors have been paid in full.”  Here, the contractor’s affidavit attached to the notice of termination was superfluous because Independence, as owner, had already averred in the notice of termination that all tenors had been fully paid. 

 

 

It is always beneficial for an owner to obtain and rely on the Contractor’s Final Payment Affidavit since the contractor would be the one to hire the subcontractors  and know whether all lienors (including itself) have been fully paid and, if not, those that are still owed money.  However, there are times an owner may not be able to get that affidavit for a host of reasons (for example, if the job never actually commenced or the contractor is uncooperative in this regard).   In these circumstances, the owner should be able to record the Notice of Termination of the Notice of Commencement absent the Contractor’s Final Payment Affidavit by averring in the Notice of Termination that all lienors have been paid.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.