Source: http://floridaconstructionupdate.com/2012/08/
Timestamp: 2019-04-25 12:56:49+00:00

Document:
The situation is a familiar one. An Owner of a completed construction project notifies the Architect and/or General Contractor of alleged construction deficiencies at a Project. Review by the Architect reveals that the alleged deficiencies, if true, relate to the work of its sub-consultants (or in the case of a General Contractor his subcontractors). The Owner ultimately files suit within the four (4) year statute of limitations set forth in Fla. Stat. § 95.11(3)(c), but only against the General Contractor and/or Architect (“Direct Defendants”), leaving the Direct Defendants, who may be only vicariously liable, to defend a claims for a multitude of defects while pursuing the actively negligent parties as third party defendants.
Especially in actions involving large, complex construction projects, an Owner might view this as an effective cost-shifting mechanism designed to maximize recovery while minimizing costs. Until recently, if the direct defendant became “uncollectable,” Owner could amend his complaint to add third party defendants as direct defendants, even after the statute of limitations applicable to those direct claims had expired, by asserting that pursuant to Florida’s Rule of Civil Procedure, Rule 1.190(c), the amended pleading, “related back” to the date of filing of the original complaint.
The pivotal Florida case interpreting Fla. R. C. P., Rule 1.190(c), to allow this circumvention of the statute of limitations was by the Fifth District Court of Appeals in Gatins v. Sebastian Inlet Tax Dist., 453 So.2d 871 (Fla. 5th DCA 1984). In Gatins,the plaintiff was the father of girl who died when she fell through the guardrail at a pier owned and operated by the Tax District. The Tax District had filed its third party complaint against the engineering firm that constructed the pier on the day before the applicable statute of limitations expired. Following expiration of the statute of limitations, the Plaintiff filed a direct claim against the engineering firm.
After a survey of the law in other jurisdictions, the Gatins court adopted a minority view allowing the relation back of the new direct claims against the third party defendant despite the expiration of the statute of limitations. It reasoned that such amendments relate back as they “merely adjust the status of an existing party,” which not inconsistent with the purpose underlying the statute of limitations – to protect against long delays in filing suits and prevent stale claims since the third party defendant is automatically made aware that it could be held liable for the plaintiff’s claims by virtue of the timely third party complaint. Gatins, 453 So.2d 871 at 875.
However, a recent decision by the First District Court of Appeals to the contrary has resulted in a direct and express conflict with Gatins. In, Graney v. Caduceus Properties, LLC, 91 So.3d 220 (Fla. 1st DCA 2012) the First District held that a plaintiff property owner with notice of latent defects attributable to third party defendant sub-consultants, but elects not plead direct claims against those third party defendants within the applicable statute of limitations, cannot, after its expiration, amend the complaint to add those direct claims and assert that they “relate back” to the date of filing of the original complaint. The underlying facts in Graney differ markedly from those in Gatins, and hold particular import for construction cases involving latent defects, as it highlights the risk that a property owner may run by failing to maintain direct claims against third party defendants, when a direct defendant becomes “uncollectable” after expiration of the statute of limitations applicable to the third party defendants.
In Graney, the lessee (“TNC”) of a property entered an agreement with an architect (“Architect”) for design improvements to the building in which TNC leased space. The Architect hired KTD Consulting Engineers (“KTD”), an engineering firm whose principal was William G. Graney (“Graney”), to design the HVAC system for the clinic. TNC hired a mechanical subcontractor separately to install the HVAC system.
The certificate of completion for the HVAC work was issued on August 5, 2005. By September 2005, TNC and Caduceus Properties, LLC, the property owner (“Caduceus”) became aware of problems with the HVAC. After approximately ten (10) months of unsuccessful efforts by the parties to determine the cause of the failure, TNC retained another contractor to design and replace the HVAC system at the clinic. Thereafter, on July 24 2006, Caduceus sued the Architect to recover damages due the failed HVAC system, but did not include as direct defendants, either KTD or Graney, though the Architect joined KTD and Graney as third party defendants. It wasn’t until June 3, 2010, more than four years after the HVAC problems became known to Caduceus, that it amended its Complaint to add KTD and Graney as direct defendants.
KTD and Graney answered and asserted that Fla. Stat. § 95.11(3)(c), Florida’s four-year statute of limitations applicable to actions, “founded on design, planning or construction of improvements to real property” barred Caduceus’s direct claims against them. At trial, the court granted KTD and Graney’s motion for involuntary dismissal of Caduceus’s claims on the grounds that they were time barred. Notably, during trial, the Architect filed for bankruptcy resulting in a stay of those claims involving the Architect.
In affirming the trial court’s decision in Graney, the First District Court of Appeals declined to follow the Gatins court’s interpretation of the relation back doctrine, concluding that the a third party complaint does not necessarily give a third party defendant reason to know that a plaintiff would assert a direct action against them. Graney, 91 So.3d 220 at 227. Instead, the First District construed “relation back” more conservatively to allow the addition of new parties after expiration of the statute of limitations only in circumstances of mistaken identification or misnomer, and not in cases where the failure to add the party was one of choice. Id at 277, 228.
The designation by the First District in Graney of an “express and direct conflict” with Gatins means that the Florida Supreme Court has discretionary jurisdiction. Unless and until the Florida Supreme Court takes up the issue, attorneys handling matters in the First District and the Fifth District can only take note of the difference and litigate accordingly. However, given that the issue remains undecided in the remaining Districts, an owner who elects to proceed without filing direct actions against third party sub-consultants and subcontractors does so at his own risk.
 The remaining, undecided districts cover the following counties: Pasco, Pinellas, Hardee, Highlands, Polk, De Soto, Manatee, Sarasota, Hillsborough, Charlotte, Glades, Collier, Hendry, and Lee (Second); Miami-Dade and Monroe (Third); and Palm Beach, Broward, St. Lucie, Martin,Indian River, and Okeechobee (Fourth).
 The First District covers Alachua, Baker, Bay, Bradford, Calhoun, Clay,Columbia, Dixie, Duval, Escambia,Franklin,Gadsden, Gilchrist, Gulf,Hamilton, Holmes,Jackson, Jefferson,Lafayette,Leon, Levy,Liberty,Madison,Nassau, Okaloosa,Santa Rosa, Suwannee,Taylor, Union, Wakulla, Walton andWashington counties.
 The Fifth District covers Orange (Orlando), Osceola, Volusia, Flagler, Putnam,St. Johns,Lake, Marion, Sumter, Citrus, Hernando, Brevard and Seminole counties.
The vast majority of construction disputes do not begin with the filing of formal litigation. In fact, Florida Statute § 558.004 protects against any “first-notice” lawsuits by requiring that notice and an opportunity to cure any alleged defect be given prior to the pursuit of formal litigation. Of course, as part of any pre-suit investigation, a conscientious insurance carrier or claims handler will generate material for inclusion within a formal claims file, including impressions of the validity of the claim, possible liability and damages exposure, and resolution strategy.
In Zirkelback Construction, Inc. v. Rajan, 37 Fla. L. Weekly D1793a, Florida’s Second District Court of Appeals has again expressed that such claims file materials, so long as litigation was “foreseeable” when they were prepared – are generally protected by the “work product” privilege, and that this represents the “majority view” within this State. In Zirkelback, an insurance carrier’s multi-year inspection and evaluation of a design/construction defect claim was held to be protected by this privilege, and that the production of the claims file could not be compelled by the trial court, absent a specific evidentiary showing of need by the claimant. Ostensibly, this would allow a carrier to validly claim privilege over all file material prepared after notice of a claim or potential claim was submitted.
However, the court also recognized that Florida’s Fourth District Court of Appeals – covering Palm Beach, Broward, St. Lucie, Martin, Indian River, and Okeechobee counties – follows a substantially different standard. Specifically, the Fourth DCA holds that, in order for claims file materials to be considered privileged work-product, the threat of litigation must be “substantial and imminent.” See e.g. Liberty Mut. Fire Ins. Co. v. Bennett, 883 So.2d 373, 374 (Fla. 4th DCA 2004). While the Fourth DCA does not require that actual litigation be pending in order to protect materials as “work-product,” it does require an actual, present and imminent threat of litigation. See id. While not lending itself to a bright-line rule, this is clearly less protection than offered throughout the rest ofFlorida. Accordingly, a carrier investigating a pre-suit claim within the Fourth DCA does run a somewhat greater risk of having a portion of its claims file forcibly produced.
Luckily, a relatively simple solution does present itself. If counsel is retained at an early stage and serves as the coordinator of investigative activity and as a conduit of information, the separate (and more stringent) attorney-client privilege can be used to protect communications made even before the likelihood of litigation is “substantial and imminent.” Accordingly, it would behoove any carrier that wishes to ensure maximum protection of its pre-suit investigative material – in construction or any other type of claim – to timely identify and retain counsel to evaluate that claim. The alternative can be the forced disclosure of highly sensitive and prejudicial documents.
The Slavin Doctrine is Alive and Well – Ask CSK’s Clients!
Cole, Scott and Kissane (“CSK”) recently won two very significant personal injury cases arising from construction projects on behalf of design professionals based on the Slavin Doctrine. The Slavin doctrine prevents an injured Plaintiff from holding a contractor liable for injuries caused by a patent, or obvious, defect in construction after control of the property has been turned over to the owner – that is, after completion and acceptance of construction. See Slavin v. Kay, 108 So. 2d 462 (Fla. 1958).
Though the doctrine initially applied only to contractors, the Florida Supreme Court extended it to design professionals in 1988. See Easterday v. Masiello, 518 So. 2d 260 (Fla. 1988). There are two rationales for the doctrine. The first rationale is that by accepting the defective condition, the owner in possession and control of the property, is charged with knowledge of the defect and responsibility for rendering the condition safe and warning of the dangerous condition until it is rendered safe. Because the design professional or contractor can no longer control the property, they have no opportunity to fix the condition or warn third parties of its existence. The second, related rationale is that the acts of the design professional or contractor are no longer the legal cause of the accident. The cause, instead, is the owner’s failure to render the condition safe.
Our firm is very proud to announce that it recently obtained a complete defense verdict in a wrongful death case following a three-week trial based on the Slavin doctrine. In that case, our firm defended a traffic engineer who designed an intersection in which a fatal accident occurred weeks after it became operational. At trial, we argued that even if the intersection was negligently designed, the engineer should not be held liable because 1) the defects were obvious, 2) the FDOT engaged in significant review of the engineering plans, and 3) the FDOT approved the plans prior to the construction of the intersection. In other words, the design was completed and accepted by FDOT prior to the accident. The jury returned its verdict and initially awarded damages of $7.7 million dollars but found that the engineer was not liable based on the Slavin doctrine. CSK’s client prevailed!
Last week, our firm obtained a complete defense final summary judgment in a motorcycle accident on behalf of a civil engineer who designed the roadway improvements where the accident occurred. The motorcyclist hit a curb that appeared to extend into the roadway. The curb was constructed per the engineer’s design.
The Plaintiff suffered severe closed-head injuries and several skull fractures, which allegedly causing impaired cognitive functioning. He was diagnosed with a traumatic brain injury and post traumatic stress disorder. The Plaintiff, who himself owned a construction company, also claimed significant lost wages and several hundred thousand dollars in past and future medical expenses. In defense of the engineer, we argued that, based on the Slavin doctrine, any dangerous condition related to the design was above ground, not concealed, and readily observable to the City before it accepted the engineer’s design and was constructed in accordance with the design. The court agreed and granted a final summary judgment in favor of our client.
It is clear that the Slavin doctrine is alive and well. Fortunately, Florida case law continues to be favorable to contractors and design professionals in personal injury cases arising from construction projects when the alleged defect and its dangerous character is readily observable by the owner or his or her agents. CSK firm will continue to aggressively utilize the Slavin doctrine to defend these claims against the contractors and design professionals we are so fortunate to represent.

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