In Florida, the law requires lawsuits to be filed within certain time periods. The time period depends upon the type of claim, for example, a claim for breach of contract has a different time period than a claim for tortious interference. In the construction world, different claims have different time periods.
What is the “statute of limitations”?
The statute of limitations requires that people start a lawsuit within a specific time period from when the claim arises. For example, in Florida, a claim for breach of a verbal contract must be brought within four years and a written contract within five years. So, in most cases, when a party breaches a contract, the other party has four or five years from the date of that breach to file a lawsuit. If the lawsuit is filed outside that window, the party defending the lawsuit claims the statute of limitation as a defence. However, in construction contracts, what “starts the clock” is not always easy to decide.
What may delay the clock starting?
Many construction contracts provide for a dispute resolution procedure that must be followed before filing a lawsuit. Courts routinely enforce these pre-suit resolution procedures, as long as they are strictly followed, so they may delay the clock starting on the statute of limitations. For example, a construction contract that requires a party to request an equitable adjustment to the contract price (seek an increase in the contract amount based on additional costs) before they can file suit, will delay the clock starting on the statute of limitations until the request is ultimately denied. This process may take months as the parties are going back and forth, providing supporting documentation, etc. These pre-suit resolution procedures must be followed to the “t”. It is strongly recommended that contracts include specific and short time periods for these pre-suit resolution periods and for when lawsuits must be ultimately filed.
In Florida, for claims involving the owner, the clock does not begin to run until the later of the following:
- The date of actual possession of the project by the owner;
- The date of the issuance of the C.O.;
- The date of the abandonment of the construction of the project (if not completed); or
- The date of completion/termination of the contract.
And, for an owner’s claims for a construction defect, the clock begins to run from the time the defect is discovered (or should have been discovered with due diligence).
How do arbitration clauses affect the statute of limitations defense?
In Florida, the statute of limitations generally does not apply to claims brought pursuant to a mandatory arbitration provision. But, as mentioned above in the context of pre-suit resolution procedures, if the parties include in the construction contract language that the statute of limitations applies to arbitration claims, then courts will generally enforce the agreement of the parties. It is recommended that if your construction contracts include mandatory arbitration agreements, that you also include language that applies the statute of limitations to said claims. As an example, you could include the following: Neither Party may commence arbitration if the claim or cause of action would be barred by the applicable statute of limitations had the claim or cause of action been filed in a state or federal court. Receipt of a demand for arbitration by the person or entity administering the arbitration shall constitute the commencement of legal proceedings for the purposes of determining whether a claim or cause of action is barred by the applicable statute of limitations.
Other construction-related claims and the statute of limitations.
Other claims may be brought related to construction projects, including: (1) construction lien foreclosure, (2) wrongful death, and (3) design defect:
Foreclosing a construction lien – once a valid lien has been recorded, the lienholder has one year to commence a foreclosure action from the date of recording; there are no exceptions.
Wrongful death – if someone is killed in a catastrophic accident in a construction site, the deceased’s estate has two years to bring a wrongful death action.
Design defect – a claim for defective design must be filed within four years. Bruce Loren and Frank Sardinha, III of the Loren & Kean Law Firm are based in Palm Beach Gardens and Fort Lauderdale. Loren & Kean Law is a boutique law firm concentrating in construction law, employment law, and complex commercial litigation. Mr. Sardinha focuses his practice in high-stakes business disputes. Mr. Loren has achieved the title of “Certified in Construction Law” by the Florida Bar, exemplifying the Bar’s recognition of this expertise. The firm’s construction clients include owners/developers, general contractors, specialty contractors in every trade, suppliers, and design professionals. Mr. Loren and Mr. Sardinha can be reached at [email protected] or [email protected] or 561-615-5701.