- Unit Owner Sues Condominium Association for Water Intrusion - Association Prevails
Unit owner Jerome Feldman and his company sued the Villa Regina Association, Inc. for water damage in the unit from the common element. Generally, if damage to a unit is repairable, thus rendering the damage "temporary", the measure of damage is the cost of repair. Where the cost of repair would exceed the value of the unit or restoration is impractical, thus rendering the damage "permanent", the measure of damages is the diminished value of the unit.
Feldman presented his case solely as a permanent damage case, presenting as his sole measure of damages the diminished value of the unit of $1,453,000.00. Even though the $1,453,000.00 diminished value opinion given by the appraiser was based upon a contractor's estimate for repair, Feldman got "hoisted on his own petard" when the jury found the damage to be temporary, meaning repairable. The judge did enter judgment for Feldman for the $1,453,000., but the Third District Court of Appeal reversed finding that once the jury determined that the damage was temporary, Feldman's failure to have presented testimony proving the cost of repair or replacement was fatal to his case.
Feldman v. Villa Regina Association, Inc., 89 So.3d 970 (Fla. 3d DCA 2012).
- Quirky Florida Attorney's Fee Decisions
We advise owners to insert prevailing party attorney's fee clauses in construction and repair contracts, as it is more likely that you as owner will pursue a claim against the contractor then vice versa. But does the clause that is inserted cover all possible attorney's fees? Maybe not. In a case just decided by the Florida Third District Court of Appeal in Miami, Pardo v. Kaplan, attorney's fees for an appeal, as opposed to the main case, were disallowed because the note being enforced did not specifically provide for appellate attorney's fees in the event of enforcement. The clause in question provided:
Collection: In the event this note shall be in default and placed for collection, then the undersigned agree to pay all reasonable attorney's fees and cost of collection.
The Third District determined that "all reasonable attorney's fees" did not include attorney's fees on appeal. What should the clause have provided in order for appellate attorney's fees to be awarded?
Collection: In the event this note shall be in default and placed for collection, then the undersigned agree to pay all reasonable attorney's fees, including attorney's fees and costs on appeal, and cost of collection.
Turning to a second quirk, it is not uncommon if as owner you signed the contractor's form contract to confront a clause which provides for attorney's fees to be awarded to the contractor in the event the contractor is required to pursue legal action to collect what is owed under the contract. As an owner's lawyer, we looked kindly upon such clauses because Florida has a reciprocal attorney's fee statute. F.S. 57.105(7) provides that if a contract contains a unilateral attorney's fee provision, the court has authority to award attorney's fees to the other party in the event the other party prevails. Consequently, when pursuing contractors for recovery for defects in the work where such a contract provision was in play, for example, we would typically seek an award of attorney's fees per F.S. 57.105(7).
Unfortunately, last year the Fourth District Court of Appeal in Ft. Lauderdale created "a fly in the ointment" in the case of Florida Hurricane Protection and Awning v. Pastina, 43 So.3d 893 (Fla. 4th DCA en banc 2010). The owner had hired a shutter company to install hurricane shutters. The contractor walked off the job forcing the owner to hire another contractor to complete the work. The contract with the original contractor provided for attorney's fees in the event the contractor pursued a collection action. The owner sought attorney's fees against the contractor per F.S. 57.105(7) citing the unilateral attorney's fee clause in the contract.
The Fourth District unfortunately determined that since the contractor's attorney's fee clause was limited to the collection of money due under the contract, F.S. 57.105(7) did not apply to the owner's breach of contract action. Thus, the owner was left with no recourse for attorney's fees. Lesson to be learned: Be sure to insert a broad prevailing party attorney's fee clause in your contracts.
Disclaimer: The decisions reported are not necessarily the law in other appellate districts in Florida. To determine the law in the Second District Court of Appeal (Tampa Bay and Southwest Florida) on these points, specific research would need to be done on the decisions of the Second District.
- HAVING A SAY ON WHO SHOWS UP TO UNDERTAKE YOUR REPAIR PROJECT
Most owners hire a general contractor for major repair projects based upon the track record of that contractor on similar projects. But the reality for most general contractors is that performance varies from job to job. Although there are a variety of possible causes for this variability, perhaps the most significant is the fact that different project superintendents and subcontractor crews show up to undertake one project versus another. In essence, although your contract is with the "company", the odds of securing peak performance on your job is highly dependent on the particular superintendent and subcontractor crews who are assigned to your job.
In one job our firm was involved in (after the fact), it was disclosed in the course of discovery that the superintendent involved had been hired by the general contractor a week before the job began and was fired at the conclusion of the job. In the end, the job in question ended up being the "tryout" with the company for this superintendent, a "tryout" that did not fare well, much to the detriment of the owner.
An owner can leave it to the discretion of the general contractor to assign the project superintendent and subcontractors for their job, hoping that the general contractor will assign their best superintendent and subcontractors. But there is an option. As part of the bid process, an owner can require that the bidders provide the resumes of the superintendents on their staff, as well as the subcontractors anticipated to be utilized for the job. In inquiring of references, the owner can ask the references who the assigned superintendent and subcontractors were for their job. If the owner wants to be even more in depth, it can inquire about who the crew chiefs were for the subcontractors on the other jobs.
Having vetted the available superintendents and subcontractors, it then becomes possible in the negotiation of the general contract to designate a particular project superintendent and particular subcontractors whom the general contractor must utilize for the performance of the work. A provision could be added to the effect that if the general contractor due to exigencies outside of its control is required to replace that superintendent or certain subcontractors, the general contractor be obligated to find suitable replacements subject to the approval of the owner. The result - - the owner has greater assurance that the best team the general contractor has to offer shows up to perform their job.
- Health Concerns on Pre-1978 Renovations
BE SAFE: National Lead Poisoning Prevention Week October 23-29, 2011
Since April 22, 2010, federal law requires that all contractors who perform renovation on buildings built prior to 1978 must be certified in lead safe work practices. The law was passed to protect homeowners, their families and the contractors themselves from the potentially toxic lead dust.
In order to obtain certification the contractors must attend a certified training course on the proper practices for safely removing and disposing of lead based paint. Also, before starting a project the contractors are required to provide disclosures on the dangers of lead based paint to the property owners.
Known as the Lead Pre-1978 Renovation Rule, the disclosure is intended to improve consumer and contractor awareness of the need for lead safe work practices. The document developed by the EPA that must be provided is titled "Protect Your Family From Lead In Your Home." The document and a multitude of other information on lead based paints is available by calling 1-800-424-LEAD or log onto www.epa.gov/lead.
The Environmental Protection Agency has the authority to allow states to administer their own program in lieu of the federal regulations however Florida has not been authorized as of yet. This means that Florida residents must look to the federal guidelines for information on pre-1978 renovations.
Although in theory because of the cost of the training and additional protective equipment, renovations may be more expensive, it is important because of the potential of personal injury that property owners only hire certified contractors for these types of renovations. In addition these contractors, if they do not follow the law could also face fines up to $37,500.00 per infraction per day.
To find a list of certified renovation contractors contact the EPA at 1-800-424-LEAD or log onto www.epa.gov/lead.
- BIG BANKS BEHAVING BADLY - IS THERE A REMEDY?
Its best with commercial loans to know your lender and foster a strong working relationship so that when challenges arise there is the opportunity to work towards a solution which satisfies both lender and borrower concerns. Unfortunately, with certain big banks, often borrower concerns fall on deaf ears.
Last year our firm handled a case where one of the nation's largest banks declared a default on a loan to a retirement facility which in the eleven years of the loan the facility had never missed a payment on and where the loan to value on the real estate was less than 25%. The facility was forced to re-finance in haste into a loan with inferior terms. Our firm represented the facility in seeking damages from the bank.
Knowing that the loan documents were skewed in the bank's favor (no surprise there) and the big banks had successfully lobbied an exemption from Florida's Unfair and Deceptive Practices Act, we had to come up with a novel theory to confront the bank's actions. Fortunately, under the common law, every contract, including a loan agreement, contains an implied covenant of good faith and fair dealing. This covenant is especially applicable where one side through greater market leverage is able to require a contract containing numerous "gotcha clauses" in its favor.
In the case of this loan to the retirement facility, the bank utilized a "gotcha clause" to declare a default. We convinced the arbitrator that the bank's use of this clause as a justification to call the loan without providing the facility with sufficient opportunity to cure constituted a breach of the bank's covenant of good faith and fair dealing.
Result: The bank had to write a big check to the facility and the individual guarantors, which check included the facility's attorney's fees.