The Florida Statute of Repose: Initial C.O. Or Final C.O.?

The Florida Statute of Repose.

An Orange County trial court, in Spring Isle Cmty. Ass’n, Inc. v. Pulte Home Corp., et al., Orange County Case No. 2017-CA-1953-O (Circuit Judge Chad K. Alvaro), recently provided guidance regarding the commencement of Florida’s Statute of Repose, Section 95.11(3)(c), for projects consisting of distinct units. The case relates to a 390-unit townhome project Pulte built over a several-year period. On March 2, 2017, the townhome Association sued Pulte for construction defects. On March 10, 2017, Pulte issued a Chapter 558 notice to its subcontractors. On March 24, 2017, Pulte filed third-party claims against its subcontractors. Although the Association filed its claims within the Statute of Repose, the trial court determined that the Statute of Repose barred the majority of Pulte’s downstream claims against two subcontractors.

Pulte had broad “Master Agreements” with its subcontractors, and it would issue a document referred to as a “Schedule A” to award work on a unit to a subcontractor. Upon completion of each unit, a certificate of occupancy would be issued. Certificates of occupancy were issued on 329 of the 390 townhomes before March 24, 2007.

Two stucco subcontractors sought partial summary judgment on the basis that the Statute of Repose barred all claims for townhomes that received certificates of occupancy more than 10 years before Pulte filed its third-party claims. The Statute of Repose, in pertinent part, provides that an action founded on the construction of an improvement to real property must be commenced within 10 years after:

1. The date of actual possession by the owner;
2. The date of completion of the contract; or
3. The date of the issuance of a certificate of occupancy, whichever date is latest.

The court held that the Statute of Repose must be calculated on a unit-by-unit basis for this project. Since Pulte developed and constructed the project, the court determined that Pulte was an “owner” for purposes of the Statute of Repose, and that each Schedule A together with terms from the Master Agreement was a separate “contract.” Because Pulte acknowledged that the subcontractors would complete a unit before a certificate of occupancy was issued, the court determined that the issuance of a certificate of occupancy for a unit was the trigger for the commencement of the Statute of Repose for such unit.

Accordingly, the court granted partial summary judgment in favor of the subcontractors with respect to Pulte’s claims relating to units with certificates of occupancy issued more than 10 years before Pulte filed its third-party claims. This case illustrates the intended application of the Statute of Repose, which is to provide a firm bar date for claims. The 2018 revision to Section 95.11[1] provides an additional year to commence third-party claims, but it may still be advisable for contractors to consider the risks of “Master Agreements” and to conduct due diligence regarding potential claims on past projects, on a unit-by-unit basis, before the Statute of Repose expires. As of this writing, the ruling is pending on appeal.

1. The amendment did not apply in this case.