savInggraCe ? tImeLyfILIngdoWnstreamCLaIms
Construction law Section Chairs : AlexM . Sarsfield & KimberlyA . Kelley — PaskertDiversThompson , P . A .
Withoutthisgraceperiod , thecontractorwouldhave noremedytopursue partieswhomaybeliable fortheowner ’ sclaims .
When does a claim trigger the statute of repose one-year grace period ?
Section 95.11 ( 3 )( b ), Florida Statutes , governs the statue of repose for an action founded on the design , planning , or construction of an improvement to real property . 1 As of April 13 , 2023 , the statue of repose was reduced from ten to seven years . Notably , section 95.11 ( 3 )( b ) affords defendants a one-year grace period to file counterclaims , crossclaims , and third-party claims that arise out the underlying construction claims asserted , even if such claims would otherwise be time barred . 2 This one-year grace period is important for contractors because it provides them time to assert “ downstream ” claims against other parties who may have performed the work on which the claims are based .
For example , if the owner of a project files a lawsuit against a contractor based upon alleged construction defects six years and 364 days after the certificate of occupancy was issued for the project , the contractor may file counterclaims , cross-claims , and third-party claims that arise from the owner ’ s claims up to one year after the owner served its pleading . Without this grace period , the contractor would have no remedy to pursue parties who may be liable for the owner ’ s claims .
But what happens when an owner files a lawsuit against a contractor on the eve of the seven-year statute of repose , despite a contractual agreement to arbitrate ? The general contractor may move to stay the lawsuit and compel arbitration pursuant to section 682.03 , Florida Statutes , and the contract . To compel arbitration , the general contractor must prove an agreement between the parties to arbitrate exists and that it is enforceable . 3 If the owner opposes the motion , the court must hold a hearing to decide the issue . 4
The lawsuit is not formally stayed unless and until the court enters an order granting the motion . If the court orders the parties to arbitration , the court “ shall stay any judicial proceeding that involves a claim subject to the arbitration .” 5 Practically speaking , this process may take months .
Does the improperly filed lawsuit or a subsequent demand for arbitration trigger the statue of repose one-year grace period ? Specifically , if the contractor waits for the owner to initiate the arbitration , does it risk the one-year grace period running on its counterclaims , cross-claims , and third-party claims that arise from the owner ’ s claims ? Alternatively , a contractor may initiate arbitration on its own against the relevant parties , without waiting for the court
to compel arbitration and the owner filing its demand for arbitration .
The timeliness of an arbitration claim is solely within the arbitrator ’ s jurisdiction . Given the private nature of arbitration , contractors are left without guidance as to when they may timely file their downstream claims . 7 n
1
See § 95.11 ( 3 )( b ); § 95.11 ( 3 )( c ) previously governed the statue of repose . 2
See id .
3
See § 682.03 ( 1 ), Fla . Stat .
4
Linden v . Auto Trend , Inc ., 923 So . 2d 1281 ( Fla . 4th DCA 2006 ).
5
See § 682.03 ( 7 ), Fla . Stat . ( emphasis added ). 6
Gomez v . S & I Properties , LLC , 220 So . 3d 539 ( Fla . 3rd DCA 2017 ).
7
Cox v . Village of Tequesta , 185 So . 3d 601 ( Fla . 4th DCA 2016 ), citing Gren v . Gren , 133 So . 3d 1066 ( Fla . 4th DCA 2014 ).
Author : Alex M . Sarsfield & Jessica Skoglund Mazariego – Paskert Divers Thompson , P . A .
1 8 M A R - A P R 2 0 2 4 | H C B A L A W Y E R