Board-Certified In Construction Law By The Florida Bar

Florida Construction Law Legislation Update 2013


By: Ian T. Kravitz, Esquire

Your Construction Law Firm™

This annual Legislative Session in Tallahassee was an active session for construction law related issues. In our continuing effort to keep our clients up to date on the latest construction law issues, Your Construction Law Firm™ provides this summary as to the Legislative enactments in 2013 affecting the construction industry:

Senate Bill (SB) 286/House Bill (HB) 0575, Relating to Design Professionals: Signed by the Governor and became effective on July 1, 2013.

This bill creates Florida Statute § 558.0035 providing for specific conditions under which a design professional employed by a business entity, or agent for a business entity, may not be held individually liable for damages resulting from negligence which occurs during the scope of work of the professional service contract entered into by that business entity.

The contractual limitation on liability applies under the following specific conditions:

• The contract is made between the business entity and a claimant or with another entity for the provision of professional services to the claimant;

• The contract does not name as a party to the contract the individual employee or agent who will perform the professional services;

• The contract includes a prominent statement, in uppercase font that is at least 5 point sizes larger than the rest of the contract text that pursuant to section 558.0035 Florida Statues, an individual employee or agent may not be held individually liable for negligence;

• The business entity maintains any professional liability insurance required under the contract; and

• Any damages caused by the negligence are solely economic in nature and the damages do not extend to personal injuries or property not subject to the contract.

This newly enacted law changes the landscape on professional negligence in the construction setting, by reversing previous precedent that held individual design professionals personally liable for negligence claims despite any contractual limitations on liability included in their professional service contract with another party. An important consideration in considering the collectability of whether to sue a design professional for negligence when the employing firm may lack the assets to collect upon any judgment rendered for such negligence.

SB 810/HB 343, Relating to Wrap-up Insurance Policies: Signed by the Governor and became effective on July 1, 2013.

Large construction projects often involve wrap-up insurance programs. These programs are used to provide workers compensation and general liability coverage on a project-wide basis. These programs can be either owner-controlled insurance (OCIP) and contractor-controlled insurance (CCIP). This new law creates Florida Statute section 627.4138 which authorizes a wrap-up insurance policy for nonpublic construction projects to have a worker’s compensation deductible of $100,000

or more if the following conditions are met:

• The workers’ compensation minimum standard premium calculated on the combined payrolls for all entities covered by the wrap-up policy exceeds $500,000;

• The estimated cost of construction at each specified worksite is at least $25 million;

• The insurance carrier is obligated to pay the first dollar of a workers’ compensation claim like any other workers’ compensation policy without a deductible;

• The reimbursement of the deductible by the insured does not affect the insurer’s obligation to pay claims;

• The insurer complies with all workers’ compensation filing requirements under Florida Statutes, Chapter 440, for losses, including those below the deductible limit;

• The insurer files unit statistical reports with the National Council on Compensation Insurance (NCCI) which show all losses, including those below the deductible limit;

• Any unit statistical reports needed to calculate an experience modification factor for the insured are filed with the NCCI; and

• The insurer establishes a program for having the first-named insured, whether the owner, the general contractor, or a combination thereof, reimburse the insurer for losses paid within the deductible.

This law allows for such a high worker’s compensation deductible on non-public projects for the first time, but only if such conditions are clearly met.

HB 21, Relating to Background Screening for Non-instructional Contractors on School Grounds: signed by the Governor and became effective May 30, 2013.

Florida law generally requires that persons individuals who provide work in or provide services to any public school or school district, submit to fingerprint-based background screenings before being allowed access on school grounds. Prior to the enactment of this new law, each school district was allowed to issue their own individual identification badges or proof of clearance, which often required a contractor to obtain a different badge, and pay an additional fee, from each district in which they performed services.

This new law amends Florida Statute § 1012.467, which allows the Florida Department of Education (DOE) to create a uniform, statewide identification badge signifying that a non-instructional contractor has satisfied the specified background screening requirements of the law. School districts are still responsible for issuing the badges, which must include a photograph of the contractor.

A contractor must be issued a badge if he or she is a:

• U.S. resident, citizen or permanent resident alien;

• 18 years of age or older; and

• Meets the specified background screening requirements.

This badge must be recognized by each Florida school district, must be visibly worn by the non-instructional contractor when on school grounds, and is valid for five years. The Department of Education must determine a uniform cost to be charged to the contractor, instead of varying costs charged by each individual school district. As of May 30, 2013, contractors working in multiple school districts can obtain and pay for a single identification badge, instead of being forced to obtain a different badge, and pay a separate fee in each individual school district in which they work.

SB 112, Relating to Filing False Documents against Real or Personal property: signed by the governor and becomes effective October 1, 2013.

This law creates Florida Statute section 817.535. Under this new law, the offense of filing or directing to file, with the intent to defraud or harass another, a document in an official record which contains materially false, fictitious or fraudulent statements or representations that affect the owner’s interest in property described in the document is a third-degree felony. A person who commits the offense a second or subsequent time will be charged with a second-degree felony.

The felony degrees will increase under the following circumstances:

• The owner of the property is a public officer or employee.

• The offender is convicted of the crime while incarcerated or on probation.

• The owner of the property incurs financial loss as a result of the document being recorded in the official record.

The bill also creates a civil cause of action for any person adversely affected by the filing of the fraudulent document. The law does state that the penalties provided under the Construction Lien Law would still govern the recording of a fraudulent construction lien, instead of the penalties of this newly enacted law.

HB 269, Relating to Public Construction Projects: signed by the Governor and became effective July 1, 2013.

This law enacts changes to the Florida Building Code. The law requires that when a state agency is constructing new structures, or renovating existing structures, a sustainable building rating system or national model green building code shall be used for each project.

The law also requires that all state and local agencies use lumber, timber, and other forest products produced and manufactured in Florida when constructing public bridges,

buildings and other structures if the wood is a component of the public work, the products are available and their price, fitness and quality are equal.

This requirement does not apply:

• To plywood specified for monolithic concrete forms.

• If the structure or service requirements for timber for a job cannot be supplied by the native species.

• If the construction is financed in whole or in part from federal funds with the requirement that there be no restrictions as to species or place of manufacture.

• To transportation projects for which federal aid funds are available.

This law also:

• Increases the maximum civil penalty imposed by local enforcement agencies against unlicensed contractors from $500 to $2000.

• Increases the civil penalty that may be charged daily by local enforcement or licensing

boards or designated special magistrate from $1000 to $2500.

• Allows local building departments to collect delinquent fines against registered and certified contractors. Allows the building departments to retain 75% of those fines and remit 25% of the fines to the Department of Business and Professional Regulation.

• Provides that the Florida Building Commission may not mandate fire sprinklers in single-family homes.

• Provides that, for the purposes of inspection and record retention, building site plans may be maintained electronically (electronic copy) at the worksite and must be open to inspection by the local building official or authorized representative.

• Amends Florida Statute section 489.514 (3) by changing the application deadline by which a registered contractor under section 489.514 may apply for certification from November 1, 2004 to November 1, 2015.

SB 530, Relating to Dispute Resolution re: change in Florida Arbitration Code: signed by the Governor and became effective July 1, 2013.

This law revises the long standing Florida Arbitration Code, and creates the following sections to that Code:

• Florida Statute section 682.011: Providing new definitions for terms such as arbitration organization, arbitrator, court, knowledge, person, and record.

• Florida Statute section 682.012: Providing new notice requirements. Notice is accomplished provided by taking reasonable action to inform the other person, regardless of that persons “actual knowledge.” A person has received legal notice if they received notice or had knowledge of the notice, or notice was delivered to the person’s residence, place of business or location held out as a place of delivery.

• Florida Statute section 682.013: provides that the revised Code applies to all agreements to arbitrate that were made on or after July 1, 2013, if all parties agree to apply the revised Code. The Revised Code does not affect an action or proceeding that commenced or accrued before July 1, 2013, which would still be governed by the prior Code. However, until June 30, 2016, the revised Code shall apply to any agreement to arbitrate made before July 1, 2013 if all parties agree to apply the revised Code. Otherwise the agreement to arbitrate will be governed by the prior Code in existence at the time the parties entered into the agreement. Beginning July 1, 2016, an agreement to arbitrate shall be subject solely to the revised Code.

• Florida Statute section 682.014: Parties to an agreement to arbitrate or arbitration proceeding may agree to waive some of the requirements of the revised Code. However, those parties may not waive the: (1) right to judicial relief; (2) right to a provisional remedy; (3) jurisdiction of the courts; (4) right to appeal; (5) right to notice; (6) right to disclosure, or; (7) right to an attorney.

• Florida Statute section 682.015: A petition for judicial relief must be made to the court in a manner provided by law or rules of the court. Notice of an initial demand for arbitration must now be provided in the same manner as service of a summons in a civil action.

• Florida Statute section 682.031: Provides for conditions of provisional remedies.

• Florida Statute section 682.032: Provides that arbitration is initiated by providing notice in a manner agreed to by the parties or by certified mail if no agreement, or by a method allowed by law or rules of court.

• Florida Statute section 682.033: Provides conditions on which a court may consolidate arbitration proceedings.

• Florida Statute section 682.051: Grants arbitrators immunity from civil liability.

• Florida Statute section 682.081: provides for judicial enforcement of pre-award rulings issued by an arbitrator. Specifically, if an arbitrator makes a pre-award ruling in favor of a party to arbitration, that party may request that the pre-award ruling be incorporated into the court’s order confirming the arbitration award.

• Florida Statute section 682.181: Provides that a court with jurisdiction over the controversy has the right to enforce an agreement to arbitrate. An agreement to arbitrate in Florida gives the court exclusive jurisdiction to enter judgment on an award.

• Florida Statute section 682.23: The revised Code conforms to section 102 of the Electronic Signatures in Global and National Commerce Act.

• Florida Statute section 682.25: The Revised Code does not apply to any dispute involving child custody, visitation, or child support.