Florida Senate Bill 360 became law on April 13, 2023. It significantly reduced the time Florida’s statute of repose and statute of limitations give plaintiffs – including subrogating insurers – to bring civil actions regarding the design, planning, or construction of improvements to real property.
The law allowed a grace period to file actions under the previous statues of limitations and repose. But that grace period ends today, July 1, which means insurers must now increase their efficiencies in investigating and paying claims involving construction defects in order to file their subrogation claims within these new and shorter statutory deadlines.
To explain: A statute of repose closes the window on the right to file a civil action after a defendant’s last act or omission, irrespective of whether an injury occurred or was later discovered. The purpose of such a statute is to provide a definitive end to the potential liability of a defendant, ensuring they are not subject to indefinite legal claims. This statute is an absolute barrier to filing claims after the period specified, and it is immune to attempts to circumvent or extend it.
A statute of limitations, on the other hand, sets the maximum period within which one can initiate legal proceedings from the date of an alleged offense or harm. The statute limits exposure to civil claims by setting a fixed period during which civil actions must be filed following the occurrence of an act giving rise to a claim. The primary purpose is to ensure legal claims are filed and litigated while evidence is fresh. It also serves to promote prompt investigation and resolution of disputes.
Before SB 360 was signed into law, the statute of repose for construction articulated in Florida Statute Section 95.11(3)(c) allowed claimants 10 years to file a civil action:
“…with the time running from the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion of the contract or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest; except that, when the action involves a latent defect, the time runs from the time the defect is discovered or should have been discovered with the exercise of due diligence.” — Florida Statute Section 95.11(3)(c)(emphasis added).
However, as of July 1, 2024, subrogating insurers now only have seven years from the earlier of the events mentioned above. Additionally, the statute of limitations has also been shortened and begins to run from the earlier of the above mentioned events as well.
Further, SB 360 provides:
- That, if a newly constructed single-dwelling residential building is used as a model home, the time to bring a construction defect action begins to run from the date that a deed is recorded first transferring title to another party;
- That, if a project involves the construction of multiple buildings, each individual building must be considered its own improvement for purposes of determining the limitations period in the bill; and
- A definition for “material violations” in connection with statutory civil actions against builders for alleged Florida Building Code violations, and amends existing law to limit recovery for material violations only.
Subrogating insurers will be impacted by this change. From a purely financial aspect, they will be required to pay for damages caused not by innocent insureds but by negligent contractors and product manufacturers that make defective products used in construction when those damages occur after seven years. To limit the negative effects of this newer shorter statute of repose and limitations, subrogating insurers whose insureds are damaged by defective construction and construction related products will need to act quickly to perfect their rights so they can assert claims when a construction failure mode is identified.
Insurers will need to conduct subrogation evaluations immediately upon receipt of the first notice of loss to determine ages of the property and products. They will need to preserve the scene and all evidence. Experts with experience investigating the type of failure modes that occurred will need to be hired to conduct investigations consistent with Daubert standards. Target entities will need to be identified, placed on notice, and provided an opportunity to investigate to prevent spoliation defenses.
All contracts and warranties related to the construction of the property will need to be reviewed and analyzed to determine contractual rights, duties, and obligations; limitations of liability; waivers of subrogation; and other warranty related language under Florida law. Insurers will also need to evaluate, adjust, and pay claims as soon as practicable so the subrogation right arises and they have standing to pursue the claims against third parties.
Ultimately, when it comes to subrogating for defects involving the design, planning, or construction of improvements to real property in Florida under this new law, TIME IS OF THE ESSENCE!
Attorney Joshua Goodman, in Miami, is chair of Cozen O’Connor’s subrogation and recovery for the Southeast region.
Related: Defect Subrogation Just Became More Difficult in Florida
Topics Florida Construction
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