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Construction Defects Litigation Reform


PROBLEM: A boutique plaintiff lawyer practice has developed in Florida to manipulate Chapter 558, Florida Statutes (F.S.), to increase construction defects litigation. The increase in litigation over the last several years and the associated litigation costs have resulted in higher commercial insurance premiums, which ultimately has increased the cost of construction and has limited the availability of insurance coverage, especially for subcontractors. The evidence of a system gone wrong is the fact that many large insurance companies have left the state of Florida with regard to construction defects coverage. The market continues to shrink, and even well-known national builders have had difficulties in securing subcontractors due to the shrinking insurance market available to subcontractors.

BACKGROUND: Chapter 558, F.S., was created in 2003 to resolve construction defect disputes without the necessity of litigation.  The stated legislative intent was to “reduce the need for litigation” and to give an opportunity to resolve construction defect claims without legal action.  

Since its enactment, the Chapter 558 process has rarely resulted in the cure of any construction defect prior to litigation, and it has become an expensive and lengthy process with few positive results. The major problems with the current Chapter 558 process are as follows:

  • Chapter 558 creates an inefficient, time-wasting “pre-suit” process. By not providing a meaningful resolution mechanism, Chapter 558 interferes with the parties’ ability to obtain quick pre-litigation resolution.
  • The prerequisite pre-suit process does not require exchange of information identifying the specific damages, date of occurrence (if known), and the party whose alleged defective work caused the damages. This lack of information makes it difficult to determine whether insurance coverage exists, thereby making resolution difficult.

SOLUTION: House Bill 295 by Rep. Santiago and Senate Bill 1488 by Sen. Gruters promote speedier resolution of construction defect cases by enhancing the notice of claim process, placing responsibility on the correct party, correctly identifying a defendant’s liability, and promoting a more efficient litigation process. The bills require a special jury verdict form to be used in litigated cases, which clearly allocates liability and damages by defendant without impacting burden of proof issues. This process will require greater transparency in the plaintiff’s case and will equitably allocate liability to the appropriate party, if any. Further, it will reduce litigation on insurance coverage issues because the jury verdict will make findings to facilitate those decisions.

CALL TO ACTION: Support HB 295 and SB 1488

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