Construction projects typically involve many parties, from design professionals to contractors, to subcontractors, to suppliers. When a project goes south and there are problems, some or all of those parties may be responsible.
In some cases, when there is a problem on a construction project, an owner may sue a general contractor, who then sues its subcontractors and suppliers. Those subcontractors may then sue their subcontractors, and on and on it goes. Those claims between the general contractor, subcontractors and/or suppliers often include claims for indemnity.
The term “indemnify” means “to save harmless; to secure against loss or damage; to give security for the reimbursement of a person in case of an anticipated loss falling upon him. Also to make good; to compensate; to make reimbursement to one of a loss already incurred by him.” Black’s Law Dictionary Free 2nd Ed.; see also Wendt v. La Costa Beach Resort Condominium Ass’n, 64 So. 3d 1228 (Fla. 2011). But, when does a party have to file a lawsuit for indemnity?
In Florida, the statute of limitations and statute of repose for claims arising out of the design, planning or construction of an improvement to real property is Section 95.11(3)(c), Florida Statutes, that provides as follows:
(c) An action founded on the design, planning, or construction of an improvement to real property, 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 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. In any event, the action must be commenced within 10 years after 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 or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest. Completion of the contract means the later of the date of final performance of all the contracted services or the date that final payment for such services becomes due without regard to the date final payment is made.
The underlined portion of the statute cited above is known as the statute of repose. The statute of repose is the absolute very last date a lawsuit may be brought in Florida for an action founded on the design, planning, or construction of an improvement to real property. Therefore, in Florida, the absolute very last date a party may bring such a claim is within ten (10) years from the later of the various dates referenced in the statute. Similarly, if a party wants to bring an indemnity claim against another party who they believe is responsible for the problems on the construction project, that claim must be brought within the time periods set forth in section 95.11(3)(c). Department of Transportation v. Echeverri, 736 So. 2d 791 (Fla. 3d DCA 1999).
In Echeverri, the plaintiff sued the Florida Department of Transportation (“DOT”) and other parties for a wrongful death claim sustained on a roadway in 1995. Construction of that roadway began in the early 1960s and completed in 1966. In response to the complaint, the DOT asserted cross-claims for indemnity and contribution.
The trial court in Echeverri dismissed the indemnity claims, on the grounds that they were barred by the statute of repose (then 15 years), pursuant to section 95.11(3)(c). The DOT argued the cross claims were improperly dismissed because the statute of limitations did not apply to actions for indemnity and contribution. The appellate court, however, agreed with the trial court and found that section 95.11(3)(c) applied to all actions “founded on the design, planning, or construction of an improvement to real property.” Therefore, the indemnity claim had to be brought within the 15-year statute of repose or it was time barred.
The teachings of Echeverri are important to contractors, subcontractors and their counsel. To the extent those parties want to bring an indemnity lawsuit against another, they must be cognizant of the deadline for doing so, otherwise, that indemnity claim may be time barred.