Florida lawmakers last month passed tort reform law extending COVID-19 liability protection to businesses and healthcare providers, but Florida’s construction industry says that it faces a form of prosecution abuse that lawmakers have not addressed. Florida home builders say lawmakers missed a crucial opportunity to boost the construction industry by passing House Bill 21 or its companion, Senate Bill 270, both of whom died in committee at the end of the session.
Bills, sponsored by the state representative Alex Andrade and state senator Keith perry, died on commission, in part thanks to a massive lobbying effort by trial lawyers to kill the bills.
The proposed legislation was intended to correct a loophole that allows opportunistic trial lawyers to broadly target contractors who were working on specific areas of the home through a so-called “558” claim. When a contractor receives a 558 claim that is too broad, that contractor is required, under the loophole, to forward the claim to every subcontractor who has worked in the immediate area of a construction project. Florida law firms view the current status quo as a potential gold mine and have written extensively on the subject to attract potential plaintiffs.
“The process… worked until the trial lawyers got involved,” said the CEO of the Florida Home Builders Association. Rusty payton. “Lately what we’ve found is that the test bar is coming in and finding ways to demand huge settlements, settlements stemming from insurance claims – and frankly, properties are not being fixed.”
The loophole creates a chain reaction as subcontractors start incurring insurance and bonding costs when offers to repair suspected or potential defects in their work are rejected by lawyers seeking to settle claims with the company subcontractor insurance. The end result of having unscrupulous lawyers exploiting this loophole for monetary gain is higher costs for owners and potential home buyers, at a time when affordable housing is increasingly difficult to find.
While the Florida legislature attempted to address the problem of construction defects in 2003 by requiring that the first step in resolving a construction defect complaint be between the contractor and the owner outside the courtroom , frivolous lawsuits lead to protracted litigation that brings courtrooms to a standstill and causes liability insurance premiums to skyrocket. These increased costs are ultimately borne by homebuyers, including low-income families who need affordable housing.
The proposed legislation aimed to address the problem by limiting civil actions to “material violations”, such as those that could cause injury to a person or significant damage to the completed structure. The proposals would have required potential claimants to describe in “specific” detail each alleged construction defect. The previous standard only required a “reasonable” description of the alleged defect, a lower standard.
Claimants would also have been required to include at least a photograph of the alleged defect or proof of the defect if it is visible, to include any repair estimate or expert report relating to the alleged defect, and to include a description damage or loss resulting from the alleged defect if this information is known.
Finally, plaintiffs would be required to identify the precise location of each alleged construction defect, which would help reduce the number of subcontractors affected by large-scale lawsuits attempting to exploit the loophole. And applicants would also be required to assert personal knowledge of the alleged construction defect and to acknowledge that a false statement is punishable by penalties for perjury.
The Florida’s Home Builder’s Association believes that these fixes will go a long way in reducing the number of frivolous lawsuits while keeping adequate protection in place for home buyers.