By: Douglas J. Roberts, Esq. and Alex Beck, Esq., Stearns, Roberts & Guttentag, LLC
When a party wishes to file a lawsuit, one of the first issues to consider is whether the action is timely under the applicable statute of limitations (“SOL”), or if the limitation period has expired, which bars the suit. The SOL is a set period of time during which a case may be filed and is calculated by determining: (a) the nature of the claim being sued upon 1 ; (b) when the limitations period begins to run (i.e., the accrual date) 2 ; and (c) whether or not the SOL has been temporarily suspended (i.e. tolled) 3 . Under Florida law, the SOL period set by the legislature may not be shortened by a contractual agreement. Any provision in a contract that attempts to shorten the SOL by either reducing the overall length of the SOL or stipulating to an earlier accrual date (when the SOL begins to run) is void and will not be enforced by the courts.
GBMC, LLC v. Proset Systems, Inc., 2013 WL 1629162 (N.D. Fla. 2013), addressed a construction contact that contained a provision to shorten the applicable SOL. In GBMC, the plaintiff filed an action against a surety on a performance bond claim. The SOL period applicable to an action on a performance bond claim is five years from when the owner accepts the project. The issue in the case was when the SOL begins to run against a surety on claims for latent defects. The surety argued that the SOL period expired and moved for summary judgment. In support of its position, the surety relied on the construction contract between the owner and contractor which provided that the SOL period began to run upon “substantial completion” of the project, and not the later accrual date from the “date of acceptance of the project as having been completed according to terms and conditions set out in the construction contract.” Since the claim on the performance bond was brought more than five years after the “substantial completion of the project,” the surety argued that the SOL period had expired.
The court rejected the surety’s argument and ruled that the contract provision which purported to start the statute running from the date of “substantial completion” rather than the later date of “acceptance of the project” was void and unenforceable. In support of its ruling, the court notes that the Florida Supreme Court has expressly ruled that the SOL period for an action on a performance bond accrues on the “date of acceptance of the project as having been completed according to terms and conditions set out in the construction contract.” As such, the provision in the construction contract which set the accrual date from the date of “substantial completion” instead of the “date of acceptance” was an attempt to shorten the SOL period and was void and unenforceable under section 95.03, Florida Statutes, which provides in pertinent part that, “Any provision in a contract fixing the period of time within which an action arising out of the contract may be begun at a time less than that provided by the applicable statute of limitations is void.”
This case demonstrated that the SOL period provided in the Florida Statues may not be shortened by a contractual agreement, and it is an exception to the general principle that parties are free to negotiate and contract absent court intervention.
About the Author: Douglas J. Roberts has been Board Certified in Construction Law since 2005, the first year the Florida Bar offered its members the opportunity to achieve such a designation. He has practiced in the area of Construction Law for 20 years, representing general contractors, subcontractors, suppliers, sureties and owners in South Florida. Mr. Roberts has been recognized by his peers as a “Florida Super Lawyer” and focuses his practice exclusively on construction law related representation. For more information, please contact him at [email protected]
Alexander S. Beck is an associate with Stearns, Roberts & Guttentag, LLC. Mr. Beck in construction law including construction lien claims, payment and performance bond claims, bid protests, construction contract preparation, and construction and design defect claims. For more information, please contact him at [email protected]