By: Michael E. Stearns, Esq. and Peter B. Rowell, Esq., Stearns, Roberts & Guttentag, LLC

In MasTec, Inc. v. Suncoast Underground, Inc., 2010 WL 173611 (Fla. 3rd DCA 2010) the court reviewed the issue of whether the City of Cocoa properly notified an excavation subcontractor with the “One Call” system and whether the subcontractor proceeded with “reasonable care” when an unmarked water main was damaged.

MasTec, Inc. (“Contractor”) entered into direct a contract with Florida Power & Light (“FP&L”) for underground utility work in the City of Cocoa, Florida (“City”). Contractor entered into a subcontract with Suncoast Underground, Inc. (“Subcontractor”) for excavation work pursuant to its direct contract with FP&L. The agreement included an indemnification clause which provided that Contractor could offset any damages it incurred as a result of Subcontractor’s breach of contract against any amount due to Subcontractor on any project with Contractor.

Under the Underground Facility Damage Prevention and Safety Act, chapter 556, Florida Statutes (2005), (“chap. 556”) Subcontractor was required to report the excavation work to Florida’s “One Call” hotline no less than two business days before any excavation work began and to provide the type and location of the excavation, along with the excavator’s contact information. The utility companies are then notified by One Call and provided an opportunity to mark existing lines. If the utility lines are still unmarked after proper notification, the excavator may proceed after two business days but must do so with “reasonable care” using “detection equipment.”

Subcontractor notified the One Call hotline on Wednesday, January 4, 2006, and provided the location of its excavation and other relevant information. On January 6, the City’s representative responded to Subcontractor’s Call by attempting to post its response on the One Call hotline. The City’s response indicated that the City did not have accurate information to mark its lines and requested that Subcontractor contact the City for further details. The notification by the City to One Call was posted on the system’s website. However, it was not until January 9 that the One Call system sent an email to Subcontractor notifying Subcontractor of the City’s response. Subcontractor began excavating only 45 minutes after the City’s email response that same day. Hours later, on January 9, Subcontractor ruptured an unmarked water main.

Subcontractor sued Contractor to recover the payments due and alleged that it complied with its statutory requirements with respect to the One Call system and chap. 556 and that the City was liable because it failed to timely mark the water line and notify Subcontractor of its location. Contractor counterclaimed against Subcontractor for indemnity. Contractor asserted that Subcontractor was responsible for the damage and that Contractor would withhold money from other projects pursuant to the indemnity provision of their agreement. The trial court granted Subcontractor’s final summary judgment on its breach of contract claim and found that there were no genuine issues of material fact that the City failed to mark the water main and timely notify Subcontractor. The trial court also found that Subcontractor complied with its statutory obligations under chap. 556. Finally, the trial court awarded summary judgment against Contractor on its claim of indemnity because Contractor had not yet paid any money with respect to its claim. Contractor appealed.

The Appellate Court applied the rule that, under chap. 556, “if [the City] has not located and marked its underground facilities within the time allowed for marking,” then “the [Subcontractor] may proceed with the excavation, provided the excavator does so with reasonable care, and provided, further, that detection equipment or other acceptable means to locate underground facilities are used.” Because it was undisputed that the City failed to notify Subcontractor within the two day period the Subcontractor was entitled to summary judgment on the notification issue. The Appellate Court stated that even though the City sent its notice to the One Call system, timely, the City had an obligation to contact Subcontractor directly which it failed to do. Therefore, summary judgment was proper on this issue. However, the Appellate Court found that whether Subcontractor proceeded with reasonable care and detection equipment, etc. were disputed issues of fact especially in light of the damage caused by the Subcontractor. As a result, summary judgment was not appropriate for this issue.

Finally, the Appellate Court found that the trial court erred in granting summary judgment as to Contractor’s counterclaim for indemnity. Contractor could state a claim for indemnity against Subcontractor even if it had not yet incurred any loss. Therefore, summary judgment was improper on Contractor’s indemnity claim.

This case illustrates that even if a municipal entity does not respond timely to a One Call notice by an excavator, the excavator must still proceed with “reasonable care” and us detection equipment or “other acceptable means to locate underground facilities.” Additionally, note that contractor intended to set off from subcontractor not only money due on the project where damage was alleged, but on all projects where contractor was alleged to owe money to the subcontractor. Such an indemnity provision may create a risk that a subcontractor would be wise to avoid at the contract negotiation stage.

About the Author Michael E. Stearns has practiced exclusively in the area of Construction Law since 1996 and was designated as a Board Certified expert in construction law by the Florida Bar in 2005, the first year this designation was available. Mr. Stearns is “AV” rated by Martindale Hubble – the highest professional peer rating for legal ability and ethical standards. He is listed among the “Best Lawyers In America”, “Florida Super Lawyers” and “South Florida’s Top Lawyers”. Mr. Stearns got his start in the construction industry working as a carpenter while attending the University of Florida’s M.E. Rinker College of Building Construction where he received a Bachelor’s Degree in Building Construction. He has held a Florida State Certified Building Contractor’s license since 1989 and directed multi-million dollar construction projects as a project manager before attending law school and embarking on his legal career.

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