ARTICLES

ESTABLISHING THE “DATE OF LOSS” AS A PREREQUISITE TO THE AWARD OF PREJUDGMENT INTEREST

By: Alex Beck, Esq., Stearns, Roberts & Guttentag, LLC Prejudgment interest is a type of damage which is suffered due to the loss of use of money which should have been paid at a particular time. Under Florida law, the prevailing party, in contract cases and certain tort cases, is entitled to prejudgment interest on the amount of damages awarded. The purpose of prejudgment interest is to make the prevailing party whole from the date of the loss. Once a verdict has liquidated the damages as of a date certain, prejudgment interest becomes a matter of right. A claim becomes

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COURT IMPOSES SANCTIONS AGAINST PARTY FOR “NEVER-SAY-DIE” ATTITUDE CHALLENGING ARBITRATION AWARD

By: Richard E. Guttentag, Esq., Stearns, Roberts & Guttentag, LLC The Federal Arbitration Act provides that an arbitration award may be vacated where: (i) the award was procured by corruption, fraud, or undue means; (ii) there was evident partiality or corruption in the arbitrators; (iii) the arbitrators were guilty of misbehavior which prejudiced the rights of a party to the arbitration; or (iv) the arbitrators exceeded their powers. While a party has the right to challenge an arbitration award on these grounds, if a party attacks the award without any real legal basis for doing so, that party may be

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SURETIES’ RIGHTS UNDER GENERAL INDEMNITY AGREEMENTS

By: Richard E. Guttentag, Esq. and Alexander S. Beck, Esq., Stearns, Roberts & Guttentag, LLC Prior to issuing payment or performance bonds, it is common for sureties to require contractors or subcontractors seeking bonding to execute a general indemnity agreement (“indemnity agreement”). In addition to the contractor entity executing the indemnity agreement, sureties generally require the contractor’s individual owners, and even their spouses to execute the agreement. The purpose of the indemnity agreement is, in part, to indemnify and hold the surety harmless, to minimize the surety’s losses, and to increase the surety’s rights to recover payments made under the

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COURT RULES THAT A SURETY’S LIABILITY UNDER A PERFORMANCE BOND IS CAPPED BY THE BOND’S PENAL SUM

By: Richard E. Guttentag, Esq., Stearns, Roberts & Guttentag, LLC In Allegheny Casualty Co. v. Archer-Western/Demaria Joint Venture III, 2014 WL 4162787, the court ruled that a surety’s liability under a performance bond is generally limited to the penal sum of the bond, particularly where a surety limits its liability in the contract under which it agrees to complete the defaulting contractors’ work. The Allegheny Casualty Co. case arose out of a large construction project. The General Contractor entered into a subcontract with a drywall subcontractor (“Subcontractor”). Pursuant to the terms of the subcontract, the Subcontractor obtained a Performance Bond

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COURT RULES IN FAVOR OF ROAD CONSTRUCTION CONTRACTOR AGAINST FORMER EMPLOYEE’S RACIAL DISCRIMINATION CLAIMS

By: Richard E. Guttentag, Esq., Stearns, Roberts & Guttentag, LLC The general purpose of the Florida Civil Rights Act of 1992 (FRCA) and Title VII of the Civil Rights Act of 1964 (Title VII) is to secure for all individuals within the state freedom from discrimination because of race, color, religion, sex, national origin, age, handicap, or marital status, to protect individuals’ interest in personal dignity, and to promote the interests, rights and privileges of individuals within the state. The case of McCrea v. Traffic Control Products of Florida, 2014 WL 4071670 (M.D. Fla. August 18, 201), involved a case

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DEVELOPER CANNOT USE SHELL COMPANIES TO PURCHASE MORTGAGE BACK FROM BANK AND THEN FORECLOSE THE MORTGAGE TO DISCHARGE CONTRACTOR’S LIEN

By: Richard E. Guttentag, Esq., Stearns, Roberts & Guttentag, LLC A contractor is not permitted to borrow money from a bank, give the bank a mortgage, contract for the improvement of the property, purchase the mortgage back from the bank, and then foreclose the mortgage for the purpose of extinguishing construction liens that increased the value of the property.  The case of CDC Builders v. Biltmore-Sevilla Debt Investors, LLC, 2014 WL 4628515 (Fla. 3d DCA September 17, 2014) analyzed this law. In CDC Builders, McBride Family Properties deeded vacant properties to two companies (“Developers”) for the development of several luxury

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CONSTRUCTION SITE INCIDENT WAS NOT “VIRTUALLY CERTAIN” TO OCCUR, THEREBY LIMITING RECOVERY TO BENEFITS RECEIVED UNDER WORKER’S COMPENSATION LAW

By: Richard E. Guttentag, Esq., Stearns, Roberts & Guttentag, LLC In R.L. Haines Const., LLC v. Santamaria, 2014 WL 4648522, the estate of a construction foreman filed a lawsuit for wrongful death due to a fatal accident on a construction site. Foreman worked for a Subcontractor on a 200,000 square foot expansion project of an existing warehouse. Subcontractor’s scope of work included the erection of four steel columns to support the building. Each column was thirty-three feet high and weighed over 2,000 pounds. The columns were attached to bolts anchored to a concrete base by an epoxy adhesive. According to

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FAILURE TO DISCLOSE SUBCONTRACTOR’S UNDERBIDDING OF PROJECT TO SURETY EXPOSES CONTRACTOR TO LIABILITY FOR FRAUDULENT MISREPRESENTATION

By: Richard E. Guttentag, Esq., Stearns, Roberts & Guttentag, LLC As previously reported, the case of Allegheny Cas. Co. v. Archer-Western/Demaria Joint Venture III, 2014 WL 4162787 (M.D. Fla. August 21, 2014), involved a dispute between a General Contractor (“Contractor”) and a performance bond Surety (“Surety”) on a construction project.  In addition to the court’s ruling that a surety’s liability under a performance bond was generally limited to the penal sum of the bond (discussed in a prior article), this case also analyzed the issue of whether the Contractor intentionally misrepresented material information to the Surety resulting in the Surety

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GENERAL CONTRACTOR IS IMMUNE FROM SUIT BY SUB-SUBCONTRACTOR’S INJURED EMPLOYEE WHERE SUBCONTRACTOR SECURES WORKER’S COMPENSATION INSURANCE

By: Richard E. Guttentag, Esq., Stearns, Roberts & Guttentag, LLC Any contractor or subcontractor who engages in public or private construction in the state of Florida is required to secure and maintain workers’ compensation for its employees. The liability imposed on employers by Florida’s Workers’ Compensation Law is to only secure workers’ compensation insurance coverage.  The case of VMS, Inc. v. Alfonso, 2014 WL 4723565 (Fla. 3d DCA September 24, 2014) analyzed the employer’s liability to secure workers’ compensation under Florida law. In VMS, Inc., a general contractor (“Contractor”) entered into a subcontract with a Subcontractor to perform certain road

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DOES YOUR CONTRACT CONTAIN A VALID AGREEMENT TO ARBITRATE?

By: Richard E. Guttentag, Esq., Stearns, Roberts & Guttentag, LLC In determining a party’s entitlement to arbitration, courts consider three elements: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived.  The first element of whether a valid written agreement to arbitrate exists was at issue in the case of Spicer v. Tenet Florida Physician Services, LLC, 2014 WL 5343503 (Fla. 4th DCA October 22, 2014). In Spicer v. Tenet Florida Physician Services, LLC, an Employee signed an employment agreement with Employer. The last paragraph of

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