Florida Court of Appeal Affirms Trial Court Judgment Awarding $9.6 Million in Favor of Condominium Association against Developer and General Contractor for Construction Defects

The First District Court of Appeal for the State of Florida affirmed a final judgment in favor of a condominium association regarding various construction defects, including but not limited to defective stucco.  The condominium association sued both the developer and the general contractor and, following a jury trial, final judgment was entered in favor of the association in the amount of $9.6 million based upon the association’s claims for negligence, violations of the building code, and violations of statutory warranties.  See D.R. Horton, Inc. – Jacksonville v. Heron’s Landing Condo. Assoc. of Jacksonville, Inc., 2018 WL 6803698, Fla. L. Weekly D109b (Fla. 1st DCA Dec. 27, 2018).

The First District’s opinion included interesting discussions of various issues that commonly arise in Florida construction defect cases.  First, the opinion discussed the admissibility of expert opinion in light of the Florida Supreme Court’s recent decision in Delisle v. Crane Co., 2018 WL 5075302, 43 Fla. L. Weekly S459a (Fla. Oct. 15, 2018), which rejected the Daubert standard and held that the Frye standard shall apply to the admissibility of expert testimony in Florida State Courts.  See Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993); Frye v. U.S., 293 F. 1013 (D.C. Cir. 1923). The Daubert and Frye standards are significantly different.  Under Frye, which was decided in 1923 by the United States Court of Appeals for the District of Columbia Circuit, the courts are to allow expert testimony that is based upon generally accepted scientific standards.   Frye v. U.S., 293 F. 1013 (D.C. Cir. 1923).  Under Daubert and its progeny, the courts are to allow expert testimony that is based upon sufficient data and reliable principles and methods.  In applying the Daubert standard, the trial court is expected to serve as a gatekeeper by excluding expert testimony that does not meet the applicable standard.  In D.R. Horton, the First District Court of Appeal held that the stucco expert’s opinion regarding whether the stucco installation was defective was admissible under both Frye and Daubert, but the court also explained that, under Frye, no analysis was even necessary:

The supreme court has described the Frye test as one in which the results of mechanical or scientific testing are not admissible unless the testing has developed or improved to the point where experts in the field widely share the view that the results are scientifically reliable as accurate.  Bundy v. State, 471 So. 2d 9, 13 (Fla. 1985). Stated differently, under Frye, the proponent of the evidence has the burden of establishing by a preponderance of the evidence the general acceptance of the underlying scientific principles and methodology.  Marsh v. Valyou, 977 So. 2d 543, 547 (Fla. 2007).  However, as stated, the Frye standard only applies when an expert attempts to render an opinion that is based upon new or novel scientific techniques. Id.

We accept Appellee’s argument that no Frye analysis is necessary in this case. In reaching our decision, we find it important that the trial court, albeit in the context of its Daubert analysis, found that Appellee’s experts used a scientifically reliable and peer-reviewed methodology that was the industry standard. That finding was supported not only by Appellee’s expert testimony but also by the affidavit of Tom Miller, a professional engineer who was asked to review the methodology employed by the experts. Miller explained in detail the methods and techniques that should be employed in the forensic investigation of wood frame stucco clad buildings by competent professional engineers. He also listed the techniques that are applied by the community of professional engineers in Florida in evaluating buildings similar to Heron’s Landing. Miller stated, “Based on my review of the documents described above, [Appellee’s experts] used the above methodologies in [their] forensic investigation of Heron’s Landing in order to reach the opinions ….” He opined that the techniques used by Woods were techniques that are generally accepted in the community of Florida and national professional engineers when investigating building conditions at projects similar to Heron’s Landing and were consistent with the intent of the peer-reviewed techniques published by the ASTM. He also opined that the methodology used was sufficiently reliable and had widespread acceptance within the relevant scientific community. As such, Appellant’s argument that Appellee’s experts’ opinions were based upon new or novel scientific methods or techniques and that a Frye analysis is necessary is without merit. Appellant has shown no error on the trial court’s part in admitting the evidence at issue.

D.R. Horton at *4.

The opinion also includes a discussion of claims that allege violations of the building code, which in Florida is codified at Fla. Stat. § 553.84.  The First District explained that only claims involving actual damages may proceed and, because the condominium association’s trial evidence included testimony reflecting that the association did suffer actual damages as a result of the defective stucco installation, the association properly supported its claim with sufficient evidence:

Appellant claims that no actual damages were sustained by Appellee as a result of building code violations. Section 553.84, Florida Statutes (2013), provides:

Notwithstanding any other remedies available, any person or party, in an individual capacity or on behalf of a class of persons or parties, damaged as a result of a violation of this part or the Florida Building Code, has a cause of action in any court of competent jurisdiction against the person or party who committed the violation; however, if the person or party obtains the required building permits and any local government or public agency with authority to enforce the Florida Building Code approves the plans, if the construction project passes all required inspections under the code, and if there is no personal injury or damage to property other than the property that is the subject of the permits, plans, and inspections, this section does not apply unless the person or party knew or should have known that the violation existed.

As Appellant points out, none of the cases that have cited this statute, which was enacted in 1974, have held that a claim under the statute can succeed without proving actual damages. The Fifth District has described section 553.84 as providing a “cause of action where a defendant has injured a plaintiff by violating the building code or doing construction without the required permit.” Stallings v. Kennedy Elec., Inc., 710 So. 2d 195, 195 (Fla. 5th DCA 1998). The Second District has described section 553.84 as “a remedial statute because it provides relief for a person whose home has been built in violation of the building code ….” Anderson v. Taylor Morrison of Fla., Inc., 223 So. 3d 1088, 1089 (Fla. 2d DCA 2017).

Other cases, while not addressing the specific issue raised in this appeal, show that homeowners have brought claims under the statute for defects similar to the ones alleged in this case. For instance, in Edward J. Seibert, A.I.A, Architect & Planner, P.A. v. Bayport Beach & Tennis Club Ass’n, 573 So. 2d 889, 890 (Fla. 2d DCA 1990), the appellants challenged a final judgment entered against them and in favor of the appellee. The Second District explained that the appellee was a condominium development; the appellant was the architect. Id. In its lawsuit against the appellant and others, the appellee claimed that the appellant was responsible for damages because of defective roofing design and construction, defective fire exit design, defective stucco design and construction, and defective ceiling slab design. Id. at 890-91. In Anderson, the issue was the interpretation of an arbitration provision. 223 So. 3d at 1089. However, it was noted that the appellants, who entered into a sales agreement with the appellee builder to purchase a home, filed a complaint against the appellee alleging in part a violation of the Florida Building Code by inadequately and improperly installing the stucco system on their home. Id. They claimed the code violations were latent and not readily observable or known to them until damages began to manifest themselves in the form of cracking to the exterior stucco years after construction ended. Id. The Second District reversed the order compelling arbitration and remanded the matter to the trial court for further proceedings “on the … complaint.” Id.

In support of its argument, Appellant relies in part upon Eagle-Picher Industries, Inc. v. Cox, 481 So. 2d 517 (Fla. 3d DCA 1985). There, the Third District, in addressing cancer-related asbestosis, held that damages were not recoverable for the future risk of cancer. Id. at 526. This case presents a different issue than someone’s exposure to a dangerous substance and possible future illness as a result. Here, numerous homeowners testified to issues they were having in their homes. Moreover, Appellee presented expert testimony regarding defects in the units – defects that, according to the experts, needed to be remedied to avoid additional loss and damage. Appellant’s own project supervisor acknowledged several defects and testified that had he seen or known about them, he would have had them remedied prior to the completion of the project. Therefore, we reject Appellant’s argument that Appellee failed to present evidence of actual damages.

Within its second issue, Appellant also asserts that Appellee did not present evidence that it knew or should have known of building code violations under section 553.84. We reject this argument as well. As stated, Appellant’s project supervisor acknowledged at trial that various problems existed at Heron’s Landing. When asked if he ever complained to Appellant that he was being handicapped, he replied, “I requested more information about certain things, yes.” He also testified, “Not everything that I needed, that I felt like I needed, to do the job. They gave me what they felt like I needed to get the job done.” Thus, the jury was presented with evidence that Appellant either knew or should have known about the issues at Heron’s Landing.

D.R. Horton at *5-6.

Finally, the opinion discusses what is required to prove a prima facie case regarding violation of Florida’s statutory implied warranty of habitability.  Specifically, the appellate court held that the plaintiff does not need to prove the property is actually uninhabitable, just that the property does not meet ordinary, normal standards reasonably expected of living quarters of comparable kind and quality:

Appellant also asserts that Appellee did not establish a breach of the implied warranty of habitability. As Appellant notes, section 718.203(1), Florida Statutes (2013), provides that a “developer shall be deemed to have granted to the purchaser of each [condominium] unit an implied warranty of fitness and merchantability for the purposes or uses intended.” “The contractor and all subcontractors and suppliers, grant to the developer and to the purchaser of each unit implied warranties of fitness as to the work performed or materials supplied by them.” § 718.203(2), Fla. Stat. (2013). As the supreme court has explained, “The general test for whether a party has breached the implied warranties of fitness and merchantability [for a new home] ‘is whether the premises meet ordinary, normal standards reasonably to be expected of living quarters of comparable kind and quality.’” Maronda Homes, Inc. of Fla. v. Lakeview Reserve Homeowners Ass’n, 127 So. 3d 1258, 1268 (Fla. 2013) (citation omitted). In other words, a warranty is breached “if the residence is rendered not reasonably fit for the ordinary or general purpose intended.” Id.; see also Schmeck v. Sea Oats Condo. Ass’n, 441 So. 2d 1092, 1097 (Fla. 5th DCA 1983) (“It is now well established that a developer may be held liable for damages for breach of implied warranties in failure to construct according to plans or in a workmanlike or acceptable manner, or for failure to provide a unit or building which is reasonably habitable.”).

According to Appellant, because none of the unit owners or the experts testified that there was an inability to inhabit the units, the use for which they were intended, the trial court should have granted a directed verdict as to the implied warranty claim. Thus, Appellant takes the position that in order to breach the implied warranty set forth in section 718.203, a condominium unit must be uninhabitable. However, nothing Appellant cites supports this position. As we stated, numerous homeowners testified about various problems they were experiencing with their condominium units. Although the defects did not force the homeowners to abandon their homes, the testimony certainly supported the jury’s determination that the units did not meet the ordinary, normal standards that were reasonably to be expected of living quarters of comparable kind and quality. Thus, the trial court did not err in denying Appellant’s motion for directed verdict on this ground.

D.R. Horton at *6.

Thus, in D.R. Horton, the First District Court of Appeal offered guidance on various issues to trial attorneys handling construction defect claims.  First, with reference to the application of Frye instead of Daubert, the court explained that no Frye analysis is required unless the expert is rendering an opinion based upon new or novel scientific techniques.  Second, the court reminded trial attorneys that, to support a building code claim, evidence of actual damages is required.  Third, the court held that the statutory implied warranty of habitability does not require actual non-habitability to support a finding of breach.

Matthew J. Meyer is a Partner in our Florida office.