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Monday, March 30, 2015

Firm Attorneys Present for the Florida Bar Education Committee

Oscar E. Soto and Dale Evans Jr. recently presented for the 2015 Certification Review Seminar of the Florida Bar Education Committee. Oscar and Dale's presentation addressed legal issues related to the construction of educational facilities in Florida to a group of over 20 attorneys preparing to take the 2015 Education Certification Examination for the Florida Bar.

Thursday, March 26, 2015

Insurance Authorizations

     Many of our restoration clients have used and still use the “insurance authorization agreement” as a way to enter into a restoration contract with individuals, associations, and commercial entities before those parties have received payment from their insurer for the damages.  Here’s how it works: after an owner of real property suffers wind, storm, fire and/or water damage to real property, the restoration company enters into an agreement with the customer.  The entire agreement is based on the property owner’s insurance carrier’s approval of the owner’s claim under its insurance policy.  The agreement typically states “this contract is subject to insurance company approval and this contract is null and void if owner’s insurance carrier fails to fund owner’s claim and/or funds less than the amount set forth in this contract.”  The less popular version of the insurance authorization agreement states the contractor will negotiate the claim with the insurance carrier and perform the work for the monies obtained from the insurance carrier.

     THE PROS: The obvious reason to use an insurance authorization agreement is to bind the owner before the owner receives the money for the remediation.  Owners typically do not seek out a contractor unless and until they have the funds to pay for the work. This agreement offers the owner an easy way to enter into a contract without waiting months for its insurance company to approve and fund its claim. The owner is often comforted by the provision voiding the contract in the event the insurance carrier fails to fund the full amount of the contract.  The restoration company benefits by avoiding the competition and usual bidding process because the owner is eager to repair the damage to the property.

     THE CONS:  The obvious problem occurs when the insurance carrier fails to pay the owner’s claim in an amount equal to or greater than the contract price.  The owner can now void the contract as it received less money from its carrier than the price for the work as stated in the insurance authorization agreement. The less obvious pitfall occurs when the owner’s insurance carrier receives sufficient funds to pay for the work as set forth in the insurance authorization agreement yet refuses to allow the contractor to perform the work.  The owner takes the position that it’s not a valid contract.  Unfortunately, one Florida Court has agreed with this position.

     In Gables I Townhomes, Inc., v. Sunmark Restoration, Inc., 687 So. 2d 6 (Fla. 3rd DCA 1996), a roofing contractor entered into an insurance authorization agreement with an owner for a new roof.  The price of the work under the contract was left up to the negotiations between the contractor and the insurance carrier.  Thereafter, the owner received funds from its insurance carrier for the work.  The owner then hired a different roofer for the work. 

     The roofing contractor filed suit against the owner for breach of contract.  The Third District Court of Appeal held “the insurance authorization agreement fails for indefiniteness rendering it unenforceable.  No meeting of the minds occurred between the owner and the contractor as the contract left it to the future will of the contractor and the insurance company to determine the price term of the contract.”  The Court further reasoned that “in the absence of a definite price or a method of determining a price not left solely up to insurance carrier’s discretion, the agreement must fail as a binding contract.” Thus, the contract is not legally binding if the price of the work is not stated in the contract and is left to the discretion of the insurance company. 

     The Takeaway:  The insurance authorization is still a good tool for inducing owners to enter into contracts quickly after a storm or emergency event.  However, be mindful of the legal pitfalls involved and adjust your contracts accordingly.  To protect themselves, many restoration companies include a provision that the work to be performed and cost of such work is reflected in a proposal/estimate to be attached and incorporated into the authorization.  Before the work is performed, the restoration company provides the customer with the proposal, obtains the customer’s signature, and attaches the proposal to the authorization.  A provision stating that the value of the contract shall be the reasonable value of the labor, materials, and services actually furnished by the restoration company and acknowledging that the customer is liable for any shortfall in the insurance proceeds may also protect the restoration company.  In addition, many restoration companies take an assignment of the owner’s entitlement to insurance benefits to prevent the scenario where an owner receives a payout from the carrier but hires another company.

This article was originally drafted by Felena Talbott, Esq. in 2008 and has been updated with the assistance of Dale A. Evans Jr., Esq.

The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and experience. Additionally, the information above is not intended to be legal advice. Please consult with an experienced lawyer if you have a specific issue or dispute

Monday, March 9, 2015

Lienable items under Florida Statute 713

     Under Florida's construction lien law labor and services performed, as well as materials furnished for the improvement of real property are lienable (Fla. Stat. 713.05; 713.06). But what qualifies as an improvement of real property? As an initial matter, the labor, services and materials must bestow a permanent improvement to the real property. In one Florida case, an electrical contractor that hard wired a kiosk at a mall was held not to have lien rights. (Palm Beach Mall, Inc. v. Southeast Millwork, Inc., 593 So. 2d 1121 (Fla. Dist. Ct. App. 4th Dist. 1992)). The Court in that case found that while the electrical outlet to which the Kiosk connected to was a permanent installation, the kiosk itself and its installation was not a permanent improvement to the property giving rise to lien rights. Examples materials which would bestow a permanent improvement would be structural steel, roof tiles and plumbing fixtures incorporated into a project. It is not difficult to imagine how these materials, once incorporated, benefit a property. Apart from materials, labor and services expended in the improvement of property is also lienable. The key phrase here is “the reasonable value of labor or services connected with improving real property”.  But apart from actual labor costs, what can be included in “reasonable value of labor”. Under Florida’s lien law, lost profits, unabsorbed home office overhead, carrying charges and restocking charges are not lienable. On the other hand, finance charges can be included in a lie.

     So what happens if you include unalienable items in your claim of lien? Such a lien could be classified as a fraudulent lien. Under Florida Statutes 713.31(2)(a), any lien which is willfully exaggerated as to amount, willfully includes amounts for work not performed or materials not furnished to the property being liened is deemed a fraudulent lien. The filing of a fraudulent lien is a complete defense to its enforcement and the lienor’s rights under the lien forfeited. Additionally, a lienor who filed a fraudulent lien may be exposed to the property owner’s attorney fees and costs. There are also criminal penalties that go along with the filing of a fraudulent lien. Under Florida Statutes 713.31(3) any person found to have willfully filed a fraudulent lien commits a felony of the 3rd degree. 

     Determining what to include include in a claim of lien is not as straight forward as it may seem. If you have any doubts about the appropriateness of including any items of work, labor or charges in your claim of lien you should contact an attorney who is knowledgeable with Florida’s construction law before proceeding to record it. Don’t wait too long of course! Remember, a lien must be recorded within 90 days of last furnishing labor, services and/or materials to a project

By: Jose A. Rodriguez, Esq.
The Soto Law Group, P.A.
2400 E. Commercial Blvd., Suite 400
Fort Lauderdale, FL 33308
TEL: 954-567-1776
FAX: 954-567-1778

The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and experience. Additionally, the information above is not intended to be legal advice. Please consult with an experienced lawyer if you have a specific issue or dispute 

Need Steel? Log on to Amazon...

     Forward Magazine, a Metals Service Center Institute publication recently circulated a fascinating article about the encroachment of Amazon on industrial supplier and distributer markets.1 The article, authored by Peter Beller, highlights a renewed interest in developing ecommerce options for steel distributors. A quick visit to confirms the author’s claim that “under the ‘materials’ category, metal: from aluminum sheets to stainless steel bars to copper tubing” are available for purchase.

     In light of Amazon's encroachment how worried should steel distributors and metal service centers be? Probably not all that much. According to experts consulted by Peter Beller, “Amazon [is not] going to laser-cut steel.”3 Furthermore, the customization, project know how and customer relationships developed by service centers are factors Amazon cannot realistically duplicate or compete with.

     Full online selling and shipping services isn’t new. In fact, as Mr. Beller highlights, some big names such as ThyssenKrupp and ArcelorMittal shut down their STEEL 24-7 portal in 2007 because it simply did not pick up enough traction.4 So if the risk of AmazonSupply displacing or cutting into the industrial steel market isn’t all that apocalyptic- why care? Well, ecommerce is [was always] here and is only growing. While AmazonSupply won’t likely be the equivalent of the big Walmart that closes down the local shops- it does highlight the importance of having an online/ecommerce presence and option. For those that already do, it’s a good reminder to review your online presence in light of new markets and legal concerns.

     For example, does your company allow customers to fill out an online credit application? If so, when was the last time your application was updated? Are new company wide procedures in place that are not reflected or accounted for in the online application? Are the companies Standard Terms and Conditions disclosed on the online application? Are they even accessible online? Can customers place orders online? Are appropriate disclaimers, terms of sale, credit terms and applicable fees disclosed in the purchase process?

     Companies need to first consider what they want/should offer customers online. How much of an online storefront do you need or want is an important question. Who will it serve? The internet is most certainly a doorway to new markets and contacts. It also brings new challenges and risks. When deciding to what degree an online storefront could be utilized to serve new and existing customers, a discussion with legal counsel knowledgeable in both the construction and business industries is a wise course of action. Together, you can decide what needs to be included in your online pages, applications and legal disclaimers. If you already have an online presence, counsel can work with you to identify legal concerns and update your forms.

By: Jose A. Rodriquez, Esq.
The Soto Law Group, P.A.
2400 E. Commercial Blvd., Suite 400
Fort Lauderdale, FL 33308
TEL: 954-567-1776
FAX: 954-567-1778

The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and experience. Additionally, the information above is not intended to be legal advice. Please consult with an experienced lawyer if you have a specific issue or dispute.

Monday, March 2, 2015

News Release - Downtown Doral Charter Elementary School shows new vision for Local Schools

The Soto Law Group drafted a Program Management Services Agreement, utilized in the ground-breaking deal between Miami-Dade County Public Schools (MDCPS) and private developer Codina Partners for the creation of the Downtown Doral Charter Elementary School.  The project is unique because the school will be privately controlled and financed, but publicly managed by MDCPS. Superintendent Alberto Carvalho said such an arrangement was unprecedented in charter-friendly Florida, if not the country.  The Program Management Services Agreement is unique because MDCPS, rather than a private third-party, served as the Program Manager for the construction of the charter school and was therefore able to retain a degree of oversight and influence over the project despite the fact that the project was funded privately.