What happens if after moving into your dream home, the walls begin
to shift and the floors begin to crack? After doing a little digging,
you discover the soil was tested and the builder knew the soil was
unsuitable for building. Houses were built without fixing the soil
problems.
You may have assumed you could rely on city inspections. That
assumption may be fatal. Even if the city knew about the soil
problems, in Florida you may not be able to hold the city responsible
for your damages.
In Dudley, et al v. City of Tampa, et al, 30 Fla. L. Weekly
D1245 (Fla. 2nd DCA, May 13, 2005), a Florida appellate
court ruled the City of Tampa did not owe a duty to homeowners to warn
them of defective soil conditions because the City did not own the
land and did not develop the land. During the 1980's, the City of
Tampa developed an Affordable Housing Program to make money available
to people who traditionally were unable to purchase homes. Tampa
Hillsborough Action Plan, Inc., a not-for-profit developer acquired
land to develop a subdivision and sell homes to qualified individuals.
Before purchasing the land, the developer hired an engineering
company to test soil conditions. The engineers reported the soil was
not suitable for building homes! Nonetheless, the developer sold the
land to Tampa United Methodist Centers, Inc, another not-for-profit
developer who contracted with All State Homes, Inc. to build single
family homes.
After it began work on the homes, All State discovered a layer of
fibrous organic material and told the Tampa United Methodist Centers
the foundations of the homes needed to be strengthened which would
require additional funds. Tampa United Methodist Centers refused to
pay the additional cost. The homes were completed without fixing the
problem.
The homeowners sued the City, claiming their homes suffered damage
due to defective soil conditions. The homeowners alleged the City was
aware of the soil defects before the building of the homes and the
City failed to disclose the soil defects to the homeowners.
The homeowners maintained the City owed the homeowners a duty to
warn them about the defective soil conditions even though the City did
not own the land and did not develop the land. The complaint alleged
the City’s role was to facilitate the project by bringing together
the various entities who ultimately built and sold the homes. The
trial court dismissed the negligence claim against the City.
The Florida appellate court agreed with the trial court, rejecting
the homeowners’ argument that the City had a duty to warn the
homeowners about the soil conditions. The court instead pointed out
the homeowners’ remedy was a suit against the builder and developer.
This decision is similar to Storm v. The Town of Ponce Inlet,
866 So. 2d 713 (Fla. 5th DCA, January 2, 2004), in which
the court ruled a homeowner could not sue the Town for the negligent
retention of the chief building official who allegedly misrepresented
the Town’s building code by giving a homeowner the wrong building
elevations when he applied for a building permit.
Moral of the story: do not count on a City or County to remedy your
problems. You need to timely hire your own inspectors.
INSURANCE: MANAGEMENT COMPANY MAY HAVE TO CONTRIBUTE
MONEY AFTER SETTLEMENT OF A WRONGFUL DEATH ACTION
What happens if a vendor sues your association for
injuries sustained in an accident caused by someone else? Hopefully,
your insurance policy will cover any losses. To reduce the charge
against your Association’s policy, the insurer may seek the at fault
party to pay the claim.
In Regis Insurance Company v. Miami Management,
Inc., 30 Fla. L. Weekly D1438a (Fla. 4th DCA, June 8,
2005), a Florida appellate court recently ruled an insurer’s
indemnification action against a management agent could move forward
because it was unclear whether the association’s management agent
was acting as a real estate manager at the time of an automobile
accident resulting in the death of a motorist. Angela Foster died
after Andre Wayne Chung lost control of his vehicle when he drove
through standing water and collided head on with her vehicle. Foster’s
Estate sued Chung and others alleging the negligent construction and
maintenance of the median and irrigation system caused water on the
street, creating a dangerous condition.
The insurance company settled with the Estate and
then filed suit seeking indemnification from Miami Management, Inc. as
subrogee of The Residences of Sawgrass Mills Community Association.
Regis alleged MMI negligently maintained the irrigation system which
caused the accident. MMI maintained it was an "additional
insured" under Regis’ insurance policy with the Association;
thus, Regis was barred from seeking indemnification.
The insurance policy defined "insured" as "any
person ... or organization while acting as a real estate manager for
the named insured." MMI executed two contracts with the
Association.
One contract involved management services. The other contract was
to perform lawn services, detail work, irrigation and fountain
services.
The trial court found that MMI was an "additional
insured" under the insurance policy and dismissed the complaint
against the management company. The Florida appellate court disagreed
and reversed and remanded the case for further proceedings. The
appellate court found that the trial court improperly dismissed the
complaint because questions remained as to whether the management
company was acting as a real estate manager at the time of the
accident.
This case demonstrates the importance of properly drafting
contracts. An association or a vendor may seek indemnification from
claims against the other. It is important that insurance policies
accurately state who is the insured and what is to be covered under
the policy.
