By: E. Carson Lange
A decision issued by the Florida Supreme Court earlier this year significantly limits the protection afforded by the statute of limitations to subcontractors and the like that are brought into construction litigation as third-party defendants.
In Caduceus Properties, LLC v. Graney , a property owner hired an architect to design a surgical center. The architect then hired an engineer to design the HVAC system for the center. When the HVAC system failed, the property owner filed a complaint against the architect. The architect then filed a third-party complaint naming the engineer as a third-party defendant, on the ground that the engineer was responsible for some, if not all, of the damages claimed by the property owner. In the course of the litigation, the architect filed for bankruptcy, bringing the proceedings to a halt. Several months later, after the applicable statute of limitations had run on the claims against the engineer, the property owner moved to amend its complaint to name the engineer as the primary defendant. The trial court granted the motion over the engineer’s statute-of-limitations based defense, and the trial ultimately resulted in a judgment totaling nearly $500,000 against the engineer.
On appeal, the First District Court of Appeal held that the property owner’s claim against the engineer was barred by the statute of limitations, certifying that its decision was in conflict with an earlier decision of the Fifth District Court of Appeal. The issue went before the Florida Supreme Court, and the First District’s decision was reversed and remanded.
The Florida Supreme Court framed the issue as whether the property owner’s amended complaint related back to the architect’s third-party complaint against the engineer. The Court stated that the “key inquiry is whether the third-party complaint put the third-party defendant on notice of the conduct, transaction, or occurrence from which the plaintiff’s claims against that defendant arose.” The Court held that “[f]or the amended pleading to be timely in this situation, the third-party complaint must have been filed prior to the expiration of the statute of limitations and the plaintiff’s claims in the amended complaint must arise from the same ‘conduct, transaction, or occurrence’ set forth in the third-party complaint.” The Court concluded that the property owner’s complaint against the engineer was timely and not barred by the statute of limitations.
Practically speaking, an amended complaint naming a previous third-party defendant as a primary defendant will almost always arise from the conduct, transaction, or occurrence described in the third-party complaint. A third-party defendant, therefore, may not be able to rely on the statute of limitations to protect itself from potential claims of the plaintiff where a timely third-party complaint was brought. The decision also highlights the importance of understanding the full extent of all potential claims, regardless of whether such claims have been brought, before settling any third-party claims.