Free v. Construction Industries Recovery Fund

Citations: 729 So. 2d 980; 1999 Fla. App. LEXIS 3406; 1999 WL 155716Docket: No. 97-04120

Court: District Court of Appeal of Florida; March 23, 1999; Florida; State Appellate Court

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David J. Walsh appealed the decision regarding his claim against the Florida Construction Industries Recovery Fund after failing to collect a judgment against J.A.F. Enterprises, Inc., the contractor hired for duplex renovations. J.A.F. and its qualifying agent, Jeffrey A. Free, argued that Walsh's claim should be reversed due to its filing beyond the two-year limitations period outlined in section 489.141(l)(e), Florida Statutes (1995). The Fund compensates consumers for damages caused by licensed contractors, disbursed upon orders from the Construction Industry Licensing Board, with contractor licenses suspended until repayment to the Fund occurs. 

To recover from the Fund, claimants must have a final judgment based on contractor violations and must notify the Board when legal action begins. The two-year filing requirement from the date of the act or its discovery cannot be waived by the Board. Walsh hired J.A.F. on October 25, 1993, and notified them of issues with the project on May 23, 1994, before filing a civil action on August 19, 1994. A final judgment was entered in Walsh's favor on February 23, 1996, but he could not collect the judgment. Walsh submitted his claim to the Fund on August 12, 1996, which was received on August 20, 1996. The appeal centers on whether Walsh's claim was timely, hinging on the definition of the "act giving rise to the claim." The court noted that the relevant dates of actions taken were not disputed, focusing on the statutory violation underlying Walsh’s claim.

The Fund was established to compensate individuals who succeed in civil actions related to construction contracts where contractors breach specific statutory provisions. In this instance, the Board found that Walsh's judgment against J.A.F. was due to a violation of section 489.129(l)(h)3., Florida Statutes, which allows for the suspension of a contractor's certificate for financial mismanagement that harms a customer. J.A.F. contends that Walsh's claim should have been filed within two years of his May 23, 1994, letter terminating the contract upon discovering he would incur costs exceeding the original contract price. J.A.F. interprets "act" in the context of the claim as the contractor's breach, suggesting that Walsh needed to file by May 23, 1994, thereby arguing that the Board's acceptance of an August 20, 1996, filing was erroneous. Conversely, the Board asserts that the act giving rise to the claim relates to the financial misconduct defined in the statute, which only became apparent after the project was completed and Walsh had a judgment indicating he paid more than originally contracted. The Board determines that the limitations period commenced upon Walsh's discovery of financial mismanagement, aligned with the May 23, 1994, letter. Despite recognizing potential difficulties in meeting statutory time requirements in lengthy litigations, the Board concluded that Walsh's judgment was timely as it occurred three months before the two-year limit expired. The statute's interpretation is supported by the "Notice of Consumer Rights Under the Construction Industries Recovery Fund," which stipulates that claimants must notify the Construction Industry Licensing Board by certified mail when initiating legal action, indicating that the act giving rise to the claim precedes the civil action.

The Recovery Fund serves as a last resort for claimants, who must file a claim within two years of either the law violation or discovery of the violation. The term "violation of law" pertains specifically to acts by the contractor that warrant a claim. In this case, J.A.F. financially mismanaged the project, prompting Walsh to terminate the contract on May 23, 1994. The Board's Final Order recognized that Walsh timely filed his claim, noting good cause to waive the notice requirement under Florida Statutes due to his complaint being filed within the two-year period preceding his lawsuit. However, the Board mistakenly conflated the notice requirement with the two-year limitations period for claims against the Fund. While the Board can waive notice requirements, it cannot waive the statutory limitations period. Consequently, the Board's Final Order is reversed. Judges BLUE and WHATLEY concur, and appellee David J. Walsh did not participate in this appeal.