02 September 2022
Dinsmore & Shohl
To print this article, all you need is to be registered or login on Mondaq.com.
At the end of July, the 11th Circuit Court of Appeals affirmed the dismissal of a roofing contractor’s complaint against another roofing contractor for allegedly interfering with its contract with a condominium association for roof repairs relating to Hurricane Irma. The case illustrates the importance of timing and advancing work related to insurance claims and should serve as a warning to those that regularly wait on insurance payments before beginning work.
While the full analysis of the case is below, one of the key reasons the first roofing contractor’s claims were dismissed was because the court found that after the project had sat for over two years, there was no real way the second roofing contractor would have any reason to know or think that another contractor had a contract to repair damage that was over two years old. One of the key takeaways from this should be the contractors signing contracts and then waiting on insurance approval before starting work may have a hard time claiming interference or breach of contract if the property owner ends up using another contractor if the insurance carrier takes a long time to approve payment. Contractors should make sure the process moves as quickly as possible and that they are keeping their customers updated on progress.
Full case analysis
CMR Construction and Roofing, LLC v. Universal Contracting Florida, arises out of damage to a condominium roof caused by the Hurricane Irma, and attempts to complete that work. In April 2018, a condominium association hired a roofing contractor to repair the hurricane-caused damage to its roof. As part of this, the Association directed its insurance carrier to pay the roofer for its work. In May 2020, the association hired a second roofing contractor to perform the same work that was covered under the contract with the first roofing contractor, and demanded that the first roofing contractor cease all work.
The first roofing contractor claimed that it had performed under the contract and pursued payment from the insurance carrier. After it was terminated by the association, the first roofing contractor sued the association and the second roofing contractor. Specifically, the first roofing contractor sued for tortious interference with its contract and relationship with the association, and violations of Florida’s Deceptive and Unfair Trade Practices Act (“FDUPTA”).
In support of the tortious interference claims, the first roofing contractor claimed that the second roofing contractor submitted a bid to perform the same work as the first roofing contractor to the association, despite knowing that the association and the first roofing contractor had already entered into a contract for the same work. The first roofing contractor claimed that this caused the association to breach its contract with the first roofer. The first roofing contractor also claimed that this conduct violated FDUPTA.
The second contractor moved to dismiss these claims, and his motion was granted. The trial court’s basis for granting the motion, in part, recognized that there was no way that the second roofing contractor could know that there was an existing contract to perform work on the roof to repair storm damage when over two years had passed since the occurrence of the damage. Further, the court dismissed the FDUPTA claim because there was no injury to a consumer pleaded in the complaint. The first roofing contractor ultimately appealed the dismissal of his lawsuit.
On appeal, the Eleventh Circuit Court of Appeals affirmed the dismissal. In addressing the dismissal of the FDUPTA claim, the court noted that the first roofing contractor had not alleged that the second roofing contractor’s conduct harmed any consumers, as would be required to state a claim under FDUPTA. And while the court acknowledged that non-consumers could bring claims under FDUPTA, they still must claim an injury to consumers as the basis for the claim. Here, the appellate court agreed with the trial court that the injury complained of was strictly to the first roofing contractor and not any consumers.
In addressing the dismissal of the tortious interference claims, the appellate court indicated that the second roofing contractor’s submission of a bid, as part of a competitive bidding process, to do work the first roofing contractor had originally agreed to perform, did not rise to the level of intentional, unjustified interference or collusion. Further, the court found that these allegations did nothing to establish that the second roofing contractor had knowledge of the first roofing contractor’s existing contract.
While it can be tempting to pursue claims against another contractor when they take over a project, this case illustrates that the mere fact that another contractor got the work may not be sufficient to establish a claim against that contractor.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
POPULAR ARTICLES ON: Real Estate and Construction from United States
The Opportunity To Fail
I have enjoyed reading some of the recent press around a large VC investment in the residential rental real estate company launched by one of the WeWork co-founders.