CONSTRUCTION LAW CERTIFICATION SAMPLE EXAMINATION QUESTIONS INTRODUCTION

Transcription

1 CONSTRUCTION LAW CERTIFICATION SAMPLE EXAMINATION QUESTIONS INTRODUCTION Disclaimer: The following questions are provided to the public as examples of the types of questions that appear on Construction Law certification exams, as well as the subject areas that are tested. All questions have been pulled from previous exams and were correct and factual at the time of administration; however, the Construction Law Certification Committee acknowledges that some questions and/or answers may no longer be accurate due to the passage of time since administration. The Committee wishes you luck and is hopeful you will make application to sit for the examination. If you have questions regarding the filing of the application, please do not hesitate to contact our Bar Staff Liaison, Bekki Rudolph at: or at (850)

2 SAMPLE MULTIPLE CHOICE QUESTIONS 1. Which of the following statements regarding liens for professional services is correct? a. The real property must have been "actually improved." b. Only Florida licensed architects and engineers are permitted to lien for professional services. c. Professional lienors are not required to serve a Notice to Owner or a Final Payment Affidavit. d. Services for "supervising" another professional may not be included in a professional services lien. Answer: (c). Section , Florida Statutes. 2. A private construction subcontract provides for final payment to the subcontractor by the contractor "within 30 days after the completion of the work and full payment by the owner." In an action brought in Florida by a subcontractor against the contractor for payment, such a provision is: a. Unenforceable as being contrary to public policy. b. Strictly enforceable until owner makes payment to contractor. c. Enforceable after a reasonable time for owner to make payment. d. Unconditionally enforceable. Answer: (c). Peacock Construction Company v. Modern Air Conditioning, Inc., 353 So. 2d 849 (Fla. 1977). 2

3 3. A private construction contract for improvements to real property in Florida provides that "venue to enforce this contract shall lie only in the State of New York." Is this provision enforceable? a. Yes, if the State of New York is willing to accept jurisdiction. b. Yes, New York law must be applied to the enforcement of such contract. c. No, Florida law must be applied to the enforcement of such contract. d. No, it is void as a matter of public policy. Answer: (d). Section , Florida Statues (2012). 4. As a Plaintiff counsel, you are attempting to schedule the depositions of the corporate defendant s former employees, including managers, and deposing same. You may do all of the following EXCEPT: a. You may contact the former employees and managers without the consent of the corporation s counsel. b. You may depose the former employees regarding communications with corporate counsel while still employed by corporate defendant. c. You may schedule the depositions directly with the former employees with corporate counsel s consent if counsel represents them. d. You may depose the former managers about all factual matters related to the matter. Answer: (b). Opinion 88-14,

4 5. Your client asks you to draft a proposed maintenance contract with Longfellow Condominium Association. Which of the following is not required to be included in the maintenance contract? a. Specifies services, obligations, and responsibilities of the parties contracting to provide maintenance services to unit owners; b. Outlines specific dates and timelines for services, obligations, and responsibilities to be performed by the parties contracting to provide maintenance services; c. Discloses any financial or ownership interest which the developer or a board member holds in the maintenance company; d. Specifies cost incurred in the performance of the services, obligations or responsibility which are to be reimbursed by the Association to the party contracting to provide maintenance services. Answer: (b). Florida Statutes The statute of limitations for a condominium association to make a claim under Section , Florida Statues for a breach of the statutory implied warranties is as follows? a. Three years from issuance of a certificate of occupancy. b. Four years from the date that the developer relinquishes control of the Association to the unit owners. c. Five years from issuance of a certificate of occupancy by the municipality. d. Ten years from that the developer relinquishes control of the Association to the unit owners. Answer: (b). The statute of limitations under Section , Florida Statutes is four years from the date that the developer relinquishes control of the Association to the unit owners. Section , Florida Statutes, states the statute of limitations for condominium associations concerning actions at law or in equity does not begin to run until the unit owners have elected a majority of the members of the board of administration. Charley Toppino & Sons, Inc v. Seawatch at Marathon Condominium Association, Inc. 658 So. 2d 922 (Fla. 1995) and Regency Wood Condominium, Inc v Bessent, Hammack & Ruckman, Inc. 405 So. 2d 440 (Fla. 1st CA 1981).

5 7. Generally, exclusions in a typical Commercial General Liability Policy are NOT: a. Meant to restrict and shape the coverage otherwise granted by the insuring agreement b. Interpreted separately, or independently of every other exclusion c. Interpreted narrowly, with the burden of proving the facts necessary to establish an exclusion on the insurer d. Meant to be read together, cumulatively Answer (d). Weedo v. Stone-E-Brick, Inc., 405 A.2d 788 (N.J, 1979)(exclusions meant to be read independently) LaMarche v. Shelby Mut. Ins., Co, 390 So. 2d 325 (Fla. 1980) stands for the principles set forth in a, b, c answer choices. 8. Which type of policy would cover both a general contractor who performs construction management services and an architect for design work on the construction of mixed use commercial project? a. Commercial General Liability Policy. b. Builders Risk Insurance Policy. c. Professional Liability Insurance Policy. d. Additional Insured Status. Answer (c). Caremedic Systems Inc v. Hartford Casualty Insurance Co, 2008 WL ( M.D. Fla. 2008) 5

6 9. The City of Sunset, Florida issued an Invitation To Bid (ITB) for a new indoor swim complex. The bid document requires bidders to disclose their proposed major sub-contractors. Bidders included the Arkansas Pool Company (APC) which is a Delaware company based in Little Rock, Arkansas. Because they are not qualified to do contracting in Florida, APC listed a Florida general contractor (G.C.) as one of its proposed sub-contractors and intended that company to act as general contractor. At bid opening, APC was low bidder but was not awarded the project. APC timely filed a protest. APC posted a bid protest bond. Should APC win the protest? a. Yes, because it was the low responsive bidder. b. Yes, because it was the low bidder, timely filed a protest and posted a bid protest bond. c. No, because it is not qualified to do contracting work in Florida. d. No, because it failed to include proof that the GC is licensed in Florida with its bid proposal. Answer (c). Section (11)(e), Florida Statutes

7 10. Owner hired an architect to prepare a complete set of design documents for the construction of a high rise, oceanfront building in Ft. Lauderdale, Florida. The architect hired a mechanical engineer to prepare the design for the HVAC systems. After construction was completed, it was discovered that the HVAC systems were defectively designed so that, as constructed, they do not comply with applicable building codes. The Owner sues the Architect for damages because of the defective design of the HVAC systems. The Court should find that the Architect: a. Is not liable to the Owner because the Architect did not design the HVAC systems. b. Is not liable to the Owner because the Mechanical Engineer is an independent contractor for whose negligence the Architect is not vicariously liable. c. Is liable to the Owner because the duty to provide a design that complies with all applicable codes is non-delegable. d. Is not liable to the Owner because the Architect did not seal the mechanical drawings for the project. Answer: (c). Hamner et al., Florida Construction Law and Practice, Rights and Liabilities of Architects and Engineers, s (7th Ed. 2013); Grossman v. Sea Air Towers, Ltd., 513 So. 2d 686 (Fla. 3d DCA 1987).

8 Part I Essay 2 Suggested Time: 60 Minutes The owner of NOLA South has consulted with you concerning its New Orleans themed mixed use project which consists of Townhomes, Apartments, a Retail Center and a Recreational Facility. A major dispute has arisen with OMNI Construction ( OMNI ) the general contractor, and the owner of NOLA has asked for an analysis of NOLA s rights and the amounts to which NOLA is entitled for each section. NOLA is preparing for an upcoming pre-suit mediation. The Project was designed by a single architect. NOLA has separate lenders for each section, and NOLA entered into separate construction contracts with OMNI for each section. Each section started at a different time with different completion dates. The Townhome Section was substantially completed on time but quickly developed roof leaks due to the roofing subcontractor s failure to properly seal electrical and mechanical penetrations. The roof leaks were promptly corrected to NOLA s satisfaction, but NOLA has not released OMNI s retainage of $750,000, claiming damage to NOLA s reputation. The lender for the Townhome Section has fully funded its loan. The Apartment Section was also substantially completed on time. The brick subcontractor could not get the brick specified for the courtyard and fountain, and substituted a similar brick from another manufacturer. NOLA s project manager observed the brick as it was being installed, but did not catch the error. When the architect discovered the error, he objected because the substitute brick gave the courtyard an Italian feel rather than the feel of old New Orleans. At the urging of the architect, NOLA has insisted that the brick be removed, and the specified brick installed. The courtyard is not needed to access the Apartments. For safety reasons, however, NOLA wants the brickwork completed before NOLA allows tenants to occupy the Apartments. NOLA has signed leases for most of the units. So far, NOLA has received a few negative comments on the brick from the tenants.

9 The original brick contract was $235,000, but the cost to remove the brick, and reinstall new brick is $950,000. OMNI will not do the brick work without a change order, and NOLA has not released OMNI s retainage of $800,000 for the Apartments. The lender for the Apartment Section has fully funded its loan. OMNI achieved substantial completion of the Retail Center 45 days late, but NOLA was able to timely deliver possession to the retail tenants. OMNI did not complete its punch list work on the retail center within the time set forth in the contract. As a result, NOLA had several of the punch list items corrected at a cost of $15,000. NOLA s owner guestimates that the remaining punch list items will cost $25,000, but has not obtained any estimates. The parties contract stipulated that NOLA s damages from OMNI's failure to timely achieve substantial completion could not be determined at the time of contracting and provided for liquidated damages of $2 million. NOLA has not released OMNI's retainage of $850,000 claiming liquidated damages of $2 million plus $40,000 for the punch list work. The Recreational Facility is still under construction with approximately half of the roof tiles have been installed. NOLA s project manager has discovered that the roof tiles are not the Premium Roof Tiles specified by NOLA and installed in the other buildings in the Project. For reasons that the architect cannot explain, a similar, but lesser quality roof tile was specified for the Recreational Center. The change was made without the agreement of NOLA. OMNI had noted the change and assumed that it had been made to save costs. Because of the change in the roof tile specification, OMNI passed the cost savings of $500,000 through to NOLA. NOLA has ordered the lower quality roof tiles removed and Premium Roof Tiles installed on the Recreational Facility. OMNI has received the following bid from the roof subcontractor to make the change which OMNI has now submitted to NOLA as a Change Order:

10 Original roof contract: $1,500, Credit for roof tiles not installed: ($500,000.00) Removal and disposal of installed roof tiles: $200, Supply and install Premium Roof Tiles $2,000, Revised Roof Total: $3,200, OMNI is refusing to proceed with the roof work until NOLA signs the Change Order. NOLA is refusing to approve the Change Order insisting that OMNI should have caught the error. OMNI, on the other hand, has denied liability contending that any all costs should be paid by NOLA and/or the architect. NOLA s lender for the Recreational Facility has learned of the situation and has insisted that parties reach a resolution within two (2) weeks or the lender will declare a default and begin foreclosure proceedings. A pre-suit mediation is scheduled for next week between NOLA and OMNI dealing with the entire Project. Analyze NOLA s rights and the amounts to which NOLA is entitled to recover on a section by section basis. A complete answer should include an explanation of the relevant law and the amounts properly recoverable by NOLA. Part I Essay 2 Answer Outline The question is best answered by analyzing NOLA s rights on a section by section basis. The Townhome Section presents a fairly straightforward situation in which the general contractor has substantially performed and is entitled to recover its full contract balance. Substantial performance does not require perfect performance. OMNI, timely corrected all errors in this work and is entitled to recover its full retainage of $750,000 for the Townhomes. Damage to OMNI s reputation is too speculative to serve as a basis for damages. OMNI properly performed all of its work on Apartment Section, except for the brick. Because OMNI has achieved substantial completion, OMNI is entitled to its full contract less damages for any work not properly performed. Generally, damages are the cost to repair or replace the incorrect work so as to conform to the original contract specifications or the diminution in value of the project, whichever is less so as to avoid unreasonable economic waste. The issue of avoiding economic waste often arises when aesthetics are involved. While the

11 brick is not as specified by the architect and desired by NOLA, NOLA may not be entitled to any damages. NOLA has leased most of the Apartments and few tenants have commented about the brick. This suggests that overall value of the building may not have been damaged by the change in the brick. Usually, value is the subject of expert opinion. If the tenants are willing to occupy the apartments, NOLA has not suffered any loss. Grossman Holding v. Hourihan, 414 So. 2d 1037 (Fla. 1982). If the courtyard is not needed for access, OMNI s safety reasons may be overstated. If OMNI refuses to allow the tenants to move in, it may be have failed to mitigate its damages. The Retail Center presents several issues involving the cost to repair as well as liquidated damages. NOLA is titled to recover its reasonable costs to correct OMNI's work. The actual expenses incurred by NOLA will be recoverable unless OMNI can demonstrate the expenditures were unreasonable. The fact pattern does not present any evidence to suggest unreasonableness. The opinion of NOLA's owner is inadequate to sustain a claim for damages absent a showing of specialized knowledge which would qualify him to offer an expert opinion as to the cost of the work. The Retail Center also presents an issue regarding liquidated damages. While liquidated damages are generally recoverable, the facts presented suggest a situation in which the court may find the liquidated damages clause unenforceable. To be enforceable, a liquidated damages clause must satisfy two conditions: 1) the damages consequent upon a breach must not be readily ascertainable; and 2) the amount must not be so grossly disproportionate to any damages that might reasonably be expected to follow from a breach as to show that the parties could have intended only to induce full performance rather than to liquidate their damages. In this case, NOLA's damages can be readily ascertained. Those damages are the amounts for which NOLA is liable to its commercial tenants for late delivery of the units. NOLA's damages also are the time value of money, in other words, interest. Furthermore, the amount of $2 million, which is not based upon the length of the delay suggests that the amount is punitive. The amount of the liquidated damages is not tied to a per diem or some other standard which ties the damages to the magnitude of the breach. Furthermore, the stipulations of the parties in contract are not binding on the court. Goldblatt v. C.P. Motion, Inc., 77 So. 3rd 798 (Fla. 3d DCA 2011). The Recreational Facility presents a fact pattern which requires an analysis of liability between the three parties, NOLA, OMNI, and the architect. A proper answer should note that arguments can be made by each of the parties may bear some responsibility for failing to note the change in the roof specification. Ultimately, the architect will bear liability for the change which includes the increased cost of performing work such as the tear out and disposal of the install roof tiles, and the cost of the original roof. Had the architect specified the proper roof at the outset, these costs would not have been incurred. Similarly, the architect is entitled to the benefit of any savings by virtue of a portion of the roof not yet installed. The architect is not liable for the first cost which in this case would have been $2,000,000. Soriano v. Hunton, Shivers, Brady & Associates, 524 So. 2d 488, 489 and fn. 2 (Fla. 5th DA 1998). Thus, the architect is liable for the increased costs of $1,200,000. The question is deliberately silent on the issue of whether the various contracts allow NOLA to set off defaults on one contract against amounts owed on other contracts. A complete answer will identify and include a discussion the possible right of set off. 11