Florida’s Fifth District Court of Appeal found that the contract between the parties required the general contractor to exhaust county administrative dispute resolution procedures prior to filing a lawsuit and could potentially result in a waiver of claims not presented through the administrative dispute resolution process.
Seminole County, Florida v. APM Construction Corporation, arises from a contract to construction a new fire station between a general contractor and the county. After the start of the work, the county terminated the contract for cause. The general contractor filed suit shortly thereafter, asserting claims for breach of contract ; prompt payment under the Local Government Prompt Payment Act; violation of Florida's Sunshine Law; and violation of Florida's Public Records Act.
The county moved to dismiss the lawsuit, arguing that under the contract and the Seminole County Administrative Code, the general contractor was first required to exhaust certain administrative dispute resolution procedures. In support of this, the county relied on the following contract language:
a) In the event of a dispute related to any performance or payment obligation arising under this Agreement, the parties shall exhaust county administrative dispute resolution procedures prior to filing a lawsuit or otherwise pursuing legal remedies. . . .
(b) In any lawsuit or legal proceeding arising under this Agreement, [the general contractor] hereby waives any claim or defense based on facts or evidentiary materials that were not presented for consideration in county administrative dispute resolution procedures set forth in subsection (a) above of which [the general contractor] had knowledge and failed to present during county administrative dispute resolution procedures.
The general contractor argued in response that those provisions only applied to disputes that arose during construction, not ones that arose following termination of the contract. The trial court agreed with the general contractor and denied the motion to dismiss. The county filed a petition for certiorari review by the appellate court.
On appeal, the Fifth District Court of Appeal reversed the trial court’s ruling. In reaching this conclusion, the court first looked to language in other sections of the contract, which specifically stated that termination of the contract “shall not affect any rights that Seminole County may have against [APM] then existing or which may thereafter accrue.”Second the court determined that “nothing in the contract shows that the parties intended to expressly exclude post-termination disputes such as the one brought by APM from the scope of its presuit administrative dispute resolution provisions.” Based on this, the appellate court concluded that the presuit administrative remedy provisions in the contract were “intended to and did survive its purported termination.” The court also noted that there was nothing in the record on appeal to suggest that the required presuit administrative procedures would be futile.
The key takeaway for contractors from this case is to pay attention to the dispute resolution procedures contained in contracts. Failing to do so may result in you waiving, even unintentionally, certain arguments or claims you may have. At a minimum, failing to do so may increase your costs of dispute resolution, in the event you have to end litigation, proceed through administrative or alternative dispute resolution procedures, and then re-start litigation.