Manufacturers May Be Exempt From Liability Under the Condominium Act

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In a recent decision, the Fourth District Court of Appeal of Florida strictly construed the terminology of the Condominium Act in favor of material manufacturers.  See Port Marina Condo. Assoc., Inc. v. Roof Svcs., Inc., -- So. 3d --, No. 4D12-3693, 2013 WL 4726923 (Fla. 4th DCA Sept. 4, 2013). The court affirmed the dismissal of a condominium association’s suit for failure to sufficiently allege that a roofing material manufacturer was a “supplier” of materials as intended by the Act.  The court explained that “suppliers” are those who sell directly to consumers (i.e., to the condominium or to the developer) while “manufacturers” are those who sell to contractors. Because the Act applies only to “suppliers,” manufacturers who sell materials directly to contractors are simply not subject to the statutory warranties provided by the Act. Id.; see also § 718.203.

 

The Facts
Everglades, LLC developed Port Marina Condominiums and an adjoining boat storage facility. Id. at 1. In furtherance of the project, Everglades hired Best Roofing (contractor) to install a roof on the boat storage facility, with GAF Materials Corporation (manufacturer) to provide a written warranty for a roofing product called TOPCOAT. Id. Shortly after the completion of the roof, the condominium association (association) noticed that the boat facility roof was leaking and called Best Roofing for the repairs. Id. Best Roofing advised the association that the leaks were from the failure of the TOPCOAT product manufactured by GAF. Id. As a result, GAF came to the site to inspect the roof. However, upon inspection GAF determined that the leaks were actually caused by the defective application of the TOPCOAT product and not from a defect in the product. Id. With each party pointing a finger at one another, the association filed suit against the developer, the roofing contractor, and the manufacturer of TOPCOAT under the Condominium Act (§718.203) alleging that each violated the implied warranty of fitness and merchantability provided by the Act. Id. GAF subsequently filed a motion to dismiss arguing that section 718.203 did not apply to “manufacturers” of materials, but that it was only applicable to “suppliers.” Id. The trial court agreed that “GAF was a manufacturer and not a ‘supplier’ within the meaning of section 718.203(2)” and dismissed GAF from the case. Id.

 

The Opinion
The appellate court began its discussion with an analysis of the Condominium Act. Specifically, the court highlighted the precise terminology of the Act: “The contractor, and all subcontractors and suppliers, grant to the developer and to the purchaser of each unit implied warranties of fitness as to the work performed or materials supplied by them.” Id. at 2 (emphasis in original). Noting that the Act did not define “supplier” or “manufacturer,” the court turned to “Black’s Law Dictionary” and determined that a “supplier” was “a person engaged, directly or indirectly, in the business of making a product available to consumers,” whereas a “manufacturer” was defined as “a person or entity engaged in producing or assembling new products.” Id. at 2 (emphasis added). The court also looked to the recent Harbor Landing Condominium Owners Association v. Harbor Landing, LLC, 78 So. 3d 120 (Fla. 1st DCA 2012), decision for guidance. In Harbor, the appellate court affirmed the dismissal of a claim against a manufacturer holding that the manufacturer “had no knowledge of the condominium project,” but simply supplied materials to the contractor, and thus, was not a “supplier” subject to the provisions of the Condominium Act. Id.

 

The court opined that because the complaint in this case alleged that GAF provided its product, TOPCOAT, to the roofing contractor, but failed to allege that GAF supplied its product directly to the consumer (i.e., the developer or the association), the complaint failed to state a cause of action under the Condominium Act. The court reasoned that to survive a motion to dismiss, the complaint must properly allege that GAF was a “supplier” within the meaning of the statute. That is to say that the complaint must allege that GAF “was in the business of making the product available to consumers, as opposed to merely producing or assembling the product that Best Roofing, a roofing contractor, not a consumer, then purchased and used for the roofing project.” Id. (internal quotations omitted). The court also pointed out that the written warranty issued from GAF to the developer was insufficient to establish that GAF “supplied” materials for the project. Based on the forgoing, the court affirmed the trial court’s dismissal of GAF.

 

Legal Implications for Manufacturers, Distributors and Retail Clients
While the full impact of the decision is unknown at this time, the case seems to draw a line in the sand between “suppliers” and “manufacturers” and their respective liabilities (or lack thereof) under the Condominium Act. Specifically, if a manufacturer wishes to limit the potential liability associated with section 718.203’s implied warranty of fitness and merchantability, the manufacturer should opt to sell directly to the contractor and eliminate any interaction with the developer/ultimate consumer. By supplying materials only to the contractor, the manufacturer would remain a “manufacturer” of materials and would not transform into a “supplier” subject to the Act.

Topics:  Condominium Act, Condominiums, Contractors, Exemptions, Manufacturers, Suppliers, Warranties

Published In: Business Organization Updates, General Business Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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