7.3 Mediation, Arbitration, Tort Law & Risk

7.3 Mediation, Arbitration, Tort Law & Risk

The rest of B&F Area B item 9 is mediation and arbitration, tort law, and risk management. A Florida HVAC qualifier who can install a 20-ton split but cannot tell mediation from arbitration will still miss these questions. Dispute clauses, construction-defect notices, negligence, indemnity, and documentation are how you keep a contract from becoming an uninsured lawsuit.

The dispute ladder: negotiation, mediation, arbitration, court

Negotiation is the parties talking, often with the architect's decision as a first stop under AIA A201-2017 Article 15. Mediation is a facilitated settlement conference with a neutral who has no power to impose a result. Arbitration is a private hearing before one or more arbitrators who issue an award that is generally binding and confirmed in court under the Florida Arbitration Code, Chapter 682. Litigation is a public lawsuit in circuit court, with discovery, a record, and appeal.

AIA A201-2017 §15.3 generally makes mediation a condition precedent to binding dispute resolution. You mediate first (commonly under AAA Construction Industry Mediation Procedures); you do not skip straight to the arbitrator or the courthouse because you are angry about a rejected extra. §15.4 arbitration applies only if the parties selected arbitration in the agreement. If they selected litigation, mediation still comes first, then court. Mediation is confidential settlement; it is not a ruling. Arbitration is a ruling; it is not a negotiation. A clause that says disputes shall be settled by mediation is incomplete — after a failed mediation you still need the selected binding forum. Chapter 558 can run alongside the AIA ladder: to the extent an arbitration clause conflicts with Chapter 558, 558.004(14) says Chapter 558 controls the notice-and-opportunity-to-repair process.

Chapter 558 notice before a defect suit

Florida's construction-defect statute is a pre-suit cooling-off device, not a substitute for the contract. In an action alleging a construction defect, the claimant must, at least 60 days before filing (or 120 days if an association representing more than 20 parcels is the claimant), serve a written notice of claim that refers to Chapter 558, describes each alleged defect in reasonable detail, and, based on at least a visual inspection, identifies locations so the respondent can find them without undue burden. If the work was under a contract, serve the person with whom the claimant contracted. The person served may inspect within 30 days (50 days for such an association) and generally must serve a written response within 45 days (75 days for such an association) offering repair, money, a combination, a dispute, or an insurer-driven option. A claimant who receives a timely offer has 45 days to accept or reject it. Service of the notice tolls the statute of limitations (not the statute of repose) for a stated period. Emergency repairs to protect health, safety, and welfare are allowed without waiting. For an HVAC qualifier, a 558 letter about a short-cycling 5-ton heat pump is a risk-management event: notify the carrier, inspect, and respond in the statutory window — do not ignore it until a complaint is served.

Tort law on an HVAC job

A tort is a civil wrong independent of contract. Negligence requires four elements: duty, breach, causation, and damages. An HVAC contractor owes a duty to perform in a workmanlike manner and to avoid creating unreasonable risks (uncapped refrigerant cylinders in a corridor, an unsecured rooftop unit at a school, a missing lockout on a live disconnect). Breach is falling below that standard. Causation links the breach to harm. Damages are the actual loss. A bad outcome without a breach is not negligence. F.S. 768.81 is modified comparative negligence: a claimant whose percentage of fault exceeds 50 percent recovers nothing. Fault is apportioned among parties; it is not all-or-nothing contributory negligence.

Vicarious liability (respondeat superior) makes the employer liable for an employee's negligence committed within the scope of employment. An employee who drops a condensing unit on a parked car while setting it with the company crane is the company's problem. A true independent contractor generally is not, but Florida still imposes nondelegable duties (workplace safety for those you control, compliance with codes you are licensed to perform). Labeling a helper a subcontractor on a 1099 does not erase a duty the qualifier assumed toward the public.

Premises liability follows control of the site: if your crew created an unmarked floor opening around a removed air handler, a visiting inspector's fall is your risk. Products liability can attach when you supply equipment as a seller, but the usual HVAC claim about a compressor that fails after start-up is a warranty and contract problem first. The economic loss rule generally keeps parties in privity from converting a purely economic construction dispute (the unit does not meet SEER, the duct leaked and the owner wants a refund) into a tort; personal injury and damage to other property (the leaking coil that ruins the owner's server rack) can still be torts. Code violations matter here: performing work you know violates FBC Mechanical 2023 is both a contract breach under A201 §3.7.3 and evidence of breach of a tort duty.

Limitations. F.S. 95.11 generally gives 5 years for an action on a written contract, 4 years for an action founded on the design, planning, or construction of an improvement to real property (running from TCO, CO, certificate of completion, or abandonment, whichever is earliest; latent defects run from discovery, but in any event within a 7-year repose from that same earliest date), 4 years for unwritten contract claims, and 2 years for an action founded on negligence. Correction of completed work under warranty does not extend the construction period once a permit and CO or certificate of completion were issued. Do not confuse these with the Chapter 713 one-year lien suit or the 255.05 one-year bond suit.

Indemnity and contractual risk transfer

Owners and general contractors will hand you a hold-harmless. F.S. 725.06 polices it. A construction-contract promise to indemnify the other party for liability caused in whole or in part by the indemnitee's own act, omission, or default is void unless the contract contains a monetary limitation on the indemnification that bears a reasonable commercial relationship to the contract and is part of the project specifications or bid documents, if any. The limitation provided to an owner of real property by a party in privity is not less than $1 million per occurrence, unless otherwise agreed. The clause still cannot require indemnification for the indemnitee's gross negligence or willful, wanton, or intentional misconduct, or for statutory violation or punitive damages except to the extent caused by the indemnitor's own people. On public projects, indemnity is limited to liabilities to the extent caused by the indemnifying party's negligence, recklessness, or intentional wrongful misconduct, and broader defend-and-hold-harmless language is void. Unlimited I indemnify you for your own negligence, including gross negligence is the clause you strike, not the clause you initial because the GC's prequalification packet is due at 5 p.m.

Risk management that actually shows up on the exam

Risk management is identifying loss exposures and treating them: avoid (do not take a Class B job that needs 40 tons), transfer (insurance and a 725.06-compliant indemnity, not an illegal one), reduce (written Article 7 changes, 21-day claims, daily reports, SDS, lockout/tagout, permits), and retain (deductibles you can actually pay). Chapter 3 already set the CILB minimums ($100,000 public liability / $25,000 property damage for air-conditioning contractors, plus workers' compensation). This section is the contract-side companion: do not create uninsured extras, do not waive lien or bond rights in a non-statutory form unless you intend to, and do not skip Chapter 558 or AIA mediation because a customer is loud.

Florida HVAC scenario. A Class A sub on a hospital addition is handed a subcontract that selects AIA A201-2017, requires indemnity for the general contractor's own negligence with no dollar cap, and is silent on Chapter 558. During start-up a hospital employee trips over an unmarked condensate hose your helper left across a corridor and breaks a wrist; separately, the owner later claims the air-handling units were short of specified capacity. Risk management splits the file. The wrist is a tort (duty, breach, causation, damages) reported to the CGL carrier; comparative fault under 768.81 will assign percentages, and a claimant more than 50 percent at fault recovers nothing. The capacity dispute is a contract and 558 problem: written claim under the 21-day clause if you are the claimant, or a 558 response if you are the respondent, then mediation before arbitration or court. The uncapped indemnity for the GC's own negligence is the 725.06 problem you should have redlined before you signed — it is void without a commercially related monetary limitation, and it cannot reach the GC's gross negligence in any event. Managing the contract meant reading those clauses when the job was awarded, not when the incident report hit the qualifying agent's desk.