Thought Leadership

Carnaval Home hired Berman Construction to renovate an existing home owned by Carnaval. Their contract set the date of substantial completion at September 4, 2019, and included a risk of loss provision placing risk predominantly on Carnaval. Berman hired subcontractors, including an electrician and project supervisor, to carry out the renovations.

On July 29, 2019, with renovation 90% complete, a fire destroyed the home. Carnaval then sued Berman for breach of contract, negligence, and violation of Florida building code. Carnaval based its breach of contract theory primarily on Berman failing to deliver the renovated property by substantial completion. At trial, Carnaval presented evidence that faulty attic wiring caused the fire, while Berman claimed it was caused by arson or another cause beyond its control. During the charge conference, Berman requested a question on the verdict form regarding the risk of loss provision and its other defenses of impossibility of performance and frustration of purpose.

The trial court granted a directed verdict on impossibility of performance and frustration of purpose, holding the risk of loss provision eliminated those defenses, and also denied Berman’s request for the risk of loss question on the verdict form. The verdict form ultimately included questions regarding the breach, negligence, and code violation claims. Its questions regarding the breach claim included the following: whether Carnaval did what was required by contract; whether Carnaval was excused from doing what was required by contract; whether Berman failed to do what was required by contract; and whether Carnaval was damaged by Berman’s failure to perform. The jury found Berman was not negligent but did violate the building code and breach its contract, though the code violation did not cause Carnaval’s damages. Carnaval was awarded $928,850 pursuant to the breach claim. The trial court denied Berman’s post-trial motions and granted Carnaval’s motion for attorneys fees.

On appeal, the 4th DCA noted that Carnaval presented evidence that the fire occurred the day electrical work was completed and power was restored to the house for the first time since construction began, when the home was under the exclusive control of Berman and its subcontractors. It presented testimony from the carpenter that the kitchen and family room lights went out while he was at the property that evening, which was also corroborated by Carnaval principal Luis Ormo. It presented expert testimony that the fire likely started in the attic and was not a result of arson. Berman offered testimony that traces of gas were detected along with unusual burn patterns and heat deformation at the bottom of door frames. Its expert testified that the fire had multiple points of origin. Berman established the home was engulfed in flames emanating from the roof within twenty minutes of Carnaval leaving the property and argued the fire could not have moved so fast absent arson. It further suggested the electrician and Ormo had separate dealings in violation of their subcontract, thus some of the electrician’s conduct was beyond Berman’s control.

The 4th DCA held Berman’s claim of inconsistency between the negligence, building code violation, and breach jury verdicts was to be remedied by a new trial, not directed verdict, and further held that it did not have to decide whether the verdict was truly inconsistent as Berman did not raise this issue before the jury was discharged and did not seek the appropriate remedy of a new trial. As such, it held the trial court was correct in denying Berman’s motion for directed verdict.

However, the court held that the trial court erred in denying Berman’s special interrogatory request as to the risk of loss provision. It explained that, where interrogatory verdict forms are used, it should include questions on both the plaintiff’s claims and any affirmative defenses. Without allowing a question regarding whether the risk of loss provision excused Berman from performance, the trial court did not resolve “the major question in the case.” The jury, having found Berman not negligent, made Berman’s defense, and the verdict form question, particularly significant. The court rejected Carnaval’s argument that Berman had waived its demand for arson-specific instructions and that Berman bore the risk of loss from non-arson-induced fires. It also held that Carnaval incorrectly applied the negative-implication canon, wherein the express mention of one thing implies the exclusion of another, stating not every positive statement of rights or obligations carries a negative implication. Further, the risk of loss provision’s clause including “perils beyond contractor’s reasonable control” amounted to a catch-all, to which the negative-implication canon cannot be applied. When read in totality, the provision clearly places risk of loss on Carnaval for perils such as arson. Berman was therefore entitled to have the jury decide whether the loss was caused by arson or another peril beyond its control.

Final judgment in favor of Carnaval was reversed, as was the trial court’s order denying Berman’s motion for attorneys fees, and the matter was remanded for a new trial.