The August 2026 floods in Indiana, Ohio and Kentucky inundated thousands of homes – and damaged hundreds of construction projects. On many projects, work will have to be torn out and replaced. After a loss like that, the question will always be, Who pays? The owner or the contractor? My October 11, 2024 blog sketched the general rule: Any portion of the work completed belongs to the owner. If damaged, it’s the owner’s loss. My blog post suggested good ways to protect yourself when the cause of damage is obvious.
But what if cause of the damage
isn’t obvious? Say a fire of suspicious origin destroys the project.
Contractors are usually considered to have control of the job site during
construction. Would that make a contractor liable for any damage? That was the claim
in a recent Florida case: Berman Construction v. Carnaval Home LLC.
Case in Point
The owner sued the contractor and several subcontractors for damage caused by fire. Source of the fire was not certain. Counsel for the owner claimed faulty wiring by a sub ignited a fire in the attic. The fire started shortly after electrical work was completed. A carpenter testified that lights in the kitchen and family room stopped working some time between 5:00 p.m. and 8:00 p.m. The fire started later that night.
The contractor had a different suggestion: arson. Traces of gasoline were detected in the ashes. An unusual burn pattern on the first floor was consistent with use of an accelerant. Expert opinion was that the fire had multiple points of origin. That’s a sign of arson.
After a jury verdict, the owner was awarded $928,850.
Counsel for the contractor appealed. Grounds? Instructions to the jury were defective. The jury should have been required to consider contract language on risk of loss:
Owner shall bear the risk of loss, costs and damage to the Work caused by natural disasters, vandalism, arson, insect infestation and perils beyond Contractor’s reasonable control.
Counsel for owner didn’t object to owner liability if arson caused the fire. But the contractor did not mount an arson-specific defense. The jury did not conclude that arson was the cause. Counsel for owner argued the doctrine of negative implication (expressio unius est exclusio alterius). Mention of one thing in a contract implies exclusion of others. If the cause wasn’t arson, a jury verdict on the risk of loss clause wasn’t essential.
Court Decision
The appellate court didn’t agree. Negative implication depends on context. Not every positive statement of rights or obligations carries a negative implication on other rights or obligations. The Ninth Amendment to the U.S. Constitution is an example. “The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.”
Plus, the final clause in the risk of loss paragraph (“and perils beyond Contractor’s reasonable control”) is expansive. Where the text contains a broad catchall provision at the end of a list of specific items, expressio unius cannot be applied without rendering the catchall mere surplusage. The appellate court returned the case for a new trial.
This is a perfect example. Thoughtful contract drafting pays dividends. There’s no better contract drafting tool than Construction Contract Writer. The trial version is free.
