Waldman Barnett Wins Award of Over $4 Million for Faulty Construction Work

Waldman Barnett, PL lawyers Eleanor Barnett, Jeffrey Lam and Glen Waldman secured a major win for their client PriceSmart Inc., the largest operator of membership warehouse clubs in Central America, the Caribbean and Colombia. The final damage total, which Waldman Barnett expects will include attorney’s fees, costs and interest, is approximately $5 million.

In February of 2016, San Diego-based PriceSmart paid $45 million to Section 31 Holdings, LLC, an affiliate of Flagler Development, for an 18.59-acre site and warehouse and distribution center at Flagler Station in Medley, Florida. The warehouse was to be built to suit PriceSmart’s needs to accommodate its particular plans for the warehouse. Section 31 hired Marcobay Construction, Inc. to act as the general contractor for the construction of the warehouse. After completion, Section 31 assigned Marcobay’s warranty obligations to PriceSmart.

Soon after PriceSmart took possession in early 2017, unusual cracks began to develop in the 300,000 square foot concrete slab floor, and attempts to fix them only led to further deterioration, Waldman Barnett asserted in its lawsuit filed in December 2019 on behalf of PriceSmart against Section 31 and its guarantor, which was later amended to include claims against Marcobay. Over time, the defects worsened and the concrete floor was covered in cracks and holes, and areas of the warehouse were becoming a safety concern. PriceSmart spent two years testing the floor to try to determine the cause of the cracking and to develop repair protocols.

While Marcobay initially took responsibility for minor repairs, when it became clear that the problems were pervasive, Marcobay abandoned its obligations and claimed the floor was defective because warehouse design professionals “under-designed” the structure “for its intended use”, and PriceSmart was abusing the floor with excessive loads. Marcobay was never able, however, to prove any deficiencies in the design or misuse of the floor by PriceSmart.

After a three-day trial, on October 14, 2021, Miami-Dade Circuit Court Judge Michael Hanzman found in favor of PriceSmart on its claims for breach of contract and breach of warranty against Marcobay, determining that the issues with the floor were the result of poor workmanship. “The overwhelming evidence in this case is that this floor was an abomination,” the judge concluded. He said PriceSmart was entitled to a concrete floor built in a workmanlike manner “and they didn’t get it.”

At trial, Judge Hanzman heard from PriceSmart and its experts about the continued deterioration of the floor, the systemic nature of the deficiencies, and the fact that the most cost-effective way to resolve the issues was to remove and replace the entire 300,000 square foot concrete slab. He determined the whole floor must be removed and replaced and that PriceSmart should be paid for the replacement, which totals approximately $4 million, as well as for the $486,000 PriceSmart previously paid for testing and prior repairs to the floor.

“They are not required to take what is a pair of blue jeans and try to turn it into a tuxedo,” Hanzman said. “They bargained for a tuxedo, they paid for a tuxedo, and they are entitled to rip up this pair of blue jeans they got and lay a proper tuxedo, period.”

“This was a great win for a deserving client,” Barnett said. “PriceSmart spent years trying to address the issues with the floor in its brand new warehouse after Marcobay abandoned its obligations and now it can make the repairs and move on with its business.”

Click here to access TheRealDeal’s coverage of the win as well as the DBR’s coverage.

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