James K. “Keith” Ramsey and Monte S. Starr – April 29, 2013
Law Permits Businesses Providing Professional Services to Limit the Liability of Individual Employees or Agents
A new law will soon go into effect in Florida that will impact anyone doing business with design professionals in that state.
Ever since Moransais v. Heathman, 744 So. 2d 973 (Fla. 1999), Florida courts have recognized that individual professionals could be held liable to third parties for their negligence in the performance of a contract entered into by their employer. In Witt v. La Gorce Country Club, Inc., 35 So. 3d 1033 (Fla. 3d DCA 2010), the Third District Court of Appeal expanded that liability to rule that as a matter of law, limitation of liability provisions in professional services contracts were not enforceable to insulate individual professionals from liability.
On April 24, 2013, Governor Rick Scott approved Senate Bill 286, which will effectively abrogate the holding of Witt and permit business entities providing professional services to limit by contract the liability of their individual employees or agents. Under the newly created Florida Statute 558.0035, effective July 1, 2013, an individual design professional (identified in the new statute as an architect, interior designer, landscape architect, engineer, surveyor or geologist) can be protected from individual liability for negligence under each of the following circumstances:
1. the contract is made between the business entity and a claimant or with another entity for the provision of professional services to the claimant
2. the contract does not name as a party to the contract the individual employee or agent who will perform the professional services
3. the contract includes a prominent statement, in uppercase font that is at least five point sizes larger than the rest of the text, that, pursuant to this section, an individual employee or agent may not be held individually liable for negligence
4. the business entity maintains any professional liability insurance required under the contract
5. any damages are solely economic in nature and the damages do not extend to personal injuries or property not subject to the contract
Other Statutes to be Amended
Several other statutes addressing design professional liability will also be amended to include the proviso, “Except as provided in s. 558.0035.” Those statutes are F.S. 471.023 (governing the certification of engineering firms); F.S. 472.021 (governing the certification of land surveyors); F.S. 481.219 (governing the certification of architecture firms); F.S. 481.319 (governing the certification of landscape architecture firms); and F.S. 492.111 (governing the certification of professional geology firms).
The effect of this new legislation is that, under the plain language of the statute, if a professional services contract complies with the newly enacted statutory requirements, those contracting with design professional entities will not be able to hold the individual professionals liable for their negligence. Moreover, under the language of subsection (a), the limitation of liability may extend to claims brought by third parties if the underlying contract was for the provision of professional services to that third party.
Those contracting with design professionals should expect to see new limitation of liability provisions being proposed in contracts for professional services from this point forward to comply with the new statute.
The text of the bill can be reviewed at http://laws.flrules.org/files/Ch_2013_028.pdf.