• Contractually Limiting Individual Liability for Design Professionals Using Florida’s New Legislation
  • December 19, 2013 | Authors: Michael J. DeCandio; R. Thomas Roberts
  • Law Firm: Marshall Dennehey Warner Coleman & Goggin, P.C. - Jacksonville Office
  • Key Points:

    • Florida law permits contractual limitation of individual liability for negligence of “design professionals” employed by business entities.
    • “Design professionals” include architects, interior designers, landscape architects, engineers, surveyors and geologists.
    • Limiting contract must “include[ ] a prominent statement that, pursuant to [§ 558.0035], an individual employee or agent may not be held individually liable for negligence.”

    In Moransais v. Heathman, 702 So. 2d 601 (Fla. 2d DCA 1997), Philippe Moransais hired a professional engineering corporation to perform an inspection of a home he had contracted to purchase. Two engineers employed by the corporation, Jordan and Sauls, performed the home inspection. Relying upon the inspection, Moransais purchased the home, only later to find defects in the home that the engineers should have discovered, which made the house uninhabitable. Accordingly, Moransais filed suit for professional negligence against the engineering firm, as well as against Jordan and Sauls.

    As the litigation proceeded, finding conflict among circuit court decisions, the Second District certified to the Florida Supreme Court the question of whether a purchaser of a home may later assert a cause of action for professional negligence against an employee of the corporation that the purchaser contracted with to perform engineering services. The court answered in the affirmative. The dissenting justice stated:

    In all probability, the immediate effect of this majority opinion will be an increase in malpractice insurance rates and the resulting increased costs of all types of professional services to the consumers. By its holding, the majority is spreading the cost of losses among the public as a whole instead of requiring contracting parties to protect themselves in their contracts.

    Following the Moransais decision, Florida courts have repeatedly permitted professional negligence suits against individual employees of hired corporations, regardless of the contractual privity, or rather lack thereof, between the claimant and the employee. See, e.g., Witt v. La Gorce Country Club, Inc., 35 So. 3d 1033, 1037 (Fla. 3d DCA 2010) (“Florida law recognizes a cause of action against an individual professional geologist for professional negligence, irrespective of whether the geologist practices through a corporation.”). More specifically, in Witt, the Third District Court of Appeal decided that a damage limitation clause contained within the employer-claimant contract could not limit individual professional liability of the professional employees. The court specifically noted that such a clause is unenforceable as to the employee as a matter of law. In April 2013, the Florida legislature spoke on the issue through Senate Bill 286.

    Senate Bill 286 created § 558.0035, Florida Statutes (2013), which states that a design professional “employed by a business entity . . . is not individually liable for damages resulting from negligence occurring within the course and scope of a professional services contract” provided that five circumstances are met. It also amended the definition of “design professional” to encompass architects, interior designers, landscape architects, engineers, surveyors and geologists.

    Pursuant to the bill, employers who wish to limit the individual liability of their professional employees must ensure that:

    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, at least five-point sizes larger than the rest of the text, that, pursuant to [§ 558.0035], an individual employee or agent may not be held individually liable for negligence;
    4. The business entity maintains professional liability insurance required under the contract; and
    5. Any damages are solely economic in nature and the damages do not extend to personal injuries or property not subject to the contract.

    Section 558.0035(1)(a)-(e). The bill took effect on July 1, 2013, and does not state that it is retroactive.

    Notably, the newly-created statute does not completely eliminate individual liability but, rather, provides for a contractual limitation of liability. Therefore, if the five enumerated contingencies were not met, a design professional would still be individually liable for professional negligence occurring within the course and scope of performing his or her professional services. See, § 471.023(3), Fla. Stat. (2013) (an engineer is personally liable for negligence except as provided in § 558.0035); § 472.021(3), Fla. Stat. (2013) (surveyor and mapper); § 481.219(11), Fla. Stat. (2013) (architect and interior designer); § 481.319(6), Fla. Stat. (2013) (landscape architect); and § 492.111(4), Fla. Stat. (2013) (geologist). Further, the bill only limits claims on economic damages, leaving individuals still liable for claims for personal injury and property damage.

    Section 558.0035’s life may be short lived. Rumors of a constitutional challenge based upon an individual’s access to courts are already buzzing throughout the legal community. See, Fla. Const. Art. I, § 21. The Florida Supreme Court has previously held that the legislature’s abolishment of a common law right without providing a reasonable alternative or showing an overpowering public necessity therefore infringes upon an individual’s right of access to courts. Kluger v. White, 281 So.2d 1, 4 (Fla. 1973). A constitutional challenge will take some time to make its way into the courts. In the meantime, design professionals should ensure that their employers adequately protect their individual liability by accurately following Florida’s new legislation.