• Awareness of Joint Venture Liability
  • October 25, 2010 | Author: Christopher D. Russo
  • Law Firm: Moody Law, P.A. - Bartow Office
  • The smart lawyer needs to aware of the joint venture theory and what it means for your client. When many of us think of joint venture, we generally think of two large corporations, such as manufacturing conglomerates, who decide to make a joint effort to produce a single product. They do so because both companies think that they can make a profit from the product but neither is willing to risk the entire cost of the project alone. Therefore, the joint adventurers will combine their resources to reach a single end result that benefits both in some way. However, the benefit does not have to be equal. One company might provide the technology while another provides the workforce to build it and the profit margins for each may be very different. Many products are built this way rather than one company taking the lead whilesubcontracting anything it cannot do by itself to others. The essential elements of a joint venture are: (1) a community of interest in the performance of a common purpose, (2) joint control or right of control, (3) a joint proprietary interest in the subject matter, (4) a right to share in the profits, and (5) a duty to share in any losses which may be sustained. Chase Manhattan Mortg. Corp. v. Scott, et. al., 694 So. 2d 827 (Fla. 4th DCA 1997. Agency may be established by express or apparent authority, ratification, or estoppel. Joint ventures can, and usually are, implicit arrangements. See Metric Eng'g v. Gonzalez, 707 So. 2d 354 (Fla. 3rd DCA 1998).

     

    Until recently, most of us never would have considered car makers such as GM or Chrysler (formerly DaimlerChrysler) going into bankruptcy. Thus, after their recent bankruptcies, crashworthiness claims against GM and Chrysler would normally be extinguished just like any other company. While GM continues its way through the bankruptcy process, GM has announced that it will continue to honor product liability claims against it. On the other hand, Chrysler does not appear to be so generous in the bankruptcy process. A crashworthiness claim against Chrysler will likely result in a joint venture claim against Daimler-Benz as the last remaining partner, in some capacity, of DaimlerChrysler, notwithstanding the difference in names. As joint venture is normally a question of fact (See Knepper v. Genstar Corp., 537 So. 2d 619 (Fla. 3rd DCA 1988)), Daimler-Benz could be on the hook if a jury finds that a joint venture exists.

     

    Joint venture can be used in other ways. In a medical malpractice case, our firm used a joint venture theory to sue the wife of a doctor as a “partner” for the doctor’s malpractice. The doctor and his wife owned the medical clinic as tenants by the entireties. Many of you probably know that a judgment against a single defendant cannot be executed against jointly held property. The doctor and his wife attempted to shield nearly six figures of annual income from liability in the form of “rent” on the small medical clinic. By alleging joint venture, the plaintiff’s lawyer is able to execute on the jointly held non-homestead property and can expose the fraud for what it is. The doctor testified at deposition that his accountant told him to do it and that his wife had nothing to do with his practice.

    The defense came in and settled the case without allowing further exploration of the rent issue with the wife’s deposition.

     

    You might also need to allege joint venture to bring a case within insurance coverage. Our firm recently used joint venture in a wrongful death case to sue a hunting club vicariously for the actions of a negligent shooter. Part of “membership” into the club waS owning land on which the club uses to hunt. Even though the shooting did not occur on the shooter’s own lands, it occurred on lands contributed to the club for hunting by all members. This mutual relationship opened the door for full vicarious liability against the club for the actions of its members. Without the contribution of the land by the members, the club would have no place to operate.

    These principles are important to those of us who practice in the areas of personal injury and medical malpractice but also to the corporate lawyer. While the personal injury attorney uses joint venture theory to hold defendants accountable, the corporate lawyer has to be able to foresee the liability of his corporate client and adequately advise of the possible risks of a tragic event so as to avoid opening the floodgates of liability. The vicarious nature of joint venture through agency principles will defeat the Legislature’s recent abolition of joint and several liability for tortfeasors. Despite such abolition, agency liability is still alive and well in the State of Florida. Knowing the ramifications of these principles might make a difference in the way you advise one of your clients.

    Chris Russo, attorney Moody Law