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Monthly Archives: April 2013

25APR 2013

The Design Professional Limitation of Liability Act, that we have been following and discussing here and here, outlined in the version of SB 286 that ultimately passed both the Senate and House has been approved by Governor Scott.  Governor Scott signed the act on April 25th.  The act creates § 558.0035, Florida Statute, and will take effect on July 1, 2013. It does not appear that this new statute will apply retroactively and will only apply to contracts entered into on or after July 1, 2013.

22APR 2013

As we have previously posted, we have been closely monitoring Senate Bill (“SB”) 286 and House Bill (“HB”) 575, which have moved quickly through their respective committees and chambers with little opposition.  On March 27, 2013, the Senate passed SB 286 by a 37 to 1 vote.  SB 286 was then substituted in place of HB 575 (thus tabling HB 575).  Subsequently, the House passed SB 286 by a 103 to 13 vote on April 17, 2013.

SB 286 is now being converted into an “act” for presentation to the Governor.  If presented while the legislature is in session, the Florida Constitution allows a 7-day period following presentation of the act to Governor Scott within which Governor Scott can either sign or veto the bill. If the legislature adjourns sine die before an act is presented to the Governor or while an act is in the Governor’s possession, the Governor has 15 days from the date of presentation in which to take action.  The last day of this year’s regular legislative session is May 3, 2013.  There is no indication that Governor Scott intends to veto this bill.

The version of SB 286 that ultimately passed both the Senate and House was similar to the originally-introduced bill.  The only material amendment to the original version of the bill was the addition of geologists within the act’s definition of design professional.

The act permits business entities providing professional services to limit by contract the liability of their individual employees or agents for negligence arising from the performance of professional services under a contract.  Florida courts have routinely held that provisions within in a professional services contract which place limitations on the liability are enforceable as to the professional association/business entity only and have not extended the contractual limitations of liability to the individual professionals performing the contracted services on behalf of the professional association/business entity.  The act provides the professional association/business entity the ability to extend the contractual limitations of liability to the individual professionals it employs.

The act, if executed by Governor Scott, will take effect on July 1, 2013.  The Legislature has not expressed an intent that the law apply retroactively.  For the protections afforded to design professionals to be enforceable, the professional services contract must comply with the requirements of the act, one of which is to “include a prominent statement, in uppercase font that is at least 5 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.”  Due to the act’s contract requirements, it is very unlikely that this law can be retroactively applied because it is impossible for existing contracts to contain the disclaimer or waiver.  Therefore, we do not anticipate any successful litigation with respect to the retroactive application of the law to contracts in effect before July 2, 2013.

Nonetheless, it will be prudent for design professionals – architects, interior designers, landscape architects, engineers, surveyors, and geologists – and their related business entities to familiarize themselves with this proposed new law and ensure strict compliance with the contractual requirements of the law moving forward.

We will provide a final update on the Design Professional Bills and the new Florida Statute the Design Professional Bills propose, § 558.0035, Florida Statute, when Governor Scott either signs or vetoes the bill.

12APR 2013

SCHOOL OF CLAIMS SEMINAR

April 25 – 26, 2013

JW Marriott Orlando Grande Lakes Resorts

MARK YOUR CALENDAR! Cole, Scott & Kissane is pleased to announce that on April 26, 2013, we will be once again hosting a complimentary Claims Management Seminar at the beautiful JW Marriott Orlando Grande Lakes Resort, 4040 Central Florida Parkway, Orlando, Florida 32837, with keynote speaker: FLORIDA GOVERNOR RICK SCOTT.

This seminar is our firm’s way of thanking you for all your hard work throughout the year and is our completely complimentary gift just for you. For those who will be staying over night, we kick off the Seminar with a cocktail reception and light dinner on April 25th, also at the JW Marriott from 5:30 p.m. to 9:30 p.m. Seminar materials will be available and sign-in begins at 7:00 a.m. on April 26th. A continental breakfast will be served from 7:00 a.m. to 9:00 a.m. at the sign-in location. We invite all guests to attend a complimentary luncheon at noon. We have some great raffle prizes and special gifts for each attendee. State approval pending for CE and CLE credits. Please note that CE and CLE credits will differ contingent upon your selection from each of the four breakout sessions. 

You MUST pre-register to attend this event, which can be done by clicking here. For your convenience there are other registration options: fax, mail, phone and email. Instructions for registration and class schedule for each break out session are outlined in the online registration packet.

If you have any questions, please do not hesitate to contact Samantha Webster at 321-972-0006 (samantha.webster@csklegal.com) or Janeena Lluy at 305-350-5319 (janeena.lluy@csklegal.com).

We look forward to seeing you in Orlando!

09APR 2013

The Florida Supreme Court has finally taken the Economic Loss Rule head-on and has attempted to address an issue that has created much litigation.   On March 7, 2013, the Court released its opinion in the case of Tiara Condominium Association, Inc. v. Marsh & McLennan Companies, Inc. , 2013 WL 828003, significantly narrowing the application of the Economic Loss Rule in Florida.

By way of background, the Economic Loss Rule is a judicially created doctrine that sets forth the circumstances under which a tort action is prohibited if the only damages suffered are economic losses.  Although the roots of the Economic Loss Rule are primarily found in the products liability arena, it has been expanded over the years to include circumstances where there is contractual privity and one party seeks to recover damages in tort arising from a contract.  The purpose of the expansion of the Rule was to prevent parties to a contract from circumventing the provisions of the contract by suing under a cause of action in tort.  In Tiara, the Court has now reverted to the original interpretation of the Economic Loss Rule holding that the “application of the economic loss rule is limited to products liability cases [receding] from prior case law to the extent that it is inconsistent with this holding.”  Tiara at 1.

The facts of the case are fairly straightforward:  Tiara Condominium Association retained Marsh & McLennan as its insurance broker. One of Marsh’s responsibilities was to secure condominium insurance coverage and secured windstorm coverage through Citizens Property Insurance Corporation with a loss limit of $50 million.  In September 2004, Tiara sustained significant hurricane damage related to two storms. Tiara began the process of an expensive loss remediation with the belief that they would be entitled to coverage for each storm.   However, when Tiara sought payment from Citizens, it was informed that the loss limit was $50 million in the aggregate, not per occurrence. Although, Tiara and Citizens settled for approximately $89 million, that amount was less than the more than $100 million spent by Tiara.  Tiara then sued Marsh and the trial court granted summary judgment in favor of Marsh on all claims.  The appeals court certified a question to Florida Supreme Court seeking a determination of whether the Economic Loss Rule bars an insured’s suit against an insurance broker where the parties are in contractual privity with one another and the damages sought are solely for economic losses.

After a lengthy discussion on the history and application of the Economic Loss Rule, the Florida Supreme Court never even addressed the original question being posed to them, as they ultimately decided, without exception, that the Economic Loss Rule applies only in the products liability context, receding from all of its prior rulings to the extent that they have applied the economic loss rule to cases other than products liability, including the Tiara case.

While the underlying facts of Tiara are not related to the construction defect litigation, the holding will likely create significant ripples in that arena and how it might be applied to construction defect cases.   Specifically, in the seminal case of Casa Clara Condominium Association v. Charlie Toppino And Sons, Inc., 620 So.2d 1244 (Fla. 1993), the Court made a determination that a cause of action against manufacturer of defective concrete was barred by the Economic Loss Rule where there was no personal injury or damage to property other than the product itself, notwithstanding absence of privity. The Court looked at the subject home in Casa Clara as a single product, as opposed to a group of disparate components, stating that “[g]enerally, house buyers have little or no interest in how or where the individual components of a house are obtained. They are content to let the builder produce the finished product, i.e., a house. These homeowners bought finished products—dwellings—not the individual components of those dwellings. They bargained for the finished products, not their various components.”

This would appear to indicate that a home or building is a product that would fall under the Florida Supreme Court’s new interpretation of the Economic Loss Rule.  Of course, only time will tell how this will all shake out, but it will likely lead to future litigation as Plaintiff attorneys likely attempt to re-broaden the scope of the newly narrowed Economic Loss Rule.