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Monthly Archives: March 2013

04MAR 2013

Florida’s 2013 Legislative session kicks off tomorrow, Tuesday March 5, 2013. This legislative session, CSK’s Construction Law Division is closely following Senate Bill (“SB”) 286 titled Design Professionals and its identical companion bill in the House, House Bill (“HB”) 575.  Both bills were introduced and filed in January of 2013.  The bills intend to alter the current state of Florida Law concerning liability of individual engineers, surveyors and mappers, architects and interior designers, and landscape architects.

Presently, tort claims against individual engineers, surveyors and mappers, architects and interior designers, and landscape architects are not barred by the economic loss rule[1] even though the individual professional was performing services pursuant to a contract between the individual professional’s employer and the property owner that contained provisions limiting liability.   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. See e.g. Fla. Power & Light v. Mid-Valley, Inc., 763 F.2d 1316 (11th Cir. 1985)(applying Florida law).  However, Florida courts have not extended such contractual limitations on liability to the professionals individually performing the contracted services.  See Witt v. La Gorce Country Club, 35 So.3d 1033 (Fla. 3d DCA 2010) and Moransais v. Heathman, 744 So.2d 973 (Fla. 1999).

For example, in Witt, Defendant Witt was a professional geologist licensed in Florida.  Witt’s company, Gerhardt M. Witt and Associates, Inc. (“GMWA”), entered into contracts with La Gorce Country Club for geological consulting services related to a water treatment system. The contracts between GMWA and La Gorce each contained limitation of liability provisions, limiting the liability of [GMWA] and its subconsultants to the total dollar amount of the approved portions of the scope for the project. Within 14 months after the project was completed, the system failed completely.  Accordingly La Gorce sued GMWA and Witt, individually, for professional malpractice, among other things.

The Third District Court of Appeal ultimately held that Witt and GMWA were liable to La Gorce for professional malpractice, but that the limitation of liability provision applied only to GMWA and not to Witt.  The court noted that Witt was not a party to the contract and that the Florida Statutes contained a section that recognized a cause of action against an individual professional geologist for professional negligence, irrespective of whether the geologist practices through a corporation. Based on Florida Statutes and Moransais, the court determined that a cause of action in negligence exists irrespective, and essentially, independent of a professional services agreement.  Thus, the court held that the limitation of liability provision was, as a matter of law, invalid and unenforceable as to Witt.

SB 286/HB 575 seeks to amend this current state of the law by extending contractual provisions limiting liability entered into between a business entity[2] and property owner, to individual professionals, like Witt.  The bills specifically create Florida Statute Section 558.0035, amends Florida Statute Section 558.002 to include as (3) a definition of “business entity,” and amends Florida Statute Sections 471.023(3) (liability as to engineers), 472.021(3) (liability as to surveyor and mapper practices), 481.219(11) (liability as to architects and interior designers), and 481.319(6) (liability as to landscape architects) to include the provision “except as provided in s. 558.0035.”

Based on the current proposed bill text, Florida Statute Section 558.0035 is created and permits business entities to limit by contract the liability of individual employees or agents of that business for negligence arising from the performance of professional services under a contract.  Section 558.0035 enumerates a number of conditions that must be met though in order for the liability limitation to apply.  Specifically, those conditions are:

  • The business entity must execute the contract with the claimant or with another entity for professional services on behalf of the claimant;
  • The contract must include a prominent statement in uppercase font that is at least 5 point sizes larger than the rest of the test, that the individual employee or agent may not be held liable;
  • The individual employee or agent must not a party to the contract;
  • The business entity must maintain professional liability insurance if required by the contract;
  • The conduct by the design professional giving rise to the damages occurs within the course and scope of the contract; and
  • The harm is solely economic and the harm does not extend to persons or property beyond the contract.

In its current form, the bill provides an effective date of July 1, 2013.

To date, SB 286 has been referred to the Senate’s Regulated Industries, Judiciary, and Community Affairs Committees and HB 575 has been referred to the House’s Civil Justice Subcommittee, Business and Professional Regulation Subcommittee and Judiciary Committee.  The bills will be heard by a respective committee and if passed by that committee will proceed to the next committee.  Should the bills pass through all committees; one of the two companion bills will be ultimately voted on by the entire Senate and House.  If the bill does not move through the committees, or is not ultimately voted on by the Senate and/or House before the close of session the bill will be said to have “died” either within the respective committee or on the floor of the Senate or House.

To date, SB 286 has already started moving during the pre-session committee meetings.  The Senate Regulated Industries committee voted on the bill on February 6, 2013.  The bill passed with an 8-0 vote.  SB 286 is now in the Senate’s Judiciary Committee and is waiting to be calendared on the committee’s meeting agenda.  In contrast, HB 575 is awaiting discussion and a vote in the House’s Civil Justice Subcommittee.

We intend to continually track these two bills through session and will update this blog with news, votes, amendments, and potential implications concerning these bills.  Please check back frequently for more Capitol Reports concerning SB 286 and HB 575.

[1] The Economic Loss Rule is a judicially created doctrine that sets forth circumstances under which a tort action is prohibited if the only damages suffered are economic losses.  The Economic Loss Rule is applicable when the parties are in contractual privity and one party seeks to recover damages in tort for matters arising from the contract.

[2] The bills define “business entity” as any corporation, limited liability company, partnership, limited partnership, proprietorship, firm, enterprise, franchise, association, self-employed individual, or trust, whether fictitiously named or not, doing business in this state.