Fairness in Liability
The Fairness in Liability legislation championed by AIA Florida and signed into law by the Governor goes into effect on July 1. The bill passed during the 2013 legislative session is a culmination of nearly four years of work by AIA Florida and its lobbying team headed by General Counsel, J. Michael Huey, Hon. AIA. The new law allows firms and owners to agree to exclude firm employees or agents from individual liability for negligence for professional services, on the condition that:
- the contract includes a prominent statement in uppercase font at least 5 points larger than the rest of the text that, pursuant to the contract, an individual employee or agent may not be held individually liable for negligence;
- the individual employee or agent is not a party to the contract;
- the business entity maintains professional liability insurance if required by the contract;
- the conduct for the design professional giving rise to the damages occurs within the course and scope of the contract; and
- the harm is purely economic.
In 1999, the Florida Supreme Court ruled that a client of a professional engineering firm could circumvent its contract and sue engineer employees of the firm for losses arising out of the performance of the contract. (Moransais v. Heathman, 744 So.2d 973) This ruling was applied in a subsequent case in 2009 where a client had negotiated a contract with a professional firm which contained a specific limitation on damages which the client might collect in the event of a breach of the contract. Witt v. La Gorce Country Club, Inc. (2009 WL 1606437) In this case, the court ruled that the client could sue the professional employee of the firm in lieu of suing the firm in total disregard of the contract and the damages limitation.
The above cases dealt with “professional” liability and did not address the liability of employees working for contractors or subcontractors. Consequently it was assumed by the construction trade that their employees were not at risk of suits naming the individual construction employees on the jobsite for negligent performance of the work being performed under the construction contract. However, in March of this year the Florida
Supreme Court ruled that the economic loss doctrine applied only to product liability cases. As noted by Mr. Huey, “This Supreme Court ruling, in conjunction with the enactment of this new legislation by AIA Florida, may result in design professionals being the only members of the design and construction industry with the ability to protect individual employers from liability exposure when performing their contract services for an owner. After four years of opposition to our legislation, I expect the contractor community to reverse course within the next couple of years and seek similar legislation to avoid the same unfair liability exposure for employees of construction firms. Clearly, the benefit of our legislation for design professionals and Florida’s architectural and engineering firms will far exceed the tremendous effort required to pass the legislation and have the Governor approve it.”
AIA Florida General Counsel has drafted the following clause for your use. This clause fits seamlessly in to AIA owner/architect agreement.
PURSUANT TO SECTION 558.0035, FLORIDA STATUTES, THE PARTIES UNDERSTAND AND AGREE THAT ARCHITECT’S EMPLOYEES OR AGENTS MAY NOT BE SUED OR HELD INDIVIDUALLY LIABILE FOR NEGLIGENT PERFORMANCE OF THIS AGREEMENT.