By Ronald S. Nisonson
On April 24, 2013, Governor Scott signed Senate Bill 286 into law creating section 558.0035, Florida Statutes.
This new law grants individual design professionals employed by a business entity or an agent of the entity immunity from liability for economic damages resulting from negligence occurring within the course and scope of a professional services contract under the following conditions:
(a) The contract is made between the business entity and a claimant or another entity for the provision of services to the claimant;
(b) The contract does not name an individual employee or agent as a party to the contract;
(c) The contract prominently states that an individual employee or agent may not be held individually liable for negligence;
(d) The business entity maintains any professional liability insurance required under the contract; and
(e) Any damages are solely economic in nature and do not extend to persons or property not subject to the contract.
The law took effect on July 1, 2013 and does not state that it is retroactive.
The bill amends sections 471.023(3), F.S. (engineers), 472.021(3), F.S. (surveyors and mappers), 481.219(11), F.S. (architects and interior designers), 481.319(6), F.S. (landscape architects), and 492.111(4), F.S. (geologists). These statutes are now amended to incorporate the new limitation of liability created by section 558.0035. The bill adds geologists as “design professionals.”
The new law limits claims for economic damages but not claims for personal injury or property damage.
This proposed statute nullifies Florida’s common law which previously has allowed professional negligence claims against an individual design professional based on the professional’s violation of his or her duty of care to those who may be foreseeably injured. Florida’s common-law imposes a duty of care on all individual professionals that exceeds the duty of care of the general public. Professionals, such as doctors, lawyers, accountants, and design professionals, have always been held to a higher standard of care and associated individual liability for professional negligence. This new law will afford design professionals protections that other professionals do not enjoy. Additionally, this proposed statute allows the design professional to contractually limit his or her liability.
In order to comply and obtain a limitation of liability, section 558.0035 requires that the business entity must maintain “any professional liability insurance required under the contract.” The statute does not require that the individual design professional maintain professional liability insurance. Also, the new law does not include any minimum or maximum amounts of coverage that the business entity must maintain.
There are some questions whether this new law may be susceptible to a constitutional challenge. However, it may be too early to tell.
To take advantage of this new law, each design professional should take care to meet the specific requirements set forth in section 558.0035(1)(a)-(e). First, the design professional should make sure that all professional service contracts are made with the business entity for the provision of services. Second, the professional services contract should not name an individual design professional as a party to the contract. Third, the professional services contract must be modified to add a prominent statement that “an individual employee or agent may not be held individually liable for negligence.” Finally, the individual must make sure that her business entity maintains any professional liability insurance required under the professional services contract.