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Senate Bill No. 286 Protects Design Professionals from Personal Liability

1. Introduction

            On April 24, 2013, Gov. Rick Scott signed Senate Bill No. 286 (the “Bill”) into law.  The Bill protects design professionals employed by a business entity from personal liability in certain situations and supersedes existing common law on the issue. 

2. Summary of the Changes

Most importantly, the Bill created section 558.0035, Florida Statutes, which provides that a design professional employed by a business entity or an agent of the business entity is not individually liable for damages resulting from negligence occurring within the course and scope of a professional services contract if:

a)     The contract is made between the business entity and a claimant or with another entity for the provision of professional services to the claimant;

b)     The contract does not name as a party to the contract the individual employee or agent who will perform the professional services;

c)     The contract includes a prominent statement, in uppercase font that is at least 5 point sizes larger than the rest of the text, that, pursuant to section 558.0035, 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 the damages do not extend to personal injuries or property not subject to the contract.

The Bill also added “geologist” to the definition of design professional in s. 558.002 and amended ss. 471.023 (engineers), 472.021 (surveyors and mappers), 481.219 (architects), 481.319 (landscape architects), and 492.111 (geologists) to reference the new Fla. Stat. § 558.0035. 

The practical effect of section 558.0035 is that business entities will now have the opportunity going forward to limit the personal liability of their design professionals.  It is important to remember, however, that this protection from personal liability is not without limit.  Whether section 558.0035 is applicable depends not only upon the existence of the statement required by subsection (c), but also upon the conduct of the design professional and the type of damages alleged.  For example, the negligence must occur within the “course and scope of a professional services contract.”  Thus, a design professional whose conduct exceeds mere negligence and can be considered reckless or intentional may be precluded from claiming protection under the new law.  Likewise, a design professional acting beyond the scope of the professional services contract may also be precluded from claiming protection.  Moreover, protection is also not available where the damages alleged arise from personal injuries or property not subject to the contract. 

3. Effect on Existing Common Law

Senate Bill No. 286 effectively supersedes existing case law addressing the personal liability of design professionals.  For example, in Witt v. La Gorce Country Club, Inc., 35 So. 3d 1033 (Fla. 3d DCA 2010), the Third District Court of Appeal found that even if the geologist, in his individual capacity, was covered by the limitation of liability provisions contained in the contract with his employer and the owner, such a limitation was unenforceable as a matter of law.  Under the amendments provided by Senate Bill No. 286, a geologist is now expressly included within the definition of design professional and would not be personally liable if all of the statutory requirements were followed.

4. Retroactivity

It does not appear that Senate Bill No. 286 will have retroactive effect because the Bill expressly provides that it shall take effect July 1, 2013.  The legislature’s inclusion of an effective date for an amendment is considered to be evidence rebutting intent for retroactive application of a law.  See State Dep’t of Rev. v. Zuckerman-Vernon Corp., 354 So. 2d 353, 358 (Fla. 1977).  Moreover, a substantive statute will generally not operate retroactively.  Because the Bill affects the rights, duties, and/or powers of design professionals and negligence claimants, it is likely that the Bill will be classified as substantive, and not operate retroactively.

Even if a Florida court finds that the Bill is retroactive, it’s application to existing contracts is unlikely given the new requirement contained in section 558.0035(1)(c) that the contract include “a prominent statement, in uppercase font that is at least 5 points 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.” 

5. Practice Pointers

• Owners:  Evaluate and adjust current professional liability insurance requirements in existing contracts prior to accepting a personal liability limitation for design professionals. 
• Architects, Interior Designers, Landscape Architects, Engineers, Surveyors, and Geologists:  To take advantage of the new law, ensure that all new contracts:
• do not name as a party to the contract the individual employee or agent who will perform the professional services;
• include a prominent statement, in uppercase font that is at least 5 point sizes larger than the rest of the text, that, pursuant to section 558.0035, Florida Statutes, an individual employee or agent may not be held individually liable for negligence; and    
• Ensure the business entity maintains all professional liability insurance required by the contract.