Florida Legislature Eliminates Personal Liability for Design Professionals
On April 24, 2013, Governor Scott signed Senate Bill 286 which provides clear guidance on the steps necessary to contractually limit personal liability for design professionals such as architects, engineers, interior designers, landscape architects, surveyors and geologists in the performance of professional services.
Historically, the fact that the design professionals provided their professional services through a limited liability business organization such as a corporation or limited-liability company, did not shield the design professional from personal liability for negligence, misconduct or wrongful acts. Therefore, if a design professional firm provided professional services for a project and was sued for negligence, misconduct or wrongful acts, the individual design professional, most commonly the professional who signed and applied his or her professional seal to the drawings or other design documents, was exposed to personal liability despite contractual limitations of liability that protected the design firm.
The new law 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 five 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;
(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.
For the purposes of this bill, the term “business entity” means 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 Florida.
This legislation has the potential to dramatically alter the practical impact of limitations of liability clauses in design professional contracts and there will certainly be rapid efforts to incorporate the new law into those contracts. Therefore, design professionals, developers and others entering into professional services agreements are cautioned to seek the advice of experienced design and construction law counsel.