Design Professional Liability: Does Your Contract Protect You?
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Under Florida law, individual design professionals can be held liable for professional negligence, even if they did not personally contract for the professional services. Moransais v. Heathman. Moreover, Florida’s statutes governing engineering, architecture and geology make clear that individual design professionals are not automatically absolved of liability simply because they are not parties to a contract.
For example, Florida Statutes 471.023 provides that even though a licensed engineer practices through a business organization, the licensee is not automatically relieved from personal liability, misconduct, or wrongful acts committed by him or her. Florida statutes governing architects and geologists contain similar provisions. See 481.229 (architects) and 492.111 (geologists).
Therefore, it is imperative that individual design professionals and their design professional firms attempt to limit liability as much as possible. This can be accomplished by carefully worded contract provisions that protect both individuals and the companies for which they work. These provisions include indemnification for one’s own negligence, setting monetary damages caps/limits, and specifying the individual design professional may not be held personally liable. In Florida, exculpatory and indemnity clauses that release a party for its own negligence and that limit damages to a set monetary amount are enforceable, so long as the intention is clear and unequivocal. Florida Power & Light Company v. Mid-Valley, Inc.
Individual design professionals often think they are immune from liability because they did not personally enter into the contract with their employers’ customers. For example, in Witt v. La Gorce Country Club, Inc., the contract between a golf course and a geologist’s company contained a limitation of liability provision (limiting damages to the greater of the approved scope of work or total fee). The golf course sued the licensed professional geologist, in his individual capacity, for the alleged negligent design and installation of a water treatment system. The limitation of liability provision did not specifically exclude liability for employee/individual design professionals of the geologist’s company. The court ultimately held the limitation of liability provision was valid and enforceable as to the geologist’s company, but not as to the geologist in his individual capacity.
Despite Florida’s common law rule, the Florida statutes referenced above, and the holding in Witt, individual design professionals can limit their liability. Employers of those design professionals can also limit the company’s exposure to claims.
As for individual design professional liability, under §558.0035, design professionals employed by a business are not individually liable if:
- the contract is between the business entity and a claimant or with another entity for the provision of professional services to the claimant;
- the contract does not name the individual employee who will perform the professional services;
- 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;
- the employee’s business entity maintains any professional liability insurance required under the contract; and
- damages are solely economic in nature and do not extend to personal injuries or property not subject to the contract.
Based on the teachings of La Gorce, it is imperative that individual design professionals and their firms utilize the language in Section 558.0035 in contracts to insulate themselves, as much as possible, from personal liability for problems on a project. Employers of these design professionals should also include robust exculpatory and indemnity provisions and specific monetary limitations of liability provisions in those contracts.