Personal Liability for Qualifying Agents in Florida
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As I mentioned in a previous post, when a construction project encounters problems, and especially when a suit is filed, a property owner will seek every bit of leverage he or she can get against the contractor handling the project. This may include, for instances, threats by the property owner that he or she will also sue the contractor’s qualifying agent for negligently supervising the project. Whether the qualifying agent is the contractor him or herself, or simply a trusted and longstanding employee or business partner, this threat of personal liability for the qualifying agent obviously stands to distress the contractor. However, based on longstanding Florida law, such a threat should not cause the contractor to worry, as it is completely without merit.
In Murthy v. N. Sinha Corp., 644 So. 2d 983 (Fla. 1994) the homeowners entered into a construction contract with a general contractor for construction of improvements and additions to their home. Eventually, the contractor filed a claim of lien against the owners’ home, alleging that the owners owed $28,010.57 on the contract. Thereafter, the owners filed a notice of contest of lien claiming the work on their home was defective and the payments requested were not yet due under the contract. The contractor then filed a complaint for breach of contract and foreclosure of its statutory mechanics’ lien, and the owners responded by filing a third-party complaint against Niranjan Sinha, the contractor’s president, sole stockholder, and qualifying agent. The third-party complaint alleged that Sinha, as the qualifying agent, was individually liable for the construction defects pursuant to chapter 489, Florida Statutes.
The owners contended that Florida Statutes Chapter 489, specifically §489.119 and §489.1195, created a cause of action against a qualifying agent who fails to supervise his contractor’s construction projects. In particular, they claimed that §489.119 and §489.1195 imposed a duty to supervise on the qualifying agent and that a violation of that duty constituted negligence per se or at least evidence of negligence sufficient to send the cause to a jury. On appeal, the Florida Supreme Court found that a qualifying agent has a duty to supervise the contractor’s construction projects, but that the failure to meet that duty does not give rise to a private cause of action against the agent.
The Court went on to explain that Chapter 489 establishes licensing procedures and regulatory duties for the construction industry and created the Construction Industry Licensing Board to enforce the performance of these procedures and duties. The Court further found that there was no evidence in the language of the statute or the statutory structure that a private cause of action against a qualifying agent was contemplated by the legislature when it enacted Chapter 489; instead, the language of chapter 489 indicated that it was created merely to secure the safety and welfare of the public by regulating the construction industry. Moreover, the Court found, the legislative history of Chapter 489 did not reveal an intent to create a cause of action against a qualifying agent either.
A subsequent case, Scherer v. Villas Del Verde Homeowners’ Association, Inc., 55 So. 3d 602 (Fla. 2d DCA 2011), extended the Murthy holding by ruling that there is similarly no private cause of action against a qualifying agent for building code violations pursuant to §553.84, Florida Statutes.
However, contractors and their qualifying agents should also be aware of the holding of Evans v. Taylor, 711 So. 2d 1317 (Fla. 3d DCA 1998). There, Florida’s Third District Court of Appeals found that a qualifying agent was subject to a cause of action for deceptive and unfair trade practices in his individual capacity in the context of a construction defect dispute. However, it should be noted that the qualifying agent in that case had not just supervised the project, but had personally performed the allegedly substandard and non-compliant work himself.
Therefore, contractors can rest assured that, where the qualifying agent has supervised a project and the owner subsequently alleges construction defects and seeks to hold him individually liable, the qualifying agent cannot be subject to liability in his individual capacity based solely on his status as qualifying agent.