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Senate Bill – 286 Allows Design Professionals (i.e. Architects and Engineers) to Contractually Limit Individual Liability

April 30, 2013

On April 24, 2013, Governor Rick Scott signed into law Senate Bill 286. See Ch. 2013-28, Laws of Florida (creating §558.0035, Fla. Stat., and amending related provisions). The new law generally allows business entities that employ design professionals, such as architects and engineers, to contractually limit the liability of such individual employees or agents for negligence arising from the performance of professional services under a contract, provided that the contract and circumstances meet the requirements set forth by the statute.

Florida courts have generally held that limitation of liability clauses in contracts involving professional services or design professionals are enforceable. However, the courts do not appear to have extended the contractual limitations of liability to individual professionals performing the contracted services on behalf of the professional association/business entity. In fact, in Witt v. La Gorce Country Club, Inc., 35 So. 3d 1033 (Fla. 3d DCA 2010), review dismissed, 44 So. 3d 108 (Fla. 2010), the Third District Court of Appeal held that a limitation of liability clause in a contract was unenforceable as to a licensed geologist. As a result, the geologist was held individually liable for over $4,000,000.00 in damages, even though his employer’s contract included a limitation of liability clause.

The new law effectively overrules Witt and provides the professional association/business entity with the ability to extend the contractual limitations of liability to the individual design professionals it employs. The law takes effect July 1, 2013. The Legislature did not expressly state whether the law will apply retroactively. Accordingly, the law will not apply retroactively unless the courts hold that it is procedural, rather than substantive, in nature.

However, even if the courts were to hold the statute is procedural (and thus, retroactive), which seems unlikely, contracts drafted/executed prior to the new law still probably would not receive the benefits of the new law unless they happen to already comply with the new technical requirements. While some of the technical requirements contained in the new law may already be present in some boilerplate design contracts, others likely are not. For example, among other things, the new law requires that any contract seeking to limit an individual design professional’s liability must include "a prominent statement, in uppercase font that is at least 5 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."

Regardless of whether the new law is applied retroactively, or prospectively only, it is important for design professionals – including architects, interior designers, landscape architects, engineers, surveyors, and geologists – and their related business entities to become familiar with this new law. It also seems advisable, and in a design professional’s best interest, to make sure that, as an ongoing matter, all contracts meet the technical requirements of the new law. See Ch. 2013-28, Laws of Florida (available at http://laws.flrules.org/files/Ch_2013_028.pdf). Additional information about the new law can also be found on the Florida Senate’s website, at http://www.flsenate.gov.

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