Individual Professional Not Protected by Limitation of Liability Provision in Contract Between His Employer and Employer's Client

INDIVIDUAL PROFESSIONAL NOT PROTECTED BY LIMITATION OF LIABILITY PROVISION IN CONTRACT BETWEEN HIS EMPLOYER AND EMPLOYER'S CLIENT

By: Larry R. Leiby, Esq. and Robert S. Tanner, Esq.

About the Author: Larry Leiby, Esq. was the founder and first chairman of the Florida Bar Construction Law Committee in 1976. He is the author of the Florida Construction Law Manual. He is Board Certified in Construction Law and was on the Construction Law Certification Committee that creates and grades the tests for construction law board certification. He was awarded the lifetime achievement award by the Florida Bar Construction Law Committee and teaches construction law at the Florida International University College of Law. He can be reached at leiby@mkpalaw.com. For more information, please visit www.mkpalaw.com.

In Witt v. La Gorce Country Club, Inc., 2010 WL 2292104 (Fla. 3d DCA June 9, 2010), La Gorce Country Club, Inc. ("Owner") had a project for an irrigation system for its golf course. Owner had discussions with ITT Industries, Inc. ("Contractor") regarding the project. Contractor introduced Owner to Gerhardt M. Witt ("Consultant"), a professional geologist licensed by the State of Florida. Consultant had his own firm, Gerhardt M. Witt and Associates, Inc. ("Consulting Firm"). Owner entered into a design-build agreement with Contractor and into various contracts with Consulting Firm for consulting services and project coordination. The agreements between Owner and Consulting Firm contained a provision that was intended to limit the liability of Consultant Firm and its subconsultants in the event of professional malpractice. The irrigation system was constructed and ultimately failed. Owner brought suit against Contractor, Consultant and Consulting Firm. One of the causes of action against Consultant and Consulting Firm was for professional malpractice.

Since the Consulting Firm's contract with Owner had a provision limiting Consulting Firm's liability, Consultant argued that his liability for professional malpractice should also be capped by the limitation of liability provision in the contract. The trial judge determined that both Consultant and Consulting Firm were liable for professional malpractice. However, the trial Judge found that the limitation of liability provision in the contract only applied to Consulting Firm, not to Consultant. The trial court reasoned that, first, Consultant was not a party to the agreement containing the provision and, second, as a professional, the law prohibited Consultant from contractually limiting his liability. Consultant appealed.

On appeal, the appellate court noted Florida Statute, section 492.111, which states, in part, that "The fact that a licensed professional geologist practices through a corporation or partnership shall not relieve the [licensed geologist] from personal liability for negligence . . . ." Additionally, the courts recognize that a buyer of goods and non-professional services may be in a better position to negotiate appropriate remedies with the seller than if the seller is a professional. Thus, Florida common law (i.e., law created by the courts through case-by-case decisions) is that there is a "cause of action against professionals based on their acts of negligence despite the lack of a direct contract between the professional and the aggrieved party." Moreover, the Florida Supreme Court has established in a slightly different context that public policy dictates that a professional's liability may not be limited by contract.

The appellate court applied the foregoing law and policy to reach the conclusion that Consultant, as a professional rendering professional services, was not protected by the limitation of liability provision that his Consulting Firm had in its contract with Owner. For clients of professionals, this rule of law provides potentially expansive protection, limited perhaps only to the professional's assets and insurance coverage. For professionals such as architects, engineers, landscape architects, and - obviously - geologists, the rule suggests that insurance purchasing and asset protection planning should be taken very seriously.