Personal Exposure for Florida Professionals
Florida – Professional Liability
- Florida’s Third District held that professionals could not, as a matter of law, contractually limit their liability for professional services.
- Accordingly, Florida professionals should review their malpractice insurance coverage to ensure they adequately hedge their personal risks.
A recent Florida Third District ruling has raised many an eyebrow and should cause every professional, from architects to attorneys, to ask the question: Is my professional liability coverage adequate? Given the outcome in Witt v. La Gorce Country Club, Inc., 35 So. 3d 1033 (Fla. 3rd DCA 2010), the answer may be no.
The historical trend was for professionals to attempt to limit their potential malpractice liability by explicitly addressing it within their contracts. Often, contracts for professional services, such as design, would include a clause limiting any liability to the amount of the contract. But, after the Third District Court's ruling in Witt v. La Gorce, such contractual clauses are now unenforceable as to individual professionals practicing in Florida. Instead, professionals are now open to potential damages caused by their work up to the amount of the damages that can be proven, even if those damages far exceed their scope of work.
In Witt v. La Gorce, La Gorce Country Club (La Gorce) entered into a contract with Gerhardt M. Witt & Associates, Inc. (GMWA) to perform hydro-geologic services. Included in the contract was the following clause limiting the liability of GMWA:
In recognition of the relative risks and benefits of the project… the risks have been allocated such that La Gorce agrees, to the fullest extent permitted by law, to limit the liability of GMWA and its subconsultants to the total dollar amount of the approved portions of the scope for the project for any and all claims, losses, costs, damages of any nature … so that the total aggregate liability of GMWA and its subconsultants to all those named shall not exceed the total dollar amount of the approved portions of the Scope or GMWA's total fee for services rendered on this project, whichever is greater. Such claims and causes include, but are not limited to, negligence, professional errors or omissions, strict liability, breach of contract or warranty.
Mr. Witt, as a licensed geologist, performed the work on behalf of his company, GMWA. Later, La Gorce sued both Mr. Witt (personally) and GMWA, and both were found liable. While the court acknowledged the above provision applied to GMWA, it concluded that since Mr. Witt was not an actual party to the contract, he could not benefit from the contract clause limiting liability and, therefore, he was open to damages in excess of the contract amount.
Reading the previous sentence, it would seem that those people who are to perform professional services could avoid this problem simply by specifically including themselves in the contracts. However, the Third District's holding that Mr. Witt, in his individual capacity, could not, as a matter of law, limit his liability for professional services completely removes this as an option.
In upholding the trial court's ruling, the appellate court noted that under §492.111 (4), Florida Statutes, geologists cannot enter into contracts which attempt to limit their liability for malpractice. Moreover, citing the Florida Supreme Court's ruling in Moransais v. Heathman, the appellate court noted that "Florida law recognizes a common law cause of action against professionals based on their acts of negligence despite the lack of direct contract between the professional and the aggrieved party." 744 So. 2d 973, 983 (Fla. 1999) (emphasis added). Therefore, even if Mr. Witt had been a party to the contract, the limited liability clause could not have applied to him personally.
While the Witt case involved a geologist, the court did not limit its holding to geologists; rather, the court's holding referenced "professionals" in general. Therefore, the impact of this case will likely extend to all professionals practicing within Florida, including architects, engineers, attorneys, etc. Florida courts will likely rule that any clauses within contracts for professional services wherein the professional attempts to limit their liability will be unenforceable.
It is highly probable that Witt v. La Gorce Country Club, Inc. will be questioned in the future, but, as of now, it stands as good law in Florida. As such, professionals should review their malpractice insurance coverage to ensure they adequately hedge their personal risks.
*Jim is an associate in our Jacksonville, Florida, office. He can be reached at 904.358.4211 or email@example.com.
Defense Digest, Volume 18, No. 1, March 2012