THERE ARE TIMES AN EQUITABLE SUBROGATION CLAIM IS THE MOST PRACTICAL RECOURSE FOR REIMBURSEMENT

Posted on April 22, 2018April 27, 2020 by Edward Garber

Equitable subrogation is a claim that can be pursued when a party (referred to as the subrogee) pays for damages to protect its interest–perhaps to mitigate its own exposure–seeks reimbursement from another party primarily liable for the damages. There are times a party seeking reimbursement for purely economic losses is best able to pursue an equitable subrogation claim, as opposed to a common law indemnification or negligence claim.

Equitable subrogation is generally appropriate where: (1) the subrogee made the payment to protect [its] own interest, (2) the subrogee did not act as a volunteer, (3) the subrogee was not primarily liable for the debt, (4) the subrogee paid off the entire debt, and (5) subrogation would not work any injustice to the rights of a third party.

Tank Tech, Inc. v. Valley Tank Testing, L.L.C., 43 Fla.L.Weekly D868a (Fla. 2d DCA 2018) quoting Dade Cty. Sch. Bd. v. Radio Station WQBA, 731 So.2d 638, 646 (Fla. 1999).

Equitable subrogation is not dependent on a contract—it is simply an “equitable remedy for restitution to one [the subrogee] who in the performance of some duty has discharged a legal obligation which should have been met, either wholly or partially, by another.” Tank Tech, Inc., supra, quoting W. Am. Ins. Co. v. Yellow Cab Co. of Orlando, Inc., 495 So.2d 204, 206 (Fla. 5^th DCA 1986).

As shown in the recent decision below, there are times an equitable subrogation claim will generate more traction for purposes of a reimbursement claim than a negligence claim or common law indemnification claim, because an equitable subrogation claim does not require the party seeking reimbursement to show a duty is owed to it by the party it is seeking reimbursement from.

The recent decision of Tank Tech, Inc. involved damage to underground petroleum storage tanks at Circle K locations. Company “A,” the subrogee, had been hired by Circle K to retrofit existing tanks by adding an interior wall inside of the tanks. Company “B” was separately hired by Circle K to test the interstitial space between the new interior wall installed by Company “A” and the existing tank wall. There was no contractual relationship between Company “A” and Company “B.”

After the tanks were retrofitted, Circle K notified Company “A” that the modified tanks were damaged and failing. Although Company’s “A” investigation revealed the failure was the result of Company’s “B’s” testing methodology, Company “A” nevertheless repaired the damage to the tanks because its contract with Circle K required it to do so regardless of whether the damage was caused by a third party, such as Company “B.”

Company “A” then sued Company “B” for reimbursement of its repair costs under various claims, one of which was equitable subrogation. Each party had expert opinions that pointed to the other for the cause of the tanks’ failure and damage. The trial court granted a motion for summary judgment in favor of Company “B” finding that equitable subrogation did not apply. This summary judgment was reversed on appeal as the Second District maintained that there were factual issues supporting the basis of the equitable subrogation claim:

Tank Tech’s [Company “A”] contract with Circle K obligated it to repair damages to the USTs [tanks]. But Tank Tech’s contractual obligation to Circle K did not convert Tank Tech into a “volunteer” to pay for damages caused by a third party and thus did not prevent the application of the equitable subrogation doctrine. Instead, Tank Tech was merely fulfilling its legal obligation to Circle K which was a necessary means of protecting itself from liability to Circle K. And Tank Tech, by virtue of Dr. Cignatta’s affidavit [expert opinion establishing Company “B” caused failure to tanks], established a genuine issue of material fact regarding whether Tank Tech or Valley Tank [Company “B”] was primarily liable for the damages. If Tank Tech is ultimately successful in proving that Valley Tank caused the damage to the USTs, then it would be entitled to seek any damages it incurred as a result of having to repair the damaged USTs. To hold that Tank Tech is precluded from pursuing a claim for subrogation would leave Tank Tech without a remedy, a “most unfair and inequitable result.”

Tank Tech, Inc., supra (internal citations omitted).

Negligence and Common Law Indemnification

Relatedly, Company “A” also sued Company “B” for negligence and common law indemnification for repairing tanks it claimed were caused by Company “B’s” testing methodology. The trial court also granted summary judgment in favor of Company “B” on these claims. Unlike the equitable subrogation claim, the Second District affirmed the summary judgment in favor of Company “B” on these claims.

For Company “A” to sustain a negligence claim, it would have to establish that Company “B” owed it a duty. Without a duty owed, there is no negligence claim. Whether there is a duty is a question of law for the court. In this case, when dealing with only economic losses, the relationship between the parties—Company “A” and Company “B”—needs to be examined to determine whether a special relationship exists to warrant creating a duty to protect the economic interests of another. “[I]n order to proceed on a common law negligence claim based solely on economic loss, there must be some sort of link between the parties or some other extraordinary circumstance that justifies recognition of such a claim.” Tank Tech, Inc., supra. Here, the Second District agreed that Company “B” did not owe Company “A” a duty to support a negligence claim:

The reason why the negligence claim fails here is because there is neither a special relationship between Valley Tank [Company “B”] and Tank Tech [Company “A”] nor any extraordinary circumstance that would require imposition of a duty. Tank Tech’s injury did not flow from Valley Tank’s testing of the USTs [tanks]. Instead, Tank Tech seeks to recover the money it spent in repairing the USTs, an expense that was the result of a negotiated contract between Tank Tech and Circle K. There was no contract between Valley Tank and Tank Tech obligating Valley Tank to repair any USTs it damaged during testing or otherwise obligating Valley Tank to repay Tank Tech for the expenses incurred pursuant to Tank Tech’s contract with Circle K. And Valley Tank’s testing did not cause any personal injury or property damage to Tank Tech, the types of injuries for which the common law of negligence has historically permitted recovery.

***

This is simply a case of a party attempting to bring a tort claim to recover monies that it spent as a result of a contractual obligation to a third party. But negligence claims cannot proceed based on a party’s desire to relieve itself from a bad bargain.

Tank Tech, Inc., supra.

Likewise, regarding the common law indemnification claim, “actions for indemnity have been restricted to situations involving either a duty, an express contract, or the existence of active and passive negligence.” Tank Tech, Inc., supra, quoting Hiller Grp., Inc. v. Redwing Carriers, Inc., 779 So.2d 602, 603 (Fla. 2d DCA 2001). Since the Second District already agreed there was no special relationship between Company “A” and Company “B” and, thus, no duty owed, the common law indemnification claim failed for the same reasons as the negligence claim.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

SUING A PUBLIC ENTITY FOR NEGLIGENT MISREPRESENTATION …NOT SO FAST

Posted on April 14, 2018April 14, 2018 by Edward Garber

Suing a public entity for negligent misrepresentation…let’s just say, is not that easy. Not that easy at all! Putting aside the doctrine of sovereign immunity (the doctrine that the king can do no wrong), a public entity does not have an affirmative duty to necessarily convey accurate information, no matter how fair or unfair this may sound. And, a negligence claim fails without the defendant (in this case, public entity) owing the plaintiff a duty of care.

For example, in City of Dunedin v. Pirate’s Treasure, Inc., 43 Fla. L. Weekly D783a (Fla. 2d DCA 2018), a commercial owner wanted to renovate its property to accommodate a refurbished marina and a new restaurant. The owner met with the city to review its preliminary conceptual site plan. Based on this meeting, the owner prepared a costly site plan to comply with the City’s development code for the restaurant and marina. The City’s engineering department approved the site plan. However, the City then informed the owner that it had concerns with the restaurant’s square footage and parking. The owner and City agreed that the site plan for the marina and restaurant would be separated, as the owner did not want to ruffle any feathers. The City then approved the separate site plan for the marina but told the owner that the site plan approval for the restaurant was terminated as the owner needed to submit a brand-new application and comply with the updated development code. The owner filed suit against the City claiming, among other things, the City made misrepresentations about the site plan approval only to engage in a bait-and-switch tactic where the misrepresentations were made to induce the development of the marina, without the accompanying restaurant.

The City moved to dismiss the negligent misrepresentation claim on sovereign immunity grounds. The trial court denied the City’s motion finding as a matter of law the City was not entitled to sovereign immunity and the City appealed.

Interestingly, the appellate court rejected the City’s sovereign immunity argument but still reversed the trial court’s holding that the City is not liable to the owner for negligent misrepresentation. The court based its reversal on its determination that the City did now owe the owner a duty of care, hence the negligent misrepresentation claim failed as a matter of law.

A duty of care analysis is different from the analysis whether the City is sovereignly immune from the suit. If there is no duty owed, there is no reason to delve into whether sovereign immunity applies. Here, the Court found no duty was owed because the City “does not owe a duty to convey accurate information concerning whether Pirate’s Treasure’s [owner] site plan complied with the City’s development code.” City of Dunedin, supra.

The owner in this case could have been 100% correct. It had assurances from the City and acted on those assurances in devoting the money and time in finalizing its site plan based on the current development code. It then submitted separate plans at the behest of the City (to appease the City) only for the City to approve the marina (the project it wanted) while terminating the site plan for the restaurant (the project it really did not want). But, assuming this is all true, it does not matter because the court found that the City never owed an affirmative duty to the owner to convey accurate information, i.e., in this case, whether the owner’s site plan complied with the development code.

NEGLIGENCE AGAINST A CONSTRUCTION MANAGER-AGENT

Posted on March 9, 2018March 9, 2018 by Edward Garber

Can a construction manager-agent / owner’s representative hired directly by the owner be liable to the general contractor in negligence? An argument likely posited by many general contractors on projects gone awry where there is a separate construction manager. Well, here is an interesting case out of Louisiana that supports a negligence claim against a construction manager-agent.

In Lathan Company, Inc. v. State, Department of Education, Recovery School District, 2017 WL 6032333 (La.App. 1^st Cir. 2017), a general contractor entered into a contract with a public owner to renovate a school. The public owner hired a separate construction manager (as the owner’s agent) for the project. The general contractor claimed that the construction manager was negligent through its: unreasonable refusal to approve payment applications; delayed responses to submittals and questions; refusal to recommend substantial completion; refusal to properly manage construction oversight; and its interference with the progress of the project. The contractor claimed, in particular, that given the scope of the construction manager’s supervisory and management responsibilities for the project, the construction manager owed a duty to exercise its responsibilities in a professional manner (akin to a professional negligence claim). These factual assertions are not unusual facts asserted by a general contractor on a problematic project with a separate construction manager / owner’s representative.

The trial court granted summary judgment in favor of the construction manager on the negligence claim. But, the appellate court reversed finding that the construction manager did owe a duty to the general contractor:

Accordingly, after careful review of the record herein, we find that although Jacobs [construction manager] was not in direct contractual privity with Lathan [contractor], Jacobs must be deemed and held to know that its services were not only for the protection or interests of the owner but also third parties, including, specifically, Lathan, who was acting as the general contractor on the project. As outlined above, it was foreseeable and to a degree certain that Lathan would suffer economic harm if Jacobs failed to perform, or negligently performed, many of its professional duties. Moreover, as outlined above, there is a close connection between Jacobs’s alleged failure to act according to industry standards, and the alleged economic harm suffered by Lathan.

***

Thus, after carefully considering the record herein, and applying the balancing test enunciated in the jurisprudence noted above, we are unable to find any reason why the courts’ rationale in such prior jurisprudence, extending the liability of architects and engineers, should not likewise apply to a project management professional, under the facts of this case.

Lathan Company, supra, at *13-14 (internal citations omitted).

NEGLIGENCE OF PROPERTY APPRAISER

Posted on September 27, 2017September 27, 2017 by Edward Garber

A new appellate decision came out discussing the statute of limitations associated with a negligence claim against a property appraiser. In this case, Llano Financing Group, LLC v. Petit, 42 Fla. L. Weekly D2071a (Fla. 1^st DCA 2017), the court held that the four year statute of limitations for negligence claims commences when the lender relied on the appraisal to fund the loan. The statute of limitations does not commence years later when the property is ultimately sold at a loss. Oh no. Once the lender receives the appraisal and funds the loan, the statute of limitations for the negligence claim begins. Applying this rationale in other contexts, the statute of limitations to sue a property appraiser in negligence would commence once an appraisal is received and relied on. This is best explained by the following hypothetical footnoted by the court:

Consider this example: An appraiser negligently appraises a $100,000 house at $150,000. A buyer reasonably relies on that negligent appraisal and buys the $100,000 house for $150,000. The buyer’s damages ($50,000) are easily determined immediately after the sale. Those damages would be the same whether the buyer promptly sold the home at a loss, lived in it forever, or sold it for $200,000 after decades of market appreciation.

Llano Financing Group, supra, n. 3.

If you feel like you suffered a loss at the hands of a negligent appraisal, make sure you consult counsel. Based on the court’s decision in this case, the lender’s statute of limitations expired. Make sure this does not happen to you.

NEGLIGENT PROCUREMENT OF INSURANCE

Posted on May 13, 2017May 13, 2017 by Edward Garber

As you know, insurance is an important part of risk assessment for many, many business needs. Oftentimes, an insured relies on an insurance broker or agent to procure specific insurance to meet its express business objectives and risks. Notably, there is a potential negligence claim associated with an insurance agent or broker’s negligent procurement of insurance for an insured. While this is not the easiest claim to prove, a recent Third District case explained this standard:

It is well settled that “where an insurance agent or broker undertakes to obtain insurance coverage for another person and fails to do so, he may be held liable for resulting damages for . . . negligence. More specifically, and as applicable here, “[a]n agent is required to use reasonable skill and diligence, and liability may result from a negligent failure to obtain coverage which is specifically requested or clearly warranted by the insured’s expressed needs.” As explained by our sister court, “[t]his general duty requires the agent to exercise due care in correctly advising the insured of the existence and availability of particular insurance, including the availability and desirability of obtaining higher limits, depending on the scope of the agents undertaking.”

Kendall South Medical Center, Inc. v. Consolidated Ins. Nation, Inc., 42 Fla. L. Weekly D1071a (Fla. 3d DCA 2017) (internal quotations omitted).

In this case, a leak occurred on commercial leased premises. The commercial tenant had a property insurance policy that provided $100,000 of coverage for the physical improvements and contents of the property. However, there was a 90% coinsurance provision. A coinsurance provision shifts risk to the insured when the insured purchases less coverage than the value of the property.

As a result of the coinsurance provision, the insured only received a fraction of its damages, and less than the $100,000 in coverage. The insured, however, claimed it was under the belief it would recover $100,000 in insurance proceeds as that was what it told its agent it needed. The insured sued its insurance agent claiming the agent’s failure to advise it that the procured policy did not address its expressed insurance needs. “[W]hen an insured alleges that it specifically communicated its insurance needs to an agent who then undertook to procure a policy addressing such needs, the insured states a cause of action for negligent procurement where it also alleges that, without providing an explanation that different coverage was required, the agent procured a policy not meeting those expressed needs.” Kendall South Medical Center, supra.

Perhaps this could have been avoided had the insured reviewed the specific terms of the insurance policy. Perhaps there are e-mails or other records where the insurance agent explained that the coverage the insured was seeking could not be procured without a coinsurance provision that shifted the risk to the insured. Know your insurance and know the risks and coverage afforded to you!

DESIGN PROFESSIONAL NEEDS A LICENSE TO BE SUED FOR PROFESSIONAL NEGLIGENCE

Posted on January 6, 2017January 6, 2017 by Edward Garber

“With regard to claims for professional negligence, the Florida Supreme Court has explained that ‘where the negligent party is a professional, the law imposes a duty to perform the requested services in accordance with the standard of care used by similar professionals in the community under similar circumstances.’” Sunset Beach Investments, LLC v. Kimley-Horn and Associates, 42 Fla. L. Weekly D130a (Fla. 4^th DCA 2017) quoting Moransais v. Heathman, 744 So.2d 973, 975-76 (Fla. 1999).

When it comes to professional negligence, two things are important:

1) the person being sued is a professional under the law (person has special education, training, experience, and skill) and

2) the standard of care for that professional (e.g, licensed, professional engineer).

In a recent case, an engineering intern—not, a licensed, professional engineer–was sued for professional negligence. The Fourth District Court of Appeal held that an engineering intern is not a person that can be sued for professional negligence, unlike a licensed, professional engineer. Sunset Beach Investments, supra.

The Fourth District explained that an engineering intern, by way of example, is not a professional because an engineering intern does not maintain a license. If the court treated an engineering intern as a professional than it would be walking down a slippery slope when it came to who is a professional and who is not. Instead of walking down that slippery slope, the court stated: “At a minimum, in a profession where a license exists, the existence of a license is a valid barometer for determining whether a person is classified as a professional. “ Sunset Beach Investments, supra.

QUALIFYING AGENTS AND COMMON LAW NEGLIGENCE

Posted on September 19, 2015September 19, 2015 by Edward Garber

Can a qualifying agent be sued for negligence? Yes, there is authority for arguments to pursue a qualifying agent under a common law theory of negligence.

A qualifying agent is not individually liable for breaching its statutory duties set forth in Florida Statutes Chapter 489— Chapter 489 governing qualifying agents for contractors does not create a private civil cause of action against qualifying agents. See Murthy v. Sinha Corp., 644 So.2d 983 (Fla. 1994). However, the Florida Supreme Court in Murthy held: “We agree that an owner may recover from a negligent qualifying agent, but only under a common law theory of negligence….” Id. at 986-87.

Further, in Cannon v. Fournier, 57 So.3d 875 (Fla. 2d DCA 2011), discussed here, the Second District Court of Appeal found that a qualifying agent of a general contractor could be liable in a personal injury action for control of the job site and supervision of matters relating to safety.

Finally, the recent decision in Taylor Morrison Services, Inc. v. Ecos, 163 So.3d 1286 (Fla. 2015), dealt with the discrete issue of whether the contractor was licensed as of the date of the contract. That was it. In dealing with this discrete issue, the First District noted:

Even though Guy [qualifying agent] was not listed on the permit as the contractor, he was responsible as the primary qualifying agent for all of Appellant’s [contractor] construction projects. Whether he carried out this responsibility faithfully is a separate question from whether he could be considered a qualifying agent that Appellant…, and one that the trial court did not need to decide.

Taylor Morrison Services, 163 So.3d at 1292, n.6 (noting that while contractor may have had qualifying agent as of the date of the contract to render it a licensed contractor under the law and the discrete issue before the court, this did not eliminate transgressions that may have occurred after the date of the contract). In other words, the Court noted that whether the qualifying agent carried out his responsibilities faithfully was a separate issue not before the court.

The bottom line is that a qualifying agent is not automatically immune from tort liability. There is authority to sustain arguments for a common law negligence claim against a qualifying agent for torts committed by the qualifying agent. But, simply violating certain statutory requirements set out in Chapter 489 should not create a private civil cause of action against a qualifying agent.

BE CAREFUL AND APPRECIATE THE RISK WHEN EXECUTING A RELEASE IN ADVANCE OF AN EVENT OR SITUATION

Posted on February 14, 2015February 14, 2015 by Edward Garber

The Florida Supreme Court in a non-construction case recently issued an opinion regarding the scope of a release. Parties expecting releases (“releasee”) need to ensure that the release they are giving others to execute (“releaser”) clearly and unambiguously reflects the scope of the release they are seeking. Regardless of the reasoning for getting a release, the release will not serve the releasee’s purpose if it is ambiguous.

In Eric Sanislo v. Give Kids the World, Inc., 2015 WL 569119 (Fla. 2015), the Florida Supreme Court answered the question whether a release that does not contain express language of the releaser releasing the releasee for negligence or negligent acts was enforceable to actually release the releasee for negligence claims.

This case involved a non-profit company that organizes vacations for sick children and their families. In advance of the vacation participants need to execute a release in favor of the non-profit company that reads:

I/we hereby release Give Kids the World, Inc. [releasee] and all of its agents, officers, directors, servants, and employees from any liability whatsoever in connection with the preparation, execution, and fulfillment of said wish, on behalf of ourselves, the above named wish child and all other participants. The scope of this release shall include, but not be limited to, damages or losses or injuries encountered in connection with transportation, food, lodging, medical concerns (physical and emotional), entertainment, photographs and physical injury of any kind….

I/we further agree to hold harmless and to release Give Kids the World, Inc. [releasee] from and against any and all claims and causes of action of every kind arising from any and all physical or emotional injuries and/or damages which may happen to me/us….

During a vacation, the mother of a child injured herself due to a malfunction of a wheelchair lift they were on. The family sued for negligence and the non-profit organization argued that such a negligence claim was barred by virtue of the release the family executed that released the non-profit company “from any liability whatsoever…” which would be broadly understood to include all negligence claims. The non-profit further argued if the release did not cover negligence claims, it would essentially be worthless since the obvious intent of the release was to bar these types of claims. Conversely, the family argued that the release did not bar negligent acts because nowhere in the release does it even use the words “negligence” or “negligent acts.”

The Florida Supreme Court agreed with the non-profit company and the broad language that released the non-profit company “from any liability whatsoever…” expounding:

[W]e are reluctant to hold that all exculpatory [release] clauses that are devoid of the terms “negligence” or “negligent acts” are ineffective to bar a negligence action despite otherwise clear and unambiguous language indicating an intent to be relieved from liability in such circumstances. Application of such a bright-line and rigid rule would tend to not effectuate the intent of the parties and render such contracts otherwise meaningless.

***

The wish request form and liability release form signed by the Sanislos [plaintiff] released Give Kids the World [non-profit company] and all of its agents, officers, directors, servants, and employees from “any liability whatsoever in connection with the preparation, execution, and fulfillment of said wish….” The language of the agreement then provided that the scope of the agreement included “damages or losses or injuries encountered in connection with transportation, food, lodging, medical concerns (physical and emotional), entertainment, photographs and physical injury of any kind….” This agreement clearly conveys that Give Kids the World would be released from any liability, including negligence, for damages, losses, or injuries due to transportation, food, lodging, entertainment, and photographs. With regard to Give Kids the World and the wish fulfilled for the Sanislos, it is unclear what this agreement would cover if not the negligence of Give Kids the World and its agents, officers, directors, servants, and employees, given that exculpatory clauses are unenforceable to release a party of liability for an intentional tort.

Sansislo, supra.

What exactly does this ruling mean?

It means, be careful, really careful, when executing a release, especially a release given in advance of an event or situation. Naturally, when a release is given in advance of an event or situation, the release is routinely executed without a lot of consideration given to when the release would apply. Before the event or situation, you do not foresee the other party committing a negligent act and/or getting hurt by such negligence. But, it certainly could happen which is why the releasee wants to give you an advance release to execute. Further, but for the execution of the release, the releasee (or company that wants the release) will probably not allow you to participate or attend the event, etc. This is another reason the release is routinely executed without a lot of consideration given to the context of the release.

But, as demonstrated by the Florida Supreme Court, this advance release can come back to haunt a person that is injured by the negligence of the releasee simply because that person executed an advance release or release given BEFORE the negligence occurred. Thus, be careful, and appreciate this risk, when executing a release in advance of an event or situation.

DESIGN PROFESSIONAL’S DUTY OF CARE NOT EXTENDED TO SUBCONTRACTORS

Posted on January 8, 2015January 8, 2015 by Edward Garber

In construction defect lawsuits, subcontractors responsible for the alleged deficient work or damage are third-partied into the lawsuit by the general contractor that hired them. And, sometimes, an owner (or association) tries to assert a claim directly against responsible subcontractors. There are times where subcontractors have the defense that the deficiencies and damages complained of are the result of design errors and omissions. A question becomes whether a subcontractor can assert a negligence claim directly against that design professional as a way to flow any potential exposure to the design professional.

Unfortunately, there is case law that says that a supervising design professional does NOT owe any duty of care to a subcontractor. See Spancrete, Inc. v. Ronald E. Frazier & Associates, P.A., 630 So.2d 1197 (Fla. 3d DCA 1994) (duty of care that supervising architect owed to general contractor did not extend to subcontractors); McElvy, Jennewein, Stefany, Howard, Inc. v. Arlington Electric, Inc., 582 So.2d 47 (Fla. 2d DCA 1991) (trial court erred in allowing case to go to jury because architect’s duty of care could not have been extended to subcontractors); E.C. Goldman, Inc. v. A/R/C Associates, Inc., 543 So.2d 1268 (Fla. 5^th DCA 1989) (consulting engineering/expert firm hired by owner to inspect and advise owner about roof owed no duty of care to roofing subcontractor). Without this duty of care, a subcontractor would NOT be able to pursue a negligence claim against the design professional because this duty of care is the very first element required to prove a negligence claim. (In order to prove a negligence claim, a plaintiff needs to prove that 1) the defendant owed the plaintiff a duty of care, 2) the defendant breached that duty of care, 3) that breach proximately caused damages/injuries to the plaintiff, and 4) the plaintiff was damaged/injured.) This does mean the subcontractor cannot assert the design professional’s errors and omissions as a defense, it just means that it will be an uphill battle for a subcontractor to assert an affirmative claim against the design professional.

PREMISE LIABILITY CLAIMS AND THE DUTY OF CARE OWED TO CONTRACTORS

Posted on January 3, 2015January 3, 2015 by Edward Garber

Unknown Premise liability claims are a concern to persons engaging a contractor (a business invitee) to perform renovation, maintenance, or repair work on property they own or lease. These are claims where a person injures himself / herself on another’s premises and sues the owner (and/or tenant) under theories grounded in negligence. “The crux of a cause of action for premises liability is not the ownership of the premises, but the negligence of the possessor in permitting [business] licensees and invitees to come unwarned to an area where they could foreseeably be injured by a dangerous condition which is not readily apparent.” Phillips v. Erican Manufacturing & Machine, Inc., 40 Fla. L. Weekly D103a (Fla. 5^th DCA 2014) quoting Houssami v. Nofal, 578 So. 2d 495, 496 (Fla. 5th DCA 1991).

In a negligence case, a plaintiff needs to prove the following four elements:

the defendant owes the plaintiff a duty of care;
the defendant breached that duty;
the defendant’s breach of that duty proximately caused damage / injury to the plaintiff; and
the plaintiff suffered damage / injury.

In premise liability claims, an issue oftentimes turns to the very first element, that being whether the defendant (e.g., property owner or tenant) owed the plaintiff (e.g., injured person) a duty of care. If the defendant did NOT owe the plaintiff a duty of care, there can be no negligence claim.

The Duty of Care in a Premise Liability Claim

In Phillips, a company was hired to clean and paint a warehouse’s corrugated metal roof that included cleaning and caulking skylights on the roof. As a worker was working on the roof, he fell through a skylight that had been concealed as it was painted the same color as the roof. While the skylight at-issue was visible from inside the warehouse, it was not visible from the exterior due to the paint. The injured worker sued the owner (amongst others) in a premise liability claim.

As reflected in a prior posting also dealing with an injury from a skylight, an owner that hires an independent contractor is typically not liable for injuries to the contractor’s employees unless: a) the owner was actively participating in the construction in that the owner directly influenced the manner in which the work was performed or b) the owner failed to warn the independent contractor of latent defects / perils that were either known or should have been known to the owner and which were not known by the independent contractor and could not have been discovered by the contractor through the exercise of due care.

This goes to the duty (first element in a negligence action) that an owner owes an independent contractor or any business invitee that an owner invites on his/her premises.

Because the painted skylight was not visible from walking on the roof, the issue was whether locating skylights solely from the roof was a reasonable inspection or whether the contractor should have also located skylights from inside the warehouse. If the contractor should have located skylights from inside the warehouse, then the contractor could have discovered the concealed peril (painted skylight) with due care, thereby defeating his premise liability claim. The Fifth District found that this was an issue for the jury.

What about this twist. The warehouse was leased to a company the owner was an officer of. Could the tenant be liable for premise liability claims? How about the owner if the tenant is the one utilizing the property and invited the contractor on the property? This is important because if a party does NOT possess or have control over the premises, and specifically the requirement to perform maintenance and repairs to the premises, then that party owed no duty of care and should not be liable for a premise liability claim. The Fifth District explained:

“In cases like this, where the facts involve a leased premises, the extent of responsibility for injuries occurring on the leased premises during the term of the lease depends on the extent the owner of the property maintains control over the premises. When the landlord and tenant have a lease that expressly sets forth which party has the power to possess and control the property during the term of the lease, the issue of control is a matter of law.”

Phillips, supra (quotations and internal citations omitted).

Notably, if a lease allows the tenant to make improvements or repairs subject to the owner’s approval, the owner will be deemed to have sufficient possessory interest or control over the leased property to owe a duty to a business invitee. See Russ v Wollheim, 915 So.2d 1285 (Fla. 2d DCA 2005).