QUALIFYING AGENTS AND COMMON LAW NEGLIGENCE

images-1Can 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.

 

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.

 

 

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

imagesThe 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.

 

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.

 

DESIGN PROFESSIONAL’S DUTY OF CARE NOT EXTENDED TO SUBCONTRACTORS

images3M3BYH2WIn 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 subcontractorSee 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. 5th 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.

 

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.

 

PREMISE LIABILITY CLAIMS AND THE DUTY OF CARE OWED TO CONTRACTORS

UnknownPremise 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. 5th 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:

 

  1. the defendant owes the plaintiff a duty of care;
  2. the defendant breached that duty;
  3. the defendant’s breach of that duty proximately caused damage / injury to the plaintiff; and
  4. 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).

 

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.

 

CONTRIBUTION CLAIMS TO PASS-THROUGH LIABILITY


images-1In lawsuits, there are times the defendant elects to sue a third-party defendant to pass-through its liability to the plaintiff to the third-party defendant. For example, in a construction defect scenario where the owner sues the general contractor, the general contractor will often sue subcontractors (third-party defendants) in order to pass-through its liability to the owner to subcontractors that performed the scopes of work at-issue. In other situations, a defendant may assert a cross-claim against another defendant to, among other things, pass-through any liability it has to the plaintiff to the other defendant. For example, in a construction defect scenario where the owner sues both the general contractor and subcontractors, the general contractor will often assert a cross-claim against the subcontractors to pass through its liability to the subcontractors.

 

A claim for contribution used to be a common claim asserted to pass-through liability in negligence-related actions. Contribution claims were routine in negligence actions when there used to be joint and several liability, i.e., a party could be responsible for all of the plaintiff’s damages irrespective of its percentage of fault with other defendants. “To state a claim for contribution, the claimant must allege a common liability to the injured party [plaintiff].” Horowitz v. Laske, 855 So.2d 169, 174(Fla. 5th DCA 2003). In other words, the defendant and third-party defendant must be jointly liable / negligent to the plaintiff for the injuries the plaintiff sustained. Therefore, by asserting a contribution claim, the defendant ensures that fault is allocated to another party that is jointly liable for the damages sustained by the plaintiff.

 

However, Florida abolished joint and several liability in negligence actions and, now, a defendant can only be liable based on its determined percentage of fault. See Fla. Stat. s. 768.81; see also T&S Enterprises Handicap Accessibility, Inc. v. Wink Indus. Maintenance & Repair, Inc., 11 So.3d 411 (Fla. 2d DCA 2009) (affirming dismissal of defendant’s third party claim for contribution in underlying negligence action due to abolishment of joint and several liability). Because of this, third-party defendants or cross-claim defendants that are sued for contribution should argue that the contribution claim is moot because the party suing it can only be held liable for its percentage of fault or negligence. Some judges will dismiss a contribution claim for this reason on a motion to dismiss, but others will still allow the claim to proceed beyond a motion to dismiss for judicial efficiency and economy since it is easier to wrap up a dispute in one litigation instead of many (considering contribution claims have been routine claims to pass-through liability).

 

imagesThe opinion in Martinez v. Miami-Dade County, 2013 WL 5434159 (S.D.Fla. 2013) is a non-construction case that illustrates how a claim for contribution can proceed. In this case, a plaintiff sued Miami-Dade County and a bar for injuries the plaintiff sustained by off-duty police officers providing security for the bar. The claims against Miami-Dade Couty were sounded in intentional tort theories and not negligence theories. Miami-Dade County asserted a cross-claim against the bar and included a claim for contribution. The bar moved to dismiss the contribution claim arguing that contribution claims are obsolete under Florida law since there is no more joint and several liability. The Southern District Court disagreed expressing that because the plaintiff’s theories against Miami-Dade County were sounded in intentional tort and not negligence, section 768.81 did not apply. (Notably, section 768.81 section does not apply to intentional tort theories of liability.)

 

Under section 768.81, a negligence action means “without limitation, a civil action for damages based upon a theory of negligence, strict liability, products liability, professional malpractice whether couched in terms of contract or tort, or breach of warranty and like theories. The substance of an action, not conclusory terms used by a party, determines whether an action is a negligence action.” Fla. Stat. s. 768.81(1)(c). Therefore, even if the claims asserted are not labeled negligence claims, this section still applies to bar joint and several liability to ensure a party is only liable for their percentage of fault. It is designed so that substance over form is analyzed to determine whether the plaintiff’s underlying action is a negligence action even if it is not labeled as such.

 

This opinion in Martinez, however, could support the argument that a contribution claim could be asserted outside of a negligence claim such as a breach of contract action (since, in the case, a contribution claim was still allowed to proceed in an intentional tort action). And, even though section 768.81 shifts the focus from the label of the plaintiff’s claims to the actual substance underlying the claims, the objective is to argue that plaintiff’s claims are not based in negligence, but based in a material breach of a contractual provision. For example, in a construction defect setting, when the general contractor is sued for breach of contract, there may be strategic reasons why the general contractor would want to attempt to assert a contribution claim in addition to an indemnification claim against subcontractors to pass-through liability. The general contractor would argue that the plaintiff’s claims are not based in negligence but based in contract since the plaintiff is asserting that the project was not constructed per the contract documents (or in a workmanlike manner) per contractual provisions.

 

Finally, if a general contractor elects to assert a contribution claim, it is important to remember that the claim will only survive if it asserts and can establish that it and the subcontractor(s) share a common liability to the owner. This is challenging.

 

In Helmet House Corp. v. Stoddard, 861 So.2d 1178 (Fla. 4th DCA 2003), a contractor was sued by an owner for breach of contract and breach of warranty for defective construction of a roof. The contractor asserted a third party party complaint against its roofing subcontractor for contribution. The Fourth District held that the contractor could not pursue a contribution claim against its subcontractor because the subcontractor did not share a common obligation / liability to the owner. The Fourth District found that parties share a common liability if they are joint tortfeasors or co-obligors on an obligation. Importantly, many subcontracts contain flow-down provisions that bind the subcontractor to the general contractor to the same extent the general contractor is bound to the owner. Flow-down provisions attempt to impose the exact same liability on the subcontractor that the general contractor assumes towards the owner. With this type of provision, or an alternative provision that would make the owner an intended third-party beneficiary of the subcontract, there may be an argument that subcontractors do indeed share a common liability to the owner with the general contractor for defects with their scopes of work.  From the general contractor’s perspective, the objective is to pass-through liability for defective construction with arguments based on the plaintiff’s allegations in the complaint.

 

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.

A GENERAL CONTRACTOR NEEDS TO UNDERSTAND CERTAIN LEGAL DOCTRINES BEFORE SUING A STATE (INCLUDING AGENCY OR SUBDIVISION) AND DESIGN PROFESSIONAL THAT IT DID NOT HIRE

HIGHWAY-CONSTRUCTION-1The recent Florida district court case, Posen Construction, Inc. v. Lee County, et al., 2013 WL 375430 (M.D.Fla. 2013), ruling on various motions to dismiss, is an interesting case that discusses two important doctrines. In this case, a roadway contractor constructing a road project for Lee County sued Lee County and Lee County’s design professionals (hired by the County) for delays and additional costs it incurred in the performance of its work. This case, among other things, discusses a state’s (inclusive of a state agency or subdivision) sovereign immunity for claims for additional work (absent a change order) and the duty of care for purposes of a negligence claim that a design professional owes to a general contractor (when the general contractor did not hire the design professional).

 

The first doctrine is known as the Miorelli doctrine which refers to a state’s (or its agencies or subdivisions) soverign immunity for extra-contractual work claims that arise on a construction project. The Miorelli doctrine is based on the Florida Supreme Court case, County of Brevard v. Miorelli Engineering, Inc., 703 So.2d 1049 (1998). The Miorelli doctrine, as maintained by the Posen court, has evolved into the following doctrine: “A claim for damages predicated on work ‘totally outside the terms of the contract’ is barred by the doctrine of sovereign immunity [unless memorialized in a written executed change order], whereas damages caused by extra work done at the state’s behest and in furtherance of contractual covenants (express or implied) are potentially recoverable.” Posen Construction, supra at *3 citing Miorelli, 703 So.2d at 1051. In applying the Miorelli doctrine, the Posen court expressed:

 

“To be clear, if Posen’s [contractor] claim is predicated on work ‘totally outside the terms of the contract’ it will fail by application of the Miorelli decision. On the other hand, claims for damages caused by additional work performed in furtherance of either express or implied covenants of the written contract  fall within Florida’s implied waiver of sovereign immunity…”

 

If a contractor is suing a state (or a state agency or subdivision) for additional costs that are not memorialized in a written executed change order, it is important that the contractor is aware of the Miorelli doctrine in order to best craft arguments to potentially recover the additional costs. The reason being is that the contractor can almost be certain that the state will raise the Miorelli doctrine through the motion to dismiss and/or summary judgment stages to establish that the state has sovereign immunity for such claims and damages. The key is that the argument should center on the additional costs being covered by the expansive scope of work set forth in the contractor’s contract with the state versus constituting work that is materially different than what the contractor bargained for.

 

The second doctrine is known as the A.R. Moyer doctrine which refers to a design professional’s duty of care to a general contractor on a construction project (when there is no contractual privity between the contractor and design professional). The A.R. Moyer doctrine is based on the Florida Supreme Court case, A.R. Moyer v. Graham, 285 So.2d 397 (Fla. 1973). In A.R. Moyer, a contractor sued a supervising architect in negligence. The Florida Supreme Court in A.R. Moyer maintained:

 

Each of the [following] conditions would present a cause of action [in negligence against a supervising architect or engineer]: (a) supervising architect or engineer is negligent is preparation of plans and specifications; (b) the supervising architect or engineer negligently causes delays in preparation of corrected plans and specifications; (c) the supervising architect or engineer negligently prepared and negligently supervised corrected plans and specifications; (d) the supervising architect or engineer failed to award an architect’s certificate of completion of the project; (e) the architect or engineer was negligent in exercise of supervision and control of contractor…” Posen Construction, supra, citing A.R. Moyer, 285 So.2d at 402.

 

Stated differently, the design professional must have a supervisory role or element of control (also referred to as a close nexus to the contractor) in order for the design professional to owe a legal duty to the contractor. The Posen court clarified that “supervising architects and engineers are liable for the foreseeable injuries to general contractors proximately caused by their negligent conduct even where there is an absence of contractual privity, whereas nonsupervising engineers and architects—irrespective of when they are hired—will not be.” Posen Construction, supra, at *12.

 

If a contractor is suing a design professional in negligence, it is important for the contractor to understand the A.R. Moyer doctrine and that the required legal element of “duty” is based on the supervisory status of the architect or engineer. This will allow the contractor to best phrase legal theories knowing that the design professional will raise this doctrine at the motion to dismiss and/or motion for summary judgment stages. However, absent this supervisory status or close nexus between the design professional and general contractor, the design professional will not be deemed to owe a legal duty to the contractor.

 

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.

THE SLOW OR NOT SO SLOW DEATH OF THE ECONOMIC LOSS RULE

UnknownWhat is the economic loss rule in Florida? The answer — who really knows anymore.

 
The economic loss rule was a rule that applied in two scenarios. Under the first scenario, the economic loss rule said that if parties were in contractual privity, one party cannot sue the other party under tort theories (such as negligence) for damages that arise out of the contract. In other words, a party cannot get around the contractual remedies and damages by suing for tort instead of for breach of contract. However, over the years, this scenario has been watered down by various exceptions that allows a party to sue in tort if their damages were independent from the contract (such as damages from being fraudulently induced into the contract, etc.) or the party they were suing was a professional (such as an architect, engineer, etc.). Nevertheless, the rule still applied to prevent a majority of contracting parties from suing in tort instead of for breach of a contract, thereby maintaining the integrity of contract law.

 

The second scenario the economic loss rule applied was in the products liability context. Under this scenario, a manufacturer cannot be sued by a non-contracting party, in particular, for a defect in a product unless that product causes personal injury or damage to other property. However, if the product just damages itself (in other words, the product is simply defective), then the economic loss rule could apply to bar a tort claim against a manufacturer.

 

Confusing? Yes! To add confusion, the Florida Supreme Court in Tiara Condominium Association, Inc. v. Marsh & Mclennan Companies, Inc., 38 F. L. Weekly S151a (Fla. 2013), eliminated the the first scenario in which the economic loss rule applied. In this case and in eliminating the first scenario, the Florida Supreme Court maintained that an insured’s tort claims (negligence and breach of fiduciary duty) against its insurance broker that it was in contractual privity with was not barred by the economic loss rule.

 

 

What exactly does this ruling mean? Ultimately, it means that parties that are in contractual privity could sue each other under tort theories such as negligence to potentially recoup damages in excess of the recoverable breach of contract damages and/or to get around contractual provisions and remedies. Thus, tort claims are now available, and quite frankly, will be pursued and argued, against contracting parties. If the Florida Supreme Court finds that tort claims between an insured and the insured’s broker (where the parties were in contractual privity) are permissible, then just think of the arguments and tort claims that could be made to dilute contract law.

 

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.

INTERFERING, EXISTING UNDERGROUND UTILITIES

images-1Horizontal projects (public roadway projects and other infrastructure improvements, etc.) often require the identification and relocation of existing underground utilities. The underground utility company / owner is typically notified of the project (and the plans for the project) so that it can identify and relocate existing utilities if they interfere with the project’s plans.

 

The recent case of Florida Power & Light Co. v. Russell Engineering, Inc., 96 So.3d 1016 (Fla. 4th DCA 2012), dealt with a utility company that did not properly locate an underground utility. This meant that the contractor installing underground drainage piping had to incur additional costs because the existing utility interfered with the planned path of the drainage piping.

 

The public owner assigned its rights against the utility company to the contractor that installed the drainage piping to recoup the additional costs. The utility company argued that under Florida statutory law (particularly Florida Statute sections 337.403 and 337.404) the public owner has an exclusive remedy of requiring the owner of the interfering utility to relocate or remove the utility before it can legally incur any damages. The trial court disagreed and damages were awarded to the contractor. On appeal, the Fourth District Court of Appeal affirmed the trial court’s ruling focusing on the following italicized language in section 337.403:

 

“(1) Whenever it shall become necessary for the authority to remove or relocate any utility as provided in the preceding section, the [utility company] shall be given notice of such removal or relocation and an order requiring the payment of the cost thereof, and shall be given reasonable time, which shall not be less than 20 nor more than 30 days, in which to appear before the authority to contest the reasonableness of the order . . . .”

 

The Fourth District found that this language was important because in the instant case it was not necessary for the existing, interfering underground utility to be removed or relocated because the contractor simply worked around the utility resulting in its costs to increase.

 

This case supports a negligence argument against a utility owner in the event additional costs are incurred due to the utility company failing to property locate an existing utility. (This was the situation in the discussed case because the drainage piping was simply redesigned to bypass the interfering, existing utility.) However, it would seem that a public owner and contractor would have to work around the existing utility (through a redesign, etc.). On the other hand, if the existing utility could not be worked around, then the statutory procedures set forth in sections 337.403 and 337.404 (not discussed in this posting) would apply.

 

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.

A CONSULTING ENGINEER / ARCHITECT’S PROTECTION FROM A NEGLIGENCE CLAIM BY A CONTRACTOR

imagesThe case of Recreational Design & Construction, Inc. v. Wiss, Janney Elstner & Associates, Inc., 2011 WL 5117163 (S.D.Fla. 2011), is a recent case discussing whether an independent engineering firm hired as a consultant by an owner can be liable to the general contractor for professional negligence under Florida law.  In this case, the City of North Miami Beach (“City”) hired a contractor to perform all design and construction services for a water slide project (“Contractor”).  The City also hired a separate engineering firm to evaluate and perform inspections of the contractor’s work (“Engineer”).  The engineering firm hired another engineering firm as a subconsultant to perform the engineering inspections (“Subconsultant”).

 

 

The Subconsultant issued a report to the Engineer that was provided to the City explaining that the water slide the Contractor designed and started to construct was structurally unsafe.  The report recommended repairs to be implemented on the slide.  The City rejected the Contractor’s work based on the Subconsultant’s recommendation and required the Contractor to implement the repairs before completing the work.

 

 

The Contractor, instead of suing the City, sued the Engineer and Subconsultant for professional negligence (also known as professional malpractice) to recover its costs in reconstructing the slide and implementing the repairs recommended to the City.  Both the Engineer and Subconsultant moved to dismiss the Contractor’s complaint arguing that they did not owe a duty of care to the Contractor; therefore, they could not be liable in negligence to the Contractor under the law.  The Southern District of Florida agreed with the Engineer and Subconsultant and dismissed the Contractor’s complaint with prejudice.

 

 

In order to be liable for professional negligence, a plaintiff must prove the following elements against the defendant-professional: 1) the defendant owed a duty of care to the plaintiff; 2) the defendant breached its duty of care; and 3) the breach of the duty of care proximately caused damages to the plaintiffSee Recreational Design & Construction, 2011 WL at *2 citing Moransis v. Heathman, 744 So.2d 973, 975 n.3 (Fla. 1999).   The element of duty, however, is a question of law in Florida and must be determined by the court before a negligence case proceeds to the jury or trier of factSee Wallace v. Dean, 3 So.3d 1035, 1046 (Fla. 2009).

 

The Contractor relied on the Florida Supreme Court’s ruling in A.R. Moyer, Inc. v. Graham, 285 So.2d 397 (Fla. 1973), in arguing that the Engineer and Subconsultant owed the Contractor a duty to perform its work and issue recommendations to the City with reasonable care and due diligence.  In A.R. Moyer, the Florida Supreme Court held that a general contractor can maintain a cause of action against a supervising architect for the architect’s negligent performance of a contractual duty (even though the contractor has no contractual privity with the architect).  Particularly, the Florida Supreme Court found that the following circumstances would present a professional negligence cause of action by the contractor against a supervising architect or engineer:

 

“(a) supervising architect or engineer is negligent in preparation of plans and specifications; (b) the supervising architect or engineer negligently causes delays in preparation of corrected plans and specifications; (c) the supervising architect or engineer negligently prepared and negligently supervised corrected plans and specifications; (d) the supervising architect or engineer negligently failed to award an architect’s certificate upon completion of the project; (e) the architect or engineer was negligent in exercise of supervision and control of contractor.”  A.R. Moyer, 285 So.2d at 402.

 

 

Of importance, the “professional defendant [in A.R. Moyer] was an architect whose responsibilities on the relevant project were to prepare the designs and plans for the project, approve the overall structural components or framework for the project, and supervise the general contractor’s execution of those plans, including having the authority to halt the contractor’s work.”   Recreational Design & Construction, 2011 WL at *4.   In other words, A.R. Moyer dealt with more of a traditional architect or engineer that, among other things, served as the architect / engineer-of-record for the project and had detailed contract administration services that enabled them to make decisions that could effect the contractor, which is why the Court described the professional as a supervisory architect or engineer.

 

 

But, in Recreational Design & Construction, the Engineer and Subconsultant, were really nothing more than a consultant providing expert-related services issuing recommendations, advice, or suggestions to the City in which the City could accept or reject.  The Engineer and Subconsultant did not serve as the engineer-of-record.  They did not design the plans for the City’s project. They did not issue specifications for the project.  They were not performing supervision to ensure that the Contractor’s construction complied with their design (since they were not the designer).  And, they did not have authority to halt the construction of the project or issue corrective details directly to the Contractor.  Instead, as previously mentioned, their services were truly within the realm of consulting services in which it was up to the City to determine how it wanted to utilize any suggestions, advice, or recommendations.   For these reasons, and because the role of the Engineer and Subconsultant in this case was substantially different than the role of the architect in A.R. Moyer, the Southern District held they did not owe a duty of care to the Contractor.  See also McElvy, Jennewein, Stefany, Howard, Inc. v. Arlington, Elec., Inc., 582 So.2d 47 (Fla. 2d DCA 1991) (finding that architect did not owe duty to subcontractor because architect was required to issue advice to owner regarding interpretation of architect’s design, but it was the owner responsible for making the ultimate decision based on the advice of the architect).

 

 

An architect or engineer that is serving as the architect / engineer-of-record for a construction project may want to implement certain language in their contract with the owner that while it will render certain advise, recommendations, or suggestions to the owner regarding its design and specifications and interpretations thereof, it is the owner that is required to render the ultimate decision regarding the advice, suggestions, and recommendations.  This way, if the contractor does pursue a professional negligence claim against them, they can argue they were not a supervisory architect or engineer and should not be deemed to owe a duty to the contractor because it was the owner that made the ultimate decision that affected the contractor.

 

 

Also, owners on construction projects sometimes hire other consultants or experts to assist in the construction of their project.  For instance, sometimes owners hire a building envelope consultant or a glazing consultant, etc.  These consultants sometimes worry about the contractor asserting a negligence claim against them based on their advice, suggestions, and recommendations made to the owner.  These consultants, however, should be able to rely on the arguments in Recreational Design & Construction to support they do not owe a duty to the contractor.  These consultants can also employ the same contractual language suggestions above so that their contract specifically expresses that it is the owner that is required to act on the advice, suggestions, and recommendations of the consultant so that it remains understood that the owner, and not the consultant, has ultimate control over the contractor’s work.

 

 

 

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.

CLARIFYING TERMS OF A RELEASE AND STANDARD OF CARE WHEN SUING A DESIGN PROFESSIONAL — BOTH TOUCHED UPON IN NEW FLORIDA CASE

Unknown-1The recent decision of Alderman v. BCI Engineers & Scientists, Inc., 2011 WL 3862094 (2d DCA 2011), implicitly underscores two important concepts.  First, it underscores the importance of clarifying releases of claims applicable to construction issues, especially if a party wants to be protected from the release down the road.  Second, it underscores what is required to hold a design professional—engineer or architect—liable for breach of contract.

 

 

Both of these concepts are important for different reasons.

 

 

A release is important because if a party (or non-party as Is the case in Alderman) wants to be truly protected by the language of a release, the release should be unambiguous.  Any ambiguity will simply foster a potential argument that the release does not protect the party being sued or the types of claims being asserted.

 

 

It is important to understand the legal burden / standard associated with finding a design professional liable for breach of contract.  Not understanding this burden could prevent otherwise colorable claims for design errors or omissions, etc. against a design professional from properly being asserted.

 

 

In Alderman, an owner’s residence sustained settlement damage  believed to have been the result of a sinkhole.  The owner retained an engineer to investigate the sinkhole and corresponding settlement damage.  The owner and the engineer entered into a contract for the engineer to perform a geotechnical investigation which included an inspection, testing, and the preparation of a report with the findings and appropriate repair protocol.  In the report, the engineer recommended for a contractor to perform subsurface compacting grouting to stabilize the residence against further settlement.  The report also recommended for the engineer to be retained during the remediation work to provide monitoring and oversight.

 

 

Based on the report, the owner hired a foundation contractor to perform the subsurface compaction grouting. The engineer’s budget for the monitoring and oversight during the repair work was approved by the owner’s homeowner’s insurer.  (The owner, like most owners with a homeowner’s insurance policy, was looking to recoup covered costs under the policy associated with the settlement damage/problem resulting from the sinkhole.)

 

 

During the grouting, septic tanks ruptured causing sewage to seep into the residence.  Additionally, once this grouting work was fully completed, the residence continued to experience settlement damage.

 

 

The owner settled the sinkhole claim with his property insurer and gave the insurer a release.

 

 

The owner, however, contended that the subsurface compaction grouting recommended by the engineer was not a suitable recommendation (and/or was not monitored correctly) since the work did not remedy the settlement problem.  The owner sued the engineer for negligence arguing that the engineer was negligent in the supervision and monitoring of the remediation work.  It also sued the engineer for breach of contract arguing that the engineer failed to recommend a suitable remediation protocol.   The trial court granted summary judgment in favor of the engineer as to the owner’s negligence and breach of contract claims and the owner appealed to the Second District Court of Appeals.

 

 

A. The Owner’s Negligence Claim Against the Engineer

 

 

The trial court granted summary judgment in favor of the engineer finding that the release the owner gave to his property insurer to settle the sinkhole claim was broad enough to cover the engineer.  The release the owner gave to his property insurer included the following language:

 

 

“1. . . . By executing this General Release, Releasor . . . does hereby fully and completely release and discharge STATE FARM FLORIDA INSURANCE COMPANY (and all parent and subsidiary companies affiliated with it in anyway [sic]), hereinafter referred to collectively as “Releasees,” from any and all current or future claims, rights[,] and actions whatsoever, whether ripe or contingent, arising in relation to the filing of insurance claims by Releasor relative to or associated with insurance coverage for the [Alderman residence].

 

2. NOW THEREFORE in consideration of the payment [of the settlement amount], the receipt and sufficiency of which is hereby acknowledged, the Releasor agrees as follows:

(a) The Releasor does hereby . . . release, discharge, acquit, and indemnify Releasees, and their officers, directors, shareholders, executors, administrators, insurers, insureds, suppliers, distributors, attorneys, contractors, subcontractors, successors, privies, assigns, associations, parents, subsidiaries, holding companies, or partnerships of and from any and all claims . . . whatsoever including but not limited to any coverage dispute, complaints regarding claims handling or bad faith, or the termination of insurance of the Property by the Releasees which the Releasor now has or which may hereafter accrue on account of or in any way growing out of any and all known or unknown, foreseen and unforeseen, property damage and any consequences of the activities listed in paragraph 1 above. The parties agree that the terms of this Release do not impact any rights of either Releasor or Releasees from seeking damages (either tort, contract, or subrogation) against unrelated entities.”

Alderman, 2011 WL at *3.

 

 

The engineer further argued (and the trial court agreed) that the insurer approved the engineer’s budget for the monitoring and oversight services performed during the subsurface compaction grouting.

 

However, the Second District Court disagreed  for two reasons.

 

 

First, the Second District expressed that the contract was between the owner and the engineer, not between the insurer and the engineer.  The court also expressed that the fact that the insurer may have approved the engineer’s budget and may have paid the engineer from insurance proceeds (that arose between the insurance policy between the insurer and the owner), and not because of any separate contract between the insurer and engineer.  The court gave an appropriate analogy: “Here, the circumstances are comparable to an automobile insurer’s approval of a body shop’s estimate for the costs of repairs to an insured’s automobile. Despite the insurer’s approval of the repair estimate, the contract for the repairs remains between the automobile owner and the body shop, not between the body shop and the insurer.” Alderman, 2011 WL at *4.

 

 

Second, the Second District expressed that the release NEVER referenced or named the engineer. “Thus for the instrument to be effective to release BCI [engineer] or other parties not specifically named, such intent must be clearly expressed.Alderman, 2011 WL at *5.

 

 

The Second District’s ruling makes sense in that it was the owner, the insured under the property insurance policy, that negotiated and executed the release with his insurer.  It would seem inequitable for the engineer to get the benefit of the release unless of course it was specifically involved in the negotiation of the release and was an engineer that the insurer specifically authorized the owner to retain (which are unknown from the facts recited in the case).  If, however, the owner hired the engineer and the engineer simply worked with the insurer to ensure that payments would be covered by insurance proceeds, it would seem inequitable for the engineer to reap the benefits of a release that certainly did not involve it.

 

 

B. The Owner’s Breach of Contract Claim Against the Engineer

 

The trial court also granted summary judgment for the engineer on the owner’s breach of contract claim finding that the owner failed to establish that the engineer violated any standard of care based on the investigation of the problem and recommendation of the subsurface compaction grouting. The owner relied on deposition testimony of his trial expert to support that the engineer violated its standard of care and therefore breached its agreement with the owner.

 

 

The Second District maintained: “Under its contract to render professional engineering services on behalf of Mr. Alderman [owner], BCI [engineer] was obligated ‘to perform such services in accordance with the standard of care used by similar professionals in the community under similar circumstances.’” Alderman, 2011 WL at *6 quoting Lochrane Eng’g, Inc. v. Willingham Realgrowth Inv. Fund, Ltd., 552 So. 2d 228, 232 (Fla. 5th DCA 1989).  The Second District found that a question of fact remained as to whether the engineer met or breached the required standard of care.

 

The Second District’s ruling makes sense because whether a design professional specifically breached a standard of care should be a question of fact, especially if there is a testifying expert that will render expert opinions supporting the breach.  The standard of care is an an important term when determining the liability of an architect or engineer for design errors, omissions, recommendations, etc.  If an opposing party has an expert that will say the architect or engineer breached their standard of care based on a design error, omission, recommendation, etc., then a factual issue exists.

 

 

For more information on a design professional’s standard of care, please see:

http://www.floridaconstructionlegalupdates.com/a-consulting-engineer-architects-protection-from-a-negligence-claim-against-a-contractor/

 

and

 

http://www.floridaconstructionlegalupdates.com/a-general-contractor-needs-to-understand-certain-legal-doctrines-before-suing-a-state-including-agency-or-subdivision-and-design-professional-that-it-did-not-hire/

 

 

For more information on the scope of releases, please see:

http://www.floridaconstructionlegalupdates.com/the-scope-of-a-release-in-a-settlement-and-contractual-indemnification/

 

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.