Limitation of Liability Provisions in Professional Contracts May Not Protect You from Personal Liability

On June 9, 2010, the Third District Court of Appeal of Florida in Witt v. La Gorce Country Club, upheld the trial court’s decision that Gerhardt M. Witt, a geologist, was personally liable for professional negligence, and that his personal liability was not capped by the limitation of liability provision contained within the agreements of his company, Gerhardt M. Witt and Associates, Inc. (“GMWA”) 35 So. 3d 1033 (Fla. DCA 3rd 2010). La Gorce Country Club (“La Gorce”) contracted with GMWA for consulting services for a certain water treatment system. The system failed and La Gorce filed suit against Witt, GMWA, and another party, alleging professional malpractice by Witt and GMWA, amongst other claims. The trial court found  that Witt and GMWA were liable to La Gorce for professional malpractice, and that the limitation of liability provision only applied to GMWA. The trial court stated that: (1) Witt was not a party to the contract and therefore he could not receive the protection of the limitation of liability provision; and, 2) the Florida Supreme Court previously questioned whether professionals could legally or ethically limit a client’s remedies by contract. Moransais v. Heathman, 744 So. 2d 973 (Fla. 1999). Witt appealed arguing that his personal liability should be capped by the limitation of liability provisions contained within GMWA’s contracts.

In upholding the trial court’s decision, the Appellate Court referenced the Florida Supreme Court’s analysis in Moransais of the economic loss rule in the context of a claim of professional negligence, wherein the Court held that the economic loss rule did not bar a cause of action against a professional for negligence even when the aggrieved party contracted with the professional’s employer.  Further, Florida recognizes a common law cause of action against professionals based on their acts of negligence, despite the lack of a direct contract between the professional and the aggrieved party. The Appellate Court also referenced Florida Statute 492.111 which provides a cause of action against an individual professional geologist for professional negligence, irrespective of whether the geologist practices through a corporation.

It remains to be seen how far Florida Courts will expand the Witt holding – but, at this juncture, it appears that design professionals and engineers will not be protected from personal liability by including a limitation of liability provision in their contracts. Further-more, this decision may force professionals to increase their malpractice insurance premiums to cover any personal liability judgments against them.