Can a manager subject a Florida community association to punitive damages?  Over landscaping??  For $15 million???

Because an association normally is a corporation, the purpose of punitive damages, to punish, is not always clear cut, and thankfully, few and far between.  But, bad things do happen! Because there have not been a large number of association situations, the courts frequently look to business corporation disputes to provide guidance.

In a recent decision, a Florida appellate court addressed whether a regional maintenance supervisor was a managing agent creating corporate liability for overgrown bamboo.  The dispute was set out in Florida Power & Light Co. v. Dominguez, 44 Fla. L. Weekly D 2619 (Fla. 2nd DCA, October 25, 2019). The court summarized the facts:  Justin Dominguez, a 15-year-old, was climbing a stalk of bamboo in his neighbor’s backyard when the stalk bent into a power line resulting in his death.  A wrongful death lawsuit alleged FPL was negligent because FPL failed to follow FPL’s own maintenance and safety standards by not removing the bamboo from the area around its power line.

How could lack of maintenance create a $27 million liability? FPL’s vegetation maintenance procedures designated bamboo as a “critical removal” species that should be removed instead of trimmed when growing around power lines.  It was alleged FPL violated its own vegetation maintenance policy by failing to remove the bamboo, warranting punitive damages because the violation was alleged to be the direct result of a corporate policy prioritizing corporate greed over safety.  It was argued that punitive liability attached through the behavior of FPL’s regional head of vegetation management where the accident occurred.  The jury agreed and awarded $12.5 million in noneconomic damages, plus $15 million in punitive damages!

The Florida appellate court did not disturb the $12.5 million award, but focused on the larger punitive damages award.  The court explained that a corporation can be held liable for punitive damages for gross negligence of a “managing agent” of the corporation.  The test is whether the managing agent’s conduct was:

so reckless or wanting in care that it constituted a conscious disregard or indifference to the life, safety, or rights of persons exposed to such conduct.

Applying this somewhat strict test can provide a bit of a benefit of a doubt to Florida corporations generally, and particularly to Florida community associations.

In the end, the appellate court was not prepared to take FPL to task for conduct of a maintenance supervisor who did not qualify as a managing agent of FPL, only being a midlevel employee, more akin to a bank vice president or hotel manager, rather than a corporate officer.  Therefore, FPL was not held liable for punitive damages.

Importantly, a Florida association can be held liable for its conduct.  Causing a death or serious injury may result in a multi-million-dollar claim, even over something that seems so minor, such as trimming trees.

Punishment in the form of punitive damages may be triggered by a manager’s gross negligence.  Associations must follow their checklists carefully, and look out for dangers.

A volunteer officer or director’s conduct may also be a trigger.  It is one thing to make decisions at a meeting in a board room.  It is another when volunteers become managers outside their board rooms, literally taking matters into their own hands!

This decision reminds associations to evaluate who is managing, and whether care is taken to protect life, safety, or rights of persons!