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Awareness of Joint Venture Liability/Published Lakeland Bar Association "Res Integra"

Chris Russo Feb 18, 2010

The smart lawyer needs to aware of the joint

 

venture theory and what it means for your client.

When many of us think of joint venture, we

generally think of two large corporations, such as manufacturing

conglomerates, who decide to make a joint effort to produce a

single product. They do so because both companies think that they

can make a profit from the product but neither is willing to risk the

entire cost of the project alone. Therefore, the joint adventurers will

combine their resources to reach a single end result that benefits

both in some way. However, the benefit does not have to be equal.

One company might provide the technology while another provides

the workforce to build it and the profit margins for each may be

very different. Many products are built this way rather than one

company taking the lead while subcontracting anything it cannot do

by itself to others.

The essential elements of a joint venture are: (1) a community of

interest in the performance of a common purpose, (2) joint control

or right of control, (3) a joint proprietary interest in the subject

matter, (4) a right to share in the profits, and (5) a duty to share in

any losses which may be sustained. Chase Manhattan Mortg. Corp.

v. Scott, et. al., 694 So. 2d 827 (Fla. 4

established by express or apparent authority, ratification, or

estoppel. Joint ventures can, and usually are, implicit arrangements.

See Metric Eng'g v. Gonzalez, 707 So. 2d 354 (Fla. 3

Until recently, most of us never would have considered car makers

such as GM or Chrysler (formerly DaimlerChrysler) going into

bankruptcy. Thus, after their recent bankruptcies, crashworthiness

claims against GM and Chrysler would normally be extinguished

just like any other company. While GM continues its way through

the bankruptcy process, GM has announced that it will continue to

honor product liability claims against it. On the other hand,

Chrysler does not appear to be so generous in the bankruptcy

process. A crashworthiness claim against Chrysler will likely result

in a joint venture claim against Daimler-Benz as the last remaining

partner, in some capacity, of DaimlerChrysler, notwithstanding the

difference in names. As joint venture is normally a question of fact

(See Knepper v. Genstar Corp., 537 So. 2d 619 (Fla. 3

1988)), Daimler-Benz could be on the hook if a jury finds that a

joint venture exists.

Joint venture can be used in other ways. In a medical malpractice

case, our firm used a joint venture theory to sue the wife of a doctor

as a “partner” for the doctor’s malpractice. The doctor and his wife

owned the medical clinic as tenants by the entireties. Many of you

probably know that a judgment against a single defendant cannot be

executed against jointly held property. The doctor and his wife

attempted to shield nearly six figures of annual income from

liability in the form of “rent” on the small medical clinic. By

alleging joint venture, the plaintiff’s lawyer is able to execute on the

jointly held non-homestead property and can expose the fraud for

what it is. The doctor testified at deposition that his accountant told

him to do it and that his wife had nothing to do with his practice.

The defense came in and settled the case without allowing further

exploration of the rent issue with the wife’s deposition.

You might also need to allege joint venture to bring a case

within insurance coverage. Our firm recently used joint

venture in a wrongful death case to sue a hunting club

vicariously for the actions of a negligent shooter. Part of

“membership” into the club was owning land on which the

club uses to hunt. Even though the shooting did not occur on

the shooter’s own lands, it occurred on lands contributed to the

club for hunting by all members. This mutual relationship

opened the door for full vicarious liability against the club for

the actions of its members. Without the contribution of the

land by the members, the club would have no place to operate.

These principles are important to those of us who practice in

the areas of personal injury and medical malpractice but also

to the corporate lawyer. While the personal injury attorney

uses joint venture theory to hold defendants accountable, the

corporate lawyer has to be able to foresee the liability of his

corporate client and adequately advise of the possible risks of

a tragic event so as to avoid opening the floodgates of liability.

The vicarious nature of joint venture through agency

principles will defeat the Legislature’s recent abolition of joint

and several liability for tortfeasors. Despite such abolition,

agency liability is still alive and well in the State of Florida.

Knowing the ramifications of these principles might make a

difference in the way you advise one of your clients.

 

  

lakelandbar.org/

AWARENESS OF JOINT

VENTURE LIABILITY

By Chris Russo     

     Christopher D. Russo, J.D.

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