Awareness of Joint Venture Liability/Published Lakeland Bar Association "Res Integra"
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.
AWARENESS OF JOINT
By Chris Russo