Florida High Court Narrows Application of Economic Loss Rule to Product Liability Actions

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In a dramatic reversal of established precedent, the Florida Supreme Court on March 7, 2013 held in a 5-2 decision that the economic loss rule only applies to product liability actions.  Tiara Condo. Ass’n v. Marsh & McLennan Cos., No. SC10-1022, 2013 WL 828003 (Fla. Mar. 7, 2013).  The case was before the Court on a question certified by the Eleventh Circuit Court of Appeals, which asked whether the economic loss rule exception for professionals applies to insurance brokers.  Rather than answer the issue framed by the Eleventh Circuit, the Court restated the certified question to broaden the issue before it as follows:  “Does The Economic Loss Rule Bar An Insured’s Suit Against An Insurance Broker Where The Parties Are In Contractual Privity With One Another And The Damages Sought Are Solely For Economic Losses?” Slip op. at 2 (all caps omitted). The Court answered the rephrased certified question in the negative, holding that the application of the economic loss rule is limited to products liability cases.

The majority of the Court reasoned that the Court “will depart from precedent as it does here when such departure is necessary to vindicate other principles of law or to remedy continued injustice.” Slip op. at 18 (internal citations omitted). Additionally, the Court noted “[s]tare decisis will also yield when an established rule has proven unacceptable or unworkable in practice.” Id. The Court believed that the repeated creation of exceptions to the rule over time, “now demonstrates that expansion of the rule beyond its origins was unwise and unworkable in practice.”  Slip op. at 18.  The Court’s decision, therefore, “return[ed] the economic loss rule to its origin in products liability.”  Id.  Interestingly, the concurring opinion noted that the majority of the Court did not view its decision as a “departure from precedent,” but instead viewed its decision as “the culmination of the Court’s measured articulation of the economic loss rule’s original intent.”  Slip op. at 19 (Pariente, J., concurring).

Chief Justice Polston and Justice Canady dissented with opinions.  Judge Polston noted that as a result of the decision “there are tort claims and remedies available to contracting parties in addition to the contractual remedies, which, because of the economic loss rule, were previously the only remedies available.”  Slip op. at 26 (Polston, C.J., dissenting).  To state it more simply, every breach of contract claim now will be accompanied by a tort claim or claims.  See Slip op. at 35 (Canady, J., dissenting).

 

Topics:  Damages, Economic Loss Doctrine, Insurance Brokers

Published In: Civil Procedure Updates, Civil Remedies Updates, General Business Updates, Insurance Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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