The Supreme Court of Florida recently blurred the lines between contract and tort law in a case involving breach of contract and negligence claims between an insured and its insurance broker. The Court used this vehicle to abandon the application of the economic loss rule in cases that involve parties who are in privity through contract. From this date forward, the Court determined that the doctrine will not apply to contract cases, limiting its use to cases involving product liability.
Why is this significant? It has been 25 years since any Florida court has either read or heard a discussion of tort claims between parties to an agreement in any context other than the economic loss rule. Thus, regardless of how any individual attorney may interpret the opinion, the results we receive with respect to tort claims between parties to a contract will likely be unsettled for some time. For, in the words of one of the justices writing in dissent: “we face the prospect of every breach of contract claim being accompanied by a tort claim.”
The impact will likely extend beyond litigation to the drafting of agreements. Should the opinion be determined to stand for the ability of contracting parties to bring claims against one another for negligence resulting in purely economic damages, we will need to seek methods to adapt our agreements to address that possibility. As this type of claim has not existed between parties in privity before this decision, a trial and error period in developing provisions to address these claims is sure to follow.
As a result, we suggest that you review your forms of contract and the status of claims in pending or anticipated cases with your attorney.