Supreme Court of Florida Holds That Economic Loss Doctrine Applies Only to Product Liability Cases

In a recent decision likely to significantly expand the use of tort law in areas previously restricted to contract law, the Supreme Court of Florida limited application of the economic loss doctrine to product liability cases. On March 7, 2013, the Supreme Court of Florida answered questions certified by the United States Court of Appeals for the Eleventh Circuit in Tiara Condominium Association v. Marsh & McClennan Companies, Inc. et al., No. SC10-1022.

Tiara Condominium Association (“Tiara”) retained Marsh & McClennan (“Marsh”) as its insurance broker. According to the opinion, Marsh secured windstorm coverage through Citizens Property Insurance Corporation, which issued a policy that contained a loss limit of approximately $50 million. In September 2004, the condominiums were damaged by hurricanes Frances and Jeanne and Tiara began the process of loss remediation. Tiara “proceeded with more expensive remediation efforts” because it had been “assured by Marsh that the loss limits coverage was per occurrence … rather than coverage in the aggregate.” Slip Op. at 3. When Tiara sought payment from Citizens, however, Citizens claimed the loss limit was $50 million in the aggregate, not per occurrence. Ultimately, Tiara and Citizens settled for approximately $89 million — an amount less than the $100 million spent by Tiara in its remediation efforts.

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