Florida’s Supreme Court Limits The Economic Loss Rule

by Carlton Fields
Contact

The Florida Supreme Court recently limited the application of the economic loss rule to products liability cases. In Tiara Condominium Association, Inc. v. Marsh & McLennan Companies, Inc., et al., the Eleventh Circuit certified a question to the Court inquiring about the professional services exception to the economic loss rule. Rather than answering the certified question, the Court took the opportunity to roll back the economic loss rule.

The rule was first applied to prohibit a plaintiff from suing in tort for purely economic losses resulting from a product’s defect.  The rationale was that contract principles are more appropriate for recovering economic losses that occur without any physical injury or property damage. The strict liability doctrine was not intended to undermine the warranty provisions of contract law, but to govern the separate problem of physical injuries caused by defective products.

The economic loss rule, however, was subsequently applied, with certain exceptions, to cases in which parties were in contractual privity and where one party sought to recover damages in tort for matters arising from the contract. The majority in Tiara opined, however, that such applications represented an expansion of the rule beyond its origins that was unwise and unworkable in practice. As a result, the Court limited application of the economic loss rule to products liability cases.

Justice Pariente concurred and argued that the decision did not amount to a “dramatic unsettling of Florida law,” as argued by the dissenting opinions. To bring a valid tort claim, Justice Pariente reasoned, a party still must demonstrate that all the required elements for the cause of action are satisfied. This includes demonstrating that the tort is independent of any breach of contract claim. When parties have negotiated remedies for nonperformance pursuant to a contract, one party may not seek to obtain a better bargain by turning a breach of contract claim into a tort claim. The majority only determined that common law principles of contract, not the economic loss rule, produced this result, which did not, in Justice Pariente’s view, represent an “upsetting of firmly established principles.”

Justice Polston and Justice Canady, however, disagreed. In his dissent, Justice Polston stated, “without justification, the majority greatly expands the use of tort law at a cost to Florida’s contract law.” Justice Canady also dissented, asserting that the majority’s opinion represented a dramatic unsettling of Florida law. Furthermore, Justice Canady asserted that the majority failed to explain why the economic loss rule is workable and wise in the products liability context, but unworkable and unwise in the context of contract-based relationships. He stated, “With today’s decision, we face the prospect of every breach of contract claim being accompanied by a tort claim.”

The effects of this decision remain to be seen. Justice Pariente opined that it will not have a substantial impact, noting it merely altered the means by which a court will dismiss alleged tort claims that arise in a contractual setting.  Justice Polston and Justice Canady, however, appear to believe that the majority eliminated a rule that “prevents contract law from drowning in a sea of tort."

Resources:

  1. Tiara Condominium Association, Inc., v. Marsh & McLennan Companies, Inc,. et al., 110 So. 3d 399 (Fla. 2013).

 

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.

© Carlton Fields | Attorney Advertising

Written by:

Carlton Fields
Contact
more
less

Carlton Fields on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.