- Florida Supreme Court Holds "Economic Loss" Rule Applies Only To Product Liability Cases
- March 22, 2013 | Author: George B. Hall
- Law Firm: Phelps Dunbar LLP - Houston Office
The Florida Supreme Court has held that the application of the “economic loss” rule is limited to products liability cases. Tiara Condo. Assoc., Inc. v. Marsh & McLennan Companies, Inc., 2013 WL 828003 (Fla. Mar. 7, 2013).
The insured’s insurance broker secured windstorm coverage for the insured. During the policy period, the insured sustained significant damage and began remediation after being assured by its broker that the policy limit was a per occurrence limit. However, after it completed expensive remediation, the insured learned that the policy limit was in the aggregate, the balance of which was less than the remediation costs. Ultimately, the insured and insurer settled for an amount greater than the aggregate limit, but less than what was spent in remediation. The insured then sued its broker alleging breach of contract, negligent misrepresentation, breach of the implied covenant of good faith and fair dealing, negligence and breach of fiduciary duty. The district court granted summary judgment in favor of the broker, and the Eleventh Circuit affirmed the district court’s decision with the exception of the negligence and breach of fiduciary duty claims. As to those claims, the Eleventh Circuit certified to the Florida Supreme Court the question whether the “economic loss” rule prohibits recovery, or whether a broker falls within the professional services exception that would permit the insured to proceed with those claims.
The Florida Supreme Court, receding from prior case law and going beyond the certified question, held that the “economic loss” rule is limited to products liability cases. The Supreme Court reasoned that the rule had been expanded over time, which led to the creation of the exceptions to the rule that ultimately made it unwise and unworkable in practice. Thus, the Florida Supreme Court explicitly stated that its intent was to return the “economic loss” rule to its origin in products liability.