The Florida Supreme Court
recently held om March 7, 2013 (SC10-1022) that the application of the Florida
economic loss rule is limited to products liability cases.
A condominium association ("Association")
retained an insurance broker ("Broker") to secure condominium insurance
coverage. Association's building suffered significant damage cause by Hurricane
Frances and Hurricane Jeanne. Association proceeded with repairs based on
assurances by Broker regarding the policy limits of Association's coverage,
but later was denied coverage for almost
half the amount of Association's costs for repairs when it submitted its claim.
Association filed a lawsuit against the Broker,
alleging causes of action including negligence and breach of fiduciary
duty.
The trial court granted summary judgment in
Broker's favor as to all counts, and the
Eleventh Circuit Court of Appeals affirmed the trial court on all but the
negligence and breach of fiduciary duty claims. The Eleventh
Circuit certified to the Florida Supreme Court the question of whether the
economic loss rule bars an insured's suit against an insurance broker where the
parties are in contractual privity and the damages sought are solely for
economic losses.
The economic loss rule
prevents a party from bringing tort actions against entities with whom they are
in contractual privity for purely economic loss unaccompanied by any personal
injury or damage to property. As stated by the Florida Supreme Court, the
underlying rationale for the economic loss rule is that "[w]hen parties are in
privity, contract principles are generally more appropriate for determining
remedies for consequential damages that the parties have, or could have,
addressed through their contractual agreement." In other words, "[w]here
damages sought in tort are the same as those for breach of contract a plaintiff
may not circumvent the contractual relationship by bringing an action in tort."
Ginsberg v. Lennar Fla. Holdings, Inc., 645 So. 2d 490, 494 (Fla. 3rd Dist.
1994).
Having noted the multiple exceptions to the
economic loss rule created since its inception, including exceptions for
professional malpractice, fraudulent inducement, negligent misrepresentation,
and free-standing statutory causes of action, the Court ultimately decided that
these exceptions "simply did not go far enough," stating that "we now take this
final step and hold that the economic loss rule applies only in the products
liability context."
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