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Is the Economic Loss Rule Dead in Florida?

Bad salesOn March 7th 2013, the Florida Supreme Court ruled that the economic loss rule can only be used in relation to product liability cases and not contractual cases.  Their decision was determined through the case Tiara Condominium Association v. Marsh & McClennan.  Tiara Condominium Association sued their insurance broker Marsh for not providing them with enough insurance coverage then was needed to sustain hurricane damages.  Tiara was reassured by Marsh that their windstorm protection coverage limit was per occurrence when in fact it was per aggregate. As a result of this false assurance, Tiara went forth with expensive repairs only to later discover Citizens would not cover the full repair amount.  Thus Tiara was left with a hefty remaining balance to pay.

Under the economic loss rule, a party suffering economic harm may recoup losses for that harm based on a contractual claim without applying tort theory.  Usually this rule is applied to product defects that resulted in economic downfall.  For instance, if the convertible top of a car fails to rise back up during a rainstorm, causing significant interior damage to the car, then the owner of the vehicle could sue manufacturer under the economic loss rule to recover damages.  Over the years the definition of economic loss rule has varied to include just contractual agreements such as contractor agreements.  Many times plaintiffs sue contractors who are neglectful or misrepresented the terms of the contract.  The economic loss rule is vague in its definition leading states to differ in opinions on how to apply it to cases.

As of March 7th of this year, Florida has clearly defined the definition.  Economic loss rule is now only to be applied to product liability cases as this is where the origins of the rule began and all other applications of the rule shall cease.  Tiara felt that Marsh did not in good faith fulfill their contractual agreement and therefore sued them, believing they had a case under the economic loss rule.  However, the Supreme Court of Florida’s decision ruled against them on grounds this was not a product liability case.  Do you support the Court’s ruling?

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