New Economic Loss Rule Case
Tiara Condominium Association, Inc., v. Marsh &
McLennan Companies, Inc., 38 Fla. L. Weekly S151a, Supreme Court of
Florida, Case No SC10-1022, filed March 7, 2013. In a 5-2 opinion (Polston and
Canady dissenting in separate opinions and Justice Pariente concurring in a
separate opinion), the court responded in the negative to a re-stated certified question form the 11th Circuit
Court of Appeals, as follows:
DOES THE ECONOMIC LOSS RULE BAR
AN INSURED'S SUIT AGAINST AN INSURANCE BROKER WHERE THE PARTIES ARE IN
CONTRACTUAL PRIVITY WITH ONE ANOTHER AND THE DAMAGES SOUGHT ARE SOLELY FOR
ECONOMIC DAMAGES?
In holding that the ELR applies
ONLY in products liability cases, the majority opinion states the court is
receding from it prior rulings in all other cases, which it characterized as
"unwise and unworkable in practice. In this case, the condominium's
insurance broker represented that the association had property damage coverage
of $50 million PER OCCURANCE; after being damages by two hurricanes (Frances
and Jeanne), the association began a more expensive remediation of damages
based on this representation, but the insurer (Citizens Property Insurance
Corporation) took the position that the coverage was limited to a total of only
$50 million for both occurrences. The parties settled for $89 million, and the
association sought the balance from its broker based on (1) breach of contract,
(2) negligent misrepresentation, (3) breach of the implied covenant fo good
faith and fair dealing, (4) negligence, and (5) breach of fiduciary duty.
The trial court granted summary
judgment in favor of the broker on all claims, and the 11th Circuit
affirmed that result as to all claims except for the negligence and breach
of fiduciary duty claims, and certified the question as to these remaining
claims in terms of whether the ELR precluded recovery and whether the broker
was a "professional" within the exception to the ELR under the
holding of Moransais v. Heathman, 744 So. 2d 973 (Fla. 1999), and
its predecessor cases. The court's majority restated the certified question so
as to ignore the "professional" exception to the ELR, since they were
receding to a "products" only application of the rule.
In his dissent, Justice Canady
agreed that the original certified question should be answered in the
negative as well, but only because he did not find the insurance broker to
within the "professional" exception to this rule. He stated:
"With today's decision, we face the prospect of every breach of contract
claim being accompanied by a tort claim."
NOTE: Even the Justice disagreed if this decision is an
"unsettling" change in law. (from RPPTL Subcommittee).
Trenton H. Cotney
Florida Bar Certified Construction Lawyer
Trent Cotney, P.A.
1211 N Franklin St
Tampa, FL 33602
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