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Construction Law Authority / Litigation  / Florida courts’ application of the “new” economic loss rule since Tiara Condominium Ass’n, Inc. v. Marsh & McLennan, Cos., Inc.

Florida courts’ application of the “new” economic loss rule since Tiara Condominium Ass’n, Inc. v. Marsh & McLennan, Cos., Inc.

The Florida Supreme Court’s March 7, 2013 decision in Tiara Condominium Ass’n, Inc. v. Marsh & McLennan, Cos., Inc., 110 So. 3d 399 (Fla. 2013), limited application of the economic loss rule [a judicially created doctrine that sets forth the circumstances under which a tort claim is prohibited if the only damages suffered are economic losses] to product liability matters.

So, how have Florida courts analyzed the application of the economic loss rule since this March 7, 2013 decision?

In short, Florida courts appear to be allowing non-contractual claims, such as fraud, negligence, negligent misrepresentation, and breach of fiduciary duty to proceed, notwithstanding the existence of a contractual relationship. F.D.I.C. v. Floridian Title Group Inc., 2013 WL 5237362 (S.D.Fla. Sept. 17, 2013).(denying a defendant’s motion to dismiss breach of fiduciary duty and negligence claims based upon the economic loss rule and rejecting an argument that these claims were in reality inextricably intertwined with a breach of contract claim); Munoz Hnos, S.A. v. Editorial Televisa Intern., S.A., 2013 WL 4823150 (Fla. 3rd DCA Sept. 11, 2013)(reversing trial court’s grant of summary judgment that dismissed negligent misrepresentation and fraud claims based upon the economic loss rule in an action by an advertiser against a publisher); Deman Data Systems, LLC v. Schessel, 2013 WL 2708538 (M.D.Fla. Jun. 11, 2013)(denying dismissal of a breach of fiduciary duty claim in an employment agreement dispute; the court interpreted the defendant’s argument as relying upon the economic loss rule , which was limited by the Florida Supreme Court’s decision in Tiara); In re Mouttet, 2013 WL 2111283 (S.D. Fla. May 16, 2013) (defendants’ argument that fraud claims against it were barred by the economic loss rule was no longer valid in light of the Florida Supreme Court’s Tiara decision that the economic lost rule does not apply to actions in which the parties are in privity, but instead only to product liability cases); Kuehne v. FSM Capital Management, LLC 2013 WL 1814903 (S.D.Fla. Apr. 29, 2013)(recognizing that the matter before it was not a products liability action and acknowledging the Tiara decision, the court declined to dismiss a plaintiff’s claim for breach of fiduciary duties, fraudulent misrepresentations, and negligence in managing the Plaintiff’s tax accounts);. F.D.I.C. ex rel. Colonial Bank v. Pearl, 2013 WL 1405941 (M.D.Fla. Apr. 8, 2013) (court applied the Tiara decision and denied a motion to dismiss a negligent misrepresentation claim based on the economic loss rule); Wiand v. Wells Fargo Bank, N.A. 2013 WL 1401414 (M.D. Fla. Apr. 5, 2013) (citing Tiara and finding that the economic loss rule did not bar a negligence claim arising out of a bank’s participation in derivative transactions with hedge funds involved in a Ponzi scheme); Razi v. Razavi, 2013 WL 1193005 (M.D.Fla. Mar. 22, 2013) (applying Tiara decision and holding that economic loss rule was not applicable to bar a Plaintiff’s fraud based claims).

Note, however, that the terms of a contact may still negate a cause of action for fraud. Altenel, Inc. v. Millennium Partners, L.L.C. 2013 WL 2363233 (S.D.Fla. Mar. 12, 2013) (although economic loss doctrine may no longer apply outside the product liability context, there remains other common law contract principles that may bar certain tort claims. Among other things, an examination of the contracts at issue delineated the defendants’ responsibilities, described the manner in which plaintiffs’ units would be used, and disclaimed the existence of earlier agreements or representations; all of which directly contradicted the very premise of plaintiff’s allegations of fraud.)

And, when substance is elevated over form and the action is determined to be for product liability, the economic loss rule may still apply. Burns v. Winnebago Industries, Inc., 2013 WL 4437246 (M.D.Fla. Aug. 16, 2013) (court dismissed negligent misrepresentation and fraudulent concealment claims against the manufacturer and dealer of a recreation vehicle, noting that the plaintiff’s claim was essentially for a defective product [the recreational vehicle], and the economic loss rule applied to bar these non-contractual claims.)

With respect to construction disputes, litigants continue to advocate their respective restrictive and expansive applications of the economic loss rule. Courts, in turn, will continue to analyze the applicability of the economic loss rule to contractual, non-contractual, and product liability claims in construction disputes.

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