Florida’s Economic Loss Rule Comes Full Circle In 'Tiara Condominium Association v. Marsh & McLennan'

In the recent case of Tiara Condominium Association, Inc. v. Marsh & McLennan, 2013 WL828003 (Fla. 2013), the Supreme Court of Florida answered a certified question asking whether the economic loss rule bars an insured's suit against an insurance broker where the parties are in contractual privity with one another and the damages sought are solely economic losses. The court answered the question no and further held that:

The application of the economic loss rule is limited to product liability cases. Therefore, the Court recedes from prior case law to the extent inconsistent with this holding.

This decision will now provide subrogating carriers, and others damaged in Florida, with the opportunity to pursue negligence claims against all individuals and entities where a breach of duty exists - as long as the claim does not involve a product that only damages itself.

The Facts of the Case

The underlying litigation arose from Tiara Condominium Association's retention of Marsh & McLennan as its insurance broker. Marsh obtained insurance for Tiara, and after damages from two hurricanes, advised Tiara that the coverage was per occurrence (meaning Tiara could be entitled to the full policy limits for each hurricane). However, Tiara's insurer claimed that the limits were aggregate - not per occurrence. Tiara filed suit against Marsh for its alleged failure to procure the necessary insurance. The trial court granted summary judgment in favor of Marsh on all claims, and Tiara appealed to the 11th Circuit. The appeals court concluded that summary judgment was proper as to the breach of contract, negligent misrepresentation, and breach of implied covenant of good faith and fair dealing claims. However, as for the negligence and breach of fiduciary duty claims, which were based on Tiara's allegations that Marsh failed to advise Tiara of its complete insurance needs, the question was certified to determine whether the economic loss rule precluded the claims. After reviewing in its opinion the history of the economic loss rule, the Supreme Court of Florida held that the economic loss rule did not apply.

Florida's Economic Loss Rule

The economic loss rule is a judicially created doctrine setting forth the circumstances under which a tort action is prohibited if the only damages suffered are economic losses. Indem. Ins. Co. of N. Am. v. Am. Aviation, Inc., 891 So.2d 532, 536 (Fla.2004). Despite its origin from products liability claims, the rule expanded to...