Goodbye Economic Loss Rule, Hello Damages: Did the Florida Supreme Court’s Tiara Decision Clear the Path from Contract to Tort Claims?

The economic loss rule was introduced as a means of preventing the application of tort remedies to contract matters, and it developed into a method of ensuring the enforcement of contractual provisions. The purpose of the economic loss rule—first applied in the products liability context and eventually extended to the broad contractual-privity context—has been to prohibit tort claims from being brought where no personal injury or product damage has occurred and the only loss suffered is monetary. Florida courts traditionally applied the contractual privity economic loss rule this way until the Florida Supreme Court’s decision in Tiara Condominium Association, Inc. v. Marsh & McLennan Companies, Inc., where it rejected the contractual-privity economic loss rule and therefore limited the application of the economic loss rule to the products liability context.

The author asserts that the future of economic disputes in Florida is unclear because Florida courts have yet to clearly interpret the Tiara decision through subsequent caselaw to establish a bright-line rule. This uncertainty, the Author explains, extends to the products liability context. Now that the contractual-privity economic loss rule has been rejected, Florida courts have not clarified which claims are barred by the economic loss rule and which claims qualify as exceptions to the rule as it is applied following Tiara. The Author takes the position that the Florida Supreme Court’s current interpretation of the economic loss rule, which allows a plaintiff to bring a claim in tort by establishing a duty arising out of the contract but without showing a breach of the duty separate from the contract, conflicts with common law principles and creates ambiguity.

While it still remains unclear as to whether a contractual provision can give rise to a duty in tort for the sole purpose of recovering economic losses, Florida caselaw following Tiara appears to make this suggestion. If this is eventually developed into a bright-line rule, plaintiffs could use tort claims to circumvent certain contractual provisions, which could potentially lead to unlimited liability.