It's The End of the Economic Loss Rule As We Know It and Plaintiffs Feel Fine!

The Florida Supreme Court has effectively eviscerated the economic loss rule in the recent case of Tiara Condominium Association, Inc. v. Marsh & McLennan Co., Inc., No. SC10-1022 (Fla. Mar. 7, 2013). In Tiara, a condominium association sued its insurance broker for allegedly failing to properly advise it about its insurance needs. The United States Court of Appeals for the Eleventh Circuit affirmed summary judgment against Tiara as to its claims for breach of contract, negligent misrepresentation, and breach of implied covenant of good faith and fair dealing, but not as to the claims for negligence and breach of fiduciary duty. As to those claims, which dealt with the "professional services" exception to the economic loss rule, the Eleventh Circuit certified a question to the Florida Supreme Court, which initially determined that the certified question "is premised on the continued applicability of the economic loss rule in cases involving contractual privity" and then restated that certified question 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 losses?

The Court answered that question in the negative, held that application of the economic loss rule is limited to products liability cases, and receded from prior case law to the extent that it was inconsistent with that holding. In its opinion in Tiara, the Florida Supreme Court analyzed the origins of the economic loss rule, its application to cases in which the parties are in contractual privity, and its roots in the products liability context. The Court noted its long-standing concern with the "over-expansion of the economic loss rule," referring to the concerns expressed in Moransais v. Heathman, 744 So.2d 973 (Fla. 1999), Comptech International, Inc. v. Milam Commerce Park, Ltd., 753 So.2d 1219 (Fla. 1999), and Indem. Ins. Co. of N. Am. v. Am. Aviation, Inc., 891 So.2d 532 (Fla. 2004). The Court concluded its opinion by noting that it had, in prior opinions, "clearly expressed its desire to return the economic loss rule to its intended purpose - to limit actions in the products liability context." Noting that it had, however, left intact exceptions that "continue the rule's unprincipled expansion," the Court concluded that it "simply did not go far enough." Based upon that analysis and finding the expansion of the rule "unwise and...