Florida’s Economic Loss Rule: No Tort Claim for Damage to Product Only

08.15.12 | Permalink

By: Steven I. Klein

Florida’s economic loss rule bars tort claims for economic losses arising when a product malfunctions and damages only itself. In Florida Power & Light Co. v. Westinghouse Elec. Corp., 510 So. 2d 899 (Fla. 1987) and Casa Clara Condominium Ass’n., Inc. v. Charley Toppino and Sons, Inc., 620 So. 2d 1244 (Fla. 1993), the Florida Supreme Court adopted the economic loss rule in Florida. 

In 2004, the Florida Supreme Court reiterated the economic loss rule as it applies to products liability claims in Indemnity Insurance Company of North America v. American Aviation, Inc., 891 So. 2d 532 (Fla. 2004).  The Court held that a manufacturer has no duty beyond that arising from contract to prevent a product from malfunctioning or damaging itself. As a result, a plaintiff cannot bring strict liability, negligence, or other tort claims against a manufacturer based upon an alleged product defect where there is no bodily injury or damage to other property. Although the court noted that strict liability is applicable in cases where plaintiff has suffered personal injury or property damage, the court refused to extend strict liability to cover economic losses absent bodily injury or damage to other property. In a concurring opinion, Justice Cantero explained that the result of allowing tort claims solely where a product damages itself would result in “contract law drowning in a sea of tort.” (quoting East River Seamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 866 (1986)).

Thus, under Florida law, when parties are not in sales or transactional privity with each other, tort law provides a remedy for product defects only when personal injury or damage to other property is at issue. By contrast, when two parties are in privity with each other, the remedy for economic damages resulting from a product defect which damages only the product itself, rests in contract./warranty law. The overlap of these two causes of action is prohibited by the economic loss rule.

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