Continued Revision of the Economic Loss Rule: Statutory Causes of Action Not Barred (Comptech International, Inc. v. Milam Commerce Park, Ltd.)

The economic loss rule has been a hot topic in Florida, with many debates and discussions on its application. Recently, the Florida Supreme Court made some important decisions to provide more clarity on the rule. In the case of Comptech, a company called Comptech sued their landlord, Milam, for damages to their computers due to faulty construction work. The court ruled that the economic loss rule does not apply in this situation, and Comptech can proceed with their lawsuit. This decision clarifies the application of the economic loss rule in certain cases. Before the recent changes, the Economic Loss Rule (ELR) had three basic forms:

1. If a product only damages itself and causes additional economic loss, there’s no recovery in a lawsuit.
2. If there’s a contract between parties, they can’t use it to sue for economic damages in a lawsuit.
3. Negligence won’t protect economic interests unless there’s personal injury or property damage, unless there’s a strong public policy reason to do so.

The first form is where the ELR comes from. It’s based on the idea that if a product fails and only damages itself, businesses can make deals for warranty protection. The economic loss rule (ELR) has three main forms that have caused confusion in the legal world. The first form bars parties from suing for economic losses if they have a contract. The second form has been debated in courts, with some applying it to statutory causes of action and others refusing to. The third form has been used to block tort claims against professionals. However, the Florida Supreme Court ruled in the Comptech case that the ELR does not apply to statutory causes of action, allowing parties to sue under certain laws created by the legislature. The existence of a contract may still be important in some cases, depending on the specific circumstances. In the case of Rosen v. Marlin, the court looked at a contract between the parties and how it affected a civil theft claim. The court decided that the requirements of the civil theft statute were not met when there was a genuine dispute about the amount owed under a contract. This interpretation later became known as the Economic Loss Rule (ELR). However, a later case called Comptech said that the ELR can’t be applied to statutory causes of action. This means that not every breach of contract claim is now considered statutory civil theft. Courts will continue to interpret legislative intent and make sure that the requirements of statutory causes of action are met. The second issue about the significance of a contract between parties will probably only come up if the legislature says it’s important. If the legislature doesn’t say that a statutory action doesn’t apply to contracting parties, then the statutory action should be available if its elements are satisfied. In the case of Comptech, the Florida Supreme Court redefined the “other property” exception in the Economic Loss Rule (ELR). The ELR originally applied to product liability cases, meaning that if a product malfunctions and only damages itself, the purchaser can’t sue for damages. But if the product causes personal injury or damages something else, then the purchaser can sue. However, the court expressed concerns about the ELR being applied outside of product liability cases and expanded beyond its original purpose. In the case of Comptech, the court ruled that the damaged computers were not considered “other property” under the ELR because the contract was for a service, not for the computers themselves. This redefinition of the “other property” exception has important implications for similar cases in the future. The Economic Loss Rule (ELR) is evolving, and it may not apply outside of product liability cases. Recent court cases have limited its application in professional liability and statutory causes of action. The ELR may also not apply to damage to items other than the main thing in a service contract. This means that it may be easier to get compensation for other property damage caused by a service contract. However, there still needs to be a balance between contract and tort law to maintain certainty in commercial relationships. The courts have long defined the boundary between contract and tort, and this will continue to be important in future cases. In 1987, the Florida Supreme Court made a decision in a case called AFM Corp. v. Southern Bell Tel. & Tel. Co. The plaintiff had a contract for phone services, but the defendant made mistakes that cost the plaintiff money. The court said the defendant didn’t break any rules and the plaintiff couldn’t get money for their lost profits. Later on, the court said they weren’t happy with their decision in AFM. They think they focused too much on a rule called the economic loss rule, instead of the basic rules of contracts. One judge said they should have only used the economic loss rule for cases about products. They also said it’s important to have some rules about when you can use a contract claim and when you can use a tort claim. And they said it’s best to make these rules when there’s a real case that needs them, instead of just making up rules without a good reason. The Florida Supreme Court is likely to change its approach to deciding cases involving harm to property or economic loss. It may start looking at whether there was a duty to prevent harm rather than just focusing on what type of harm occurred. A recent case involving a faulty airplane repair shows this shift in thinking. Overall, the court seems to be moving away from a strict rule that limits when someone can sue for harm to their property. This could lead to more changes in the future. Simply put, the Economic Loss Rule (ELR) in Florida says that if you have a contract with someone and they break that contract, you can’t sue them for a separate tort (like negligence or fraud) unless there was damage to something other than the thing covered by the contract. This rule has been the subject of a lot of legal debate and there have been many cases about it. The courts have made some decisions about when the ELR applies and when it doesn’t, but there is still some uncertainty about it.

Source: https://www.floridabar.org/the-florida-bar-journal/continued-revision-of-the-economic-loss-rule-statutory-causes-of-action-not-barred-comptech-international-inc-v-milam-commerce-park-ltd/