The economic loss rule (ELR) says that you can’t sue for just economic damages (like lost profits) caused by a defective product. You can only sue for personal injury or damage to property caused by the product. This rule helps to separate contract law from tort law, which is about causing harm to someone else. The Florida Supreme Court clarified this rule in a case called Casa Clara Condominium Assân, Inc. v. Charley Toppino and Sons, Inc. They said that tort law isn’t meant to give people remedies for not getting what they expected from a product. Despite this, some people have tried to make exceptions to the rule and sue for economic damages anyway. The Florida Supreme Court recently rejected some arguments in a case involving Airport Rent-A-Car and Prevost Car, Inc. Airport bought used buses from a distributor, not the manufacturer, and didn’t get any warranties. They tried to sue for negligence and strict liability, saying they had no contract remedy, but the court said that argument doesn’t work in product liability cases. In simpler terms, the court said you can’t sue in tort just because you don’t have a contract remedy, unless the defendant had specific supervisory responsibilities. The court rejected two claims made by Airport in a lawsuit against Prevost. The first claim was that they should be able to sue for economic damages if a product suddenly fails, even if no one was hurt. The court said that the law only allows for lawsuits if someone was hurt or property was damaged. The second claim was that Prevost should be held responsible for a defect they found after selling the buses. The court said that the law only applies to defects that were present when the product was sold. The court looked at whether a company can be sued for not warning about a danger that they didn’t know about when they made the product. They said that if no one was hurt because of the lack of warning, then the company can’t be sued. But there are still some issues that the courts haven’t decided on, like whether you can sue for fraud or intentional harm, and when it’s okay to sue for economic damages in certain situations. Courts are applying a legal rule to theft and fraud cases, saying that you can’t sue for economic damages in these cases. This means that some intentional torts, like civil theft and fraud, may not be allowed to be sued for. One case, Hosefline, Inc. v. U.S.A. Diversified Products, Inc., said that the plaintiff couldn’t sue for civil theft and fraud because they didn’t involve injury to a person or property. But some people think this decision might be wrong because the law was meant to allow people to sue for economic losses from a criminal act. So, the debate is whether or not these intentional torts should be allowed to be sued for. The Economic Loss Rule (ELR) shouldn’t apply to cases involving fraud or intentional interference with a contract because it would eliminate the ability to seek damages for those actions. The ELR was designed for products liability cases and should not be applied to other types of cases, like services. Courts have only looked at applying the ELR to defective products, and it shouldn’t be used for cases involving services. In AFM Corporation v. Southern Bell, the court said that if you buy a service and the person providing the service does it badly, you can’t sue for the money you lost. Some courts have disagreed, and there are exceptions for certain professionals like accountants and engineers. The case A.R. Moyer, Inc. v. Graham is often talked about, even though it doesn’t really have to do with this issue. The Max Mitchell case established that accountants can be held responsible for their financial information to people who were supposed to use it, even if they didn’t directly work with the accountant. Another case, Moyer, also recognizes this principle. However, in cases involving products, a different rule applies. It’s important to keep these principles separate. The economic loss rule should only apply to products, while the Restatement of Torts should apply to professional services. This helps maintain the boundary between contract and tort law. The economic loss rule in Florida bars lawsuits for fraud or theft when the only loss is economic. This means you can’t sue someone for cheating you out of money if it’s related to a contract. There’s also a rule that says you can’t sue someone for personal injury just because they broke a contract, unless they did something else really bad. This applies to various professionals like architects, engineers, accountants, and lawyers. In a court case, it was said that people who aren’t directly involved in a professional service can still be sued for making mistakes. This means that denying liability for economic losses would make it harder to sue for mistakes that already have established liability.
Daniel B. and Bard R. are lawyers who work for a law firm in West Palm Beach. They both went to law school and specialize in tort and insurance law. They wrote this article on behalf of the Trial Lawyers Section.
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Source: https://www.floridabar.org/the-florida-bar-journal/the-practical-limitations-of-the-economic-loss-rule/
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