One year ago this month, my article titled Ruminations on the Relationship Between the Economic Loss Rule and Claims for Breach of Fiduciary Duty appeared in The Florida Bar Journal. The article discussed conflicting decisions among the Florida District Courts of Appeal on the question of whether the legal doctrine known as the economic loss rule bars common law claims for breach of fiduciary duty when the parties’ relationship is embodied both in a contract and in a relationship giving rise to a fiduciary duty. Fiduciary duties are the highest duties known in law and arise in certain relationships, such as that between a trustee and the beneficiary of a trust, among others.
Today, the Supreme Court of Florida effectively resolved that conflict through a sweeping 5-2 opinion that limits application of the economic loss rule to products liability cases. The court made the pronouncement in Tiara Condominium Association, Inc. v. Marsh & McLennan Companies, Inc., No. SC10-1022. The opinion is available HERE.
Tiara began in federal court but reached the Supreme Court of Florida after the U.S. Court of Appeals for the Eleventh Circuit certified the following question: “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 Supreme Court of Florida rephrased the Eleventh Circuit’s question because it assumed the continuing applicability of the economic loss rule to cases involving contractual relationships. The rephrased question was: “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?”
Ultimately, the court answered the rephrased question negatively, concluding it unnecessary “to decide whether the economic loss rule exception for professionals applies to insurance brokers” because “application of the economic loss rule is limited to products liability cases.”
Now the case returns to the federal appeals court, which will render judgment in accordance with Florida law as announced by the Supreme Court of Florida.