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Florida Limits Economic Loss Rule to Products Liability

June 27, 2013

Tiara Condominium Assoc., Inc. v. Marsh & McLennan Companies, Inc., 110 So. 3d 399 (Fla. 2013)


A condominium association sued its insurance broker in federal district court under contract and negligence causes of action based on the broker’s alleged failure to secure sufficient insurance coverage for damages caused by hurricanes Frances and Jeanne. The district court granted summary judgment to the broker on all counts and the association appealed to the Eleventh Circuit. The appellate court reversed the summary judgment granted on the negligence and breach of fiduciary duty claims and certified the question to the Florida Supreme Court whether the economic loss rule prohibited recovery or whether an insurance broker falls within the professional services exception to the rule. 

Critical Issues

The Florida Supreme Court’s lengthy opinion considered the scope of the economic loss rule and applicable exceptions and strictly limited the rule to the products liability context. 


The Florida Supreme Court ruled that the economic loss rule applies only in the products liability context. The Court receded from its prior rulings to the extent that they applied the rule to cases other than products liability. 

The Court explained that departure from precedent was necessary because the rule had become “unworkable in practice.” A strongly worded dissent by Chief Judge Polston criticized the overruling of precedent and the majority’s expansion of tort law at the expense of contract law.


The majority opinion notes that the economic loss rule originated in the products liability context. In justifying its ruling, the majority attempts to return the rule to its “roots in the products liability context.” The majority notes that the rule was never intended to eliminate torts independent of the contract. Thus, the mere existence of a contract should not be the basis for barring a tort action. In sum, the majority eliminated Florida’s contractual privity economic loss rule. 


Florida’s economic loss rule has been strictly limited to the products liability context. The existence of a contract between the parties cannot be used to bar a tort action. The parties may be limited to contract remedies pursuant to the scope of their agreement, but the rule may no longer be used to bar tort recoveries purely based on privity of contract. The Court’s decision has been strongly criticized by the business community for overly expanding tort remedies in the contract context.