[CLC-Discussion] Tiara Condominium - Economic Loss Rule and Independent Tort

Fri Mar 21 08:03:05 PDT 2014

Ok, apparently I have too much time on my hands, so I am going to chime in.  Frankly, I like Kim's analysis, which seems to be to start with what kind of damage you have.

I see the whole ELR argument to have initially derailed when someone coined that phrase, "Economic Loss Rule".  I want to suggest another term, perhaps, the "Edge of Duty" rule.  It takes me back to Torts at Stetson with Professor Lindsey, I wonder what ever happened to him and his pith helmet.  But I digress.  Follow me down the path (rabbit hole) of duty.

Our duties obviously arise out of our relationships to one another.  Two strangers pass on the street.  What duty do they owe to one another?  Does one, a wizard of Wall Street, owe a duty to tell the other of his latest hot stock tip? No.  Does the other owe a duty to warn the wizard that his shoelace is untied? No.  The context of their relationship brings them into only the most simple of duties, to not damage the other in their person or property.  Society, and therefore the Law, does not impose any other duty upon them.

Change our two test subjects to doctor and patient, or attorney and client and you obviously have a different outcome, but only in the context of the relationship that they have.  The patient and client are now in the relationship for the express or implied purpose of relying upon the professional for his or her skill and judgment and there are reasonable expectations about the skill and judgment based on the profession.  And that's the limit.  The professional does not owe some duty beyond the expertise of his profession.  So, we have no cause of action for the doctor giving bad legal advice or the attorney misdiagnosing our symptoms.

Now take our test subjects out of the professions and into something more mundane, the sale of a product.  Let's pick on car dealers (contractors).  The customer buys a new car (building) with the understanding that it comes with certain warranties (to code) and will perform satisfactorily as transportation (shelter) with all the comforts of leather seats, various dials and gauges, air conditioning and satellite radio (roof, HVAC, Plumbing).  He buys a certain perceived quality based upon brand recognition and price.  This bargained for exchange sets his expectations about the purchase and he is free to buy better quality (different specs).

Lets say, brand x, is known as the best of the best.  Our purchaser does not know that brand x cars buy the worst radio (you choose the item) built under the worst conditions in a country with no standards. (sub performing to specifications).  But brand x knows this and knowing the low quality of the radio, buys them and puts them in their cars. (low bid gets the job).

Now the radio fails.  Purchaser has suffered an economic loss because radio in the car does not live up to his expectations and his action is against the seller who warranted or represented the quality of the entire product.  Purchaser has no claim against the manufacturer because he had no dealings with the manufacturer.  The manufacturer never said the product was any good.  The manufacturer had no duty to the car purchaser.  The manufacturer sold his product at a low price because he and the buyer knew it was low quality.  Brand x could have bought a better radio for its cars for which the manufacturer would have charged more.  This is the edge of the manufacturer's duty.  The radio performed as the manufacturer and brand x cars anticipated that it would.  How brand x represented the final product to the purchaser is not within the manufacturer's control.

Change the scenario, when the radio fails, it burns up the car.  Again, our car purchaser has a car that didn't perform as warranted and he or she has a disappointed economic expectation and a cause of action against the brand x seller.  Now that there is damage to something other than the radio, the brand x guys may have a cause of action against the manufacturer of the radio.  We knew the radio wouldn't last long, but no one expected it to catch fire.  The car buyer is beyond the edge of the manufacturer's duty, but brand x cars may not be.

Change it again, the radio burns up causing the car to burn up and that sets the house of the car buyer on fire.  Now, because we all owe to each other a duty not to injure even a stranger in his person or property, the car buyer is within the protected class and has liability.

So, what was damaged and how, and the relationship of the parties, establishes the edge of duty.  The contract expresses the duty that the parties have agreed exist, beyond those imposed by society (no harm to person or property), in exchange for the contract price.  Strangers to the contract are not owed any duty and do not owe any duty other than those imposed by society (no harm to person or property).  Thus, the Edge of Duty.

OK, go back to work.

Timothy R. Moorhead, Esq.
[cid:image001.jpg at 01CF44F5.22488CD0]
Wright, Fulford, Moorhead & Brown, P.A.
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Altamonte Springs, FL 32701
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From: clc-discussion-bounces at lists.flabarrpptl.org [mailto:clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of kim.ashby at akerman.com
Sent: Thursday, March 20, 2014 11:02 AM
To: EWhelan at gunster.com; smickley at gouldcooksey.com
Cc: clc-discussion at lists.flabarrpptl.org
Subject: Re: [CLC-Discussion] Tiara Condominium - Economic Loss Rule and Independent Tort

Recall that generally speaking contract damages are for "the benefit of the bargain" as well as according to the express reservations against certain damages in the contract.  Tort damages are "but for" as in "but for the negligence the damages would not have been incurred." Sometimes this helps break down the analysis.
I blame myself for the quagmire- I had always asked for a Tiara, and now I have one. Prefer one of Princess Di's though.

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From: clc-discussion-bounces at lists.flabarrpptl.org [mailto:clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of Whelan, Ed
Sent: Wednesday, March 19, 2014 8:58 PM
To: Sean A. Mickley
Cc: clc-discussion at lists.flabarrpptl.org
Subject: Re: [CLC-Discussion] Tiara Condominium - Economic Loss Rule and Independent Tort

The judge is correct -- if the facts don't support a claim beyond a breach of contract then you are contractually limited to the contractual limitations -- tort law does not apply to addressing just a breach of a mutually agreed to contract.
Sent from my iPhone

On Mar 19, 2014, at 7:00 PM, "Sean A. Mickley" <smickley at gouldcooksey.com<mailto:smickley at gouldcooksey.com>> wrote:
How is everyone, if anyone, arguing against motions to dismiss negligence claims in the construction defect context when there is also a breach of contract claim? The obvious position I am getting from opposing counsel on cases is that Justice Pariente is a genius and that an independent tort must be alleged without citing more; however, the Tiara decision does not necessarily stand for that proposition. Arguably, in the construction defect context, a cause of action for negligence could almost always be brought simultaneously with a breach of contract action given the limitations of consequential damages in contract actions. Stated differently, a negligence action could almost be used as a catch-all for purposes of making the plaintiff whole.

I understand that we have plaintiff and defense attorneys alike on this listserv, and we all, at one time or another, represent one or the other. So, if my question is out of line, I apologize. However, I am interested in picking the brains of our talented construction legal community. If you want to discuss offline, feel free to call me.

Thanks in advance.

<image001.jpg>

Sean A. Mickley, Esq.

Gould Cooksey Fennell

979 Beachland Boulevard

Vero Beach, FL 32963

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