Florida court reaffirms economic loss rules applicability to construction projects

The Third District Court of Appeal recently issued an opinion on 2711 Hollywood Beach Condominium Association, Inc. v. TRG Holiday, LTD et al. [1] reaffirming the economic loss rule’s applicability to construction projects in Florida. The trial court granted defendant Nibco, Inc.’s Motion for Summary Judgment on the Association’s negligence and strict liability product defect claims. Nibco manufactured fittings that were included in the fire suppression system. The Association filed a multi-count lawsuit and several subcontractors and suppliers were brought in by the developer and general contractor. The defects included leaks in the fire suppression system. Nibco filed a motion for partial summary judgment relying on the Casa Clara Condominium Ass’n, Inc. v. Charley Toppino & Sons, Inc., 620 Fla. So. 2d 1244, 1247 (Fla. 1993) to argue that the economic loss rule limited its tort liability for defective products to injuries to persons or damage to property other than the allegedly defective products.

The trial court found that the fittings Nibco provided were an integral part of the fire suppression system, which in turn, was an integral part of the completed building the Association purchased from the developer. Because the fittings were an integral part of the completed project the Association purchased, any damage was not damage to other property that would defeat the economic loss rule. The Third District Court of Appeal affirmed the trial court’s entry of partial summary judgment in Nibco’s favor.

This decision is in line with decades of economic loss rule precedent and will benefit contractors who are faced with tort-based claims. Owners often assert tort-based claims to recover damages that may not otherwise be recoverable under the terms of a contract between the parties. Contractors can cite to this case as more recent precedent to eliminate tort claims and to preserve the risk allocation negotiated into their contracts.

If you have any questions regarding the economic loss rule or need help defending with any claims, please reach out to our construction group.

[1] 2020 WL 5539822: this decision has not yet been released for publication and is subject to withdrawal.

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