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Civil Litigation

What is The Economic Loss Rule and When Does it Apply?

By September 28, 2023No Comments

The economic loss rule is a court-created doctrine that prohibits the extension of a tort recovery. This rule is applicable in cases where a product sustains damage exclusively to itself, as opposed to causing damage to something other than itself.

The District Courts of Appeal’s Perspective

Furthermore, Florida’s District Courts of Appeal states, โ€œ[t]he economic loss rule . . . prohibits recovery in tort where a product damages itself, causing economic loss, but does not cause personal damage to any property other than itself.โ€ Fishman v. Boldt, 666 So. 2d 273, 274 (Fla. 4th DCA 1996);ย see alsoย Tiara Condominium Assโ€™n, Inc. v. Marsh & McLennan Companies, Inc., 110 So. 3d 399, 404 (Fla. 2013).

Exceptions to the Economic Loss Rule

However, where there are allegations of damage to another property, a complaint shouldn’t be dismissed under the economic loss rule. For example, when a kitchen instrument is defective and causes damage to other components surrounding the kitchen area, these damages are โ€œsufficient [at the motion to dismiss stage] to satisfy the other property exception to the economic loss rule.โ€ Rife v. Newell Brands, Inc., 632 F. Supp. 3d 1276, 1309 (S.D. Fla. 2022).

The Rife Case: An Illustration

Inย Rife, the plaintiff, Griffin, purchased a pressure cooker from the defendants.ย Id. at 1284. When the plaintiffโ€™s daughter opened the lid while preparing dinner, โ€œthe scalding hot contents exploded out of the pot, spraying the plaintiffโ€™s daughter and her surrounding kitchen area.โ€ Id.ย at 1285. The defendants argued that the economic loss doctrine โ€œbar[red] the purchasing plaintiffsโ€™ claims for negligence and strict products liability.โ€ย Id.ย at 1306. Theย Rife court held that the plaintiff Griffin did invoke the โ€œother propertyโ€ exception to the economic loss rule, reasoning that the alleged โ€œkitchen damage is sufficient, at this stage of the case, to satisfy the โ€œother propertyโ€ exception to the economic loss rule.โ€ Id.ย at 1309.

Limitations on the Economic Loss Rule

The economic loss rule cannot be abused, though. For instance, in Commerce Park, Ltd., 753 So. 2d 1219 (Fla. 1999), Florida’s Supreme Court โ€œrecognized the danger in an unprincipled extension of the [economic loss] rule.โ€ Id. at 1225. The Florida Supreme Court reasoned that โ€œthe economic loss rule cannot be used as a barrier to legitimate causes of action,โ€ ultimately holding that when an item is โ€œnot an integral part of the product,โ€ it is considered โ€œother property.โ€ Id.ย at 1225-27.

The Merriam-Webster dictionary defines โ€œintegralโ€ as โ€œessential to completeness.โ€ When looking to applicable case law, it is clear that the Florida courts have uniformly determined whether an item was considered โ€œother propertyโ€ under this same definition. See Comptech, 753 So. 2d 1219 (holding that computers damaged during renovations to a warehouse were โ€œother propertyโ€ for purposes of the economic loss rule);ย compare American Universal Ins. Group v. General Motors Corp., 578 So. 2d 451 (Fla. 1st DCA 1991) (holding that a replacement oil pump was an integral part of a repaired engine, and was thus not โ€œother propertyโ€).

Seeking Legal Guidance

For more expert legal guidance on economic loss rules, contact one of our experienced attorneys at 305-570-2208. You can also email our lead attorney Eduardo directly at eduardo@ayalalawpa.com.

We at Ayala Law PA are passionate about helping those in legal need, so please donโ€™t hesitate to schedule a case evaluation with us online here.

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