Chipping Away at the Economic Loss Rule

I n its decision of Philippe H. Moransais v. Paul S. Heathman, et al., 24 Fla. L. Weekly S308 (Fla. July 1, 1999),1 the Florida Supreme Court held the Economic Loss Rule (ELR) to be inapplicable to negligence actions against engineers and other professionals. This sudden but welcome detour arrived after more than a decade of case law which stretched, sculpted, and misapplied a product liability doctrine to bar causes of action for negligent professional services. Consequently, the application of the ELR became the focus of countless articles and CLE lectures which acknowledged confusion as to its scope and application.2 The practical result of all the debate and controversy led to the ultimate distillation of the ELR to a simpler premise: The plaintiff always loses. The Supreme Court’s anticipated retreat from prior ELR rulings became evident during oral argument in Moransais, where several Justices expressed their views on a topic that has confused the judiciary as well as practitioners of construction and commercial litigation.3 As Justice Charles Wells pointed out: “It looks to me that the whole notion of the economic loss rule has gotten way out of kilter . . . . Why isn’t it just applicable to products? Where is it that we’ve expanded the economic loss rule to professional liability?”4 Justice Barbara Pariente expressed she has “really got problems” with the idea that negligence cannot apply in commercial situations where only economic damages exist.5 Most notably, Justice Harry Lee Anstead asked, “How did the economic loss rule get tangled up in this in terms of determining the legal liability” of a professional?6 Justice Anstead answered his own question in a well crafted majority opinion that reviewed the history of the ELR and proceeded to realign it closer to its origin in product liability cases. In this context, the opinion may be credited with bringing the runaway train carrying the ELR to a sudden halt. However, the opinion leaves the construction practitioner with certain unresolved issues. These issues likely will generate continued debate over the scope and application of the ELR in future litigation. This article will explore the Moransais decision, the unresolved issues, and the future of the ELR as it relates to construction claims.