The Demise of the Economic Loss Rule Does Not Do Away With Basic Pleading Requirements

By April 16, 2013

By Abbey Kaplan
In light of the recent Florida Supreme Court case of Tiara Condominium Ass’n, Inc. v. Marsh & McLennan Co., Inc. which did away with the economic loss rule, in all matters except products liability cases litigators predict that this case opens the floodgates to tort claims that arise from the breach of an underlying agreement.
However, it is important to note that Tiara did not dispose of basic pleading requirements.  For example, in a breach of contract action where the plaintiff claims the defendant did not pay money owed, it is still necessary that a plaintiff include allegations beyond the mere breach of the agreement to support a tort that arises out the breach of an agreement.

As an example it is unlikely that plaintiff will prevail on a claim for conversion simply because the plaintiff was not paid. Some additional facts would have to be pled in order to sustain the tort of conversion that is based on a failure to pay under a contract. Likewise, fraud in the performance claims, which were previously barred by the economic loss rule, might proceed past the dismissal stage but the plaintiff is still required to allege the specific fraudulent statements or acts beyond the simple failure to pay.  Merely failing to perform the actions set forth in the contract will not alone satisfy the pleading requirements for fraud or other torts that are no longer barred by the economic loss rule.
As plaintiffs amend their complaints in light of the Tiara holding, I expect to see many motions to dismiss and motions for summary judgment as the courts sift through true tort claims and tort claims dressed up as breach of contract claims.  While Tiara did away with the economic loss rule in commercial disputes it is important for litigators to remember that the basic pleading requirements are still alive and well.