Florida District Court Returns to Majority's Approach in Applying Economic Loss Doctrine to Consumers In Admiralty Cases
Product Liability Advisory
For more than a decade, Florida's federal district courts inexplicably have refused to follow the majority rule and apply the economic loss doctrine to consumer transactions in admiralty product liability actions. Recently, the Middle District of Florida admirably changed course in Federal Insurance Company v. Lazzara Yachts of North America, 2010 WL 1223126 (M.D. Fla. March 25, 2010). The plaintiff's insured, John Venable, owned a yacht that caught fire. The fire damaged the yacht but not any additional personal property. Federal sued various defendants in a product liability action for strict liability and negligence, along with other contractual claims. The defendants moved to dismiss the product liability tort claims because the economic loss doctrine precluded recovery. The Middle District agreed, despite a trend in Florida district courts to hold that the economic loss doctrine does not apply to consumer transactions.
In its decision, the court held that while the admiralty economic loss doctrine developed in a commercial setting, most federal courts since have extended the doctrine to consumer settings. The courts that have applied the economic loss doctrine to consumer cases reason that the overriding concern is to keep contract and product liability law separate. Consumer plaintiffs complain that this is unjust given the inequitable bargaining powers of the parties. For more than a decade, Florida courts agreed with the consumers. In looking at the larger picture, the Middle District held that in the absence of personal injury, a party should be bound by its contractual bargain. And furthermore, the vessels typically in dispute are insured, thereby creating no risk to the consumer. Lazzara Yachts swings Florida back into the sensible majority and hopefully encourages subsequent Florida district courts to recognize the wisdom of its approach.