A new FL Supreme Court case is a game changer regarding the Economic Loss Rule. This week, the Florida Supreme Court held, ". . . the application of the economic loss rule is limited to products liability cases. Therefore, we recede from prior case law to the extent that it is inconsistent with this holding." Tiara Condominium Assoc., Inc. v. Marsh & McLennan Companies, Inc., 38 Fla. L. Weekly S151a (Fla. March 7, 2013).

For those of you that are builders and not lawyers, the issue raised by the Supreme Court's decision is whether the door is now open to negligence lawsuits by a party who could not file a lawsuit for breach of contract. For example, your contract has an enforceable "no damages for delay clause." Thus, a court will not allow a breach of contract lawsuit for delay damages. Now, the party who claims delay damages may argue that it can file the same suit for damages under a negligence theory even though the contract says no damages for delay.  This is the crux of the debate that will play out in the courts.

On one side of the debate there will be good legal argument that the economic loss rule has always been misapplied and that historical and time-tested concepts of contract law versus tort law have always prevented a party from seeking negligence damages based on a breach of contract. On the other side of the debate you will have attorneys arguing that without the economic loss rule the lines are blurred.

What should you do? Carefully review and update the limitations of damages, dispute resolution, indemnity, and insurance provisions of your contract in light of the new opinion. It is a good idea to have your contracts reviewed and updated regularly anyway.