{"id":902405,"date":"2024-03-13T13:58:01","date_gmt":"2024-03-13T19:58:01","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=902405"},"modified":"2024-03-13T13:58:08","modified_gmt":"2024-03-13T19:58:08","slug":"subrogation-recovery-florida-courts-clairfy-rule","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/subrogation-recovery-florida-courts-clairfy-rule\/","title":{"rendered":"Fed Court Wants Florida Supremes to Clarify Rule That Can Bar Subrogation Recovery"},"content":{"rendered":"\n<p>William Rabb | <a href=\"https:\/\/www.insurancejournal.com\/news\/southeast\/2024\/03\/07\/763847.htm\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Insurance Journal<\/a><\/p>\n\n\n\n<p>In the next year or so, the Florida Supreme Court will decide on the exact meaning of a legal doctrine that, under one interpretation, has blocked millions of dollars per year in <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/subrogation-leading-out-loud\/\">subrogation recovery<\/a> for liability insurance companies.<\/p>\n\n\n\n<p>The 11th U.S. Circuit Court of Appeals late last month submitted a certified question to the state high court, asking it to clear up conflicts between differing court rulings on what\u2019s known as the economic loss rule, an often-controversial idea in tort litigation. As it stands now, manufacturers and corporations facing subrogation and negligence claims have, in many cases, been shielded by Florida case law that limits damage awards to no more than the economic value of the product at fault.<\/p>\n\n\n\n<p>In some instances, that has amounted to zero dollars.<\/p>\n\n\n\n<p>\u201cIt lets the manufacturer completely off the hook,\u201d said Josh Goodman, of Miami, an insurance subrogation specialist with the Cozen O\u2019Connor law firm.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignleft\"><img decoding=\"async\" src=\"https:\/\/www.insurancejournal.com\/app\/uploads\/2024\/03\/subrogation-pic-300x191.jpeg\" alt=\"\" class=\"wp-image-763849\"\/><\/figure><\/div>\n\n\n<p>Goodman is the lead attorney for the plaintiffs in NBIS Construction and Transport Insurance Services vs. Liebherr-American Inc., the case that prompted the 11th Circuit\u00a0<a href=\"https:\/\/www.insurancejournal.com\/app\/uploads\/2024\/03\/11th-circ-on-crane-collapse.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">to ask the state justices for clarity<\/a>.<\/p>\n\n\n\n<p>The case began in February 2018, when a massive construction crane built by Liebherr in Germany was delivered to Sims Crane &amp; Equipment Co., based in Tampa. After Sims workers set the crane to hold a 276-foot boom, the boom suddenly collapsed, fatally injuring a worker for the erector company. The worker\u2019s name was Christopher Wade, of Villa Rica, Georgia.<\/p>\n\n\n\n<p>The crane was also heavily damaged in the collapse. NBIS, also known as NationsBuilders Insurance and owned by Align Financial Holdings Inc., paid Sims Crane $3.2 million to cover the cost of the crane, plus $180,000 for towing and salvage. NBIS was able to sell the damaged equipment for $1.65 million. That left about $1.74 million, for which NBIS sued the manufacturer in federal court.<\/p>\n\n\n\n<p>Liebherr argued that it had no duty to protect the insurance company against purely economic harms, that its actions were not the cause of the boom\u2019s collapse, and that Florida\u2019s economic loss rule prevented NBIS from recovering the money.<\/p>\n\n\n\n<p>The rule has continued to evolve through the years, but seems to have begun with court rulings in the late 1980s and 1990s. It developed largely to protect manufacturers from liability for economic damages caused by a defective product, beyond those damages provided by a warranty. The rule arose in part to limit tort claims when contracts already governed a product or service, the court explained.<\/p>\n\n\n\n<p>The Florida Supreme Court in 1993 defined economic losses as \u201cdamages for inadequate value, costs of repair and replacement of the defective product, or consequent loss of profits\u2014without any claim of personal injury or damage to other property,\u201d the appellate judges noted. Liebherr lawyers argued that the rule prevents a claim against a product manufacturer when the product damages only itself.<\/p>\n\n\n\n<p>After a bench trial, the federal district court judge in 2022 disagreed with Liebherr\u2019s argument, however, and awarded NBIS the $1.7 million, plus interest. Liebherr appealed.<\/p>\n\n\n\n<p>And that\u2019s where things got complicated.<\/p>\n\n\n\n<p>The crux of Goodman\u2019s and NBIS\u2019 argument is that the claim against Liebherr was not about a faulty product or product liability, to which the economic loss rule has historically applied \u2013 at least in some cases. Liebherr knew that if pins on the crane boom were not placed in exactly the right position, or that if one of them were moved, it could result in death, injury and property damage, NBIS argued. A similar collapse had happened in 2017 in Japan.<\/p>\n\n\n\n<p>Yet, the manufacturer did not provide enough training to Sims workers and did not provide a crucial safety bulletin and warning signs to Sims \u2013 documentation that would have explained the importance of proper pin placement \u2013 until one week after the collapse.<\/p>\n\n\n\n<p>All other crane operator firms that had purchased Liebherr cranes had received the bulletin, NBIS contended.<\/p>\n\n\n\n<p>That makes it a negligent service suit, not a product liability claim, Goodman explained.<\/p>\n\n\n\n<p>\u201cAs a direct and proximate result of defendant\u2019s negligence,\u201d Sims and NBIS sustained damage, NBIS\u2019s initial complaint said. Liebherr owed a duty to Sims to provide the bulletin and proper training.<\/p>\n\n\n\n<p>The appeals court pointed out that a number of court rulings over the last few decades have raised questions about what circumstances the economic loss rule applies to. In one ruling, the Florida high court limited tort liability to those cases in which damage happened to more than just the product itself. But in other decisions, the courts have found that a product may be considered defective because of inadequate warnings, a line of thought that\u00a0<a href=\"https:\/\/www.insurancejournal.com\/app\/uploads\/2024\/03\/Liebherrs-answer.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Liebherr embraced<\/a>\u00a0in the NBIS suit. Liebherr was essentially using its own alleged failure to warn about the crane boom as a defense in the negligence claim.<\/p>\n\n\n\n<p>The economic loss rule has frustrated insurance subrogation recovery, in some cases, for decades. As long ago as 2002, a Cozen attorney\u00a0<a href=\"https:\/\/www.floridabar.org\/the-florida-bar-journal\/economic-loss-rule-the-integral-part-approach-to-the-other-property-exception\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">wrote for the Florida Bar<\/a>\u00a0that few subjects generate more controversy and confusion than Florida\u2019s \u201cever-evolving version\u201d of the rule.<\/p>\n\n\n\n<p>The 11<sup>th<\/sup>&nbsp;Circuit said it\u2019s time to settle the matter once and for all.<\/p>\n\n\n\n<p>\u201cWe find Florida law unclear as to the economic loss rule\u2019s applicability here,\u201d Judge Barbara Lagoa wrote in the\u00a0<a href=\"https:\/\/www.insurancejournal.com\/app\/uploads\/2024\/03\/11th-circ-on-crane-collapse.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Feb. 29 opinion<\/a>. \u201cOn one hand, we see merit in Liebherr-America\u2019s argument that NBIS\u2019s theories of negligence are like the failure-to-warn theories found in products liability law.\u201d But on the other hand, NBIS is correct in arguing that the economic loss rule applies only to product defects, the judges said.<\/p>\n\n\n\n<p>The 11<sup>th<\/sup>\u00a0Circuit will take up the lawsuit again after the Florida Supreme Court answers the certified question.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>William Rabb | Insurance Journal In the next year or so, the Florida Supreme Court will decide on the exact meaning of a legal doctrine that, under one interpretation, has blocked millions of dollars per year in subrogation recovery for liability insurance companies. The 11th U.S. Circuit Court of Appeals late last month submitted a&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/subrogation-recovery-florida-courts-clairfy-rule\/\">Continue reading <span class=\"screen-reader-text\">Fed Court Wants Florida Supremes to Clarify Rule That Can Bar Subrogation Recovery<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[10721],"tags":[9895,22,233,11343],"class_list":["post-902405","post","type-post","status-publish","format-standard","hentry","category-insurance","tag-advise-consult","tag-insurance","tag-subrogation","tag-subrogation-recovery","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Fed Court Wants Florida Supremes to Clarify Rule That Can Bar Subrogation Recovery - Advise &amp; 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