Florida Business Litigation Update: Third DCA Reaffirms Application of The Independent Tort Doctrine In Business Litigation Cases

Mar 31, 2020   
Print Friendly, PDF & Email

On March 25, 2020, the Third DCA issued its panel decision in Island Travel & Tours, Ltd. v. MYR Indep., Inc., 3D16-1364, 2020 WL 1451990, at *3 (Fla. 3d DCA Mar. 25, 2020), which reaffirmed application of the independent tort doctrine to bar common law tort claims in business litigation cases where there is already a contract between the parties.

The independent tort doctrine provides that “[w]here a contract exists, a tort action will lie for either intentional or negligent acts considered to be independent from acts that breached the contract.” HTP, Ltd. v. Lineas Aereas Costarricenses, S.A., 685 So. 2d 1238, 1239 (Fla. 1996). “It is only when the breach of contract is attended by some additional conduct which amounts to an independent tort that such breach can constitute [an actionable tort].” Elec. Sec. Sys. Corp. v. S. Bell Tel. & Tel. Co., 482 So. 2d 518, 519 (Fla. 3d DCA 1986).

In 2013, the Florida Supreme Court held that a related doctrine — the economic loss rule — was restricted to products liability cases and could not be used to bar general commercial tort claims. Tiara Condo. Ass’n, Inc. v. Marsh & McLennan Cos., 110 So. 3d 399, 408 (Fla. 2013).

In a concurring opinion, however, Justice Pariente distinguished the independent tort doctrine as still being a valid defense in cases outside the products liability area.

The majority’s conclusion that the economic loss rule is limited to the products liability context does not undermine Florida’s contract law or provide for an expansion in viable tort claims. Basic common law principles already restrict the remedies available to parties who have specifically negotiated for those remedies, and, contrary to the assertions raised in dissent, our clarification of the economic loss rule’s applicability does nothing to alter these common law concepts. For example, in order to bring a valid tort claim, a party still must demonstrate that all of the required elements for the cause of action are satisfied, including that the tort is independent of any breach of contract claim.

Tiara Condo., 110 So. 3d at 408 (Pariente, J., concurring with opinion joined by Lewis and Labarga, JJ.).

Technically, because Justice Pariente’s concurrence was not joined by a majority of the Court, some judges have interpreted the majority ruling in Tiara as having nullified the independent tort doctrine as well as the economic loss rule outside the products liability context. See USI Ins. Services LLC v. Simokonis, 15-CV-24337, 2016 WL 11547701, at *6 (S.D. Fla. Apr. 15) (“There is some disagreement among the district courts in this Circuit on whether the independent tort rule remains intact following the Tiara decision. Some courts have cited to Justice Pariente’s concurrence in determining or at least suggesting that the independent tort rule is still applicable notwithstanding the holding of Tiara.”); report and recommendation adopted, 2016 WL 11547699 (S.D. Fla. May 13, 2016).

It was not until 2017 that the Third District Court of Appeal in Peebles v Puig, 223 So. 3d 1065 (Fla. 3rd DCA 2017), applied the independent tort doctrine for the first time since Tiara to reverse a jury verdict for commercial fraud (i.e., in a case outside the products liability context).

It is well settled in Florida that, where alleged misrepresentations relate to matters already covered in a written contract, such representations are not actionable in fraud. It is similarly well settled that, for an alleged misrepresentation regarding a contract to be actionable, the damages stemming from that misrepresentation must be independent, separate and distinct from the damages sustained from the contract’s breach. Both of these legal principles are rooted in the notion that, when a contract is breached, the parameters of a plaintiff’s claim are defined by contract law, rather than by tort law.

Peebles, 223 So. 3d at 1068 (citation omitted). The Peebles Court cited Tiara in a footnote, clarifying: “We do not evaluate this case under the economic loss rule.” Id. at 1068 n.4.

The Third DCA’s March 2020 decision in Island Travel reaffirms its commitment to apply the independent tort doctrine that it resuscitated in Peebles to bar tort claims in the commercial litigation context where there is an existing contract between the parties. Island Travel, 2020 WL 1451990, at *3 (“The only properly alleged misrepresentation simply has to do with Island’s failure to perform under the contract. It is a fundamental, long-standing common law principle that a plaintiff may not recover in tort for a contract dispute unless the tort is independent of any breach of contract.”).

The Court in Island Travel further noted that, although fraud in the inducement is generally considered to be an “independent” tort (because the misrepresentation that induces someone to enter into a contract is often unrelated to the obligations under the contract) the Plaintiff’s fraud claim in Island Travel was “clearly duplicative of its breach of contract claim [because Plaintiff] sought the exact same damages for both its fraud claim and its breach of contract claim.” Id. n.7 (emphasis added).

The takeaway: where a contract has been breached, a simultaneous common law tort claim lies only for acts deemed independent of those establishing the contract’s breach or for damages that are attributable to actions other than those that caused the breach of contract.

The litigation and corporate attorneys of Fuerst Ittleman David & Joseph have extensive experience handling complex matters throughout Florida and the United States and can assist with a full range of litigation, transactional, and compliance services from start-up to daily operations of your thriving business enterprise. Please contact us at 305-350-5690 or email us at info@fuerstlaw.com.