Casa Clara Condominium Ass'n, Inc. v. Charley Toppino and Sons, Inc.

• Citation: 620 So.2d 1244
• Decision Date: 24 June 1993
• Docket Number: 79128,Nos. 79127,s. 79127
• Parties: , 18 Fla. L. Week. S357, Prod.Liab.Rep.(CCH)P 13,552 CASA CLARA CONDOMINIUM ASSOCIATION, INC., etc., et al., Petitioners, v. CHARLEY TOPPINO AND SONS, INC., etc., et al., Respondents. Christopher H. CHAPIN, et al., Petitioners, v. CHARLEY TOPPINO AND SONS, INC., etc., et al., Respondents.
• Court: United States State Supreme Court of Florida

Page 1244

620 So.2d 1244

62 USLW 2025, 18 Fla. L. Week. S357,

Prod.Liab.Rep.(CCH)P 13,552

CASA CLARA CONDOMINIUM ASSOCIATION, INC., etc., et al., Petitioners, v. CHARLEY TOPPINO AND SONS, INC., etc., et al., Respondents.

Christopher H. CHAPIN, et al., Petitioners, v. CHARLEY TOPPINO AND SONS, INC., etc., et al., Respondents.

Nos. 79127, 79128.

Supreme Court of Florida.

June 24, 1993.

H. Hugh McConnell and Steven M. Siegfried of Siegfried, Kipnis, Rivera, Lerner & De La Torre, P.A., Coral Gables, and Daniel S. Pearson of Holland & Knight, Miami, for petitioners.

Arthur J. England, Jr., Charles M. Auslander, Alan H. Rolnick of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., Miami, and Lynn E. Wagner and Richard A. Solomon of Cabaniss, Burke & Wagner, P.A., Orlando, for respondents.

Mark Hicks of Hicks, Anderson & Blum, P.A., Miami, amicus curiae for the Babcock Co.

Stephen Wasinger, Elizabeth Norma McKenna, Robert W. Boos, E. Powell Miller and M. Elizabeth Wall of Honigman, Miller, Schartz and Cohn, Tampa, amicus curiae for Pulte Home Corp.

Edwin A. Scales, III and David Brannon of Lane, Trohn, Clarke, Bertrand, Vreeland & Jacobsen, P.A., Lakeland, amicus curiae for Polk County, Fla.

Donald M. Kaplan of McCarter & English, Boca Raton, and Andrew White, III of Patton, Boggs & Blow, Denver, CO, amicus curiae for Osmose Wood Preserving, Inc. and Hoover Treated Wood Products, Inc. William J. Payne, West Palm Beach, amicus curiae for the Florida Concrete and Products Ass'n, Inc.

Kimberly A. Ashby of Maguire, Voorhis & Wells, P.A., Orlando, amicus curiae for Florida Defense Lawyers Ass'n.

Susan E. Trench of Goldstein & Tanen, P.A., Miami, amicus curiae for ORIXGP Intracoastal.

Edward T. O'Donnell of Herzfeld and Rubin, Miami, amicus curiae for the Product Liability Advisory Council, Inc.

G. William Bissett of Hardy & Bissett, P.A., Miami, amicus curiae for Masonite Corp.

McDONALD, Justice.

We review Casa Clara Condominium Association, Inc. v. Charley Toppino & Sons, Inc., 588 So.2d 631 (Fla. 3d DCA 1991), and Chapin v. Charley Toppino & Sons, Inc., 588 So.2d 634 (Fla. 3d DCA 1991), because of conflict with Latite Roofing Co. v. Urbanek, 528 So.2d 1381 (Fla. 4th DCA 1988), Drexel Properties, Inc. v. Bay Colony Club Condominium, Inc., 406 So.2d 515 (Fla. 4th DCA 1981), review denied, 417 So.2d 328 (Fla.1982), and Adobe Building Centers, Inc. v. Reynolds, 403 So.2d 1033 (Fla. 4th DCA), review dismissed, 411 So.2d 380 (Fla.1981). We have jurisdiction. Art. V, Sec. 3(b)(3), Fla. Const. The issue is whether a homeowner can recover for purely economic losses from a concrete supplier under a negligence theory. We agree with the district court that such a recovery cannot be had and approve the decisions under review and disapprove the conflicting decisions.

Charley Toppino & Sons, Inc., a dissolved corporation, supplied concrete for numerous construction projects in Monroe County. Apparently, some of the concrete supplied by Toppino contained a high content of salt that caused the reinforcing steel inserted in the concrete to rust, which, in turn, caused the concrete to crack and break off. The petitioners own condominium units and single-family homes built with, and now allegedly damaged by, Toppino's concrete. ¹ In separate actions the homeowners sued numerous defendants and included claims against Toppino for breach of common law implied warranty, products liability, negligence, and violation of the building code. The circuit court dismissed all counts against Toppino in each case. On appeal the district court applied the economic loss rule and held that, because no person was injured and no other property damaged, the homeowners had no cause of action against Toppino in tort. The district court also held that Toppino, a supplier, had no duty to comply with the building code.

Plaintiffs find a tort remedy attractive because it often permits the recovery of greater damages than an action on a contract and may avoid the conditions of a contract. William L. Prosser, The Borderland of Tort and Contract in Selected Topics on the Law of Torts, 380, 425 (Thomas M. Cooley Lectures, 4th Series, 1953). The distinction between "tort recovery for physical injuries and warranty recovery for economic loss" rests

on an understanding of the nature of the responsibility a manufacturer must undertake in distributing his products. He can appropriately be held liable for physical injuries caused by defects by requiring his goods to match a standard of safety defined in terms of conditions that create unreasonable risks of harm. He cannot be held for the level of performance of his products in the consumer's business unless he agrees that the product was designed to meet the consumer's demands.

Seely v. White Motor Co., 63 Cal.2d 9, 45 Cal.Rptr. 17, 23, 403 P.2d 145, 151 (1965) (emphasis supplied). An individual consumer, on the other hand,

should not be charged at the will of the manufacturer with bearing the risk of physical injury when he buys a product on the market. He can, however, be fairly charged with the risk that the product will not match his economic expectations unless the manufacturer agrees that it will.

Id. (emphasis supplied). Seely sets out the economic loss rule, which prohibits tort recovery when a product damages itself, causing economic loss, but does not cause personal injury or damage to any property other than itself. ² E.g., East River Steamship Corp. v. Transamerica Delaval, Inc. 476 U.S. 858, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986); Florida Power & Light Co. v. Westinghouse Elec. Corp., 510 So.2d 899 (Fla.1987); Danforth v. Acorn Structures, Inc., 608 A.2d 1194 (Del.1992). The rule is "the fundamental boundary between contract law, which is designed to enforce the expectancy interests of the parties, and tort law, which imposes a duty of reasonable care and thereby encourages citizens to avoid causing physical harm to others." Sidney R. Barrett, Jr., Recovery of Economic Loss in Tort for Construction Defects: A Critical Analysis, 40 S.C.L.Rev. 891, 894 (1989).

Economic loss has been defined as "damages for inadequate value, costs of repair and replacement of the defective product, or consequent loss of profits--without any claim of personal injury or damage to other property." Note, Economic Loss in Products Liability Jurisprudence, 66 Colum.L.Rev. 917, 918 (1966). It includes "the diminution in the value of the product because it is inferior in quality and does not work for the general purposes for which it was manufactured and sold." Comment, Manufacturers' Liability to Remote Purchasers for "Economic Loss" Damages--Tort or Contract?, 114 U.Pa.L.Rev. 539, 541 (1966). In other words, economic losses are "disappointed economic expectations," which are protected by contract law, rather than tort law. Sensenbrenner v. Rust, Orling & Neale Architects, Inc., 236 Va. 419, 374 S.E.2d 55, 58 (1988); Stuart v. Coldwell Banker Commercial Group, Inc., 109 Wash.2d 406, 745 P.2d 1284 (1987). This is the basic difference between contract law, which protects expectations, and tort law, which is determined by the duty owed to an injured party. For recovery in tort "there must be a showing of harm above and beyond disappointed expectations. A buyer's desire to enjoy the benefit of his bargain is not an interest that tort law traditionally protects." Redarowicz v. Ohlendorf, 92 Ill.2d 171, 65 Ill.Dec. 411, 414, 441 N.E.2d 324, 327 (1982).

The homeowners are seeking purely economic damages--no one has sustained any physical injuries and no property, other than the structures built with Toppino's concrete, has sustained any damage. They argue that holding them to contract remedies ³ is unfair and that homeowners in general should be excepted from the operation of the economic loss rule. We disagree.

In tort a manufacturer or producer of goods "is liable whether or not it is negligent because 'public policy demands that responsibility be fixed wherever it will most effectively reduce the hazards to life and health inherent in defective products that reach the market.' " East River, 476 U.S. at 866, 106 S.Ct. at 2300 (quoting Escola v. Coca Cola Bottling Co., 24 Cal.2d 453, 150 P.2d 436, 441 (1944) (Traynor, J., concurring). Thus, the "basic function of tort law is to shift the burden of loss from the injured plaintiff to one who is at fault ... or to one who is better able to bear the loss and prevent its occurrence." Barrett, supra at 935. The purpose of a duty in tort is to protect society's interest in being free from harm, Spring Motors Distributors, Inc. v. Ford Motor Co., 98 N.J. 555, 489 A.2d 660 (1985), and the cost of protecting society from harm is borne by society in general. Contractual duties, on the other hand, come from society's interest in the performance of promises. Id. When only economic harm is involved, the question becomes "whether the consuming public as a whole should bear the cost of economic losses sustained by those who failed to bargain for adequate contract remedies." Barrett, supra at 933.

We are urged to make an exception to the economic loss doctrine for homeowners. Buying a house is the largest investment many consumers ever make, see Conklin v. Hurley, 428 So.2d 654 (Fla.1983), and homeowners are an appealing, sympathetic class. If a house causes economic disappointment by not meeting a purchaser's expectations, the resulting failure to receive the benefit of the bargain is a core concern of contract, not tort, law. East River, 476 U.S. at 870, 106 S.Ct. at 2301. There are protections for homebuyers, however, such as statutory warranties, ⁴ the general warranty of habitability, ⁵ and the duty of sellers to disclose defects, ⁶ as well as the ability of purchasers to inspect houses for defects. Coupled with homebuyers' power to bargain over price, these protections must be viewed as sufficient when compared with the mischief that could be caused by allowing tort...