Florida Power & Light Co. v. Westinghouse Elec. Corp.
| Citation | 12 Fla. L. Weekly 339,510 So.2d 899 |
| Decision Date | 09 July 1987 |
| Docket Number | No. 68540,68540 |
| Court | Florida Supreme Court |
| Parties | , 12 Fla. L. Weekly 339, 3 UCC Rep.Serv.2d 1759, Prod.Liab.Rep. (CCH) P 11,492 FLORIDA POWER & LIGHT CO., Appellant, v. WESTINGHOUSE ELECTRIC CORP., Appellee. |
Alvin B. Davis and Nancy E. Swerdlow, of Steel, Hector & Davis, Miami, for appellant.
R. Benjamine Reid and Paul L. Nettleton, of Kimbrell & Hamann, Miami, for appellee.
This case is before us on the following certified questions from the Eleventh Circuit Court of Appeals in Florida Power & Light Co. v. Westinghouse Electric Corp., 785 F.2d 952 (11th Cir.1986):
(1) Whether Florida law permits a buyer under a contract for goods to recover economic losses in tort without a claim for personal injury or property damage to property other than the allegedly defective goods.
(2) If Florida law precludes recovery for economic loss in tort without a claim for personal injury or property damage to other property, whether this rule should be applied retroactively in this case.
We have jurisdiction. Art. V, § 3(b)(6), Fla.Const. We answer the first question in the negative, agreeing with the majority view that contract principles are more appropriate than tort principles to resolve purely economic claims. With regard to the second question, we find our answer to the first question does not change any decision of this Court or modify any past principles of law and, consequently, the rule is applicable to all pending cases.
The Eleventh Circuit stated the applicable facts as follows:
In November 1965 Florida Power & Light (FPL) entered into contracts with Westinghouse in which Westinghouse agreed to design, manufacture, and furnish two nuclear steam supply systems, including six steam generators. According to the complaint, FPL discovered leaks in all six generators. FPL brought this suit, alleging that Westinghouse was liable for breach of express warranties in the contract and for negligence and seeking damages for the cost of repair, revision, and inspection of the steam generators.
The trial court denied Westinghouse's motion for partial summary judgment on the breach of warranty count and granted Westinghouse's motion for partial summary judgment on the negligence count on the grounds that Florida law precludes the recovery of economic loss without any claim of personal injury or property damage to other property.
The appellant, Florida Power & Light Company, argues that a negligence claim, based on traditional concepts of duty, causation, and foreseeability, is the appropriate vehicle to resolve this issue. Florida Power & Light contends that their contract with Westinghouse created a legal duty on Westinghouse to use reasonable care in performing the contract and, even absent a contractual duty, tort law imposes a duty on Westinghouse to avoid harming Florida Power & Light. Florida Power & Light alleges that Westinghouse negligently designed and manufactured the steam generators, failed to provide proper operating instructions, and failed to warn of potential problems. Further, Florida Power & Light claims that Westinghouse knew that Florida Power & Light was relying on their proffered expertise in nuclear power and their conduct was the direct cause of Florida Power & Light's injuries.
In response, Westinghouse asserts that the majority view in the United States, including a United States Supreme Court decision, precludes recovery of economic damages in tort where there is no property damage or personal injury, relying principally on the theory expressed in Seely v. White Motor Co., 63 Cal.2d 9, 45 Cal.Rptr. 17, 403 P.2d 145 (1965), as approved in East River Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986), and three Florida District Court of Appeal cases, GAF Corp. v. Zack, 445 So.2d 350 (Fla. 3d DCA 1984); Cedars of Lebanon Hospital v. European X-Ray Distributors, 444 So.2d 1068 (Fla. 3d DCA 1984); and Monsanto Agricultural Products Co. v. Edenfield, 426 So.2d 574 (Fla. 1st DCA 1982).
Justice Traynor expressed the reasoning behind the majority view in Seely v. White Motor Co.:
The distinction that the law has drawn between tort recovery for physical injuries and warranty recovery for economic loss is not arbitrary and does not rest on the "luck" of one plaintiff in having an accident causing physical injury. The distinction rests, rather, 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. A consumer 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. Even in actions for negligence, a manufacturer's liability is limited to damages for physical injuries and there is no recovery for economic loss alone.
63 Cal.2d at 18, 45 Cal.Rptr. at 23, 403 P.2d at 151 (citations omitted).
Most courts have followed this theory, concluding that contract principles are more appropriate than tort principles for resolving economic loss claims. In East River Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986), the United States Supreme Court held that "a manufacturer in a commercial relationship has no duty under either a negligence or strict products liability theory to prevent a product from injuring itself," id. 106 S.Ct. at 2302. The opinion stated that tort law is concerned with safety and standards of care, and, consequently, is particularly unsuited to cover instances where a product injures only itself. Further, in the latter situation, the parties can negotiate risks by contractual agreement. The opinion reasoned:
Damage to a product itself is most naturally understood as a warranty claim. Such damage means simply that the product has not met the customer's expectations, or, in other words, that the customer has received "insufficient product value." The maintenance of product value and quality is precisely the purpose of express and implied warranties.
Id. at 2303 (footnotes and citations omitted).
The policy adopted by the majority of courts encourages parties to negotiate economic risks through warranty provisions and price. On the other hand, the minority view exposes a manufacturer to liability for negligence based on economic loss alone, replacing the freedom of bargaining and negotiation with a duty of care. A duty of care, as emphasized in...
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