Casa Clara Condominium Association, Inc. v. Charley Toppino and Sons, Inc

In Casa Clara Condominium Ass'n v. Charley Toppino & Sons, Inc., 620 So. 2d 1244 (Fla. 1993), homeowners sought to recover damages in tort against concrete suppliers when the concrete supplied was defective because it contained a high quantity of salt. The salt caused the reinforced steel inserts in the concrete to rust, which in turn caused the concrete walls to crack. In holding that the economic loss rule precluded a claim for negligence and a claim for violation of the building code by the homeowners, the Court found that the homes themselves were not "other property" for purposes of the economic loss rule. The Court relied in part on the concept of what was purchased by the homeowners. The Court recognized the economic loss rule as "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." Id. at 1246 The Court defined economic loss 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." Casa Clara, 620 So. 2d at 1246. In Casa Clara, the Court held that the economic loss rule barred a cause of action in tort for providing defective concrete where there was no personal injury or damage to property other than to the product itself. The was not unanimous, especially as to the characterization of "other property." The Court stated that tort law was designed to protect the interest of society as a whole by imposing a duty of reasonable care to prevent property damage or physical harm to others, whereas contract law operates to protect the economic expectations of the contracting parties when a "product" is the object of the contract. Casa Clara, 620 So. 2d at 1246. The Court said: "The homeowners also argue that Toppino's concrete damaged "other" property because the individual components and items of building material, not the homes themselves, are the products they purchased. We disagree. The character of a loss determines the appropriate remedies, and, to determine the character of a loss, one must look to the product purchased by the plaintiff, not the product sold by the defendant. King v. Hilton-Davis, 855 F.2d 1047 (3d Cir. 1988). Generally, house buyers have little or no interest in how or where the individual components of a house are obtained. They are content to let the builder produce the finished product, i.e., a house. These homeowners bought finished products--dwellings--not the individual components of those dwellings. They bargained for the finished products, not their various components. The concrete became an integral part of the finished product and, thus, did not injure "other" property." Casa Clara, 620 So. 2d at 1247. The "product" purchased by Comptech was the renovation of the warehouse. The computers placed in the warehouse were not an integral part of the product and were therefore "other property" under the Casa Clara rationale. Id. The Court held that the economic loss rule barred a cause of action in tort for providing defective concrete where there was no personal injury or damage to property other than to the product itself. 620 So. 2d at 1246. The opinion, however, was not unanimous, especially as to the characterization of "other property." The Court stated that tort law was designed to protect the interest of society as a whole by imposing a duty of reasonable care to prevent property damage or physical harm to others, whereas contract law operates to protect the economic expectations of the contracting parties when a "product" is the object of the contract. Id. at 1246. The Court also stated expansively in Casa Clara that "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.'" Id. at 1247. The Court explained the distinction between tort and contract actions and the resulting application of the economic loss rule to maintain that distinction. The Court stated: 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, 40 S.C.L. Rev. 891, 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." (620 So. 2d at 1246-47.) In Casa Clara, the defendant had contracted to supply concrete for the construction of condominiums. That concrete contained a high salt content that caused reinforcing rods to rust and the concrete to break off. The plaintiff Casa Clara Condominium Association brought tort actions against the supplier of that concrete. The trial court, district court of appeal, and, finally, the Court applied the economic loss rule in dismissing those causes of action. The Court held: Therefore, we again "hold contract principles more appropriate than tort principles for recovering economic loss without an accompanying physical injury or property damage." Florida Power & Light, 510 So. 2d at 902. If we held otherwise, "contract law would drown in a sea of tort." East River, 476 U.S. at 866, 106 S. Ct. at 2300. We refuse to hold that homeowners are not subject to the economic loss rule. Numerous other jurisdictions have also refused to give greater tort remedies to homeowners. E.g., Danforth v. Acorn Structures, Inc., 608 A.2d 1194 (Del.Super.Ct. 1992); Redarowicz v. Ohlendorf, 92 Ill. 2d 171, 65 Ill. Dec. 411, 441 N.E.2d 324 (1982); Sensenbrenner v. Rust, Orling & Neale, Architects, Inc ., 236 Va. 419, 374 S.E.2d 55 (1988); Stuart v. Coldwell Banker Commercial Group, Inc., 109 Wash. 2d 406, 745 P.2d 1284 (1987). (620 So. 2d at 1247.)