Application of Economic Loss Rule to a Distributor’s Failure to Warn Will Remain Unclear for Now
Case: NBIS Constr. & Trans. Ins. Servs., Inc. v. Liebherr-Am., Inc., 93 F.4th 1304 (11th Cir. 2024)
NBIS (the insurer/subrogee for Sims Crane & Equipment Company) sued Liebherr-America, a distributor and servicer of large cranes, after a crane’s boom collapsed. Importantly, NBIS and Liebherr stipulated that the crane itself was not defective. Instead, the claims centered on Liebherr-America’s failure to properly train the operators and its failure to send a critical safety bulletin in time. That bulletin—warning that improper handling of the “T4 pin” could cause a catastrophic collapse—was circulated by Liebherr’s German affiliate months before the accident, but ownership records were outdated and Sims did not receive it until after the collapse.
NBIS sought only economic damages: the cost to repair or salvage the crane. Liebherr argued that Florida’s economic loss rule barred recovery in tort when only economic losses are alleged. After a five-day bench trial, the magistrate judge rejected that defense, finding Liebherr owed duties in training and timely warnings, breached those duties, and proximately caused the collapse. NBIS was awarded approximately $1.74 million .
On appeal, the Eleventh Circuit found Florida law unclear on whether the economic loss rule extends to negligence claims against a distributor when the product is stipulated non-defective and the only damages are to the product itself. It certified the following question to the Florida Supreme Court:
Does Florida’s economic loss rule bar negligence claims against a distributor (non-defective product) for failure to warn or alert of risk, when only damages are to the product itself?
In a recent Florida Bar article, “A Proposed Answer to the 11th Circuit’s Recent Certified Question About the Economic-Loss Rule’s Breadth,” Mark A. Brown argues that, looking at Florida’s prior high-court decisions like Tiara Condominium Ass’n v. Marsh & McLennan and others, the Florida Supreme Court should answer the certified question “no”—meaning the economic loss rule should not block NBIS’s negligence claims in this scenario. His view is that when a distributor undertakes duties (training, warnings, safety bulletins), negligence in those areas shouldn’t be shielded just because there isn’t a product defect.
Before the Florida Supreme Court could take up the certified question, the parties settled. That means the issue will not be resolved in this case, and the scope of Florida’s economic loss rule in this context remains unsettled.
