As I mentioned last week when talking about the Impact Rule, lawyers love rules. But if there’s one thing lawyers love more than rules it’s “doctrines.” So, as a special treat, today I’m talking about both a rule and a doctrine—the Independent Tort Doctrine and the Economic Loss Rule.
Most broadly, the Independent Tort Doctrine and the Economic Loss Rule are potentially implicated when a party (usually a plaintiff) has asserted a purely economic injury. In other words, if the plaintiff has physical or emotional/mental injuries, neither the doctrine nor the rule applies. That’s the case even though physical and emotional/mental injuries usually have economic consequences (e.g., medical bills, the cost of therapy, and the like).
But if you’re dealing with a purely economic injury, you do need to consider both the doctrine and the rule. Critically, though, they are not the same thing (though some courts have mistakenly said they are).
Independent Tort Doctrine
It makes sense to start with the Independent Tort Doctrine because, as we’ll soon see, it is far broader than the Economic Loss Rule in terms of potential applicability.
The Independent Tort Doctrine essentially exists to prevent parties from bringing a breach of contract claim that is disguised as a tort claim. The idea makes sense. If you’re really just claiming that the other side breached an agreement you had with them (thereby costing you money), you should bring a breach of contract claim, not a tort claim. As courts have framed the doctrine: “As a general principle of law, a plaintiff may not recover in tort for a contract dispute unless the tort is independent of any breach of contract.” SBP Homes, LLC v. 84 Lumber Co., 384 So. 3d 241, 247 (Fla. 4th DCA 2024) (cleaned up).
With the purpose of the doctrine clear, a key limiting principle to the doctrine should become obvious: the Independent Tort Doctrine only comes into play when there is a contract between the plaintiff and the defendant. So, no contract, no Independent Tort Doctrine. Costa Invs., LLC v. Liberty Grande, LLC, 353 So. 3d 627, 632 (Fla. 4th DCA 2022) (“This [Independent Tort Doctrine] principle only applies, however, to the parties to the contract.”) (emphasis in original).
If, however, there is a contract between the parties, more analytical work is needed to decide whether the Independent Tort Doctrine bars the tort claim. And that work is targeted at assessing one thing: whether the tort claim at issue can exist separate and apart from the contract at issue. And how do we determine such independence? By identifying whether the defendant has breached some extra-contractual duty (i.e., a duty society imposes that exists wholly apart from any duties memorialized in the contract at issue). If the defendant has breached such an extra-contractual duty, the Independent Tort Doctrine doesn’t apply. This is so “because the independent tort doctrine only serves to bar a tort claim where the offending party has committed no breach of duty independent of a breach of its contractual obligations.” Roop v. Prime Rate Premium Fin. Corp., Inc., 710 F. Supp. 3d 1165, 1175 (M.D. Fla. 2024) (emphasis added).
A bit of explanation here. Contracts typically impose various duties on each party to the contract (e.g., a duty to deliver a certain number of widgets by a certain date). Separately, under certain circumstances, society imposes various duties on a person to exercise reasonable care (e.g., a person who has invited others onto his or her property owes a duty to make sure that property is reasonably safe). To bring a negligence claim against a defendant, you must be able to identify the breach of a societal, non-contractual duty. If you instead bring a negligence claim against a defendant that relies on a contract as the “source” of the duty allegedly breached, the Independent Tort Doctrine applies. Final Expense Direct v. Python Leads, LLC, No. 8:23-CV-2093-WFJ-AAS, 2024 WL 474038, at *6 (M.D. Fla. Feb. 7, 2024) (recognizing that the “source of the duty breached” is what drives application of the Independent Tort Doctrine).
The federal case Kazak v. Truist Bank, 692 F. Supp. 3d 1112 (M.D. Fla. 2023), provides a textbook illustration of how plaintiffs can survive application of the Independent Tort Doctrine by alleging the breach of an extra-contractual duty.
In Kazak, the plaintiffs had bank accounts with Truist and sued after third parties fraudulently wired over $112,000 from their accounts. Among the claims asserted were breach of contract, breach of fiduciary duty, and negligence. Truist argued that the plaintiffs’ tort claims were barred by the Independent Tort Doctrine.
The court disagreed. Applying Florida law, it held that the plaintiffs had plausibly alleged duties beyond those arising from their banking agreements. Specifically, the plaintiffs alleged that a bank representative affirmatively undertook to protect their accounts—by promising to lock the accounts and stop the transfers—but then failed to do so. The court reasoned that such conduct supported a claim for breach of a fiduciary duty implied in law and also for negligence, because the duties at issue went beyond any duty imposed by contract.
This case underscores that when a defendant’s conduct gives rise to legal duties that exist independently of the contract—such as fiduciary duties voluntarily assumed or duties of care that stem from the factual context—a tort claim may proceed alongside a contract claim.
Economic Loss Rule
If no contract exists between the parties, you’re officially out of the Independent Tort Doctrine. But what about the Economic Loss Rule? Well, unlike the Independent Tort Doctrine, this rule “applies even in the absence of privity of contract.” Indem. Ins. Co. of N. Am. v. Am. Aviation, Inc., 891 So.2d 532, 541 (Fla. 2004). So, you can’t avoid it by pointing to the absence of a contract between you and the defendant.
All the same, the Economic Loss Rule applies only to a very narrow type of tort claim that seeks only a narrow category of damages. Specifically, a products liability tort claim where the party is seeking only damages caused to the product itself. Tiara Condo. Ass’n, Inc. v. Marsh & McLennan Companies, Inc., 110 So. 3d 399, 407 (Fla. 2013) (“[W]e now take this final step and hold that the economic loss rule applies only in the products liability context.”); Indem. Ins. Co. of N. Am., 891 So.2d at 541 (“In exchange for eliminating the privity requirements of warranty law and expanding the tort liability for manufacturers of defective products which cause personal injury [by adopting strict products liability], we expressly limited tort liability with respect to defective products to injury caused to persons or damage caused to property other than the defective product itself.”).
In short, then, if you’re either (a) bringing some tort claim other than a products liability tort claim or (b) bringing a products liability tort claim alleging that the product at issue physically injured the plaintiff or some piece of property other than the product itself, the economic loss rule has no application.
Takeaways
The Independent Tort Doctrine and Economic Loss Rule are two different things. So, when assessing whether to bring a tort claim against a defendant for purely economic damages, you need to determine whether either applies. For the Independent Tort Doctrine, the analysis is straightforward—see if there’s a contract between your plaintiff and the possible defendant and, if there is, ensure that any duty you allege was breached was extra-contractual (i.e., derived from some source other than the contract itself). For the Economic Loss Rule, although it can apply to bar a tort claim whether or not a contract exists, it applies to a very specific flavor of tort claim: a products liability tort claim that only seeks damages caused to the product itself.