Source: http://insurance-counsel.com/tag/risk/
Timestamp: 2019-04-20 01:14:11+00:00

Document:
By, Ellen G. Smith, Esq.
The employer engaged in conduct that the employer knew, based on prior similar accidents or on explicit warnings specifically identifying a known danger, was virtually certain to result in injury or death to the employee, and the employee was not aware of the risk because the danger was not apparent and the employer deliberately concealed or misrepresented the danger so as to prevent the employee from exercising informed judgment about whether to perform the work.
In reaction to the Supreme Court’s ruling in Turner v. PCR, Inc., 754 So. 2d 683 (Fla. 2000), the Florida legislature raised the bar in the enactment of Florida Statute §440.11(1)(b), from the previous standard of substantially certainty, to create an even narrower window where employees can avoid the immunity employer’s possess under the worker’s compensation laws. Not only did the legislature require that employees prove their case by the heightened standard of clear and convincing evidence, but also created a standard where an employer must have deliberately intended the harm or where a harm is so obvious to occur because the harm has occurred before and will occur every time a that act is performed. Since its enactment several District Courts have evaluated claims under the new heightened test, all of which have failed to meet the significantly higher standard created in Florida Statute §440.11(1)(b). See Gorham v. Zachry Industrial Inc., 105 So. 3d 629, 634 (Fla. 4th DCA 2013)(“[T]he mere knowledge and appreciation of a risk-something short of substantial certainty – is not intent. The defendant who acts in the belief or consciousness that the act is causing an appreciable risk of harm to another may be negligent, and if the risk is great the conduct may be characterized as reckless or wanton, but it is not an intentional wrong.”); See Boston v. Publix Super Market, Inc., 112 So. 3d 654, 657 (Fla 4th DCA 2013)(“the statute provides an exceptionally narrow exclusion from immunity, requiring intentional, deceitful conduct on the part of the employer.”); See List Industries, Inc. v. Dalien, 107 So. 3d 470, 471 (Fla. 4th DCA 2013)(“The change from ‘substantial certainty’ to ‘virtually certain’ is an extremely different and manifestly more difficult standard to meet. It would mean that a plaintiff must show that a given danger will result in an accident every – or almost every – time.”); See Vallejos v. Lanm Cargo, S.A., 116 So. 3d 545 (Fla. 3d DCA 2013)(“the failure to train or warn of obvious dangers does not amount to concealing or misrepresenting the danger so as to prevent [the employee] from exercising informed judgment”).
The Florida Supreme Court in Travelers Indem. Co. v. PCR. Inc., 889 So. 2d 779 (2004) relied upon the standing rule that “tort law principles do not control judicial construction of insurance contracts….Thus, intentional act exclusions are limited to the express terms of the policies and do not exclude coverage for injuries more broadly deemed under tort law principles to be consequences flowing from the insured’s intentional acts.” at. 793; quoting Prudential Prop. & Cas. Ins. Co. v. Swindal, 622 So. 2d 467, 470 (1993). Intentional act exclusions are not a bar to insurance coverage for liability arising from claims brought under the objectively, substantially certain to result in injury exception. Travelers, 889 So. 2d at 781. The key distinction is whether the employer intended to cause the harm, not whether the employer intended the action. See id.; Swindal, 622 So. 2d at 472 (intentional acts exclusion did not bar coverage where insured approached another with a loaded handgun, got into an altercation with that individual during which the gun discharged and severely injury the individual; insured testified he did not intend to shoot and cause harm to the person) (emphasis added); See Cabezas v. Florida Farm Bureau Cas. Ins. Co., 830 So. 2d 156, 160 (Fla. 3d DCA 2002)(intentional acts exclusion did bar coverage where the insured admits he intentionally struck the person behind him who he believed was an assailant); Cloud v. Shelby Mut. Ins. Co. of Shelby OH, 248 So. 2d 217 (Fla. 3d DCA 1971)(ruling that tort law’s “reasonably foreseeable consequences” rule has no application to insurance policies, and intentional act exclusion did not bar coverage where the insured intentionally pushed another car out of its way causing injury to a passenger in the car being pushed); Phoenix Ins. Co. v. Helton; 298 So. 2d 177 (Fla. 1st DCA 1974)(exclusionary clause did not bar coverage because the insured did not intend to injure others even though insured intentionally drove his car into a crowd of people).
The Florida legislature’s enactment of Florida Statute 440.11(1)(b) combined with the Florida Supreme Court ruling in Travelers makes clear that the legislature intends for employees to use the channels created in the workers’ compensation law scheme which itself was put in place to provide quick recovery for employees who are injured on the job and emphasizes that tort principles have no place in workers’ compensation claims.
 The Supreme Court recognized that an exception to employer’s worker’s compensation immunity existed in Turner utilizing a “substantially certain” to cause injury or death standard.
The March 7, 2013 Florida Supreme Court ruling in Tiara Condominium Association, Inc. v. Marsh & McLennan Companies, Inc., et. al., 110 So. 3d 399 (Fla. 2013) limited the application of the Economic Loss Rule to the products liability context, creating the potential for an increase in tort claims arising out of contract.
In Tiara, Tiara Condominium Association (“Tiara”) hired Marsh & McLennan (“Marsh”) as its insurance broker to secure condominium insurance coverage. Id. at 400. Marsh obtained a windstorm policy with a loss limit of about $50 million through Citizens Property Insurance Corporation (“Citizens”). Id. After sustaining damage caused by hurricanes Frances and Jeanne in September 2004, Tiara began a loss remediation process. Id. Marsh assured Tiara that the loss limit coverage was per occurrence and not in the aggregate. Id. Tiara relied on this assurance when it decided to undergo more expensive loss remediation. Id. Unfortunately, when Tiara went to Citizens to recover payment, it was informed that the loss limit was in the aggregate, not per occurrence, causing Tiara to sustain economic loss due to its more expensive remediation efforts. Id.
In October 2007, Tiara filed suit against Marsh, including claims for negligence and breach of fiduciary duty. Id. The appeals court certified a question to the Supreme Court to determine whether the Economic Loss Rule prevents Tiara from recovering on these claims. Id. at 401. The Supreme Court decided in favor of Tiara and ruled that Tiara’s negligence claim was not barred because “the Economic Loss Rule applies only in the products liability context.” Id. at 407.
In its opinion, the Court provided a background as to the origins and rationale behind the Economic Loss Rule. The Rule was initially intended to apply in products liability cases to prevent tort actions to recover solely economic damages when the parties are in contractual privity. The rationale behind the rule was that “contract principles [are] more appropriate than tort principles for resolving economic loss without an accompanying physical injury or property damage.” Florida Power & Light Co. v. Westinghouse Elec. Corp., 510 So. 2d 899, 902 (Fla. 1987). The courts wanted to prevent plaintiffs from circumventing the bargained for terms of a contract by bringing an action in tort. Despite the Rule’s roots in products liability, over the years courts have expanded the Economic Loss Rule to apply to other situations involving claims in tort arising out of contract. In Tiara, the Court determined that applying the Economic Loss Rule outside of the products liability context is “unwise and unworkable in practice;” thus, it decided to limit the Rule’s scope to products liability cases. Tiara, 110 So. 3d at 407.
Justice Canady wrote a dissenting opinion emphasizing the important role that the Economic Loss Rule plays in maintaining the boundary between tort and contract. Id. at 411. Canady expressed his worry that, with the majority’s decision, “we face the prospect of every breach of contract claim being accompanied by a tort claim.” Id. at 414.
Justice Pariente’s concurring opinion attempted to address Canady’s concerns and asserted that common law principles of contract already restrict tort claims between parties in contractual privity. Id. at 408. Pariente emphasized that the majority’s decision “is neither a monumental upsetting of Florida law nor an expansion of tort law at the expense of contract principles. To the contrary, the majority merely clarifies that the economic loss rule was always intended to apply only to products liability cases.” Id.
It is unclear how the majority decision in Tiara will affect litigation in the future. However, it certainly raises the possibility that courts will entertain an increased amount of tort claims arising out of contractual relationships. This may have an impact on the insurance industry in that the potential for increased exposure to liability may lead to higher premiums and more complex indemnification provisions in policies.

References: v. 
 §440
 §440
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.