Opinion ID: 1755072
Heading Depth: 1
Heading Rank: 6

Heading: The Duty Element

Text: Limiting the scope of the economic loss rule removes one obstacle to the recovery of purely economic losses. But significant obstacles remain. As the majority recognizes, plaintiffs whose cases fall outside of the economic loss rule must still satisfy the traditional negligence principles of duty, breach, and proximate cause. Majority op. at 543. The duty prong remains a strong filter in these cases  virtually as strong as the rule itself. A service provider's mere failure to exercise reasonable care in performing a service contract does not render it liable in tort to every party who loses revenue or incurs additional expense. The plaintiff still must demonstrate an independent duty to protect that plaintiff's purely economic interests. See Onita Pac. Corp. v. Trs. of Bronson, 315 Or. 149, 843 P.2d 890, 896 (1992) (holding that a negligence claim for the recovery of economic losses caused by another must be predicated on some duty of the negligent actor to the injured party beyond the common law duty to exercise reasonable care to prevent foreseeable harm). Such a showing will be difficult in most cases. Illinois's experience is instructive. In Congregation of the Passion, 201 Ill.Dec. 71, 636 N.E.2d at 514, the Illinois Supreme Court did roughly what the majority does today: it limited the application of the economic loss rule in the services context to cases where the duty of the party performing the service is defined by contract. Id. After Congregation of the Passion, however, Illinois courts quickly recognized that the duty element plays a filtering role similar to that of the economic loss rule. As one Illinois appellate court noted, [T]he concept of duty is at the heart of the distinction drawn by the economic loss rule. The rule acts as a shorthand means of determining whether a plaintiff is suing for injuries arising from the breach of a contractual duty ... or for injuries resulting from the breach of a duty arising independently of the contract ... Tolan & Son, Inc. v. KLLM Architects, Inc., 308 Ill.App.3d 18, 241 Ill.Dec. 427, 719 N.E.2d 288, 294 (1999) (quoting 2314 Lincoln Park West Condo. Ass'n v. Mann, Gin, Ebel & Frazier, Ltd., 136 Ill.2d 302, 144 Ill.Dec. 227, 555 N.E.2d 346, 351-52 (1990)). Thus, even without the economic loss rule, Illinois courts continue to deny relief to most plaintiffs seeking purely economic losses because they generally cannot prove a breach of a duty independent of the contract. See, e.g., Harger v. Spirit Airlines, Inc., No. 01-C-8606, 2003 WL 21218968, at  (N.D.Ill. May 22, 2003) (finding no independent duty on the part of an airline to transport passenger bags safely to their destination, because any such duty is merely incidental to the contract); Peter J. Hartmann Co. v. Capital Bank & Trust Co., 296 Ill.App.3d 593, 230 Ill.Dec. 830, 694 N.E.2d 1108 (1998) (finding that any duties of a subcontractor to a property owner were merely incidental to [the subcontractor's] contractual duty). Courts have considered allowing recovery from service providers for purely economic loss where a special or fiduciary relationship exists. See, e.g., Mut. Serv. Cas. Ins. Co. v. Elizabeth State Bank, 265 F.3d 601 (7th Cir.2001) (applying Illinois law) (concluding that a bank's handling of its customers' transactions might create independent tort duties); Choi v. Chase Manhattan Mortgage Co., 63 F.Supp.2d 874, 884 (N.D.Ill.1999) (holding that independent tort duties might exist where one party, due to a close relationship, relies heavily on the judgment of another). The experience of Illinois suggests that our limitation of the economic loss rule in the services context will not open up a brave new world of tort liability because the duty element will continue to weed out most claims for purely economic loss. Even the strongest advocates of limiting the economic loss rule in Florida have recognized this. See Paul J. Schwiep, The Economic Loss Rule Outbreak: The Monster That Ate Commercial Torts, Fla. Bar J., Nov. 1995, at 34, 42 (The duty-analysis, had it been employed [in this Court's previous] cases, may very well have led to the same final outcome [as the economic loss rule]  the facts aren't clear. The point of this article is not to criticize the result, but to urge rigor in the analysis.).