Opinion ID: 549851
Heading Depth: 2
Heading Rank: 2

Heading: The Directed Verdict on the Negligence Counts

Text: 10 Under Florida law at the time of trial, Blu-J was required to show privity of contract with Kemper in order to proceed in negligence. Investment Corp. of Florida v. Buchman, 208 So.2d 291 (Fla.Dist.Ct.App.1968). The district court correctly recognized this and directed a verdict on the negligence claims because Blu-J had failed to demonstrate privity. R6-326. 11 In Buchman, the Florida court expressly declined to adopt the Restatement of Torts Sec. 552 and its expansion of professional liability beyond the confines of privity. Id. at 295-96. However, after the trial but before this appeal reached oral argument, the Florida Supreme Court, in First Florida Bank, N.A. v. Max Mitchell & Co., 558 So.2d 9 (1990), overruled the Buchman decision and adopted the rule from Restatement (Second) of Torts Sec. 552 (1976). The new rule provides: 12 (1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for the pecuniary loss caused to them by their justifiable reliance on the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. 13 (2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered 14 (a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and 15 (b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction. 16 The Max Mitchell court thus rejected the requirement of privity and adopted the foregoing rule from the Restatement. The Florida Supreme Court also held this same rule applies to allegations of negligence and gross negligence alike. Max Mitchell, 558 So.2d at 14. This intervening decision of the Florida Supreme Court requires that we reverse the district court's directed verdict on the two negligence counts. 1 On remand, the district court will apply the Restatement rule pursuant to the Max Mitchell decision. 17 Counsel for Kemper argues that the directed verdict on the negligence claims should be affirmed notwithstanding the Max Mitchell case, because the doctrine announced in AFM Corp. v. Southern Bell Tel. & Tel. Co., 515 So.2d 180 (Fla.1987) bars Blu-J's negligence claims. AFM involved a tort claim against the publisher of a yellow page phone directory for economic loss caused by the publication of an incorrect telephone number. Recognizing that the plaintiff had an available cause of action for breach of contract, which it elected not to pursue, the court held that without some conduct resulting in personal injury or property damage, there can be no independent tort flowing from a contractual breach which would justify a tort claim solely for economic losses. Id. at 181-82. Kemper argues that Blu-J's third party beneficiary theory, although it resulted in a directed verdict which Kemper contends should be affirmed, nevertheless is an available alternative remedy within the meaning of AFM that bars recovery of economic losses on a negligence theory. We reject this argument. 18 The AFM case does not stand for the proposition that the mere allegation of any alternate theory of recovery forecloses the award of economic damages in tort. Rather, the court in AFM merely held that a party to a contract could not recover economic damages on a tort theory in the absence of a tort independent of the breach of contract itself. Id. at 181. That this was the holding of AFM is demonstrated by the fact that the court distinguished A.R. Moyer, Inc. v. Graham, 285 So.2d 397 (Fla.1973). 19 In Moyer, the plaintiff was a general contractor who alleged economic and other loss resulting from an architect's failure to adequately perform his contractual duties to the owner. The plaintiff advanced two alternate theories for recovery: (1) the architect was liable for negligence despite a lack of privity; and (2) that he was a third party beneficiary of the contract. Finding no contractual intent to benefit the general contractor, the court rejected the third party beneficiary theory. Id. at 402-03. However, the court allowed the plaintiff to recover economic loss pursuant to his negligence cause of action. Id. at 398-402. The AFM court distinguished Moyer on the ground that the plaintiff was not the beneficiary, either directly or as a third-party beneficiary, of the underlying contract. AFM, 515 So.2d at 181. Thus, it is clear that the mere allegation of a third party beneficiary claim is not enough to trigger the AFM doctrine. 20 In the instant case, we need not address the issue whether the availability of a valid third party beneficiary cause of action would bar a tort recovery for economic loss. In this case, Blu-J does not have the status of a third party beneficiary, and Florida law is clear that the AFM doctrine does not bar Blu-J's negligence claims. 21 We therefore reverse the district court's directed verdict on the negligence counts and remand for proceedings consistent with this opinion and First Florida Bank, N.A. v. Max Mitchell & Co., 558 So.2d 9 (Fla.1990). 22