Recently, the 11th Circuit Court in Miami-Dade County dismissed a claim filed by the purchaser of a home for negligent construction against a contractor who performed work for the seller. The basis for the decision was the lack of any damages to anything other than the house, meaning there were no personal injuries or damages to other property. Though only a trial court order, the case discusses several recent appellate decisions and provides a good window into how trial courts are applying new cases in a trial setting.
In Balkin v. Muniz General Contractors, a purchaser bought a single family home from the seller. The purchase agreement indicated the sale was “as-is” and that the sellers were making no warranties as to the condition of the property. Further, the purchasers had 10 days to inspect the home. After the purchase, the purchaser sued the sellers and the general contractor who had performed work at the home for the sellers, claiming defective work in the home resulting in damages to the home.
Specifically, the purchasers claimed that the general contractor negligently installed tiles on the wall of the master bathroom. These tiles then fell, requiring the purchaser to redo all of the tile in the master bathroom. The purchaser also alleged that a negligently installed pipe leaked causing damage to the downstairs floors, subfloors, walls, baseboards, and wall studs.
In evaluating the general contractor’s motion to dismiss these claims against it, the trial court framed the issue as whether the general contractor could be held liable in negligence for alleged defects where the only allegations of damage were to the house itself, as opposed to damages to other property or personal injuries. The trial court determined it could not.
In reaching this conclusion, the trial court first examined Florida’s economic loss rule which “prohibits tort claims when the only damages alleged are economic losses, without any assertion of personal injury or damage to property other than to the product itself.” In the context of construction, this rule has been used to look at finished construction work as a whole, rather than viewing work in pieces such that one part of the work could damage another one and open the door to a tort claim. This is because, in the eyes of Florida’s courts, individuals are purchasing a completed home, not the individual components of the home:
Generally, house buyers have little or no interest in how or where the individual components of a house are obtained. They are content to let the builder produce the finished product, i.e., a house. These homeowners bought finished products -- dwellings -- not the individual components of those dwellings. They bargained for the finished products, not their various components.
While the Florida Supreme Court has retreated from the economic loss rule in recent years, the trial court held that last year’s decision in Hollywood Beach Condominium Ass’n v. TRG Holiday, LTD, illustrated that the economic loss rule still prohibited tort claims for damage to a structure caused by defective work within that structure. Applying the Hollywood Beach decision here, the trial court concluded:
Applying the object of the bargain rule to the present case prevents Plaintiffs from seeking damages from MGC for negligent construction. Plaintiffs bargained for, purchased and received a completed building, which included the master bathroom tiles as well as the downstairs floors, subfloors, walls, baseboards, and wall studs. These components were an integral part of the finished product, the building itself. Damage to these components would not constitute damage to other property. The economic loss rule therefore bars Plaintiffs' recovery as to MGC to the extent that they seek damages to replace the master bathroom tiles and repair the downstairs floors, subfloors, walls, baseboards, and wall studs of the building.
Because these were the sole bases for the claims raised by the purchasers against the general contractor, the trial court dismissed them.
This case should not be viewed as a get out of jail free card for poor work, or an incentive to setup “straw man” transfers to protect a contractor from liability to subsequent purchasers. There are other ways to pursue damages for poorly performed construction. But this case does illustrate that liability to subsequent purchasers is not all encompassing, which is a good thing for contractors.