18 F.

3d 1555

AIRPORT RENT-A-CAR, INC., a Florida corporation,

Plaintiff-Appellant,
v.
PREVOST CAR, INC., a New Jersey Corporation, DefendantAppellee.
No. 93-4015.

United States Court of Appeals,

Eleventh Circuit.
April 19, 1994.

Hugh T. Maloney, Gary S. Maisel, Patterson, Maloney & Gardiner, Ft.

Lauderdale, FL, for plaintiff-appellant.
Shirley Jean McEachern, Bard D. Rockenbach, Daniel M. Bachi, Sellars,
Supran, Cole, Marion & Espy, P.A., W. Palm Beach, FL, for defendantappellee.
Appeal from the United States District Court for the Southern District of
Florida (No. 91-6653-CIV) Shelby Highsmith, Judge.
Before KRAVITCH, ANDERSON and EDMONDSON, Circuit Judges.
PER CURIAM:

1
CERTIFICATION
FROM THE UNITED STATES COURT OF APPEALS FOR
THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF FLORIDA
PURSUANT TO ARTICLE 5, SECTION 3(B)(6) OF THE FLORIDA
CONSTITUTION.
2TO THE SUPREME COURT OF FLORIDA AND ITS HONORABLE JUSTICES:
3

This case comes to the United States Court of Appeals for the Eleventh Circuit
on appeal from the Southern District of Florida. It involves questions of Florida
law which are determinative of the cause, but unanswered by controlling
precedent of the Supreme Court of Florida. We therefore certify this question

for resolution by the highest court of Florida.

I. Facts
4

The Plaintiff, Airport Rent-A-Car, Inc., ("Rent-A-Car"), brought this action

against Defendant, Prevost Car, Inc., ("Prevost"), arising from the destruction
of two passenger buses owned by Rent-A-Car and manufactured by Prevost.
This appeal concerns the dismissal with prejudice of Rent-A-Car's second
amended complaint.

Rent-A-Car owned several buses manufactured by Prevost. Two of the buses

caught fire and were destroyed while in transport. According to Rent-A-Car,
one of the buses caught fire while transporting school children. Rent-A-Car did
not purchase the buses directly from Prevost or from a distributor. Rather,
Rent-A-Car purchased the buses from Associated Cab Company, Inc.,
("Associated"), who was asserted not to be a supplier or distributor of the
buses. Further, Rent-A-Car alleged that Associated was not a merchant within
the definition under the Uniform Commercial Code; thus, no express or implied
warranty claim against Associated was brought. Instead, Rent-A-Car brought
claims against Prevost, the manufacturer and seller of the buses, alleging the
buses when sold were defective and unreasonably dangerous.

In its first amended complaint, Rent-A-Car alleged in Counts I and II that

Prevost was liable under a strict products liability theory because the bus
purchased by Rent-A-Car was defective when it left the manufacturer and that
the defect made it unreasonably dangerous. Rent-A-Car claimed damages for
the loss in the value of the bus, damage resulting from the loss of use of the
bus, and costs of litigation. Counts III and IV asserted Prevost's liability under a
negligence theory and included a demand for damages. Counts V and VI were
for breach of warranty. Prevost moved to dismiss the complaint.

The district court granted Prevost's motion to dismiss. The district held that the
Economic Loss Rule applied, precluding recovery in tort for damages to the
product itself, absent personal injury or damage to other property. Rent-A-Car
urged the district court to apply two exceptions to that rule, namely, (1) "no
alternate remedy", and (2) "sudden calamity". However, the district court
concluded that neither exception applied. The court also dismissed the breach
of warranty counts for failure to allege privity.

Rent-A-Car subsequently filed its second amended complaint. The second

amended complaint, essentially the same as the previously dismissed first

amended complaint, alleged in addition that there was property lost in one of
the bus fires that belonged to the passengers of the bus. Counts I and II
consisted of negligent products liability claims, with Counts III and IV
asserting claims of strict products liability claims. Rent-A-Car also added two
other counts of negligence in Counts V and VI for Negligent Failure to Warn.
Prevost moved to dismiss the second amended complaint for failure to state a
claim.
9

The district court granted Prevost's motion to dismiss, reasoning that Rent-ACar had failed to overcome the Economic Loss Rule. 788 F.Supp. 1203.
Because Rent-A-Car did not assert an ownership interest in the property
belonging to the passengers, the district court concluded that such property did
not constitute "other property" for purposes of removing Rent-A-Car's claims
from the Economic Loss Rule. Rent-A-Car then brought this appeal.

II. Contentions of the Parties

A. No Alternate Remedy
10

As its initial contention, Rent-A-Car argues that it has stated a cause of action
under the theories of negligent products liability and strict products liability
because it falls within the "no alternate remedy" exception to the Economic
Loss Rule. The Florida Supreme Court adopted the Economic Loss Rule which
bars recovery in tort for "purely economic losses," absent personal injury or
damage to other property. Florida Power and Light Co. v. Westinghouse
Electric, 510 So.2d 899, 901 (Fla.1987). Fueling the exclusion of tort recovery
is the notion that contract principles are more appropriate than tort principles to
resolve purely economic claims. Prior to its adoption of the Economic Loss
Rule in Florida Power and Light, Rent-A-Car states that the Florida Supreme
Court permitted recovery in tort for "purely economic losses," citing A.R.
Moyer, Inc. v. Graham, 285 So.2d 397 (Fla.1973), and First American Title Ins.
Co. v. First Title Serv. Co., 457 So.2d 467 (Fla.1984). Rent-A-Car accordingly
maintains that Florida's adoption of the Economic Loss Rule is not "ironclad,"
thus permitting resort to tort remedies where "no alternate remedy" in contract
exists.

11

Rent-A-Car derives support for this distinction from the Florida Supreme
Court's explanation of its decision in A.R. Moyer:

12 distinguishes Moyer from the above cases, however, is that the Plaintiff was
What
not the beneficiary, either directly or as a third party beneficiary of the underlying
contract. In that case we held a general contractor had a cause of action for the

alleged negligent supervisory performance by an architect.... Since there was no

contract under which the general contractor could recover his loss, we concluded he
did have a cause of action in tort.
13

AFM Corp. v. Southern Bell Telephone and Telegraph Co., 515 So.2d 180, 181
(Fla.1987). Rent-A-Car thus argues that A.R. Moyer supports the "no alternate
remedy" exception because it permitted tort recovery for pure economic loss
where no contract action was possible.

14

Rent-A-Car buttresses its argument for such a "no alternate remedy" exception
to the Economic Loss Rule by quoting a recent decision of the Fourth District
Court of Appeals:

15It seems clear that the invocation of the rule precluding tort claims for only
...
economic losses applies only when there are alternate theories of recovery better
suited to compensate the damages party for a particular kind of loss.
16

Latite Roofing Co., Inc. v. Urbanek, 528 So.2d 1381, 1383 (Fla. 4th DCA
1988). Rent-A-Car maintains that the "no alternate remedy" exception derives
from the policy underlying the Economic Loss Rule which "encourages parties
to negotiate economic risks though warranty provisions and price." Florida
Power and Light, supra, at 901. Where no warranty claim is possible, the "no
alternate remedy" exception permits resort to tort principles to permit recovery
because otherwise there would be no cause of action at all, according to RentA-Car. Rent-A-Car maintains that it falls within this "no alternate remedy"
exception precisely because it lacks such a warranty claim against either
Associated or Prevost.

17

Prevost responds that Florida in fact fails to recognize such a "no alternate
remedy" exception as espoused by Rent-A-Car. Prevost principally relies upon
the Florida Supreme Court's recent decision in Casa Clara Condominium
Association, Inc. v. Charley Toppino and Sons, Inc., 620 So.2d 1244
(Fla.1993). In Casa Clara, according to Prevost, the Florida Supreme Court has
refused to recognize any exceptions to the Economic Loss Rule, specifically
disapproving Latite Roofing Co. v. Urbanek, 528 So.2d 1381 (Fla. 4th DCA
1988), and limiting A.R. Moyer, Inc. v. Graham, 285 So.2d 397 (Fla.1973), to
its facts. In its limitation of A.R. Moyer, Prevost maintains that the Supreme
Court has implicitly agreed with the reasoning of Sandarac Association, Inc. v.
W.R. Frizzell Architects, Inc., 609 So.2d 1349 (Fla. 2d DCA 1992).

18

The Sandarac decision analyzed the Latite decision and concluded that the

court had misunderstood the significance of the dicta in AFM as creating a new
relationship of duty in negligence to protect economic expectations merely
because no contract exists. 609 So.2d at 1355. In refusing to recognize an
exception to the Economic Loss Rule, the Sandarac court stated that the true
distinction of A.R. Moyer explained by AFM was the fact that the contractor
was forced to rely upon the abilities of the architect and that the architect
actively supervised the project. Id. From this, Prevost concludes that the
Supreme Court did not base its decision in A.R. Moyer upon the presence or
absence of an alternative theory of liability, but rather upon the tort concept of a
duty created by the undertaking of an act. Prevost relies upon the following
language in A.R. Moyer:
19
Considerations
of reason and policy impel the conclusion that the position and
authority of a supervising architect are such that he ought to labor under a duty to the
prime contractor to supervise the project with due care under the circumstances,
even though his sole contractual relationship is with the owner ...
20

A.R. Moyer, supra, at 401. Thus, Prevost maintains that Latite is an inaccurate
interpretation of the law of Florida derived from dicta. Prevost further urges
that permitting such an exception to the Economic Loss Rule is contradictory to
the underpinnings of the rule's policy.

21

Finally, Prevost alternatively argues that Rent-A-Car has failed to show a

factual basis for its legal conclusion that its "no alternate remedy" theory exists.
Prevost bases this upon Rent-A-Car's conclusory assertion that no alternative
theory of recovery exists and that Associated is not a "merchant" as defined
under the Uniform Commercial Code.
B. Sudden Calamity

22

As a second contention, Rent-A-Car argues that it has stated a cause of action

under the theories of negligent products liability and strict products liability
because it falls under the "sudden calamity" exception to the Economic Loss
Rule. Under this theory, several jurisdictions recognize an exception to the
Economic Loss Rule where a sudden calamitous event causes damage. The
exception appears to compensate for the unreasonable "risk of harm to persons"
potentially associated with the sudden destruction of a product. Rent-A-Car
asserts that only two cases applying Florida law discuss the "sudden calamity"
exception, namely Florida Power and Light Co. v. McGraw Edison Co., 696
F.Supp. 617 (S.D.Fla.1988), aff'd, 875 F.2d 873 (11th Cir.1989) and General
Dynamics Corp. v. Wright Airlines, Inc., 470 So.2d 788 (3d DCA 1985).

23

In General Dynamics, the court distinguished Cedars of Lebanon Hosp. Corp.

v. European X-Ray Distrib. of America, Inc., 444 So.2d 1068 (Fla. 3d DCA
1984), as a case where the property damage sustained was not the product of a
sudden calamitous event. Thus, Rent-A-Car concluded that the court in General
Dynamics determined that the plaintiff fell within the "sudden calamity"
exception. Id. at 789 n. 1. Although the court in Florida Power and Light Co. v.
McGraw denied recovery in the explosion of a transformer based upon the
Economic Loss Rule, Rent-A-Car asserts that the instant case is distinguishable
due to the unreasonable risk of harm to persons presented by the explosion of
the buses. Rent-A-Car bases its argument upon the alleged fact that one of the
buses caught fire while transporting school children.

24

Prevost argues that Florida has not adopted the "sudden calamity" exception,
relying mainly upon the Florida Power & Light Co. v. McGraw decision.
Further, Prevost notes that the court in American Universal Insurance Group v.
General Motors Corp., 578 So.2d 451 (Fla. 1st DCA 1991), referred to the
exception but did not recognize its applicability in Florida. Finally, Prevost
argues that adoption of the "sudden calamity" exception would lead to
anomalous and undesirable results by exposing a manufacturer to vast and
unpredictable liability. Such a result, according to Prevost, is contrary to the
underlying rationale of the Economic Loss Rule which is to prevent endless
liability from subsequent purchasers. As support for this contention, Prevost
relies upon language in East River Steam Ship Corp. v. Transamerica Delaval,
Inc., 476 U.S. 858, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986):

25
Permitting
recovery for all foreseeable claims for a purely economic loss could
make a manufacturer liable for vast sums. It would be difficult for a manufacturer to
take into account the expectations of persons downstream who may encounter the
product.
26

Id. at 874, 106 S.Ct. at 2304.

27

Prevost further argues that the "sudden calamity" exception itself is based upon
faulty distinctions already rejected by the Supreme Court in East River:

28 realize that the damage may be qualitative, occurring through gradual

We
deterioration or internal breakage. Or it may be calamitous. But either way, since by
definition no person or other property is damaged, the resulting loss is purely
economic. Even when the harm to the product itself occurs through an abrupt,
accident-like event, the resulting loss ... is essentially the failure of the purchaser to
receive the benefit of his bargain--traditionally the core of contract law.

29

Id. at 870, 106 S.Ct. at 2302. For innocent bystanders and consumers who are
injured or have property damaged, tort and strict liability apply, serving the
purpose of tort law to distribute the risk of loss to members of society in a
situation where private contract cannot anticipate and compensate for the risk;
in a commercial setting, the parties are free to negotiate who will bear the risk
of loss. According to Prevost, this element of negotiation and hence, price
adjustment, would be forfeited if a manufacturer were subjected to liability for
the dissatisfaction of subsequent purchasers of whom it has no knowledge.
C. Independent Tort of Duty to Warn

30

Third, and finally, Rent-A-Car contends that it has stated a cause of action
under the theory of negligent failure to warn because it has alleged an
independent tort separate from any contractual action. Although apparently no
decisions of the Florida Supreme Court have squarely addressed this issue,
Rent-A-Car argues that its allegation that the failure to warn occurred "after the
manufacturing process," creates an "independent tort" apart from any
contractual actions. Rent-A-Car asserts that the Florida Supreme Court has
recognized that the existence of such an independent tort will avoid the reach of
the Economic Loss Rule. See AFM Corp. v. Southern Bell, 515 So.2d 180, 181
(Fla.1987) (quoting Lewis v. Guthartz, 428 So.2d 222, 224 (Fla.1982)). Where
an "independent tort" is alleged separate and apart from any contractual action,
Rent-A-Car asserts that the Economic Loss Rule is inapplicable, citing
Interstate Securities Corp. v. Hayes Corp., 920 F.2d 769 (11th Cir.1991). RentA-Car distinguishes the case of failure to warn a purchaser of a defect in a
product known at the time of the manufacturing process from the instance
where failure to warn upon the discovery of a defect occurs after the
manufacturing process and after the contract. It is this instance of subsequent
discovery which Rent-A-Car seeks to denominate as an independent tort
sufficient to remove it from the reach of the Economic Loss Rule. See Miller
Industries v. Caterpillar Tractor Co., 733 F.2d 813 (11th Cir.1984); McConnell
v. Caterpillar Tractor Co., 646 F.Supp. 1520 (D.N.J.1986).

31

Prevost responds that Rent-A-Car's third argument represents an attempt to

apply federal admiralty law which accords a favored status to fishermen instead
of the more rigorous generally applicable Florida law. Further, Prevost asserts
that the Supreme Court's decision in East River disapproved the Miller
decision. Operation of the Economic Loss Rule, argues Prevost, turns not upon
the timing of the asserted negligence but only upon its existence, coupled with
the absence of personal injury and property damage; thus, absent personal
injury or injury to property, there is no tort. Prevost asserts that Florida law

adopts this limitation on the applicability of tort law, citing Affiliates for
Evaluation and Therapy v. Viasyn Corp., 500 So.2d 688, 690 (Fla. 3d DCA
1987). Further, Prevost states that the duty to warn cases following the tort's
recognition in Florida in Tampa Drug Co. v. Wait, 103 So.2d 603 (Fla.1958),
have uniformly dealt with injuries to person or property which resulted from a
defective product. Thus, Prevost argues that the absence of tort damages
precludes recognition of this third theory proposed by Rent-A-Car.
32

Further, Prevost adopts its policy arguments raised in urging against adoption
of the "sudden calamity" exception. Permitting an "independent tort" to
circumvent the Economic Loss Rule, according to Prevost, would allow a
subsequent purchaser to create a warranty protection not purchased in the
transaction by simply claiming that the manufacturer had information that the
product might break down during use. Prevost urges that intrusion of tort law
into commercial transactions is undesirable and should not be permitted, absent
a compelling justification.

III. Conclusion
33

We believe that the issues of Florida law raised by the parties in this appeal are
appropriate for resolution by the highest court of Florida. We, therefore, certify
the following questions:

34

(1) WHETHER, UNDER FLORIDA LAW, THE ECONOMIC LOSS RULE

APPLIES TO NEGLIGENCE CLAIMS FOR THE MANUFACTURE OF A
DEFECTIVE PRODUCT WHERE THE ONLY DAMAGES CLAIMED ARE
TO THE PRODUCT ITSELF AND WHERE THE PLAINTIFF CLAIMS TO
HAVE NO ALTERNATIVE THEORY OF RECOVERY.

35

(2) WHETHER, UNDER FLORIDA LAW, A CAUSE OF ACTION

OTHERWISE PRECLUDED BY THE ECONOMIC LOSS RULE MAY BE
MAINTAINED IF THE DAMAGE TO THE PRODUCT IS CAUSED BY A
SUDDEN CALAMITOUS EVENT.

36

(3) WHETHER, UNDER FLORIDA LAW, A CAUSE OF ACTION MAY

EXIST OUTSIDE THE BAR OF THE ECONOMIC LOSS RULE WHERE
THE PLAINTIFFS ALLEGE A DUTY TO WARN WHICH AROSE FROM
FACTS WHICH CAME TO THE KNOWLEDGE OF THE COMPANY
AFTER THE MANUFACTURING PROCESS AND AFTER THE
CONTRACT.

37

We do not intend the particular phrasing of these questions to limit

37

We do not intend the particular phrasing of these questions to limit

consideration of the problems posed by the entire case. The Court is at liberty
to consider the problems and issues involved in this case as it perceives them to
be. In order to assist the determination, the entire record, along with the briefs
of the parties, shall be transmitted to the Supreme Court of Florida.

38

QUESTIONS CERTIFIED.