A potentially historical decision of the Supreme Court of Florida, that responsibility insurers expected it to expand greatly how much they can recover in subrogation actions, will have to wait another day.
In the construction and transport insurance services of NBIS observed versus Liebherr-American Inc., a Federal Appeals Court had asked the Superior Court of the State to clarify the meaning of the “economic loss.” But the case was resolved this month, a few days before the judges were configured to listen to oral arguments.
The lawyers involved in the case could not reveal the terms of the agreement. But NBIS’s main lawyer, the insurer of a construction cranes operator, said that the legal agreement and arguments could lead to courts to consider true costs when a manufacturer does not provide a safe product or adequate instruction on the product .
“The courts must observe the substance of the case, not only what a lawyer describes it,” said Josh Goodman, insurance subrogation lawyer in Miami, of the Cozen O’Connor law firm. “They need to look at the forest and trees.”
The case began in 2018, when a massive crane built by Liebherr, in Germany, was delivered to Sims Crane & Equipment Co., in Tampa. After a Sims team put the crane to maintain a boom of 276 feet, the boom collapsed, killing a worker.
The crane was very damaged in the collapse. Nbis, also known as Nationsbuilders Insurance, paid Sims Crane $ 3.2 million to cover the cost of the crane, plus $ 180,000 for elimination. Nbis was able to sell the damaged equipment for $ 1.65 million. That left around $ 1.74 million, so Nbis sued the manufacturer in the Federal Court.
Liebherr argued that he had no duty to protect the insurance company against purely economic damage, that his actions were not the cause of the collapse of the boom and that the Florida economic loss limitation rule prevented the NBI from recovering the money.
The rule of often weakened economic loss was largely developed to protect manufacturers from responsibility for economic damage caused by a defective product, beyond the damage provided by a guarantee. The rule arose in part to limit grievance claims when contracts already ruled a product or service, the US 11th The Circuit Appeals Court was explained.
The Florida Supreme Court in 1993 defined economic losses such as “damage due to inappropriate value, repair and replacement costs of the defective product, or the consequent loss of profits, without any claim of personal injury or damage to other properties,” said the judges of appeals. Liebherr’s lawyers argued that the rule prevents a claim against a product manufacturer when the product only damages itself.
However, after a trial in 2022, a judge of the Federal District Court did not agree with Liebherr’s argument, and gave NBIS the $ 1.7 million, plus interest. Liebherr appealed.
The Quid of the Goodman and Nbis argument is that the statement against Liebherr was not a product or responsibility of defective product, to which the economic loss limitation rule has often applied. Liebherr knew that if the pins at the rise of the crane were not placed exactly in the correct position, or that if one of them moved, it could cause damage to death, injuries and property, Nbis argued. A similar collapse had happened in 2017 in Japan.
However, the manufacturer did not provide sufficient training for Sims workers and did not provide a crucial safety bulletin and warning banners to Sims, documentation that would have explained the importance of the proper PIN placement, until a week after the collapse, he argued NBIS.
All other cranes operating companies that had bought the Liebherr cranes had received the newsletter, Nbis said.
“This case is not a defect in a product, but, on the other hand, a defect in Liebherr’s services provided to Sims,” Jeffrey Greenspan of Goodman and Cozen advocated in their brief to the Supreme Court of the State.
No evidence in the trial showed a product defect. NBIS’s legal team cited a 2013 decision of the Florida Supreme Court, known as Tiara Condominium against Marsh & Mclennan, to argue that the economic loss rule should not be applied in the case of crane collapse.
That would make it a demand for negligent service, not a claim for the responsibility of the product, explained Goodman. If negligence is proven, an insurance company is likely to recover more in damage than only the cost of the equipment itself.
“Here, the crane was not damaged due to a crane defect,” argues the brief NBIS. “The crane was damaged by the negligent training of the Liebherr operator and its negligent maintenance of its property records.”
11th Circuit asked the Supreme Court of Florida to clarify past spring once and for all if the loss limitation should be applied beyond the cost of the product. The decisions of the previous courts in conflict in the matter, and the Federal Court of Appeals said that Florida’s law needed to clarify.
“The Court must answer the certified question of the eleventh circuit in negative,” concluded NBIS’s team in his brief. “The economic loss rule has no request for claims outside the context of the responsibility of the products under the decision of this court in Tiara. “
But with the case now established and the terms are confidential, another case is likely to be needed to determine the true scope of the economic loss rule.
Goodman said that insurance companies expect to recover complete damage in subrogation claims can take some heart of the result. In the future, insurers can protect their interests quickly retaining a competent lawyer after an incident; immediately preserving all evidence; retain experienced experts to examine the circumstances; and place all possible defendants in notice, so that the evidence is not lost or destroyed.
You could not contact Leibherr lawyer in the case to comment this week, but Leibherr’s letter before the court can be seen here.
Topics Loss of gain
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