Florida State Bd. of Admin v. Law Eng. & Env. Servs., Inc.

Florida State Board of Administration (FSBA) (plaintiff), a Florida state agency, was interested in purchasing a commercial property in Minnesota. The commercial property contained an office building with an attached parking structure. FSBA contracted with Law Engineering and Environmental Services, Inc. (Law Engineering) (defendant) for a structural-soundness assessment. The contract had a choice-of-law clause that provided it would be “governed by and construed in accordance with the laws of the State of Florida.” The contract further provided that Law Engineering accepted a role of trust and confidence in its relationship with FSBA, and that Law Engineering would perform its services to meet a responsible engineering professional’s standards of practice. Law Engineering inspected the property and issued a report estimating maintenance costs and immediate repair costs. Based on the report, FSBA purchased the property, and soon FSBA needed to make repairs costing significantly more than that estimated by Law Engineering. FSBA filed a diversity action against Law Engineering in federal district court in Minnesota, asserting claims for breach of contract, negligence, breach of fiduciary duty, and negligent misrepresentation. Law Engineering argued that the economic-loss rule applied, barring FSBA’s tort claims. FSBA argued that Minnesota law applied to its tort claims, and Minnesota did not apply the economic-loss rule to negligence claims against engineers. Law Engineering argued that Florida law applied, and therefore the claims were barred.