People Express Airlines, Inc. v. Consolidated Rail Corp.

Brief Fact Summary.

The plaintiff was forced to evacuate its offices due to a chemical spill caused by the defendant. No physical harm was suffered, but economic loss occurred due to the suspension of business.

Synopsis of Rule of Law.

A defendant who has breached his duty of care to avoid the risk of economic injury to foreseeable plaintiffs may be held liable for actual economic losses proximately caused by his breach of duty.

Facts.

The defendant negligently allowed a dangerous chemical to escape its railway tank car, causing the evacuation of the surrounding area. The plaintiff, a commercial airline company, was forced to evacuate its premises and suffered an interruption of business services, but no physical damage.

Issue.

Can the plaintiff recover for a purely economic injury with no accompanying physical harm?

Held.

Yes. The appellate decision is affirmed and the case is remanded for further proceedings.

Discussion.

It is generally accepted that defendants are liable for any proximately caused harm, including economic losses, when there is an accompanying physical harm. It is also generally accepted that a plaintiff cannot recover for pure economic losses without any physical injury. That being said, this court rejects the notion that a physical injury must be present to allow for compensation and chooses instead to analyze the facts of the case. In analyzing liability, the court considers foreseeability of the harm to the specific plaintiff in question. The defendant’s freight yard is located near the plaintiff’s business and the potential for economic loss was clear.