Brief Fact Summary. Two ships collided, causing toxic chemicals to be released into the environment and causing the United States Coast Guard (Coast Guard) to close a Mississippi River outlet. Numerous lawsuits were filed by those affected by the closing of the outlet. The district court granted a motion for summary judgment on all claims for economic loss unaccompanied by physical damage to property.
Synopsis of Rule of Law. The majority rule does not allow recovery for economic loss, unless physical damage to property occurs.
Issue. Is physical damage to a proprietary interest still a prerequisite to recovery for economic loss in cases of unintentional maritime tort?
Held. Yes. Decision of district court granting summary judgment to defendants on all claims for economic losses unaccompanied by physical damage is affirmed.
* The well settled present rule is demonstrated in Robins [Robins Dry Dock v. Flint, 275 U.S. 303 (1927)]. This case, stated broadly, denied a plaintiff recovery for economic loss if that loss resulted from physical damage to property in which he had no proprietary interest. The reason for this rule is strictly pragmatic, otherwise liability would be virtually open-ended.
* Plaintiff tries to confine Robins to losses suffered from the inability to perform contracts between a plaintiff and others. However, if a plaintiff connected to the damage by contract is denied recovery, it is indisputable that others more remotely situated cannot recover.
* Plaintiffs further urge that the present rule is arbitrary and unfair and should be replaced by a rule allowing the trier of fact to determine questions of remoteness. The court feels that doing away with the present bright line rule would create a situation where there is no determinable measure on the limit of foreseeability, forcing the trier of fact to make an arbitrary judgment.
* Although the present bright line rule may result in unjust decisions for some plaintiffs, this court feels that it is justified when compared to other options. The bright line rule allows for extensive losses, such as the losses in the present case to be spread over first party or loss insurance. If liability were to be spread by a new rule, the change would create a shift to more costly third party insurance to protect defendants.
* Plaintiff’s final contention is that the damages that occurred can be characterized as damages caused by a public nuisance. To do so, would create a nearly impossible task of determining who in the community suffered a pecuniary loss so great to justify distinguishing his losses from similar losses suffered by others. Based on these conclusions, the pragmatic approach of not allowing claims for economic loss unaccompanied by physical damage to property is affirmed.
It is well-settled that the invocation of federal admiralty jurisdiction results in the application of federal admiralty law rather than state law.View Full Point of Law