Chorpus Christi Oil & Gas Co. v. Zapata Gulf Marine Corporation

Brief Fact Summary.

Chorpus Christi Oil & Gas Co. (plaintiff) sued Zapata Gulf Marine Corporation (defendant) for damages arising out of a boat accident.

Synopsis of Rule of Law.

In order for a plaintiff to recover damages from an injury, which was purely an economic loss, it must be associated with some sort of physical injury.

Facts.

Plaintiff had an offshore platform, in relation to a natural gas well, with a vertical pipe attached to one of the platforms legs. The pipe linked gas to a pipeline, which was a short distance from the platform. One night, during a storm, the defendant’s tug boat broke loose from their dock and hit the pip, damaging it. The plaintiff was unable to transport gas until the pipe was fixed, which took about two weeks. Because they could not transport the gas, they were forced to burn it off to avoid the loss of the well. The district court awarded damages for the gas lost during the two week period and lost revenue.

Issue.

Whether in order for a plaintiff to recover damages from an injury, which was purely an economic loss, it must be associated with some sort of physical injury.

Held.

Yes. In order for a plaintiff to recover damages from an injury, which was purely an economic loss, it must be associated with some sort of physical injury.

Concurrence.

None

Discussion.

While some courts do make an exception if a pure economic loss is associated with some sort of physical injury even if that injury was not caused by the economic loss, without that injury plaintiff may not recover for a pure economic loss. Here, the plaintiff mitigated their damages by ensuring the well was not destroyed by burning off the gas. It follows that injury would have occurred if they had not mitigated damages, and they may recover for the value of gasoline. However, they may not recover for lost revenue because that is a pure economic loss.