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GETTY REF. & MKTG. CO. v. M/T FADI B

August 29, 1984

GETTY REFINING AND MARKETING CO.
v.
M/T FADI B, her engines, tackle, apparel, furniture, equipment, and all other necessaries thereunto appertaining and belonging, In Rem and FADI SHIPPING CORPORATION In Personam



The opinion of the court was delivered by: VANARTSDALEN

 VanARTSDALEN, District Judge

 Plaintiff Getty Refining and Marketing Co. (Getty) operates a marine terminal at Delaware City, Delaware. This terminal is used primarily for the loading and unloading of crude oil and oil products at Getty's refinery. The M/T Fadi B is an oil tanker owned by defendant Fadi Shipping Corporation (Fadi). On January 12, 1981, the Fadi B sustained a crack in her deck and side hull plating while discharging a cargo of crude oil at Pier 1 of Getty's Delaware City terminal. The source of the crack was a defective weld in the ship's main deck plating. The weld had been put in place in early 1980 during shipyard repairs in Piraeus, Greece. The crack caused neither physical damage to Getty's facilities nor pollution damage to the waters surrounding Getty's terminal. The United States Coast Guard, however, ordered the Fadi B to cease discharging her cargo and to remain at her berth until a safe plan for discharging the balance of the cargo could be developed and implemented. As a result, the Fadi B's cargo operations ceased for over two and one-half days, and the ship was forced to remain moored at Getty's pier until January 17, 1981.

 Getty brought the present action to recover damages for the loss of use of its pier during the extra time used by the Fadi B following the cracking of her hull. Getty contends that the defendants are liable for the consequences of the Fadi B's cracking, because the defendants were negligent in failing to inspect the defective weld at the time of the ship's repair in Greece, and later in mooring the Fadi B at Getty's terminal under conditions that foreseeably would result in the cracking of the ship. The damages that Getty seeks to recover as a result of the defendants' negligence consist of the demurrage paid by Getty to several vessels that were scheduled to dock at Getty's terminal, but were delayed in doing so while the Fadi B remained at Getty's pier.

 A nonjury trial was held earlier this year. At the close of Getty's evidence, the defendants moved for dismissal of the action pursuant to Federal Rule of Civil Procedure 41(b). The basis for the defendants' motion was that Getty had offered evidence only as to economic injury, and that recovery for purely economic loss is barred as a matter of law by Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 72 L. Ed. 290, 48 S. Ct. 134 (1927). At the time, I declined to render a judgment, but took the defendants' motion under advisement until the close of all the evidence. At the close of all the evidence, the defendants renewed their motion. I heard arguments of counsel on the Robins issue, and requested additional briefing by the parties. Because the Robins issue is dispositive, judgment will be entered in favor of the defendants. *fn1"

 In Robins, the operators of a shipyard negligently damaged a ship's propeller while performing repair work on the ship. The damage to the propeller required the ship to remain in drydock for several additional days. A party that had contracted with the owner to charter the ship sued the shipyard for the damages arising from the loss of use of the ship during the time needed to replace the damaged propeller. The Supreme Court held that the time charterer could not recover from the shipyard. Justice Holmes, writing for the court, stated:

 
[the time charterer's] loss arose only through [its] contract with the owners -- and while intentionally to bring about a breach of contract may give rise to a cause of action, no authority need be cited to show that, as a general rule, at least, a tort to the person or property of one man does not make the tort-feasor liable to another merely because the injured person was under a contract with that other, unknown to the doer of the wrong. The law does not spread its protection so far.

 275 U.S. at 308-09 (citations omitted).

 Although the Robins court did not articulate a rationale for the rule denying the charterer's claim for the negligent interference with contractual relations, it is generally accepted that the rule reflects a concern for limiting the scope of a defendant's potential economic liability. See generally, Restatement (Second) of Torts § 766C, comment a (1979); Prosser and Keeton on the Law of Torts, § 129 at 1001 (W. P. Keeton 5th ed. 1984); James, Tort Liability for Economic Loss, 25 Vand. L. Rev. 43 (1972). Without such a limitation, a defendant may be exposed to potentially limitless liability, because a single negligent act may affect a multitude of contractual relationships. Prosser and Keeton note:

 
The policy against recovery based on [negligent interference with contractual relations] is rooted at least in part on what Professor James has called the "pragmatic objection" that while physical harm generally has limited effects, a chain reaction occurs when economic harm is done and may produce an unending sequence of financial effects best dealt with by insurance, or by contract, or by other business planning devices.

 Prosser and Keeton, § 129 at 1001. By limiting a defendant's exposure for economic losses that arise solely by reason of a contractual relation, the rule against recovery for the negligent interference with the performance of a contract cuts off the chain reaction of financial effects at the first link.

 Some courts have extended this policy analysis, and apply Robins as authority for a per se rule barring recovery for all negligently inflicted economic losses, where such losses are unaccompanied by physical damage to the plaintiff's person or property. In particular, the Fifth and Eleventh Circuits routinely apply Robins to deny recovery where a defendant negligently obstructs the use of a navigable waterway and causes vessel owners, terminal operators, or various other commercial enterprises to lose profits or incur additional expenses. See, e.g., Louisiana v. M/T Testbank, 728 F.2d 748 (5th Cir. 1984); Hercules Carriers, Inc. v. Florida, 720 F.2d 1201 (11th Cir. 1983); Akron Corp. v. M/T Cantigny, 706 F.2d 151 (5th Cir. 1983); Kingston Shipping Co. v. Roberts, 667 F.2d 34 (11th Cir.), cert. denied, 458 U.S. 1108, 73 L. Ed. 2d 1369, 102 S. Ct. 3487 (1982); Dick Meyers Towing Service, Inc. v. United States, 577 F.2d 1023 (5th Cir. 1978), cert. denied, 440 U.S. 908, 59 L. Ed. 2d 455, 99 S. Ct. 1215 (1979). In Testbank, for example, the court stated:

 
Building on the Supreme Court's decision in [ Robins ], the Fifth Circuit Court of Appeals has developed a doctrine of maritime law that controls the outcome of this case: in a suit based upon the alleged negligence of a defendant, a plaintiff cannot recover consequential economic losses if the alleged negligence has not caused any physical damage to the person or property of the plaintiff.

 728 F.2d at 749-50. Needless to say, application of such a per se rule in the present case would bar Getty from recovering from the defendants, because Getty admittedly has not ...


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