Opinion ID: 41387
Heading Depth: 1
Heading Rank: 3

Heading: claims pursuant to general maritime law

Text: 5 It is unmistakable that the law of this circuit does not allow recovery of purely economic claims absent physical injury to a proprietary interest in a maritime negligence suit. In Robins Dry Dock & Repair v. Flint, 275 U.S. 303, 309 (1927), the Supreme Court held that a tortfeasor is not liable for negligence to a third person based on his contract with the injured party. In Louisiana ex. rel. Guste v. M/V TESTBANK, 752 F.2d 1019, 1023 (5th Cir. 1985) (en banc), this court concluded that Robins is a pragmatic limitation on the doctrine of foreseeability. We reasoned that “[i]f a plaintiff connected to the damaged chattels by contract cannot recover, others more remotely situated are foreclosed a fortiori.” 752 F.2d at 1024. Accordingly, we reaffirmed the rule that there can be no recovery for economic loss absent physical injury to a proprietary interest. Id.
Because of the number of parties involved in this appeal, we find it helpful to briefly summarize the underlying claims. Cajun Wireline, Inc. (“Cajun”), a full service slick wireline provider, claims that three of its jack up boats could not perform their duties due to the allision and subsequent evacuation. Coastline Marine, Inc. (“Coastline”), a pile driving business, claims it was unable to perform work on its contracts as a result of the evacuations. Pam Dore, doing business as Cove Marina (“Cove Marina”), claims loss of revenues and sales from a convenience store as a result of the evacuation. Legnon Enterprises (“Legnon”) claims lost charter revenues and lost sales and revenues due to the evacuation. Coy Reeks, doing business as Riverfront Seawalls and Bulkheads (“Riverfront”), claims he had to leave his equipment on the island during the evacuation and as a result could not work for one week. Twin Brothers Marine (“Twin Brothers”), a fabrication and dock facility, claims it was forced to halt work in progress for two construction projects. Marine Turbine Technologies (“MTT”) claims that it suffered physical damage in the form of toxic gas permeation 6 on its property. North American Salt Company/Carey Salt Company (“North American”) claims it had to suspend operations due to the discharge of the gas into the air. Morton International (“Morton”) claims it began to shut down operations before the evacuation order was issued and that its whollyowned subsidiary, CVD Incorporated d/b/a Rohm & Haas Advanced Materials (“Advanced Materials”), suffered physical damage. Advanced Materials is a chemical vapor deposition facility that manufactures material used to make specialty lenses for military equipment and other purposes. It claims that two of its manufacturing runs had to be prematurely terminated and the company lost the materials in those runs and could not sell the products. Big D’s Seafood (“Big D’s”), Blue Gulf Seafood, Inc. (“Blue Gulf”), and Bagala’s Quality Oysters (“Bagala’s”) claim lost revenues from their wholesale fishing operations. Mason Seafood (“Mason”) claims it lost eighty-eight boxes of dressed crabs that spoiled in a freezer when law enforcement officials shut off the electricity during the evacuation.

The district court concluded that Cajun, Coastline, Cove Marina, Legnon, Riverfront, and Twin Brothers suffered no physical damage; however, the court endorsed a geographic exception to the TESTBANK rule and concluded that the claimants should have the opportunity to prove that their damages were foreseeable and proximately caused by the allision. The court concluded that Blue Gulf, Big D’s and Bagala’s either suffered physical damage or satisfied the commercial fishermen exception1 to TESTBANK, and denied summary judgment as to those claims as well. The district 1 Relying, inter alia, on the Ninth Circuit’s decision in Union Oil Co. v. Oppen, 501 F.2d 558 (9th Cir. 1974), the district court in TESTBANK, denied summary judgment as to the commercial fishermen who “were exercising their public right to make a commercial use of those waters.” 7 court concluded that MTT’s and North American’s claims of physical damage in the forms of the presence of gas on their properties satisfied TESTBANK; accordingly, it denied summary judgment. The court also concluded that Morton, along with Advanced Materials, satisfied the physical damage requirement. (Advanced Materials’s claims are addressed below.) Appellants’ argue that the district court erred in denying their motions for partial summary judgment because these claimants did not suffer physical damage to a proprietary interest, and thus, their claims for economic loss are barred by our decision in TESTBANK. Claimants make several arguments in support of the district court’s denial of summary judgment. Cajun, Coastline, Cove Marina, Legnon, Riverfront and Twin Brothers argue that their claims should be subject to traditional foreseeability/proximate cause evaluations, asserting that their businesses are located in close proximity to the accident site and that they all worked and/or resided within the evacuated area. They also argue that this case is distinguishable from TESTBANK because that case involved forty-one lawsuits, whereas here, fourteen claims are the subject of these motions for summary judgment. Blue Gulf and Big D’s argue they sustained physical impact and damage from the allision and that they had to destroy or decontaminate their products and equipment. North American and MTT allege they suffered physical damage because the gaseous cargo became physically present on their properties. Louisiana ex rel. Guste v. M/V TESTBANK ,524 F. Supp. 1170, 1173-74 (E.D. La. 1981). On appeal, we recognized the argument in favor of an exception for commercial fishermen, but left the contours of such an exception for another day because the claims of the commercial fishermen were not before us. See TESTBANK, 752 F.2d at 1027 n.10. 8 North American and Morton2 claim that they shut down operations in order to prevent damage to their equipment and products. Contrary to the district court’s conclusion, twelve of the fourteen businesses that are parties to this appeal suffered no physical damage attributable to the allision and thus, their claims are barred by TESTBANK. There is no geographic exception to the TESTBANK rule and there is no exception based on the number of claimants. The TESTBANK court expressly rejected the case-by-case approach urged by Claimants, and adopted by the district court in the case at bar. In Reserve Mooring Inc. v. American Commercial Barge Line, LLC, 251 F.3d 1069, 1071-72 (5th Cir. 2001), this court reversed the district court’s conclusion that TESTBANK “is merely an application of the general requirement that damage be foreseeable to be recoverable in tort,” and concluded that “physical injury to a proprietary interest is a prerequisite to recovery of economic damages in cases of unintentional maritime tort.” Additionally, as we explained above, Bagala’s, Big D’s and Blue Gulf’s claims, if any, as commercial fishermen were not included in the motions for partial summary judgment; only their claims as wholesale fishermen were included. Accordingly, the district court erred in concluding that these claimants satisfied the commercial fishermen exception to TESTBANK. Their claims are for economic losses from their wholesale operations, and thus, they are barred by TESTBANK. While other jurisdictions may have abandoned or relaxed the bright line rule of Robins and TESTBANK, this circuit “has not retreated from TESTBANK’s physical injury requirement,” Reserve Mooring, 251 F.3d at 1071. Therefore, the district court erred in denying Appellants’ motions for partial summary judgment as to Cajun, Coastline, Cove Marina, Legnon, Riverfront, 2 Because we conclude that the district court erred in denying Appellants’ motions for summary judgment as to Advanced Materials’s claims, we need not address Morton’s argument based on its ownership of its Advanced Materials’s facilities. 9 Twin Brothers, Blue Gulf, Big D’s and Bagala’s. These claimants have not suffered physical damage; therefore, their claims are barred by our decision in TESTBANK. Likewise, the district court erred in concluding that MTT, North American, and Morton suffered physical damage sufficient to satisfy TESTBANK. MTT’s and North American’s arguments that the physical presence of the gas on their property satisfies TESTBANK’s physical damage requirement are unpersuasive. These claimants have not raised an issue of fact as to whether the gas physically damaged their property nor caused any personal injury; indeed, as noted above, such claims were not subjects of Appellants’ motions for partial summary judgment. Nor are we persuaded by North American’s and Morton’s arguments that they mitigated damages by shutting down their operations. In Corpus Christi Oil & Gas Co. v. Zapata Gulf Marine Corp., 71 F.3d 198 (5th Cir. 1995), an allision between a barge and a platform damaged a gas riser, owned by Houston Pipeline Company, which was connected to the platform owned by Corpus Christi. Realizing the allision was about to occur, workers on the Corpus Christi platform shutdown operations to prevent fire or explosion. During the two weeks it took to repair Houston Pipeline’s gas riser, Corpus Christi flared gas to prevent loss of its wells. This court concluded that “[e]xcept for its acts in mitigation, Corpus Christi would have suffered great physical damages to its wells.” Id. at 202. Accordingly, the court affirmed the district court’s award of damages for the costs incurred in flaring the gas. Id. Nevertheless, the court disallowed Corpus Christi’s damages resulting from the inability to produce and sell its gas during the repair period, reasoning that “[t]he additional economic losses that Corpus Christi seeks to recover occurred solely and only because of the physical damage that was done to Houston’s property,” and that “Corpus Christi lost its gas sale profits because it could not use the 10 pipeline, not because it was flaring its own gas.” Id. Unlike the plaintiffs in Corpus Christi, North American and Morton did not lose any of the salt in their mines and they are not claiming costs of mitigation. Instead, their claims are for lost revenues caused by the inability to use their facilities; such claims are not recoverable. See id. at 202. Accordingly, the district court erred in denying Appellants’ motions for partial summary judgment as to MTT, North American, and Morton. Finally, we note that Claimants may not recover under state law. See IMTT-Gretna v. Robert E. Lee SS, 993 F.2d 1193, 1195 (5th Cir. 1993) (“Maritime law specifically denies recovery to non proprietors for economic damages. To allow state law to supply a remedy when one is denied in admiralty would serve only to circumvent the maritime law’s jurisdiction.”), supplemented by, 999 F.2d 105 (5th Cir. 1993). These twelve claimants have simply not raised an issue of fact as to whether their economic losses resulted from physical damage to their proprietary interests. Accordingly, the district court erred in denying Appellants’ motions for partial summary judgment.
As noted above, Mason and Advanced Materials claim to have suffered physical damage. Mason claims it lost eighty-eight boxes of dressed crabs that spoiled in a freezer when law enforcement officials shut off the electricity during the evacuation. Advanced Materials claims that two manufacturing runs had to be prematurely terminated and the company lost the materials in those runs and could not sell the products. The district court concluded that Mason’s and Advanced Materials’s damages met the physical damage requirement of TESTBANK. Appellants argue that even if Mason and Advanced Materials suffered damage, the damage was not directly caused by the allision and was unforeseeable. Accordingly, they contend the district court erred in denying their motions for summary judgment as to these claims as well. Mason and Advanced Materials argue that their 11 damages were foreseeable and that foreseeability should not be determined on a motion for summary judgment. Contraryto the district court’s conclusion, neither of these claimants suffered physical damage as a result of the allision. Mason’s crabs spoiled because the electricity was turned off during the evacuation, not because of contact with the barge, the bridge, or the gaseous cargo. Likewise, Advanced Materials claims losses from its inability to sell products that were in the process of being manufactured; it is not claiming that its property was damaged as a direct result of the allision. Claimants’ reliance on Consolidated Aluminum Corp. v. C.F. Bean Corp. (Consolidated I), 772 F.2d 1217 (5th Cir. 1985) is misplaced. There, a dredge struck and ruptured a pipeline, which caused a reduction in gas pressure and supply to Consolidated’s power plant. We held that TESTBANK did not bar recovery because Consolidated suffered physical damage to its equipment. Id. at 1222. Unlike the circumstances presented in Consolidated I, here, the allision did not physically cause the disruption in electrical power nor did it physically impact Advanced Materials’s facilities. Accordingly, Advanced Materials and Morton have not raised a genuine issue of material fact as to whether they suffered physical damage to a proprietary interest as a result of the allision. Moreover, even if we were to conclude that Mason’s and Advanced Materials’s inability to sell their products qualified as physical damage for purposes of TESTBANK, they would not be entitled to recover because their damages were not foreseeable. In Consolidated Aluminum Corp. v. C.F. Bean Corp. (Consolidated II), 833 F.2d 65, 68 (5th Cir. 1988), we stated: We perceive a harm to be the foreseeable consequence of an act or omission if harm of a general sort to persons of a general class might have been anticipated by a reasonably thoughtful person, as a probable result of the act or omission, considering the interplay of natural forces and likely human intervention. 12 We reasoned that injury to property and persons from the escaping gas or from a fire were examples of foreseeable consequences of negligent dredging. Id. Therefore, we concluded that, even though Consolidated suffered physical damage, the physical damage was unforeseeable. Id. In the instant case, as in Consolidated II, the foreseeable harms as a result of escaping gas would likely be damage to property and people from the gas or from a fire. Further, in the case at bar, the connection between the loss of electricity and the allision is even more remote than that between the reduction in gas supply and the negligence in Consolidated II. In Consolidated II, the negligent dredging damaged a gas pipeline which disrupted the flow of gas to electric turbines causing them to shut down. Here, the barge allided with a bridge, causing the release of gas, which resulted in a mandatory evacuation during which the law enforcement officials turned off the electricity. The spoiling of Mason’s crabs and the premature shut down of Advanced Materials’s manufacturing run due to the evacuation and loss of electricity were simply not foreseeable results of the release of the gaseous cargo. Accordingly, the district court erred in denying Appellants’ motion for partial summary judgment as to the claims of Mason and Advanced Materials.