Court Opinion

ID: 8932250
Source: CourtListenerOpinion
Date Created: 2022-11-27 07:13:52.639315+00
Date Added: 2024-06-11T17:09:33.010302
License: Public Domain

MANSMANN, Circuit Judge,
dissenting.
This case requires the eourt to decide whether the district court properly dismissed the appellant’s action pursuant to Federal Rule of Civil Procedure 41(b) following the close of evidence in a nonjury trial. My reading of the facts in evidence leads me to conclude that the district court’s holding that “the Robins analysis directly governs the disposition of Getty’s claim” is error. Getty Refining & Marketing Co. v. M/T FADI B, 595 F.Supp. 452, 455 (E.D.Pa.1984) (hereinafter “Getty”) (citing Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 48 S.Ct. 134, 72 L.Ed. 290 (1927) (hereinafter “Robins”)). Because I would rely on traditional tort principles rather than the bright line rule advocated by the majority, I would reverse and remand the case.
I
The trial court preliminarily ruled that the appellant’s cause of action for the negligent blocking of its pier was a claim for negligent interference with contract as set forth in section 766C of the Restatement (Second) of Torts (1977). The court reasoned:
Assuming for purposes of the present motion that the defendants acted negligently, the only injury that Getty has established was its payment of demur-rage to several vessels that were delayed while the Fadi B was forced to remain at Getty’s pier. Getty’s obligation to pay these demurrage claims arose, if at all, from Getty’s contracts with each of the delayed vessels. Getty’s claim thus essentially is one for interfering with its contracts by requiring it to undertake contractual obligations that made its performance more expensive.
Getty, 595 F.Supp. at 455. Absent physical injury, ruled the court, the appellant’s claim for economic losses stemming from this negligent interference was “barred as a matter of law by the holding of Robins." Id. at 456.
The Robins holding is not as broad as the district court suggests. In Robins, a vessel had been time-chartered by the plaintiffs. The owners, who remained in possession of the ship, docked the vessel with the defendant pursuant to a charter provision requiring docking every six months and suspension of payments by plaintiffs to the owners during that period. The ship was injured by the defendant’s negligence, and the necessary repairs caused a two week delay in returning the ship to service. The defendant, which “had no notice of the charter party until the delay had begun,” “settled with the owners” and “received a release of all their claims.” Robins, 275 U.S. at 307, 48 S.Ct. at 135. The charterers of the ship sued the defendant dry dock “in a cause of contract and damage.” Id.
The Supreme Court of the United States considered theories of recovery in contract and in tort. The Court summarily rejected all rationale for a contract claim, concluding that the plaintiffs were not parties or third-party beneficiaries to a contract with the defendant. The Court then considered the theory of recovery in tort founded on the plaintiffs’ alleged “ ‘property right' m the vessel.” Id. at 308, 48 S.Ct. at 135. “The question is,” declared the Court, “whether the respondents have an interest protected by the law against unintended injuries inflicted upon the vessel by third persons who know nothing of the charter.” Id. The Robins Court concluded that any such interest “must be worked out through their contract relations with the owners, not on the postulate that they have a right in rem against the ship.” Id. The court announced:
[N]o 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 tortfeasor liable to another merely because the injured person was under a contract with that other, unknown to the doer of the wrong.
Id. at 309, 48 S.Ct. at 135.
There are fundamental distinctions between the Robins holding and the facts of the instant ease. First, in Robins there was physical injury to the boat. Robins, *837therefore, does not establish a per se prohibition of recovery where there has been no physical injury to the property. Second, the Court merely found that the plaintiffs had no property interest in the boat and concluded that any contractual relationship with the owners was an insufficient interest in the property to entitle them to recover from defendant. Essentially, the Robins Court found that the defendant owed no duty to the plaintiffs: “Of course the contract of the petitioner [defendant dry dock] with the owners imposed no immediate obligation upon the petitioner to third persons.” Robins, 275 U.S. at 308, 48 S.Ct. at 135. In the instant case, it is the owner of the dock (the allegedly injured property) who has sued the alleged tortfeasors. If there had been physical injury to the dock, as in Robins, it could not be said that the instant defendants owed no duty to the plaintiff.
Judge Clark, confronting a case similar to the one at bar, explained the inapplicability of the Robins holding.
In Robins and Byrd [u English, 117 Ga. 192, 43 S.E. 419 (1903) ], plaintiff A was in contract with party B, who failed to deliver contracted for benefits to A because of interference from tortfeasor C. Since A’s injury resulted from B’s failure to perform his contractual obligations, A’s remedy, if any, is against B on the contract, and not against C, who cannot be touched for want of privity. The instant case, however, is solely a matter of tort. There is only plaintiff A who has suffered economic loss at the hands of tortfeasor C. There is no party B, no contract upon which A might base a claim for recovery, and no privity bar to an action against C.
Hercules Carriers, Inc. v. Florida, 720 F.2d 1201, 1203 (11th Cir.1983) (Clark, J., concurring specially and suggesting rehearing en banc), aff'd by an equally divided court on rehearing en banc, 728 F.2d 1359 (11th Cir.) (per curiam), cert. denied, — U.S. -, 105 S.Ct. 128, 83 L.Ed.2d 69 (1984). “In short, the relationship between the parties in Robins is fundamentally different.” Id. While the Robins holding would preclude those who contracted with the appellant from proceeding against the appellee, it does not prohibit the instant suit. Accord J. Ray McDer-mott & Co. v. SS EGERO, 453 F.2d 1202, 1204 (5th Cir.1972) (“Robins does not stand for the proposition that no one may recover damages suffered or liabilities incurred by virtue of a contract when a ship is tortiously detained”).
Not only is the Robins holding inapplicable to the litigation at bar, but the cases cited by Justice Holmes in Robins as “good statement^]” of the holding, likewise, do not govern the instant suit. See Robins, 275 U.S. at 309, 48 S.Ct. at 135 (citing Elliott Steam Tug Co. v. The Shipping Controller, 1 K.B. 127, 139-40 (1922); Byrd v. English, 117 Ga. 192, 43 S.E. 419 (1903); The Federal No. 2, 21 F.2d 313 (2d Cir.1927)). Unlike the instant case, all three cases cited by Justice Holmes involve the type of third-party participation found in Robins.
In Elliot Steam Tug, the plaintiffs had chartered a tug which was subsequently requisitioned by the government. The court noted that, at common law, the charterers would not be entitled to loss of profits.
In case of a wrong done to a chattel the common law does not recognize a person whose only rights are a contractual right to have the use or services of the chattel for purposes of making profits or gains without possession of or property in the chattel.
Elliott Steam Tug, 1 K.B. at 139 (Scrutton, L.J.). The court noted, however, that “the shipowner suing a wrongdoer for temporary loss of the ship’s services would be entitled at common law to recover the loss of profits during that period as a direct consequence of the wrong.” Id. at 140. Thus, the court’s discussion of the charterer’s inability “to sue for such an injury to his merely contractual rights,” refers not to a prohibition on the recovery of “loss of profits” but to the nature of the plaintiffs’ interest in the injured chattel. Id. Elliott *838Steam Tug supports the Robins proposition that one whose interest in an allegedly injured chattel is contractual cannot recover from the tortfeasor although the same party may have a right in contract against the owner of the chattel.
In Byrd, the defendant’s negligence was alleged to have damaged a utility company’s conduits, thus cutting off power to the plaintiff’s printing plant. The Byrd court noted that “[i]t is only the proximate injury that the law endeavors to compensate.” Byrd, 43 S.E. at 421. The Byrd court held that the plaintiff, as a party who was injured by the failure of the other party to comply with the terms of a contract, could not recover damages for the negligént act of a third person which rendered performance of the contract impossible. Byrd, like Robins, involves physical damage as well as a plaintiff who is a third-party to the tort. The Byrd court did not preclude the possibility that the utility company might recover from the defendant “any sums which the company was compelled to pay in damages to its customers.” Id. at 420.
In The Federal No. 2, the employer of a seaman was not permitted to recover from the tortfeasor for the “cost of cure” although the employer was obliged to pay those expenses by contract and by the law of the ship. The court held that “[t]he tug [the alleged tortfeasor] owed no legal duty to the appellant with reference to its contractual rights with the seaman.” The Federal No. 2, 21 F.2d at 313. While the court acknowledged that “[t]he seaman had a cause of action against the tug for negligence," the court concluded that “[i]t is too indirect to insist that [the hospital bills and maintenance] may be recovered, where there is neither the natural right nor legal relationship between the appellant and the tug.” Id. at 313-14. The court found that the tort was too remote from the plaintiff’s obligation to allow recovery. The holding of The Federal No. 2 was summarized as follows:
[O]rdinarily damage suffered by one whose interest in the party or thing injured is contractual is too remote for recovery, unless the wrong is done with intent to affect the contractual relations.
Id. at 314 (emphasis added). The holding in The Federal No. 2 does not differ from that of Robins, Elliot Steam Tug, or Byrd.
These cases deal essentially with cutting off chains of causation beyond the two parties involved in the tort based on a policy of insuring proximate injury and avoiding remoteness. All four cases discussed above involve physical injury, but the “owner” of the “item” injured is not the plaintiff seeking recovery. As I read them, none of these cases, including Robins, stands for the proposition that the alleged victim is prohibited from recovering in the absence of physical injury. Contrary to the district court’s holding, neither Robins nor the cases cited by the Robins Court bars the plaintiff’s claim as a matter of law. I would find that the district court’s holding that Robins directly governs this case is error.
II
Before reaching its decision of Robins’. applicability, the district court discussed two conflicting approaches to claims for economic loss. The majority relies on one of these approaches: a bright line rule precluding recovery for “negligent interference with contract.” I would adopt the second approach and apply traditional concepts of foreseeability and proximate cause.
The bright line approach extends Robins to preclude “recovery for economic loss if that loss resulted from physical damage to property in which [the plaintiff] had no proprietary interest.” Louisiana ex rel. Guste v. M/V TESTBANK, 752 F.2d 1019, 1022 (5th Cir.1985) (en banc) (citations omitted) (hereinafter “TESTBANK”). The alternative is to rely on traditional tort principles of proximate cause and foreseeability. This court has not heretofore adopted the bright line rule. But cf. In re S.C. Loveland Co., 170 F.Supp. 786, 792 (E.D.Pa.1959) (implicitly requiring physical injury absent intentional interference).
*839The rule has caused some controversy in other circuits. The Courts of Appeals for the Fifth and Eleventh Circuits have embraced the bright line rule. See, e.g., Akron Corp. v. M/T CANTIGNY, 706 F.2d 151 (5th Cir.), reh’g denied, 711 F.2d 1054 (5th Cir.1983); Kingston Shipping Co. v. Roberts, 667 F.2d 34 (11th Cir.), cert. denied, 458 U.S. 1108, 102 S.Ct. 3487, 73 L.Ed.2d 1369 (1982). Both courts, however, have recently reconsidered the advisability of the bright line test en banc. The United States Court of Appeals for the Fifth Circuit voted in a 10 to 5 decision to retain the rule, although a number of the jurists expressed doubt about the absoluteness of the physical injury requirement. TESTBANK, 752 F.2d at 1034-35, 1053 (uncertainty about physical injury requirement expressed by Garwood, J., concurring, and by Rubin, J., dissenting). The United States Court of Appeals for the Eleventh Circuit was equally divided as to whether to affirm or to reverse and, consequently, affirmed the district court’s decision, which utilized the bright line rule, by operation of law. Hercules Carriers, Inc., 728 F.2d at 1359.
The United States Court of Appeals for the Sixth Circuit, after reviewing case law in search of an “overriding domestic policy translated into law” which would preempt application of Canadian law, “conclude[d] that there is no absolute rule either in Canada or the United States which forbids recovery for economic loss where the claimant has suffered no physical injury.” Bethlehem Steel Corp. v. Marriott Corp., 631 F.2d 441, 447, 448 (6th Cir.1980) (citation omitted), cert. denied, 450 U.S. 921, 101 S.Ct. 1370, 67 L.Ed.2d 349 (1981). The United States Court of Appeals for the Second Circuit rejected outright the bright line approach “prefer[ing] to leave the rock-strewn path of ‘negligent interference with contract’ for more familiar tort terrain.” Kinsman Transit Co. v. City of Buffalo, 388 F.2d 821, 824 (2d Cir.1968) (hereinafter “Kinsman II”). The Kinsman II court reasoned:
[W]e hesitate to accept the “negligent interference with contract” doctrine in the absence of satisfactory reasons for differentiating contractual rights from other interests which the law protects.
Id. at 823.
The conflict among the courts revolves around the policy debate concerning the merits of bright line tests versus the merits of case-by-case analysis. The bright line approach is a “pragmatic” attempt to thwart a “chain reaction” of economic injuries which “may produce an unending sequence of financial effects best dealt with by insurance, or by contract, or by other business planning devices.” W. Keeton, D. Dobbs, R. Keeton, D. Owen, Prosser and Keeton on The Law of Torts § 129, at 1001 (5th ed. 1984). “The result” of the case-by-case approach, we are told, “would be that no determinable measure of the limit of foreseeability would precede the decision on liability.” TESTBANK, 752 F.2d at 1028. The drafters of the Restatement indicate that the courts applying the bright line approach “have been influenced by the extremely variable nature of the relations, the fear of an undue burden upon the defendant’s freedom of action, the probable disproportion between the large damages that might be recovered and the extent of the defendant’s fault, and perhaps in some cases the difficulty of determining whether the interference has in fact resulted from the negligent conduct.” Restatement (Second) of Torts § 766C comment a (1977).
The potential difficulties of applying a case-by-case approach referred to by the commentators are not unique to the class of economic injuries. As Judge Wisdom explained in his dissent in TESTBANK:
[T]his criticism of “foreseeability” as the criterion for judgment applies with equal force to well-established tort law for physical injury. The unquestioned concepts of foreseeability and proximate cause as established in Palsgraf[v. Long Island R.R. Co., 248 N.Y. 339, 162 N.E. 99 (1928)] and its progeny are open to the same condemnation.
TESTBANK, 752 F.2d at 1051-52 n. 38 (Wisdom, J., dissenting). The decisions *840which the advocates of the bright line ap-' proach fear are decisions which are made by the courts every day in numerous contexts. Accord id. at 1051-52. The bright line rule must be adopted only if it can7 be said that the courts are not capable of sifting through the various relations of the parties, of determining whether proximate cause exists, and of placing some adjudicative limit via the concept of foreseeability on the chain reaction of injuries. Judge Kaufman addressed this question and concluded:
The argument[s], frequently heard, that to allow recovery in such instances would impose a penalty far out of proportion to the defendant’s fault or open the field to collusive claims and increased litigation, see Prosser, The Law of Torts, 964 (3d ed. 1964), . . . are the spectres commonly raised whenever the law extends its protection. Here, as elsewhere, the answer must be that courts have some expertise in performing their almost daily task of distinguishing the honest from the collusive or fraudulent claim. And “[i]f the result is out of all proportion to the defendant’s fault, it can be no less out of proportion to the plaintiff’s entire innocence.” Id. at 296.
Kinsman II, 388 F.2d at 823.
Likewise, concerns about unlimited liability and limited funds are unwarranted. Courts demonstrate daily their ability to place limits on liability and to resolve cases in which valid claims surpass available funds. In the context of maritime torts, the courts are aided by statutory procedures to limit the extent of vessel owners’ liability. See 46 U.S.C. §§ 181-195.
The concerns raised by the bright line advocates must be viewed in light of the artificial and often inequitable results of the application of the rule. An example used by Judge Wisdom illustrates the point.
[I]f a vessel negligently crashes into one marina and then sinks, thereby blocking all access to another marina, the first marina may recover all of its consequential economic losses, but the second may not.
Louisiana ex rel. Guste v. M/V TESTBANK, 728 F.2d 748, 750 n. 1 (5th Cir.1984) (Wisdom, J., concurring specially and suggesting rehearing en banc), aff'd on rehearing en banc, 752 F.2d at 1019, 1032. Indeed, the court handling the claim of the physically damaged marina would confront many of the difficulties that would face a court handling the claim of the marina which was not physically damaged. To prohibit absolutely any recovery for negligence where there is no physical injury is inconsistent with principles of equity and contrary to the increasing willingness of the courts to allow such recovery absent physical injury. See, e.g., Holcomb Const. Co. v. Armstrong, 590 F.2d 811, 813 (9th Cir.1979) (complaint alleging negligent entrustment resulting in obstruction of bridge and making performance of contract more expensive was sufficient to state a cause of action); Union Oil Co. v. Oppen, 501 F.2d 558, 566-70 (9th Cir.1974) (permitting recovery for oil spill causing harm to commercial fishermen); Consolidated Edison of New York, Inc. v. Westinghouse Elec. Corp., 567 F.Supp. 358, 364 (S.D.N.Y.1983) (permitting “suit for negligent performance of contractual duties ... where only economic injury is alleged”).
While it is preferable to avoid the bright line rule, the instant case can also be viewed as falling within the exception to the rule outlined by Prosser and Keeton.
But the rule is not addressed at all to the case in which some independent tort to the plaintiff causes an interference with contract. In such cases the plaintiff may recover damages for the tort, including damages for the interference with contract if it is a proximate result. This is not because negligent interference is actionable, but because the interference is an item of damages resulting from some other tort.
W. Keeton, D. Dobbs, R. Keeton & D. Owen, Prosser and Keeton on The Law of Torts § 129, at 997 (5th ed. 1984). The negligence of the appellees in blocking the *841dock (which we assume for- purposes of reviewing this issue) is the independent tort. That tort caused certain injury to appellant, including the contractual requirement that it pay demurrage to other ships. Consequently, the “interference is an item of damages resulting from [the] other tort.” Id. The tortious activity complained of is not the interference with contracts but the blockage of the dock.
Clearly, the instant case does not present the potential of an unending chain of liability. It is not the owners of the delayed vessels who are bringing suit. Their claims would fall within the ambit of the Robins prohibition. The instant suit presents only the owner of the injured property and the alleged tortfeasor. The measure of damages (money paid out) does not affect the nature of the injury and ought not preclude the imposition of liability-
The application of the bright line rule precluding recovery for economic loss absent physical injury is not necessary given the ability of the courts to utilize traditional limits on tort liability. Indeed, the district court expressed doubts about appellant’s capacity to fulfill these traditional requirements. See Getty, 595 F.Supp. at 455 & nn. 2-3, 456. As explained above, the rule also is inequitable to the extent that appellant’s neighbor, had appellee physically damaged the neighbor’s pier, would be allowed to recover whereas appellant would be precluded from recovering. This court should reject the path taken by the Fifth and Eleventh Circuits in favor of traditional tort law.
Ill
Litigation of the instant suit is not prohibited by the Robins mandate. The plaintiff at bar is the owner of the allegedly injured pier and not a third-party related to the tort only by contract.
Adoption of a bright line rule precluding liability for negligence which results only in economic loss is unwarranted. The use of traditional tort principles limiting liability would result in a more equitable approach, especially in the narrow factual context of this case. The courts have the capacity to apply these traditional principles and do so on a daily basis.
Consequently, I respectfully dissent from the majority's opinion. I would find error in the district court’s conclusion that Robins bars recovery, and I would reverse and remand the case for consideration under traditional concepts of tort law.