Barber Lines A/S v. M/V Donau Maru
764 F.2d 50 (1985)
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Rule of Law:
A plaintiff cannot recover damages for purely economic losses that are negligently caused, even when foreseeable, unless those losses are accompanied by physical injury to the plaintiff's person or property, or fall within a recognized exception.
Facts:
- In December 1979, the ship Donau Maru spilled fuel oil into Boston Harbor.
- The oil spill physically blocked a nearby berth, preventing a different ship, the Tamara, from docking there.
- The Tamara did not sustain any physical damage from the oil spill itself.
- Forced to find an alternative, the Tamara had to discharge its cargo at a different pier.
- Using the alternative pier resulted in the Tamara's owners and charterers incurring significant extra costs for labor, fuel, transport, and docking.
Procedural Posture:
- The Tamara, her owners, and her charterers (plaintiffs) sued the Donau Maru and her owners (defendants) in admiralty in a federal district court.
- Plaintiffs alleged negligence and sought to recover the extra expenses incurred as damages.
- The district court denied recovery and dismissed the case based on the pleadings, citing precedent.
- The plaintiffs (appellants) appealed the district court's judgment to the U.S. Court of Appeals for the First Circuit.
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Issue:
Does a party that suffers only purely economic financial loss, without any physical damage to its own person or property, have a cause of action in tort to recover those losses from a negligent defendant?
Opinions:
Majority - Breyer
No. A party cannot recover damages for purely economic harm caused by negligence unless there is accompanying physical injury to the plaintiff's person or property. The court relied on the precedent set in Robins Dry Dock & Repair Co. v. Flint, which established that a tort to the person or property of one person does not make the tortfeasor liable to another person who is only financially injured due to a contractual relationship with the first person. This case is analogous, as the oil spill prevented the Tamara from using the dock, just as a damaged propeller in Robins prevented a charterer from using a ship. The court also cited Kinsman II, reasoning that foreseeability of harm is not enough; policy considerations require drawing a legal line to prevent liability for purely financial injuries that are too remote. The court concluded that allowing recovery for purely economic loss would lead to administrative problems, such as a proliferation of lawsuits from a single incident, and would create liability disproportionate to the defendant's fault.
Analysis:
This decision strongly reaffirms the economic loss rule in American maritime tort law, solidifying the precedent from Robins Dry Dock. The court's analysis clarifies that mere foreseeability of economic harm is insufficient to establish a duty of care to prevent such harm. By providing a detailed policy-based justification—focusing on administrative costs, the potential for limitless liability, and disproportionality—the court provides a robust framework for lower courts to deny claims for purely financial losses. This serves to contain the scope of negligence liability and prevent a cascade of litigation from a single tortious act.
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