Louisiana ex rel. Guste v. M/V Testbank
752 F.2d 1019 (1985)
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Rule of Law:
Under general maritime law, a claimant cannot recover for purely economic losses resulting from an unintentional tort unless the claimant has also suffered physical damage to a proprietary interest.
Facts:
- On July 22, 1980, the M/V SEA DANIEL and the M/V TESTBANK collided in the Mississippi River Gulf outlet.
- The collision caused containers aboard the TESTBANK to be damaged and fall overboard.
- One container released approximately twelve tons of pentachlorophenol (PCP), a toxic chemical, into the waterway, and another released hydrobromic acid into the air.
- The United States Coast Guard closed the outlet to navigation for approximately three weeks, until August 10, 1980.
- Authorities also suspended all fishing, shrimping, and related commercial and recreational activities in the outlet and in 400 square miles of surrounding waterways.
- Numerous businesses, including shipping interests, marina operators, seafood wholesalers, restaurants, and tackle shops, suffered economic losses due to the closure and suspension of activities.
Procedural Posture:
- Forty-one lawsuits were filed and consolidated in the U.S. District Court for the Eastern District of Louisiana.
- Defendants moved for summary judgment on all claims for economic loss that were not accompanied by physical damage to property.
- The district court granted the defendants' motion for summary judgment against all such claimants except for commercial fishermen, shrimpers, crabbers, and oystermen.
- The plaintiffs whose claims were dismissed appealed to the United States Court of Appeals for the Fifth Circuit.
- A three-judge panel of the Fifth Circuit affirmed the district court's grant of summary judgment.
- The Fifth Circuit then voted to rehear the case en banc, with all active judges participating, to reexamine the circuit's precedent on this issue.
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Issue:
Does general maritime law permit recovery for purely economic losses, unaccompanied by physical damage to a proprietary interest, resulting from an unintentional tort?
Opinions:
Majority - Judge Higginbotham
No. Claims for purely economic loss unaccompanied by physical damage to a proprietary interest are not recoverable in maritime tort. The court reaffirms the bright-line rule established in Robins Dry Dock & Repair Co. v. Flint, which serves as a pragmatic and necessary limitation on the tort doctrine of foreseeability. Without this rule, liability for negligent acts could become limitless and indeterminate, creating a wave of successive economic consequences that courts are ill-equipped to manage. This principle provides predictability, allowing courts to adjudicate based on a clear rule rather than engaging in ad hoc line-drawing. The court also rejects plaintiffs' attempts to circumvent this rule through public nuisance theory, federal statutes, or state law, holding that the established uniform rule of maritime law governs.
Concurring - Judge Gee
Yes, the majority is correct. The central issue is the institutional competence of courts. Courts are poorly equipped to manage the massive and general resource allocation required to resolve disasters of this magnitude. Such tasks are better left to legislative bodies. The bright-line rule of physical damage properly restrains courts to matters within the competence of their traditional dispute-resolution procedures.
Concurring - Judge Williams
Yes, the majority reaches the correct result for the claimants in this case. However, the requirement of a 'proprietary interest' may be an problematic framework for analyzing the unique claims of commercial fishermen. A better approach for such claims, which are not before the court, would be the one used in Union Oil Co. v. Oppen, which focuses on the duty owed to those who directly make use of a sea resource in the course of their business.
Dissenting - Judge Wisdom
No. The court should not bar recovery for purely economic loss. The majority's application of Robins is an unwarranted extension of a rule that was originally limited to negligent interference with contract. The physical damage requirement is an artificial and unjust rule that conflicts with modern tort principles of foreseeability and proximate cause. The better approach would be to analyze claims under these conventional tort principles, using the 'particular damage' requirement from public nuisance law to properly limit the scope of liability. This would allow recovery for innocent victims who were foreseeably and directly harmed, such as commercial fishermen and vessel operators, while holding negligent defendants accountable for the costs of their actions.
Analysis:
This en banc decision firmly entrenches the Robins Dry Dock rule in the Fifth Circuit, establishing a strict 'bright-line' test requiring physical damage to a proprietary interest for the recovery of economic losses in unintentional maritime torts. The ruling prioritizes predictability and judicial economy over a more flexible, case-by-case analysis based on foreseeability, thereby creating a significant barrier to recovery for a wide range of businesses indirectly impacted by maritime pollution and navigation obstructions. By explicitly leaving the question of commercial fishermen's claims open, the court signals that this group may represent a unique exception to the otherwise rigid rule, setting the stage for future litigation on that specific issue.
