Robins Dry Dock & Repair Co. v. Flint
275 U.S. 303 (1927)
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Rule of Law:
A party cannot recover for purely economic losses resulting from a third party's negligent damage to property with which the claimant has only a contractual, non-proprietary relationship.
Facts:
- The respondents, Flint, were time charterers of the steamship Bjornefjord from its owners.
- The charter party required the vessel to be dry-docked at least once every six months.
- Under the charter party, payment of hire was suspended while the vessel was in dry dock until it was again in proper state for service.
- The vessel was delivered to the petitioner, Robins Dry Dock & Repair Co., for required maintenance.
- While in the dry dock, Robins Dry Dock's negligence caused damage to the ship's propeller.
- This damage necessitated the installation of a new propeller, causing a two-week delay in the ship's return to service.
- Robins Dry Dock was not aware of the charter party's existence until after the delay had already begun.
- Robins Dry Dock later settled all claims with the vessel's owners.
Procedural Posture:
- The time charterers, Flint, filed a libel (a lawsuit in admiralty) against Robins Dry Dock & Repair Co. in a federal District Court.
- The District Court awarded damages to Flint.
- Robins Dry Dock, as appellant, appealed the decision to the U.S. Circuit Court of Appeals.
- The Circuit Court of Appeals affirmed the lower court's judgment in favor of Flint, the appellees.
- The Supreme Court of the United States granted a writ of certiorari to review the case.
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Issue:
Does a time charterer have a cause of action against a third party who negligently damages the chartered vessel, causing the charterer to suffer purely economic losses from the loss of the vessel's use?
Opinions:
Majority - Mr. Justice Holmes
No. A time charterer cannot recover for economic losses stemming from the loss of use of a vessel when a third party's negligence, unknown to the tortfeasor, damages the vessel. The charterers were not parties to the dry-docking contract and were not intended third-party beneficiaries, so they have no claim in contract. Furthermore, the charterers possessed no property interest in the vessel; the negligent damage was a tort against the owners' property, not the charterers'. The law does not permit recovery for a tort to the property of one person that causes another person to suffer economic loss merely because the second person had a contract with the first.
Analysis:
This case establishes the seminal 'Robins Dry Dock' rule, a foundational principle in both tort and admiralty law that significantly limits recovery for purely economic losses. By denying recovery for negligent interference with contractual relations where there is no proprietary interest, the court created a bright-line rule to prevent a potentially limitless cascade of liability. This decision insulates negligent tortfeasors from claims by a wide array of parties who might suffer financial harm indirectly. The rule has been widely adopted and serves as a major barrier to recovery for economic damages in the absence of physical injury to a claimant or their property.
