532 Madison Avenue Gourmet Foods, Inc. v. Finlandia Center, Inc.

New York Court of Appeals · 2001 · Torts

TortsNegligencePublic NuisanceEconomic Losseconomic lossdutyforeseeabilitylandowner liability

Facts

A section of the south wall of 540 Madison Avenue partially collapsed after construction work aggravated existing structural defects, causing city officials to close a 15-block stretch of Madison Avenue and adjacent side streets for about two weeks, with some nearby businesses remaining closed longer. Plaintiff 532 Madison operated a delicatessen one-half block away and was closed for five weeks; the 5th Ave. Chocolatiere plaintiffs were retailers two blocks away who alleged customers could not access their stores during the closure. In the related Goldberg Weprin matter, a construction elevator tower collapsed in Times Square, leading to traffic closures and evacuations that disrupted nearby businesses and residents. The plaintiffs in all cases sought recovery for lost income and other economic losses without alleging personal injury or property damage.

Issue

Whether landowners or construction-related defendants owe a negligence duty to nearby businesses and residents for purely economic losses caused by street closures following building or construction collapses, absent personal injury or property damage. Whether such plaintiffs can maintain a private public-nuisance action by claiming lost business from the closures as a special injury.

Rule

Foreseeability alone does not create a duty in negligence. Where an urban disaster causes only economic loss to an indeterminate class of persons, defendants' duty is limited to those who suffer personal injury or property damage; a landowner does not owe a duty to protect an entire urban neighborhood from purely economic loss. A private action for public nuisance lies only when the plaintiff suffers a special injury different in kind, not merely degree, from that suffered by the community at large.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In downtown Chicago, masonry from a negligently maintained office tower falls into the street. City officials close several surrounding blocks for ten days, and Mira Patel's coffee shop two blocks away loses substantial profits but suffers no physical damage and no one there is injured.

If Mira sues the building owner for negligence to recover lost profits, what is the most likely result?

Explanation. The majority held that foreseeability alone does not define duty. In an urban-disaster setting, defendants do not owe a negligence duty to an indeterminate class of surrounding businesses for purely economic losses when the plaintiffs allege no personal injury or property damage. A nearby merchant's lost profits from access restrictions therefore fall outside the scope of duty.