Barber Lines A/S v. M/V Donau Maru

United States Court of Appeals for the First Circuit · Torts

TortsEconomic LossNegligenceAdmiraltypure financial injuryeconomic lossnegligenceadmiralty

Facts

In December 1979, the ship Donau Maru spilled fuel oil into Boston Harbor. The spill prevented the Tamara from docking at a nearby berth, forcing her to discharge cargo at another pier. As a result, the Tamara and associated plaintiffs incurred significant extra labor, fuel, transport, and docking costs. They sought to recover those added expenses as negligence damages even though they alleged no physical injury to themselves or their property.

Issue

May plaintiffs recover in negligence for foreseeable purely financial losses caused by an oil spill that prevented use of a dock, when the plaintiffs suffered no physical injury to themselves or their property and identify no other special circumstance? Does admiralty law permit recovery of such added expenses despite the absence of physical harm?

Rule

A negligent defendant is generally not liable for purely financial or economic loss, even if foreseeable, unless the loss is accompanied by physical injury to the plaintiff or the plaintiff's property or falls within a recognized special category or special circumstance. Courts treat plaintiffs suffering only such financial harm as outside the scope of the defendant's duty, or as too remote for recovery.

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

In Seattle, a tanker operated by North Shoal Shipping negligently releases diesel into Elliott Bay, and the harbor master temporarily closes one terminal. A cargo vessel owned by Lena Ortiz must unload at Tacoma instead, incurring extra tug, fuel, and labor costs, but neither the vessel nor its cargo is physically damaged.

Can Lena Ortiz most likely recover those added costs in negligence from North Shoal Shipping?

Explanation. The majority draws a general line against recovery for negligently caused pure financial loss, even if foreseeable, unless accompanied by physical injury to the plaintiff or the plaintiff's property or some recognized special circumstance. The fact that the claim is for extra expenses rather than lost profits does not matter; the opinion expressly rejects that distinction. (Derived from Barber Lines A/S v. M/V Donau Maru (n.d.).)