Byrd v. English

Supreme Court of Georgia · Torts

TortsNegligenceProximate CauseEconomic Losspure economic losscontractual expectancyinjury to third party propertyremote damages

Facts

The plaintiff operated a printing and publishing business and relied on electric power supplied by the Georgia Electric Light Company through underground conduits. The defendants, while excavating a building lot and the adjoining sidewalk without legal authority and in violation of a city ordinance, negligently caused earth to fall onto the conduits, breaking the wires and interrupting the current for several hours. The interruption prevented the plaintiff from operating his business and caused the business losses alleged in the petition. The plaintiff alleged that his right to power came from his contract with the electric company and that he could not recover from that company for this accidental interruption.

Issue

May a business customer recover from alleged tortfeasors for losses caused by interruption of electric service where the defendants' conduct damaged the electric company's conduits, but did not directly injure the plaintiff's person or property, and the plaintiff's claimed right to service arose solely from contract with the utility?

Rule

Where defendants' alleged negligence injures the property of a third party and thereby prevents that third party from performing a contract with the plaintiff, the plaintiff has no tort action against the defendants for his own resulting business losses when the defendants owed him no contractual duty and caused no injury to his person or property. The law compensates only proximate injury, not remote losses flowing through another's contract relations.

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

In Denver, Mason Kline operated a commercial bakery that depended on natural gas delivered through underground mains owned by Front Peak Gas Service. While excavating for a parking garage, Red Butte Construction negligently ruptured one of Front Peak’s mains, shutting off gas to Mason’s ovens for a day and causing him to lose a large catering order. Mason’s bakery building and equipment were not physically damaged.

If Mason sues Red Butte Construction in tort for his lost profits, what is the most likely result?

Explanation. The majority rule is that a plaintiff has no direct tort action for purely consequential business losses when the defendant injured only a third party’s property and thereby prevented that third party from performing its contract with the plaintiff. Foreseeability alone does not make the loss legally recoverable. Because Mason suffered no injury to his own person or property and his entitlement to gas arose solely from contract with the utility, his loss is too remote. (Derived from Byrd v. English (n.d.).)