## Facts

- 532 Madison Avenue Gourmet Foods, Inc. operated a 24-hour delicatessen near 540 Madison Avenue in midtown Manhattan.
- During construction work on 540 Madison Avenue that included cutting numerous window openings, a portion of the building’s south wall partially collapsed, sending debris onto Madison Avenue.
- City officials closed multiple blocks of Madison Avenue and adjacent streets for public safety for about two weeks; some nearby premises remained closed longer.
- 532 Madison alleged it was forced to close for roughly five weeks and sought lost profits based on disrupted customer and supplier access.
- In related consolidated actions, other nearby businesses and a law firm sought similar recovery for lost business income following (1) the Madison Avenue closures and (2) a separate Times Square construction elevator-tower collapse that also led to street closures.
- None of the plaintiffs alleged personal injury or physical damage to their own property; all sought recovery for economic losses only.

## Issues

1. Whether landowners, contractors, or related entities owe a duty in negligence to neighboring businesses to prevent purely economic losses from construction-related accidents and resulting street closures, absent personal injury or property damage.
2. Whether street and sidewalk closures causing lost business income constitute a public nuisance actionable by private plaintiffs who claim greater economic harm than the general public.

## Decision

- The Court of Appeals held defendants owed no negligence duty to protect plaintiffs from purely economic loss in the absence of personal injury or property damage.
- The Court held plaintiffs could not maintain public nuisance claims because they did not allege a legally cognizable special injury distinct in kind from the public’s harm.
- The Court reversed the intermediate appellate rulings that had reinstated claims in the Madison Avenue-related actions and ordered dismissal of those complaints.
- The Court affirmed dismissal of the negligence and public nuisance claims in the Times Square-related action.

## Legal Principles

- Foreseeability of harm does not itself create a duty; duty is a question of law informed by policy and administrability concerns.
- In negligence, absent personal injury or property damage, defendants generally are not liable to neighboring businesses for purely economic losses caused by disruptions such as street closures following an accident.
- Limiting duty in economic-loss cases serves to avoid exposing defendants to liability to an indeterminate and potentially very large class of claimants affected by urban disruptions.
- A public nuisance is a substantial interference with a common public right, typically redressed by public authorities rather than private suits.
- A private plaintiff may sue for public nuisance only upon showing special injury different in kind, not merely greater in degree, than that suffered by the community at large.

## Conclusion

The court rejected negligence and public nuisance liability for commercially affected neighbors seeking only lost profits after construction-related incidents triggered public-safety street closures, holding that no negligence duty extends to purely economic loss without physical injury or property damage and that public nuisance requires a special injury different in kind from the public’s harm.


532 Madison Avenue Gourmet Foods, Inc. v. Finlandia Ctr., Inc., 96 N.Y.2d 280 (N.Y. 2001)