## Facts

- Corpus Christi owned offshore natural-gas wells and an offshore platform in the Gulf of Mexico.
- A vertical pipeline segment (“riser”) attached to the platform connected production to a transmission line; the riser was owned by Houston Pipeline Company.
- During a storm, Zapata’s tug and barge broke free and allided with the platform, damaging the riser.
- The riser damage prevented Corpus Christi from transporting gas into Houston’s pipeline for roughly two weeks while repairs were made.
- To avoid damage to its wells during the shut-in, Corpus Christi flared (burned) gas.
- Corpus Christi sought damages for (1) the value of gas flared and (2) lost revenue/profits from the inability to sell gas during the shutdown.
- The district court found Zapata liable and awarded both categories of damages; Zapata appealed, invoking the maritime economic-loss rule.

## Issues

1. Whether a maritime tort plaintiff may recover lost profits from an interruption in operations when only a third party’s property was physically damaged and the plaintiff’s own proprietary property was not.
2. Whether the value of gas flared to protect the plaintiff’s wells is recoverable as damages, or is barred as pure economic loss.

## Decision

- The Fifth Circuit affirmed in part and reversed in part.
- The court reversed the award of lost revenue/profits, holding it was unrecoverable pure economic loss because Corpus Christi’s own property did not suffer physical damage.
- The court affirmed the award for the value of the flared gas, treating it as a reasonable mitigation expense tied to threatened physical injury to Corpus Christi’s wells.
- The case was remanded for recomputation of damages consistent with the ruling.

## Legal Principles

- Under federal maritime law, a plaintiff generally cannot recover purely economic losses (including lost profits) absent physical damage to the plaintiff’s own proprietary interest.
- Physical damage to a third party’s property, even if essential to the plaintiff’s business operations, does not satisfy the proprietary physical-damage requirement.
- Reasonable costs incurred to prevent or mitigate threatened physical damage to the plaintiff’s own property are recoverable, even if the mitigation involves sacrificing valuable product (such as flaring gas).
- The physical-damage requirement functions as a limiting rule to avoid indeterminate and expansive liability for ripple-effect economic claims.

## Conclusion

The Fifth Circuit applied the maritime economic-loss rule to bar Corpus Christi’s shutdown lost profits because the allision physically damaged only Houston’s riser, not Corpus Christi’s proprietary property, but it allowed recovery for the value of gas flared as a reasonable measure taken to avert threatened physical harm to Corpus Christi’s wells.


Corpus Christi Oil & Gas Co. v. Zapata Gulf Marine Corp., 71 F.3d 198 (5th Cir. 1995)