Facts
- A tug owned and operated by Taira Lynn Marine towed the barge The Barry, which carried a gaseous propylene/propane cargo, when the tow allided with the Louisa Bridge in Louisiana.
- The allision caused a discharge of the gaseous cargo into the air.
- Louisiana State Police ordered a mandatory evacuation of residences and businesses within a specified area near the bridge.
- Taira Lynn initiated a federal limitation-of-liability proceeding to resolve the many damage claims arising from the incident; hundreds of claims were filed.
- Fourteen businesses filed claims seeking lost work, lost sales, and lost revenues attributed to the evacuation and disruption, asserting theories under general maritime negligence law, Louisiana law, and federal statutes (including CERCLA and the Oil Pollution Act).
- Most of the businesses did not allege physical damage to property they owned; their damages were tied to evacuation orders, inability to access premises, and interruption of operations.
- Some claimants alleged that the presence of discharged gas on or near their property constituted physical damage.
- Mason Seafood alleged that 88 boxes of crabs spoiled after law enforcement shut off electricity during the evacuation, causing a freezer failure.
- Advanced Materials alleged that it lost chemical materials and product when it had to terminate a manufacturing process during the evacuation and could not sell the resulting product.
- The vessel/bridge interests moved for partial summary judgment, arguing that under Fifth Circuit maritime law (including Testbank), purely economic losses are not recoverable absent physical injury to a proprietary interest; the district court denied the motions and allowed the claims to proceed based on a proximity-based approach, and the movants appealed.
Issues
- Whether, under general maritime negligence law, businesses may recover purely economic losses from a maritime allision when they suffered no physical injury to a proprietary interest.
- Whether a proximity- or location-based (“geographic”) exception to the Fifth Circuit’s maritime economic-loss rule permits recovery by businesses near the accident site despite no physical property damage.
- Whether the claimants’ asserted losses under CERCLA or the Oil Pollution Act fit those statutes’ remedial requirements on the summary-judgment record.
- Whether Louisiana tort law can provide recovery for the claimed economic losses when general maritime law bars them in this maritime-casualty setting.
Decision
- The Fifth Circuit reversed the district court’s denial of partial summary judgment.
- The court reaffirmed the Fifth Circuit rule that there is no recovery in a maritime negligence suit for economic loss unaccompanied by physical injury to a proprietary interest.
- The court rejected the district court’s proximity-based “geographic exception,” holding that closeness to the accident and foreseeability of business harm do not replace the proprietary-physical-injury requirement.
- Applying that rule, the court held that the business-interruption and lost-profit claims by claimants who showed no physical injury to property they owned were barred under general maritime law.
- The court concluded that Mason Seafood’s and Advanced Materials’ alleged losses flowed from evacuation-related conditions (including loss of utilities and shutdown of operations) rather than physical injury to their property caused by the allision and discharge, and thus did not avoid the maritime economic-loss bar on the record presented.
- The court also held that the federal statutory claims failed on their own terms: the claimants did not show recoverable “response costs” under CERCLA, and they did not satisfy the statutory predicates for recovery under the Oil Pollution Act on the summary-judgment record.
- The court held that state-law claims could not be used to obtain a broader recovery that conflicts with controlling maritime limits in this context.
- The case was returned to the district court with instructions consistent with granting partial summary judgment against the barred economic-loss claims.
Legal Principles
- In the Fifth Circuit, a maritime negligence plaintiff generally cannot recover purely economic losses unless the plaintiff suffered physical injury to a proprietary interest.
- Courts may not create a proximity-based exception to this economic-loss rule; geographic closeness to the casualty and a limited claimant class do not justify recovery without proprietary physical injury.
- Economic harms that result from evacuation orders, loss of access, loss of utilities, or interruption of commerce are treated as indirect economic losses when unaccompanied by physical injury to the claimant’s own property.
- CERCLA generally provides recovery for necessary response costs (not business-interruption profits), and a claimant seeking CERCLA relief must show qualifying response costs.
- The Oil Pollution Act provides specific categories of damages tied to qualifying discharges and statutory conditions; a claimant must fit within those categories and requirements.
- When a maritime casualty falls within general maritime law, state-law remedies cannot be applied to expand recovery in a way that conflicts with established maritime limits on economic-loss liability.
Conclusion
The Fifth Circuit enforced the Fifth Circuit’s bright-line maritime economic-loss rule, reversing a district court approach that would have allowed nearby businesses to recover evacuation-related lost profits without physical damage to property they owned; it also rejected CERCLA, Oil Pollution Act, and Louisiana-law paths to the same purely economic recovery on the record presented.