Am. Petroleum & Transp., Inc. v. City of N.Y.

• Decision Date: 06 December 2013
• Docket Number: No. 12–4505–CV.,12–4505–CV.
• Citation: 737 F.3d 185
• Parties: AMERICAN PETROLEUM AND TRANSPORT, INC., Plaintiff–Appellant, v. CITY OF NEW YORK, Department of Transportation of the City of New York, Defendants–Appellees.
• Court: U.S. Court of Appeals — Second Circuit

737 F.3d 185

AMERICAN PETROLEUM AND TRANSPORT, INC., Plaintiff–Appellant,

v.CITY OF NEW YORK, Department of Transportation of the City of New York, Defendants–Appellees.

No. 12–4505–CV.

United States Court of Appeals,Second Circuit.

Heard: Aug. 27, 2013.

Decided: Dec. 6, 2013.

James M. Maloney, Port Washington, NY (Law Office of James M. Maloney, Port Washington, NY, on the brief), for Appellant.

Michael J. Pastor, Senior Counsel, New York, NY, (Michael A. Cardozo, Corporation Counsel of the City of New York, Kristin Helmers, Corporation Counsel of the City of New York, New York, NY, on the brief), for Appellees.

Before: NEWMAN, RAGGI, and LYNCH, Circuit Judges.

JON O. NEWMAN, Circuit Judge.

The issue on this appeal is whether, under maritime law, an owner of a vessel may be awarded damages for economic loss due to negligence in the absence of physical damage to its property. For many years a number of courts have derived from the Supreme Court's opinion in Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 48 S.Ct. 134, 72 L.Ed. 290 (1927), a “rule” prohibiting such damages. Plaintiff–Appellant American Petroleum and Transport, Inc. (“American”) appeals from the October 11, 2012, judgment of the United States District Court for the Southern District of New York (Paul A. Engelmayer, District Judge), granting a motion to dismiss by Defendants–Appellees City of New York and the New York Department of Transportation (“City”). See American Petroleum and Transport, Inc. v. City of New York, 902 F.Supp.2d 466 (S.D.N.Y.2012).

Although we conclude that Robins Dry Dock has been overread to establish a rule barring damages for economic loss in the absence of an owner's property damage, we believe the rule has been so consistently applied in admiralty that it should continue to be applied unless and until altered by Congress or the Supreme Court.

Background

American is a corporation in the business of transporting petroleum products by water. At all relevant times, American was the registered owner of a barge, the John Blanche, and the demise charterer ¹ of a tug, the Caspian Sea. The City operates a drawbridge, the Pelham Parkway Bridge, over the Hutchinson River. In March 2011, the tug and the barge, after passing upstream on the Hutchinson River under the opened bridge, requested the City to open the bridge for the downstream voyage. Due to a mechanical malfunction, which American alleges was the result of negligence, the City did not open the bridge, delaying the tug and the barge for approximately two and one-half days.

As a consequence of the delay, American alleges that it suffered $28,828 in economic losses. American acknowledges that it did not suffer any property damage.

In May 2012, American brought claims against the City for common law negligence and for violation of 33 U.S.C. § 494, which requires that a drawbridge over navigable water “be opened promptly by the persons owning or operating such bridge upon reasonable signal for the passage of boats and other water craft.” ² In October 2012, the District Court, relying on Robins Dry Dock v. Flint, 275 U.S. 303, 48 S.Ct. 134, 72 L.Ed. 290 (1927), granted the City's motion to dismiss under Fed.R.Civ.P. 12(b)(6). See American Petroleum, 902 F.Supp.2d at 468–71. The Court stated:

The issue presented by the City's motion to dismiss is whether the “Robins Dry Dock rule,” as the case law has come to refer to it, precludes American from recovery here. American is quite correct that, on its facts, Robins Dry Dock itself does not address the situation here: a claim for economic damages by a vessel's owner (as opposed to a time charterer). However, since that decision, the courts in this Circuit have extracted from it a broader prohibition with respect to maritime tort suits that is fatal to American's negligence claim here.

Specifically, as the Second Circuit has stated, the Robins Dry Dock rule “effectively bars recovery for economic losses caused by an unintentional maritime tort absent physical damage to property in which the victim has a proprietary interest.”

902 F.Supp.2d at 468–69 (quoting G&G Steel, Inc. v. Sea Wolf Marine Transportation, LLC, 380 Fed.Appx. 103, 104 (2d Cir.2010) (summary order), and citing Gas Natural SDG S.A. v. United States, No. 07–2129–CV, –––Fed.Appx. ––––, ––––, 2008 WL 4643944, at *1 (2d Cir. Oct. 21, 2008) (summary order)). Although both G&G Steel and Gas Natural were non-precedential summary orders, see 2d R. 32.1.1(a), we had unequivocally stated in the latter decision, “[T]here exists a bright line rule barring recovery for economic losses caused by an unintentional maritime tort absent physical damage to property in which the victim has a proprietary interest.

” Gas Natural, ––– Fed.Appx. at ––––, 2008 WL 4643944, at *1 (internal quotation marks and citations omitted) (emphases in original).

The District Court also concluded that most Circuits have held that 33 U.S.C. § 494 does not give rise to an implied private right of action. American Petroleum, 902 F.Supp.2d at 470.

Discussion

In Robins Dry Dock, a dry docking company damaged a propeller on a steamship, rendering the vessel unusable for two weeks. The steamship's time charterer sued the dry dock company to recover its lost profits resulting from the delay. The Supreme Court denied recovery. See Robins Dry Dock, 275 U.S. at 308–10, 48 S.Ct. 134. The Court first ruled that the time charterer could not prevail as a third-party beneficiary of the contract between the vessel owner and the dry docking company. See id. at 307–08., 48 S.Ct. 134 Turning to the time charterer's tort claim, the Court first stated generally that whether the dry dock company repaired the owner's vessel “promptly or with negligent delay was the business of the owners and of nobody else,” and more specifically that “[t]he injury to the propeller was no wrong to the [time charterer] but only to those to whom it belonged.” Id. at 308, 48 S.Ct. 134. The Court next considered what effect, if any, the charterparty had on the time charterer's claim: “But as there was a tortious damage to a chattel [the propeller of the owner's vessel] it is sought to connect the claim of the [time charterer] with that in some way.” Id. The Court observed that the time charterer's loss “arose only through their contract with the owners,” id., and then rejected the time charterer's claim in the passage most often quoted from Robins Dry Dock:

[A]s a general rule, at least, a tort to the person or property of one man does not make the tort-feasor liable to another merely because the injured person was under a contract with that other unknown to the doer of the wrong. The law does not spread its protection so far.

Id. at 309, 48 S.Ct. 134 (internal citation omitted).³

Robins Dry Dock made two explicit rulings. The first ruling—that the time charterer was not the third-party beneficiary of the contract between the vessel owner and the drydocker—has no relevance to the pending case. The drawbridge operator has no contract with anyone. The second ruling was that the fact that the time charterer had a contract with the vessel owner whose property had been damaged by an unintentional tort gave the time charterer no right to recovery of its economic losses. This ruling, which we will call the “narrow ruling” of Robins Dry Dock, also seems to have no relevance to the pending case: American Petroleum is not grounding its claim for economic losses on a contract between the negligent operator of the drawbridge and some other party whose property was damaged. Therefore, if American Petroleum's claim is barred, as the District Court held, by a Robins Dry Dock “rule” that economic losses cannot be recovered for an unintentional maritime tort in the absence of physical damage to the claimant's property, it must be because either there is some additional broader ruling implicit in that decision, or the narrow ruling has been extended, whether justifiably or not, into a broader ruling.⁴

Justice Holmes's text, however, gives no hint of either an implicit broader ruling or a basis for an extended broader ruling. He stated the Robins Dry Dock rule in narrow terms, explicitly declining to permit recovery just because the claimant has a contract with a party damaged by the tort. “[A]s a general rule, at least, a tort to the person or property of one man does not make the tort-feasor liable to another merely because the injured person was under a contract with that other unknown to the doer of the wrong.” Robins Dry Dock, 275 U.S. at 309, 48 S.Ct. 134. Moreover, the three cases Justice Holmes cited as a “good statement,” id., of the “general rule” all involved a claimant seeking recovery because of its contract with the tort victim. See The Federal No. 2, 21 F.2d 313 (2d Cir.1927)⁵; Elliott Steam Tug Co. v. Shipping Controller, 1 K.B. 127 (1921); Byrd v. English, 117 Ga. 191, 43 S.E. 419 (1903).⁶ Nowhere in the text of Robins Dry Dock is there a broad statement that economic losses for an unintentional maritime tort are not recoverable in the absence of physical damage to the claimant's property.

A leading treatise on maritime law has candidly acknowledged that the broad rule is not to be found in Robins Dry Dock. Referring to the broad rule, Professor Schoenbaum states, “This is the interpretation accorded to the case of Robins Dry Dock and Repair Co. v. Flint, 275 U.S. 303, 48 S.Ct. 134, 72 L.Ed. 290 (1927).” 1 Thomas J. Schoenbaum, Admiralty and Maritime Law § 5–16, at 317 n. 3 (5th ed.2011) (emphasis added), and also acknowledges that the “Robins Dry Dock holding was later transformed into a bright-line rule against liability for pure economic loss that has been consistently applied in admiralty in a wide variety of contexts....” 2 Schoenbaum, supra § 18–4, at 319 (emphasis added).

Since Robins Dry Dock, the Supreme Court has cited it three times, all without illuminating its meaning. In Aktieselskabet Cuzco v. The Sucarseco, 294...