Nat'l Roofing, Inc. v. Alstate Steel, Inc.

• Decision Date: 07 December 2015
• Docket Number: No. 34,006.,34,006.
• Citation: 366 P.3d 276
• Parties: NATIONAL ROOFING, INC., Midtown Metals, LLC, and Building Envelope Services, LLC, Plaintiffs–Appellants, v. ALSTATE STEEL, INC., Hughes & Associates, Inc., Reid & Associates, LLC, Mason Corporation, Merillat LP, Masco Cabinetry, LLC, John Doe, and Studio Southwest Architects, Inc., formerly known as Design Collaborative Southwest, Defendants–Appellees.
• Court: Court of Appeals of New Mexico

366 P.3d 276

NATIONAL ROOFING, INC., Midtown Metals, LLC, and Building Envelope Services, LLC, Plaintiffs–Appellants,

v.ALSTATE STEEL, INC., Hughes & Associates, Inc., Reid & Associates, LLC, Mason Corporation, Merillat LP, Masco Cabinetry, LLC, John Doe, and Studio Southwest Architects, Inc., formerly known as Design Collaborative Southwest, Defendants–Appellees.

No. 34,006.

Court of Appeals of New Mexico.

Dec. 7, 2015.

Certiorari Denied, Jan. 29, 2016, No. S-1-SC-35675.

Daymon B. Ely, Law Offices of Daymon B. Ely, Michael F. Menicucci, Calvert Menicucci P.C., Albuquerque, NM, for Appellants.

Gerald G. Dixon, Dennis W. Hill, James C. Wilkey, Dixon, Scholl, & Bailey, P.A., Albuquerque, NM, for Appellee Alstate Steel, Inc.

Holly R. Harvey, The Law Offices of Robert Bruce Collins, Albuquerque, NM, for Appellee Reid & Associates, LLC and Hughes & Associates, LLC.

Earl E. DeBrine, Anna E. Indahl, Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque, NM, for Appellee Merillat LP and Masco Cabinetry, LLC.

Terry Guebert, Robert F. Gentile, Guebert Bruckner P.C., Albuquerque, NM, for Appellee Mason Corporation.

OPINION

VANZI, Judge.

{1} Subject to various exceptions, "[a]n action for damages resulting from a tort can only be sustained by the person directly injured thereby, and not by one claiming to have suffered collateral or resulting injuries." Loucks v. Albuquerque Nat'l Bank, 1966–NMSC–176, ¶¶ 46–47, 76 N.M. 735, 418 P.2d 191. Nevertheless, National Roofing (Plaintiff) has sued several defendants in strict liability and negligence for damages allegedly resulting from physical injuries to its employees. The district court dismissed Plaintiff's claims against all Defendants on the ground that no duty exists. Plaintiff argues on appeal that the district court impermissibly relied on principles of foreseeability in dismissing its claims, contrary to Rodriguez v. Del Sol Shopping Center Associates, 2014–NMSC–014, 326 P.3d 465. We hold that the principle stated in Loucks remains good law, entirely consistent with the duty analysis set forth in Rodriguez, and we affirm.

I. BACKGROUND

{2} Plaintiff has alleged the following facts, which we accept as true. See Envtl. Improvement Div. v. Aguayo, 1983–NMSC–027, ¶ 10, 99 N.M. 497, 660 P.2d 587 ("[I]f a district court grants a motion to dismiss pursuant to Rule [1–0]12(b)(6) [NMRA], then the allegations pleaded in the complaint must be taken as true for purposes of an appeal."). In March 2010 employees of Plaintiff were injured while repairing the deck of a canopy at a cabinet manufacturing facility owned by Masco Cabinetry, LLC and Merillat LP. The canopy was designed and manufactured by Mason Corporation and/or Studio Southwest Architects, Inc., and installed by Alstate Steel, Inc., Hughes & Associates, Inc., and/or Reid & Associates, LLC. Plaintiff and its affiliates sued all seven entities (collectively Defendants) in strict liability and negligence for damages Plaintiff sustained as a result of the injuries to its employees—specifically, increased workers' compensation premiums, sums paid to reduce its insurance rating or modifier, and "los[t] income and future income" resulting from its now deficient safety record.¹ Because Plaintiff itself suffered no physical injury or property damage, the district court granted Defendants' motion to dismiss all counts, precipitating this appeal. Plaintiff now asserts as a matter of law that Rodriguez precludes dismissal. Our review is de novo. Delfino v. Griffo, 2011–NMSC–015, ¶ 9, 150 N.M. 97, 257 P.3d 917.

II. DISCUSSION

{3} In Rodriguez, our Supreme Court held that "foreseeability is not a factor for courts to consider when determining the existence of a duty, or when deciding to limit or eliminate an existing duty in a particular class of cases." 2014–NMSC–014, ¶ 1, 326 P.3d 465. In so holding, the Court expressed concern that a determination of "no duty" based on an improbable or remote nature of risk invites a court to weigh the particular facts of a case, usurping the jury's role in determining legal cause and breach.See id. ¶¶ 18–19, 22. In short, foreseeability is simply not subject to categorical analysis by a court because "[w]hat may not be foreseeable under one set of facts may be foreseeable under a slightly different set of facts[,]" id. ¶ 1, and facts are appropriately weighed by the jury, see Romero v. Philip Morris Inc., 2010–NMSC–035, ¶ 9, 148 N.M. 713, 242 P.3d 280. Nonetheless, "[c]ourts are not powerless to dismiss cases as a matter of law [.]" Rodriguez, 2014–NMSC–014, ¶ 24, 326 P.3d 465. A court may still (1) articulate policy reasons (unrelated to foreseeability) that justify a categorically limited duty, or no duty rule, id. ¶ 5; or (2) decide, as a matter of law, that no reasonable jury could find legal cause or breach, id. ¶ 24.

{4} This framework was adopted from the Restatement (Third) of Torts: Liability for Physical and Emotional Harm § 7 cmt. j (2010). Rodriguez, 2014–NMSC–014, ¶ 1, 326 P.3d 465. Cases that do not involve physical or emotional harm to the plaintiff are treated separately in the Restatement. See Restatement (Third) of Torts: Liability for Economic Harm § 1(a) (Tentative Draft No. 1, 2012) ("An actor has no general duty to avoid the unintentional infliction of economic loss on another.").² Comments to Section 1 recognize that "[a]n actor ordinarily has a duty of care when engaged in any activity that creates a risk of physical harm to others[,]" but that "[d]uties to avoid the negligent infliction of economic loss are notably narrower." Id. cmt. a. Thus—specifically relevant to this case—a plaintiff normally cannot recover for economic loss caused by "unintentional injury to another person[,] or unintentional injury to property in which the [plaintiff] has no proprietary interest." Restatement (Third) of Torts: Liability for Economic Harm § 7 (Tentative Draft No. 2, 2014). These limits

are related applications of the same principle, and they apply to facts that usually have certain features in common. The plaintiff and defendant typically are strangers. The defendant commits a negligent act that injures a third party's person or property, and indirectly though perhaps foreseeably—causes various sorts of economic loss to the plaintiff: lost income or profits, missed business opportunities, expensive delays, or other disruption. The plaintiff may suffer losses, for example, because the defendant injured someone with whom the plaintiff had a contract and from whom the plaintiff had been expecting performance, such as an employee or supplier. Or the plaintiff may be unable to make new contracts with others, such as customers who cannot conveniently reach the plaintiff's business because the defendant's negligence has damaged property that now blocks the way. The common law of tort does not recognize a plaintiff's claim in such circumstances.

Id. cmt. a. (citations omitted)³

{5} The ALI's position, while often framed in different ways, is not novel. The rule against recovery for harm to another is typically associated with Robins Dry Dock & Repair Co. v. Flint, where the plaintiffs—time charterers of a ship owned and possessed by a third party—sued the defendant for negligently damaging the ship's propeller, and thereby causing them to lose profits while the propeller was being repaired. 275 U.S. 303, 307, 48 S.Ct. 134, 72 L.Ed. 290 (1927), superseded by statute on other grounds as stated in Slaven v. BP America, Inc., 786 F.Supp. 853 (C.D.Cal.1992). The United States Supreme Court held that the plaintiffs lacked standing to sue in negligence because they had no proprietary interest in the damaged ship. Id. at 308–09, 48 S.Ct. 134. Thus, Justice Holmes famously wrote, even assuming that the plaintiffs' loss "flowed directly" from the injury to the propeller, "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 (citation omitted).

{6} The dominant justification for the continued reliance on this general rule is pragmatic: liability for indirect (but foreseeable) consequences to third parties resulting from negligent harm could be limitless given society's proliferation of commercial relationships and the corresponding potential for unbounded actual and prospective economic harm flowing from a single negligent act. See, e.g., Barber Lines A/S v. M/V Donau Maru, 764 F.2d 50, 54 (1st Cir.1985) ("The number of persons suffering foreseeable financial harm in a typical accident is likely to be far greater than those who suffer traditional (recoverable) physical harm."); Restatement (Third) of Torts: Liability for Economic Harm § 7 cmt. b ("Recognizing claims for those sorts of losses would greatly increase the number, complexity, and expense of potential lawsuits arising from many accidents. In some cases, recognition of such claims would also result in liabilities that are indeterminate and out of proportion to the culpability of the defendant."); see generally Fleming James, Jr., Limitations on Liability for Economic Loss Caused by Negligence: A Pragmatic Appraisal, 25 Vand. L. Rev. 43, 45, 48–55 (1972).

{7} For its part, the Restatement (Second) of Torts treated the type of claim for lost profits advanced in Robins as a nonactionable assertion of negligent interference with contracts and prospective contractual relations. See Restatement (Second) of Torts § 766C (1979). In essence, one cannot typically sue another in negligence for conduct that causes a third person to breach a contract with the plaintiff; or that causes the plaintiff's performance of a contract to be more expensive or burdensome; or that interferes with the plaintiff's ability to acquire potential contractual relationships with third persons—e.g., lost profits. Id. Applying Section 766C, for example, the Supreme Court of...