PPG Industries, Inc. v. Bean Dredging

• Decision Date: 27 February 1984
• Docket Number: No. 82-C-2201,82-C-2201
• Citation: 447 So.2d 1058
• Parties: PPG INDUSTRIES, INC. v. BEAN DREDGING, et al.
• Court: Louisiana Supreme Court

Page 1058

447 So.2d 1058

1986 A.M.C. 197

PPG INDUSTRIES, INC. v. BEAN DREDGING, et al.

No. 82-C-2201.

Supreme Court of Louisiana.

Feb. 27, 1984.

Fred H. Sievert, Jr., Robert S. Dampf, Stockwell, Sievert, Viccellio, Clements & Shaddock, Lake Charles, for applicant.

Cornelius G. VanDalen, Allen F. Campbell, Deutsch, Kerrigan & Stiles, New Orleans, for respondent.

LEMMON, Justice.

The issue in this case is whether a dredging contractor who negligently damaged a natural gas pipeline may be held liable for the economic losses incurred by the pipeline owner's contract customer who was required to seek and obtain gas from another source during the period of repair. Thus, this case brings into focus the broad question of recovery of an indirect economic loss incurred by a party who had a contractual relationship with the owner of property negligently damaged by a tortfeasor. ¹ We conclude that while the situation giving rise to the question in this case falls literally within the expansive terms of La.C.C.Art. 2315, in that the dredging contractor's "act ... cause[d] damage to another", the customer cannot recover his indirect economic loss. ² For the policy reasons hereinafter stated in a duty-risk analysis, we hold that the damages to the economic interest of the contract purchaser of natural gas, caused by a dredging contractor's negligent injury to property which prevents the pipeline owner's performance of the contract to supply natural gas to the purchaser, do not fall within the scope of the protection intended by the law's imposition of a duty on dredging contractors not to damage pipelines negligently.

Bean Dredging Company's dredging operations in the Calcasieu River caused damage to Texaco's natural gas pipeline. As a result, Texaco was unable to fulfill its contract to supply natural gas to PPG Industries for operation of its manufacturing plant, and PPG had to obtain fuel from another source at an increased cost. PPG filed this suit against Bean, seeking to recover the increased cost of obtaining natural gas. Bean filed an exception of no cause of action, contending that Louisiana has never recognized the right of recovery for negligent interference with contractual relations.

The trial court sustained Bean's exception of no cause of action. The court of appeal affirmed, relying on Forcum-James Co. v. Duke Transportation Co., 231 La. 953, 93 So.2d 228 (1957). 419 So.2d 23. We granted certiorari. 422 So.2d 151.

When the question of recovery of indirect economic losses caused by a negligent injury to property that interferes with contractual relations has been presented in previous cases, the courts of this state have generally denied recovery without analyzing the problem, taking a mechanical approach to the unreasoned conclusion that the petition fails to state a cause of action for which relief can be granted. Most cases have cited Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 48 S.Ct. 134, 72 L.Ed. 290 (1927), and Forcum-James Co. v. Duke Transportation Co., above, which were relied on by the court of appeal in the present case. See, for example, Desormeaux v. Central Industries, Inc., 333 So.2d 431 (La.App. 3rd Cir.1976), cert. denied 337 So.2d 225 (La.1976); Messina v. Sheraton Corporation of America, 291 So.2d 829 (La.App. 4th Cir.1974).

In Robins, an admiralty case, the charterer of a vessel sought recovery of damages for its loss of use while the vessel was out of service after the dry dock operator negligently damaged its propeller. The Supreme Court denied recovery on the basis that the negligent repairer, who acted unintentionally while unaware of the contract of charter, cannot be held liable unless the party seeking damages had a proprietary interest in the damaged property.

Although knowledge does not seem to be a relevant factor to the determination of the defendant's liability to the charterer, the case has been cited countless times for the proposition that recovery is generally denied for negligent interference with contractual relations. ³ A better reasoned explanation for the Robins decision was suggested in F. Harper & F. James, The Law of Torts § 6.10 (1956), as follows "It is the reluctance of the Court to hold the tort-feasor liable, in addition to the physical damage to the vessel, for the value of two bargains. Under the contract with the owners, the charterers were excused from paying rent while the ship was laid up for repairs. This loss was included in the settlement between the defendants and the owners. Having made good one bargain, the tort-feasor is now asked to make good the still better bargain of the charterer. This, conceivably, could go on and on. The Court drew the line after the first. The multiplicity of actions and the unforeseeable extension of liability may well have influenced the Court in denying the charterer's claim, as a matter of policy." (Emphasis supplied.)

Similar policy considerations lead to our decision in the present case. Under the alleged facts, there appears to be no question that Bean is liable to Texaco for the costs of repairing the pipeline and for the direct economic losses sustained by Texaco during the period of repair. ⁴ However, the rule of law which prohibits negligent damage to property does not necessarily require that a party who negligently causes injury to property must be held legally responsible to all persons for all damages flowing in a "but for" sequence from the negligent conduct.

Rules of conduct are designed to protect some persons under some circumstances against some risks. Malone, Ruminations on Cause-in-Fact, 9 Stan.L.Rev. 60 (1956). Policy considerations determine the reach of the rule, and there must be an ease of association between the rule of conduct, the risk of injury, and the loss sought to be recovered. Hill v. Lundin & Assoc., Inc., 260 La. 542, 256 So.2d 620 (1972). A judge, when determining whether the interest of the party seeking recovery of damages is one that falls within the intended protection of the rule of law whose violation gave rise to the damages, should consider the particular case in the terms of the moral, social and economic values involved, as well as with a view toward the ideal of justice. See Entrevia v. Hood, 427 So.2d 1146 (La.1983).

There is clearly an ease of association in the present case between the rule of law which imposes a duty not to negligently damage property belonging to another and the risk of injury sustained by Texaco because of the damage to its property. As noted, however, a rule of law is seldom intended to protect every person against every risk. It is much more difficult to associate the same rule of law, in terms of the moral, social and economic values involved, with the risk of injury and the economic loss sustained by the person whose only interest in the pipeline damaged by the tortfeasor's negligence arose from a contract to purchase gas from the pipeline owner. It is highly unlikely that the moral, social and economic considerations underlying the imposition of a duty not to negligently injure property encompass the risk that a third party who has contracted with the owner of the injured property will thereby suffer an economic loss.

Moreover, imposition of responsibility on the tortfeasor for such damages could create liability "in an indeterminate amount for an indeterminate time to...