JUSTICE SCOTT delivered the Opinion of the Court
JUSTICE STARCHER and JUSTICE MCGRAW concur and reserve the right to file
concurring Opinions.
2. A de novo standard is applied by this court in addressing the legal issues
presented by a certified question from a federal district or appellate court. Syl. Pt. 1, Light
v. Allstate Ins. Co., 203 W. Va. 27, 506 S.E.2d 64 (1998).
3. 'In order to establish a prima facie case of negligence in West Virginia, it
must be shown that the defendant has been guilty of some act or omission in violation of a
duty owed to the plaintiff. No action for negligence will lie without a duty broken.' Syl. Pt.
1, Parsley v. General Motors Acceptance Corp., 167 W. Va. 866, 280 S.E.2d 703 (1981).
Syl. Pt. 4, Jack v. Fritts, 193 W. Va. 494, 457 S.E.2d 431 (1995).
4. Questions of negligence, due care, proximate cause and concurrent
negligence present issues of fact for jury determination when the evidence pertaining to such
issues is conflicting or where the facts, even though undisputed, are such that reasonable men
may draw different conclusions from them. Syl. Pt. 5, Hatten v. Mason Realty Co., 148 W.
Va. 380, 135 S.E.2d 236 (1964).
5. The determination of whether a defendant in a particular case owes a duty
to the plaintiff is not a factual question for the jury; rather the determination of whether a
plaintiff is owed a duty of care by a defendant must be rendered by the court as a matter of
law.
6. 'To be actionable, negligence must be the proximate cause of the injury
complained of and much be such as might have been reasonably expected to produce an
injury.' Point 3, syllabus, Hartley v. Crede, [140] W. Va. [133,] [82 S.E.2d 672]. Syl. Pt.
5, Puffer v. Hub Cigar Store, 140 W. Va. 327, 84 S.E.2d 145 (1954), overruled on other
grounds as stated in, Mallet v. Pickens, 206 W. Va. 145, 522 S.E.2d 436 (1999).
7. A person is not liable for damages which result from an event which was
not expected and could not reasonably have been anticipated by an ordinarily prudent
person. Syl. Pt. 6, Puffer v. Hub Cigar Store, 140 W. Va. 327, 84 S.E.2d 145 (1954),
overruled on other grounds as stated in, Mallet v. Pickens, 206 W. Va. 145, 522 S.E.2d 436
(1999).
8. The ultimate test of the existence of a duty to use care is found in the
foreseeability that harm may result if it is not exercised. The test is, would the ordinary man
in the defendant's position, knowing what he knew or should have known, anticipate that
harm of the general nature of that suffered was likely to result? Syl. Pt. 3, Sewell v.
Gregory, 179 W. Va. 585, 371 S.E.2d 82 (1988).
9. An individual who sustains economic loss from an interruption in commerce
caused by another's negligence may not recover damages in the absence of physical harm to
that individual's person or property, a contractual relationship with the alleged tortfeasor, or
some other special relationship between the alleged tortfeasor and the individual who
sustains purely economic damages sufficient to compel the conclusion that the tortfeasor had
a duty to the particular plaintiff and that the injury complained of was clearly foreseeable to
the tortfeasor.
Scott, Justice:
This case arises upon certified question from the Circuit Court of Berkeley
County and presents the issue of entitlement to recovery in tort of economic loss not
accompanied by bodily injury or property damage, a matter not previously resolved with
precision by this Court.
Plaintiff instituted the underlying cause of action on May 28, 1997, seeking
recovery for the decreased revenues he experienced due to closure of the Route 901 overpass.
Asserting that his reduced revenues were proximately caused by the accident, Plaintiff seeks
recovery of $9,000 in lost income.
Arguing that as a matter of law Plaintiff could not recover for his economic
losses in the absence of direct bodily injury or property damage, Defendants moved for
summary judgment. The circuit court denied Defendants' motion for summary judgment,
ruling that there are factual issues in this case pertaining to causation and foreseeability
which remain appropriate for jury determination. The circuit court further held that, under
West Virginia law, the Plaintiff may not be barred from recovering for economic injuries
alleged to have been suffered as a result of the Defendants' negligence.
Following the circuit court's denial of Defendants' motion for summary
judgment, the parties requested and the circuit court agreed to certification of the following
issue:
Whether a claimant who has sustained no physical damage to his
person or property may maintain an action against another for
negligent injury to another's property which results
consequentially in purely economic loss to the claimant.
The circuit court answered this question in the affirmative. In syllabus point three of Kincaid v. Mangum, 189 W. Va. 404, 432 S.E.2d 74 (1993), we explained:
When a certified question is not framed so that this Court
is able to fully address the law which is involved in the question,
then this Court retains the power to reformulate questions
certified to it under both the Uniform Certification of Questions
of Law Act found in W.Va.Code, 51-1A-1, et seq., and
W.Va.Code, 58-5-2 [1967], the statute relating to certified
questions from a circuit court of this State to this Court.
Recognizing that this Court, in addressing certified questions, has retained the right to
address them with some flexibility[,] we reframe the question presented in the case sub
judice to more thoroughly encompass the full breadth of the question to be answered. Miller
v. Lambert, 195 W. Va. 63, 69, 464 S.E.2d 582, 588 (1995). The question, as reformulated,
is consequently as follows:
May a claimant who has sustained purely economic loss
as a result of an interruption in commerce caused by negligent
injury to the property of a third person recover damages absent
either privity of contract or some other special relationship with
the alleged tortfeasor?
We answer this question in the negative.
We recognized in syllabus point one of Light v. Allstate Insurance Co., 203 W. Va. 27, 506 S.E.2d 64 (1998), [a] de novo standard is applied by this Court in addressing the legal issues presented by a certified question from a federal district or appellate court.
This same standard requiring de novo review applies equally to legal issues presented by
circuit courts.
Given our reliance on Hatten, we must address a recent misapprehension of that
decision in Harris v. R.A. Martin, Inc., 204 W. Va. 397, 513 S.E.2d 170 (1998), a per curiam
opinion. In discussing the determination that a genuine issue of material fact existed
regarding a city employee's injury, this Court asserted that it had repeatedly held that duty
is a question of fact for jury determination. Id. at 402, 513 S.E.2d at 175. As support for this
assertion, however, the opinion references the above-quoted syllabus point from Hatten, as
well as three other opinions citing to that syllabus point. Syllabus point five of Hatten does
not stand for the proposition that the existence of duty is a question of fact. To the contrary,
it declares that [q]uestions of negligence, due care, proximate cause, and concurrent
negligence are questions of fact for the jury. 148 W. Va. at 381, 135 S.E.2d at 238, syl. pt.
5. The initial determination of the existence of a duty, however, continues to be an issue
resolved by the trial court. To correct any misconception this anomaly of Harris might have
generated, we restate the law of this State, as follows: The determination of whether a
defendant in a particular case owes a duty to the plaintiff is not a factual question for the jury;
rather the determination of whether a plaintiff is owed a duty of care by a defendant must be
rendered by the court as a matter of law.
This declaration is in accord with prior West Virginia law, as well as legal
commentators on this issue. In Miller v. Whitworth, 193 W. Va. 262, 455 S.E.2d 821 (1995),
this Court explained that [w]e are mindful that the determination of whether there is a duty
is a question of law and not a question of fact for the jury. Id. at 265, 455 S.E.2d at 824.
Likewise, legal commentators agree that [t]he determination of any question of duty . . . has
been held to be an issue of law for the court rather than for the jury, to be determined by
reference to the body of statutes, rules, principles, and precedents which make up the law.
57A Am.Jur.2d Negligence § 86, at 142 (2d. ed. 1989) (footnote omitted).
We recognized in Robertson v. LeMaster, 171 W. Va. 607, 301 S.E.2d 563
(1983), that while foreseeability of risk is a primary consideration in determining the scope
of a duty an actor owes to another, [b]eyond the question of foreseeability, the existence of
duty also involves policy considerations underlying the core issue of the scope of the legal
system's protection[.] Id. at 612, 301 S.E.2d at 568. Such considerations include the
likelihood of injury, the magnitude of the burden of guarding against it, and the consequences
of placing that burden on the defendant. Id.
In Puffer v. Hub Cigar Store, 140 W. Va. 327, 84 S.E.2d 145 (1954), overruled
on other grounds as stated in, Mallet v. Pickens, 206 W. Va. 145, 522 S.E.2d 436 (1999), this
Court held in syllabus point five: 'To be actionable, negligence must be the proximate cause
of the injury complained of and must be such as might have been reasonably expected to
produce an injury.' Point 3, syllabus, Hartley v. Crede, [140] W. Va. [133,] [82 S.E.2d
672]. Accord Wehner v. Weinstein, 191 W. Va. 149, 444 S.E.2d 27 (1994). A person is
not liable for damages which result from an event which was not expected and could not
reasonably have been anticipated by an ordinarily prudent person. Puffer, 140 W. Va. at
328, 84 S.E.2d at 148, syl. pt. 6.
Emphasizing the relationship between foreseeability and duty, we explained
in syllabus point three of Sewell v. Gregory, 179 W. Va. 585, 371 S.E.2d 82 (1988):
The ultimate test of the existence of a duty to use care is
found in the foreseeability that harm may result if it is not
exercised. The test is, would the ordinary man in the
defendant's position, knowing what he knew or should have
known, anticipate that harm of the general nature of that
suffered was likely to result?
Commentators have similarly evaluated the critical element of duty:
[T]he obligation to refrain from particular conduct is owed only
to those who are foreseeably endangered by the conduct and
only with respect to those risks or hazards whose likelihood
made the conduct unreasonably dangerous. Duty, in other
words, is measured by the scope of the risk which negligent
conduct foreseeably entails.
2 F. Harper & F. James, The Law of Torts § 18.2 (1956) footnote omitted).
The United States Supreme Court has also recognized the need to draw a line
to prevent unfettered imposition of unlimited exposure to liability. The Supreme Court
reasoned that the doctrine of remoteness is a component of proximate cause, which in turn
embraces the concept that the judicial remedy cannot encompass every conceivable harm
that can be traced to alleged wrongdoing. Associated Gen. Contractors v. California State
Council of Carpenters, 459 U.S. 519, 536 (1983).
The need to restrict the spatial concept of duty to something less than the limits
of logical connection was cogently stated as follows in In re Exxon Valdez, No. A89-0095-
CV, 1994 WL 182856 (D. Alaska March 23, 1994):
There is no question but that the Exxon Valdez grounding
impacted, in one fashion or another, far more people than will
ever recover anything in these proceedings. There is an
understandable public perception that if one suffers harm which
is perceived to be a result of the conduct of another, the harmed
person should be compensated. That perception does not always
square up with the institutional guidelines (statutes and case
law) under which the court must operate. It is the function of
both Congress and the courts (principally the courts of appeal
and supreme courts) to determine the extent to which public
expectations with respect to financial responsibility are to be
realized. Legal liability does not always extend to all of the
foreseeable consequences of an accident. In the area of harm to
one's body, the reach of what is recoverable is very great.
Where one's property is injured, the extent of legal liability is
considerable, but not to the same extent as with bodily injury.
Where pure economic loss is at issue--not connected with any
injury to one's body or property, and especially where that
economic loss occurs in a marine setting--the reach of legal
liability is quite limited except as to commercial fishermen.See footnote 2
2
. . . .
Were it otherwise, we would have a form of organized
anarchy in which no one could count on what rule would apply
at any given time or in any given situation.
Id. at 8-9 (footnote and emphasis added).
While the holding of the majority in Harris is not in conflict with our decision
in the present case, we underscore the reasoning of Justice Maynard in his insightful dissent
in Harris. Justice Maynard cautioned against the limitless expansion of the element of duty,
postulating that the majority had so expand[ed] the element of duty, that its existence now
becomes almost a given in any tort case. If a party is injured by the conduct of another, there
must have been a duty to avoid such conduct. 204 W. Va. at 403, 513 S.E.2d at 176. In his
dissent, Justice Maynard quoted, with approval, the following language from 57A Am.Jur.2d
Negligence § 87:
A line must be drawn between the competing policy
considerations of providing a remedy to everyone who is injured
and of extending exposure to tort liability almost without limit.
It is always tempting to impose new duties and, concomitantly,
liabilities, regardless of the economic and social burden. Thus,
the courts have generally recognized that public policy and
social considerations, as well as foreseeability, are important
factors in determining whether a duty will be held to exist in a
particular situation.
204 W. Va. at 403, 513 S.E.2d at 176 (emphasis supplied).
The obvious question: Who draws the line demarcating tort liability? Who, in
our society, has the burden of defining the existence and extent of the element of duty in
tort actions? It necessarily falls to the courts to consider all relevant claims of the competing
parties; to determine where and upon whom the burden of carrying the risk of injury will fall;
and to draw the line, to declare the existence or absence of duty, in every case, as a matter
of law. The temptation is to accede to the arguments of logical connection in every instance
of resulting harm while, in fact, the consequences of pure logic would be socially and
economically ruinous.
The sole issue presented for our resolution is whether economic loss from an
interruption in commerce in the absence of damage to a plaintiff's person or property is
recoverable in a tort action. While this Court has never directly addressed this issue, other
jurisdictions, almost without exception, have concluded that economic loss alone will not
warrant recovery in the absence of some special relationship between the plaintiff and the
tortfeasor. In the seminal decision of Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303
(1927), the United States Supreme Court refused to permit recovery from the dry dock owner
when plaintiffs were denied use of a vessel for two weeks because of a third party's act of
negligence during the ship's refurbishing. In establishing this long-standing rule of denying
recovery in tort for indirect economic injury, Justice Holmes articulated the rationale, based
upon English and American precedent, that continues to justify the nonexistence of a legally
cognizable or compensable claim for such attenuated injuries even today:See footnote 3
3
The law does not
spread its protection so far. Id. at 309. In writing Robins Dry Dock, Justice Holmes relied
upon the reasoning of the English case of Elliott Steam Tug Co. v. The Shipping Controller,
1 K.B. 127 (1922), in which recovery was refused for negligent interference with contractual
rights.See footnote 4
4
See Holt Hauling & Warehousing Sys., Inc. v. M/V Ming Joy, 614 F. Supp. 890, 896
n.13 (E.D. Pa. 1985) (rejecting argument that Robins Dry Dock only applies to interference
with economic expectancies generally or only to interference with contractual interests and
stating that the precept established by Robins Dry Dock 'is essentially a principle of
disallowance of damages because of remoteness') (quoting Venore Transp. Co. v. M/V
Struma, 583 F.2d 708, 710 (4th Cir. 1978)).
Where the factual scenario involves a plaintiff's contractual right to use
property damaged by a tortfeasor, courts have invoked the Restatement of Torts as a basis
for denying causes of action limited to economic damages. In Philip Morris, Inc. v. Emerson,
368 S.E.2d 268 (Va. 1988), the plaintiff sought recovery of lost profits to his campground
business due to the negligent release of gases from the defendant's property. Citing the well-
recognized principle in the Restatement of TortsSee footnote 5
5
which recognizes that interference with the
ability to contract with third persons is too remote to permit recovery, the court refused to
permit recovery of the profits plaintiffs allegedly sustained from his inability to contract with
campers for overnight stays. 368 S.E.2d at 282 (citing Restatement (Second) of Tort § 766
(1979)).
In denying economic damages in the absence of physical impact, courts
frequently refer to this element of remoteness between the injury and the act of negligence
that is the source of such injury. In Rickards v. Sun Oil Co., 41 A.2d 267 (N.J. 1945), a case
remarkably similar to the one under scrutiny by this Court, plaintiff business owners sought
to recover losses from expectant gains from a defendant whose barge negligently damaged
a drawbridge which served as the only means of access to the island on which plaintiffs'
business premises were situated. Id. at 268. In granting the defendant's motions to strike the
complaints, the court held that [defendant's] negligent action may be a cause of injury to
the plaintiffs, but it is not the natural and proximate effect of such negligence and therefore
[is] not actionable. Id. The court observed:
The entire doctrine assumes the defendant is not
necessarily to be held for all consequences of his acts. Professor
McLaughlin, Article 39 Harvard Law Review (Dec. 1925) 149
at 155. It is fundamental that there must be some reasonable
limitation of liability for the commission of the tort. The
wrongdoer is not liable in the eyes of the law for all possible
consequences. He is thus responsible in damages only for the
natural and probable consequence of his negligent act.
41 A.2d at 269 (citation omitted). The court recognized that [n]o rule embraces within its
scope all the resulting consequences of the given act. The effect would be to impose a
liability entirely disproportionate to the act committed or to the failure to perform the duty
assumed. Id.
In Kahl v. Love, 37 N.J.L. 5 (N.J.Super. 1874), the New Jersey Supreme Court observed that not everyone who suffers a loss can maintain a suit.
The limit of the doctrine relating to actionable negligence is, that
the person occasioning the loss must owe a duty, arising from
contract or otherwise, to the person sustaining such loss. Such
a restriction on the right to sue for a want of care in the exercise
of employments or the transaction of business, is plainly
necessary to restrain the remedy from being pushed to an
impracticable extreme. There would be no bounds to actions
and litigious intricacies, if the ill effects of the negligences of
men could be followed down the chain of results to the final
effect.
Id. at 8 (emphasis supplied); see also In re Marine Navigation Sulphur Carriers, Inc. v. Lone
Star Indus., 638 F.2d 700, 702 (4th Cir. 1981) (affirming district court's dismissal of
plaintiff's claims for economic damages arising from bridge closing and noting that [t]he
economic, nonphysical losses as alleged were too remote to be legally compensable);
Petition of Kinsman Transit Co., 388 F.2d 821, 825 (2d Cir. 1968) (denying recovery to
plaintiffs who incurred economic expense due to destructive chain of ship wrecks, ice drifts,
and bridge damage and observing that the connection between defendants' negligence and
the claimants' damages is too tenuous and remote to permit recovery).See footnote 6
6
In General Foods Corp. v. United States, 448 F. Supp. 111 (D. Md. 1978), the
plaintiff manufacturer sought to recover economic damages from the defendant bridge owner
for economic damages allegedly arising from the closing of the Penn Central Railroad Bridge
over the Chesapeake and Delaware Canal caused by a ship wreck. Citing Robins Dry Dock
for the proposition that economic losses suffered by the plaintiff in conducting its business,
even if proven, are not recoverable damages as a matter of law, the court dismissed plaintiff's
complaint, explaining:
Courts which have addressed this issue have repeatedly
expressed concern that a contrary rule would open the door to
virtually limitless suits, often of a highly speculative and remote
nature. Such suits would expose the negligent defendant to a
severe penalty, and would produce serious problems in
litigation, particularly in the areas of proof and apportionment
of damages.
448 F.Supp. at 113.
In an analogous case, Nebraska Innkeepers, Inc. v. Pittsburgh-Des Moines
Corp, 345 N.W.2d 124 (Iowa 1984), the Iowa Supreme Court considered the viability of an
action brought by various business owners to recover purely economic losses resulting from
the closure of a bridge to repair certain structural defects.See footnote 7
7
Affirming the lower court's grant
of summary judgment to defendants, the court recognized, as uniform[,] the position of
rejecting negligence actions seeking pure economic damages regardless of how vital to the
claimant be the flow of commerce that is interrupted. Id. at 126. Critical to the court's
ruling was its conclusion that [e]xceptions to that general rule such as ownership of the
bridge, physical injury or direct damages to the claimant's property or person, or a direct
contractual relation with the alleged wrongdoer [we]re not factually present here. Id.
The recognized necessity of imposing a line of demarcation on actionable
theories of recovery serves as another rationale for the denial of purely economic damages.
In Stevenson v. East Ohio Gas. Co., 73 N.E.2d 200 (Ohio Ct. App. 1946), the Ohio court
held that employees of a neighboring company could not recover lost wages incurred after
they were evacuated due to an explosion and fire allegedly caused by the defendant's
negligence. The Stevenson court reasoned as follows:
While the reason usually given for the refusal to permit
recovery in this class of cases is that the damages are indirect
or are too remote it is our opinion that the principal reason
that has motivated the courts in denying recovery in this class of
cases is that to permit recovery of damages in such cases would
open the door to a mass of litigation which might very well
overwhelm the courts so that in the long run while injustice
might result in special cases, the ends of justice are conserved.
. . .
Id. at 203 (emphasis added).
In similar fashion, the Seventh Circuit, in affirming the district court's
dismissal of an action seeking economic damages arising from a bridge closing, reasoned that
extension of liability in the absence of harm to a plaintiff's person or property would thrust
courts into a field with no sensible or just stopping point. Leadfree Enterprises, Inc. v.
United States Steel Corp., 711 F.2d 805, 808 (7th Cir. 1983) (citing Hass v. Chicago & North
Western Ry, 179 N.W.2d 885, 888 (1970)). The court observed further in Leadfree
Enterprises, that [i]n the economic injury case, there is less a fear of fraudulent claims than
a sense of wanting to have a sensible stopping point in order to preclude open-ended,
crushing liability on a tortfeasor. 711 F.2d at 808; see also Dundee Cement Co. v. Chemical
Labs., Inc., 712 F.2d 1166, 1172 (7th Cir. 1983) (discussing policy reasons advocating
against permitting third party recovery of economic losses and conclud[ing] that there is a
legitimate fear that a crushing burden of litigation would result from allowing recovery for
economic damages like this).
Astutely anticipating the economic chaos that would result from permitting
theoretically limitless recovery of economic injury, the court in Aikens v. Baltimore & Ohio
R.R. Co., 501 A.2d 277 (Pa.Super.Ct. 1985), denied recovery for indirect economic losses
incurred by employees who lost wages due to the defendant's alleged negligence in causing
a train derailment which damaged the plaintiffs' employer's plant. The court affirmed the
dismissal of the complaint and opined:
that allowance of a cause of action for negligent interference
with economic advantage would create an undue burden upon
industrial freedom of action, and would create a disproportion
between the large amount of damages that might be recovered
and the extent of the defendant's fault. To allow a cause of
action for negligent cause of purely economic loss would be to
open the door to every person in the economic chain of the
negligent person or business to bring a cause of action. Such an
outstanding burden is clearly inappropriate and a danger to our
economic system.
Id. at 279 (citation omitted).
In analyzing the development of legal theories regarding the efficacy of
permitting economic damages in the absence of physical harm, the United States Court of
Appeals for the Fifth Circuit in State of Louisiana v. M/V Testbank, 752 F.2d 1019 (5th Cir.
1985), reexamined the authority and scope of Robins Dry Dock. Two vessels had collided
in the Mississippi River Gulf Outlet, resulting in a chemical spill. Fearing widespread
contamination, authorities closed the outlet to navigation for approximately twenty days.
Forty-one plaintiffs, including commercial fishermen, operators of marinas, bait and tackle
shops, cargo terminal operators, and restaurant owners filed suit, and those actions were
consolidated. In its canvass of relevant case law, the M/V Testbank court acknowledged the
opposition to the exclusionary policy prohibiting recovery of economic damages in the
absence of physical impact and noted that [t]he push to delete the restrictions on recovery
for economic loss lost its support and by the early 1940's had failed. Id. at 1023. The
majority of the court reasserted the traditional interpretation of Robins Dry Dock and
concluded that all claims for economic loss in the absence of physical injury should be
excluded:
After extensive additional briefs and oral argument, we are
unpersuaded that we ought to drop physical damage to a
proprietary interest as a prerequisite to recovery for economic
loss. To the contrary, our reexamination of the history and
central purpose of this pragmatic restriction on the doctrine of
foreseeability heightens our commitment to it. Ultimately we
conclude that without this limitation foreseeability loses much
of its ability to function as a rule of law.
752 F.2d at 1021. A concurring justice expressed reservation that the issues of proximate
cause, foreseeability, and remoteness could alone provide an adequate guide for
distinguishing, on a normative, pre-event basis, between the classes of cases in which
recovery will be allowed and those in which it will not. Id. at 1035 (Garwood, J.,
concurring).
Narrowly crafting its decision to apply to a limited and particularized group,
the New Jersey court held:
that a defendant owes a duty of care to take reasonable measures
to avoid the risk of causing economic damages, aside from
physical injury, to particular plaintiffs or plaintiffs comprising
an identifiable class with respect to whom defendant knows or
has reason to know are likely to suffer such damages from its
conduct. A defendant failing to adhere to this duty of care may
be found liable for such economic damages proximately caused
by its breach of duty.
495 A.2d at 116. In further explaining its rationale for departure from established doctrine,
the New Jersey court noted:
the close proximity of the North Terminal and People Express
Airlines to the Conrail freight yard; the obvious nature of the
plaintiff's operations and particular foreseeability of economic
losses resulting from an accident and evacuation; the
defendants' actual or constructive knowledge of the volatile
properties of ethylene oxide; and the existence of an emergency
response plan prepared by some of the defendants (alluded to in
the course of oral argument), which apparently called for the
nearby area to be evacuated to avoid the risk of harm in case of
an explosion.
Id. at 118. In fashioning its test, the court in People Express determined that liability and
foreseeability stand in direct proportion to one another[:] The more particular is the
foreseeability that economic loss will be suffered by the plaintiff as a result of defendant's
negligence, the more just is it that liability be imposed and recovery allowed. Id. at 116.
An analysis of the facts involved in the People Express decision supports the
conclusion that the New Jersey court traversed a logical path more closely akin to that
navigated in cases involving physical damage to property. Subsequent to the Three Mile
Island nuclear incident, plaintiffs similarly asserted claims of temporary loss of use of
property and damage to property as a result of the intrusion of radioactive materials
through the ambient air. In resolving their claims in Commonwealth of Pennsylvania v.
General Public Utilities Corp., 710 F.2d 117 (3rd Cir. 1983), the United States Court of
Appeals for the Third Circuit acknowledged that the complaints did not contain any claim
of damages for direct physical damage to any of the plaintiffs' property. Id. at 120-21. While
the lower court had concluded that the losses claimed were purely economic in nature and
unrecoverable, the plaintiffs contended that increased radioactivity and radioactive materials
emitted during the nuclear incident permeated the entire area, and this rendered the public
buildings unsafe for a temporary period of time, and constituted a physical intrusion upon the
plaintiffs' properties. Id. at 122. The plaintiffs maintained that the gaseous intrusion
satisfied the requirement of physical harm to justify the recovery of damages in tort. The
Third Circuit found that the plaintiffs' contentions were sufficient to defeat a motion for
summary judgment, permitting the plaintiffs an opportunity to prove that an invasion by an
invisible substance may still constitute a physical damage warranting recovery of economic
loss. Similar to the inhabitability problems experienced by the Three Mile Island plaintiffs,
the plaintiff's building in People Express was rendered uninhabitable by the negligent release
of toxic gases. Thus, in People Express, the New Jersey court could have reached its
decision by reasoning that to render a building uninhabitable by releasing poison gas against
it constitutes a direct physical damage to that building.
Analysts of the People Express rationale have also criticized the wisdom of that
approach by emphasizing that the Court itself noted the contradictory and inconsistent
nature of its reasoning by acknowledging the inherent limitations to predicating recovery
on a principle of particular foreseeability. Lear Siegler, 825 S.W.2d at 86. The People
Express court stated that there will arise many similar cases that cannot be resolved by our
decision today. 495 A.2d at 117. The court further recognized that:
some cases will present circumstances that defy the
categorization here devised to circumscribe a defendant's orbit
of duty, limit otherwise boundless liability and define an
identifiable class of plaintiffs that may recover. In these cases,
the courts will be required to draw upon notions of fairness,
common sense and morality to fix the line limiting liability as a
matter of public policy, rather than an uncritical application of
the principle of particular foreseeability.
495 A.2d at 116.
In another case typically referenced as supportive of a minority position on this issue, a California court applied the special relationship exception and permitted a restaurant owner to sue for lost profits allegedly caused by a contractor's failure to promptly install and maintain an air conditioner. J'Aire Corp. v. Gregory, 598 P.2d 60 (Cal. 1979).
The plaintiff introduced evidence that the reliance upon the air conditioning function was
repeatedly brought to the defendant's attention. In concluding that such action could be
maintained, the court explained that a contractor owes a duty of care to the tenant of a
building undergoing construction work to prosecute that work in a manner which does not
cause undue injury to the tenant's business, where such injury is reasonably foreseeable.
Id. at 66. The court's decision to permit recovery was expressly predicated on the existence
of a special relationship: Where a special relationship exists between the parties, a plaintiff
may recover for loss of expected economic advantage through the negligent performance of
a contract although the parties were not in contractual privity. Id. at 63.
In another case frequently cited as support for the minority position, an
employer sought recovery for economic loss sustained as a result of tortious injuries to his
employees. Mattingly v. Sheldon Jackson College, 743 P.2d 356 (Alaska 1987). Plaintiff's
employees were injured when a trench dug by Sheldon Jackson College employees collapsed,
which prevented them from cleaning a drainpipe. Plaintiff sought recovery of economic
damages as a result of the loss of services of his employees. Pivotal to the Alaska Supreme
court's decision to permit economic recovery in this case was its determination that the
plaintiff was a foreseeable and particularized plaintiff. Id. at 361. Although recovery of
economic damages was permitted, the court made clear that such recovery is only permitted
where it can be established that the defendant owed a duty to particular plaintiffs or
plaintiffs comprising an identifiable class with respect to whom defendant knows or has
reason to know are likely to suffer such damages from its conduct. Id. at 360 (quoting
People Express, 495 A.2d 116).
The special relationship between the plaintiff and the alleged tortfeasor was
also emphasized in another case frequently cited for the minority view. In Hawthorne v.
Kober Construction Co., 640 P.2d 467 (Mont. 1982), the plaintiff had suffered economic
losses due to a delay in the shipment of steel. The court acknowledged that [t]he action is
one for negligence in the performance of a contractual duty. Id. at 470. Concluding that
such action could be maintained because of the foreseeability of harm, the court relied upon
Prosser's textbook reasoning:
[B]y entering into a contract with A, the defendant may place
himself in such a relation toward B that the law will impose
upon him an obligation, sounding in tort and not in contract, to
act in such a way that B will not be injured. The incidental fact
of the existence of the contract with A does not negative the
responsibility of the actor when he enters upon a course of
affirmative conduct which may be expected to affect the
interests of another person.
640 P.2d at 470 (citing Prosser, Law of Torts, 4th Ed., Section 93.
After thoroughly considering the intricacies of a potential rule permitting the
recovery of economic damages absent physical or personal injury, we conclude that an
individual who sustains purely economic loss from an interruption in commerce caused by
another's negligence may not recover damages in the absence of physical harm to that
individual's person or property, a contractual relationship with the alleged tortfeasor, or some
other special relationship between the alleged tortfeasor and the individual who sustains
purely economic damages sufficient to compel the conclusion that the tortfeasor had a duty
to the particular plaintiff and that the injury complained of was clearly foreseeable to the
tortfeasor. The existence of a special relationship will be determined largely by the extent
to which the particular plaintiff is affected differently from society in general. It may be
evident from the defendant's knowledge or specific reason to know of the potential
consequences of the wrongdoing, the persons likely to be injured, and the damages likely to
be suffered. Such special relationship may be proven through evidence of foreseeability of
the nature of the harm to be suffered by the particular plaintiff or an identifiable class and can
arise from contractual privity or other close nexus. As observed by the Maryland court in L
& P Converters v. Alling & Cory Co., 642 A.2d 264 (Md. 1994), a civil action in which the
tort of negligent misrepresentation was asserted, Where failure to exercise due care only
creates a risk of economic loss, an intimate nexus between the parties is generally required.
The requirement of an intimate nexus is satisfied by contractual privity or its equivalent.
Id. at 267 (citations omitted). The Maryland court continued, In the absence of contractual
privity, its equivalent has been found and a tort duty imposed when 'a sufficiently close
nexus or relationship' is shown. Id. (quoting Weisman v. Connors, 540 A.2d 783, 793
(1988)). Any attempt by this Court to more specifically define the parameters of
circumstances which may be held to establish a special relationship would create more
confusion than clarity.
We base our holding upon our analysis of the complexities of this area of tort
law, demonstrated through both historical evolvement and current concerns, and our belief
that a hybrid approach must be fabricated to authorize recovery of meritorious claims while
simultaneously providing a barrier against limitless liability. The common thread which
permeates the analysis of potential economic recovery in the absence of physical harm is the
recognition of the underlying concept of duty. Absent some special relationship, the confines
of which will differ depending upon the facts of each relationship, there simply is no duty.
A thorough examination of the cases comprising what has been referenced as the minority
view reveals reasoning similar to ours, which provides the opportunity for recovery only
upon a showing of a special relationship between the plaintiff and alleged tortfeasor and
narrowly tailors the recovery to conform to the facts of the case under scrutiny.
Our decision under the limited factual scenario presented in this certified
question has no impact upon our prior rulings permitting recovery of purely economic
damages in negligence actions where a special relationship exists between the plaintiff and
the alleged tortfeasor. Our holding in the case sub judice is, in fact, consistent with the
rationale underlying such rulings, and we affirm our previous recognition that where a
special and narrowly defined relationship can be established between the tortfeasor and a
plaintiff who was deprived of an economic benefit, the tortfeasor can be held liable. In cases
of that nature, the duty exists because of the special relationship. The special class of
plaintiffs involved in those cases were particularly foreseeable to the tortfeasor, and the
economic losses were proximately caused by the tortfeasor's negligence.
For example, auditors See footnote 8
8
have been held liable to plaintiffs who bought stock in
reliance upon a financial statement negligently prepared for a corporation; surveyors
See footnote 9
9
and
termite inspectors See footnote 10
10
liable to remote purchasers of property; engineers See footnote 11
11
and architects See footnote 12
12
liable
to contractors who relied upon plans negligently prepared for property owners who later
hired the contractors; attorneys See footnote 13
13
and notaries public See footnote 14
14
liable to beneficiaries of negligently
prepare wills; real estate brokers for failure to disclose defects; and telegraph companies
See footnote 15
15
liable to individuals who failed to secure a contract due to the negligent transmission of a
message.
We also emphasize that the holding of this case applies strictly to plaintiffs
alleging purely economic loss from an interruption in commerce caused by another's
negligence. This opinion therefore does not encompass, and has no effect upon, our prior
rulings regarding medical monitoring, negligent infliction of emotional distress cases, or
nuisance law. See Bower v. Westinghouse Elec. Corp., 206 W. Va. 133, 522 S.E.2d 424
(1999) (permitting medical monitoring in absence of present physical injury); Stump v.
Ashland, Inc., 201 W.Va. 541, 499 S.E.2d 41 (1997) (holding that plaintiffs did not have to
actually witness injury being inflicted to recover for negligent infliction of emotional distress
where plaintiffs were present at scene of injury-producing event); Marlin v. Bill Rich Constr.,
Inc., 198 W. Va. 635, 482 S.E.2d 620 (1996) (finding that plaintiff is not required to prove
physical injury in asserting claim for negligent infliction of emotional distress); West v. Nat'l
Mines Corp., 168 W. Va. 578, 285 S.E.2d 670 (1981) (finding entitlement to preliminary
mandatory injunction requiring defendants to abate nuisance where coal truck travel on
public road caused dust to settle on plaintiffs' house and surrounding property).
The resolution of this matter of restrictions on tort liability is ultimately a
matter of practical politics. Palsgraf, 162 N.E. at 103 (Andrews, J., dissenting). The law
arbitrarily declines to trace a series of events beyond a certain point. Id. In other words, it
is a question of public policy. The purely economic damages sought by a plaintiff may be
indistinguishable in terms of societal entitlement from those damages incurred by the
restaurant owner in the next block, the antique dealer in the next town, and all the ripple-
effect losses experienced by each employer and each resident of every town and village
surrounding the location of the initial act of negligence. In crafting a rule to address the issue
of economic damages, we have attempted to avoid the expression of a judicial definition of
duty which would permit the maintenance of a class action as a result of almost every car
wreck and other inconvenience that results to our state's citizenry.
In determining questions of duty and extension of duty to particular plaintiffs,
the court in Stevenson echoed widespread speculation concerning the ripple effects of a
negligence claim based upon pure economic loss and observed:
Cases might well occur where a manufacturer would be obliged
to close down his factory because of the inability of his supplier
due to a fire loss to make prompt deliveries; the power company
with a contract to supply a factory with electricity would be
deprived of the profit which it would have made if the operation
of the factory had not been interrupted by reason of fire damage;
a man who had a contract to paint a building may not be able to
proceed with his work; a salesman who would have sold the
products of the factory may be deprived of his commissions; the
neighborhood restaurant which relies on the trade of the factory
employees may suffer a substantial loss. The claims of
workmen for loss of wages who were employed in such a
factory and cannot continue to work there because of a fire,
represent only a small fraction of the claims which would arise
if recovery is allowed in this class of cases.
73 N.E.2d at 203-04.
In an endeavor to focus upon the rights of other innocent parties not typically
considered, a commentator reconstructs the Stevenson paradigm, as follows:
Cases might well occur where a manufacturer would be
obliged to close down his factory [and the manufacturer's
employees would be obliged to spend days idle and without
income] because of the inability of [the manufacturer's] supplier
due to a fire loss to make prompt deliveries; the [employees of
a] power company with a contract to supply a factory with
electricity would be deprived of [their income] which [they]
would have made if the operations of the factory had not been
interrupted by reason of fire damage; a [person] who had a
contract to paint [the worker's house] may not be able to
proceed with [the] work; a [travel agent] who would have sold
[the workers vacation packages] may be deprived of [her]
commissions; the [teen-age gardener, the grocer's delivery
person, the piano teacher, and the weekly housekeeper who
serviced the worker's home and family] may [each] suffer a
substantial loss.
Silverstein, Eileen, On Recovery in Tort for Pure Economic Loss, 32 U.Mich.J.L.Ref 403,
437 (1999).
Tort law is essentially a recognition of limitations expressing finite boundaries
of recovery. Using the absurdity of these chain-of-reaction but purely logical examples,
courts and commentators have expressed disdain for limitless liability and have also
cautioned against the potential injustices which might result. This Court's obligation is to
draw a line beyond which the law will not extend its protection in tort, and to declare, as a
matter of law, that no duty exists beyond that court-created line. It is not a matter of
protection of a certain class of defendants; nor is it a matter of championing the causes of a
certain class of plaintiffs. It is a question of public policy. Each segment of society will
suffer injustice, whether situated as plaintiff or defendant, if there are no finite boundaries
to liability and no confines within which the rights of plaintiffs and defendants can be
determined. We accept the wise admonition expressed over a century ago, in language both
simple and eloquent, proven by the passage of time and the lessons of experience: There
would be no bounds to actions and litigious intricacies, if the ill effects of the negligences
of men could be followed down the chain of results to the final effect. Kahl, 37 N.J.L. at
8.
Certified Question Answered.
275 U.S. at 309.
Negligent Interference with Contract or Prospective Contractual
Relation. One is not liable to another for pecuniary harm not
derived from physical harm to the other, if that harm results
from the actor's negligently
(a) causing a third person not to perform a contract with the
other, or
(b) interfering with the other's performance of his contract or
making the performance more expensive or burdensome, or
(c) interfering with the other's acquiring a contractual relation
with a third person.
company); Local Joint Executive Board v. Stern, 651 P.2d 637 (Nev.1982) (ruling that hotel employees could not recover lost wages due to hotel fire allegedly caused by defendant's negligence); General Public Util v. Glass Kitchens of Lancaster, Inc., 542 A.2d 567 (Pa.Super.Ct. 1988) (denying economic loss damages to corporations associated with the Pennsylvania Dutch tourist industry who sought damages for economic loss due to diminution of visitors to Lancaster County after Three Mile Island nuclear incident); Moore v. Pavex, Inc., 514 A.2d 137 (Pa.Super.Ct. 1986) (ruling that there could be no recovery for economic loss by the plaintiffs in this case who did not suffer physical harm to property in which they had a proprietary interest); United Textile Workers v. Lear Siegler Seating Corp., 825 S.W.2d 83 (Tenn.Ct.App.1990) (holding that industrial park employees could not recover economic damages without physical damage when park was closed due to gas leak allegedly caused by defendant's negligence); Coastal Conduit & Ditching, Inc. v. Noram Energy Corp., 2000 WL 1289406 (Tex. App. 2000) (holding that economic loss could not be recovered in negligence action against gas lines operator, based upon absence of duty).
(subcontractor could recover additional contract costs from engineering firm which negligently prepared plans).