Union Oil Company
An oil spill
off the coast of Santa Barbara occurred.
commercial fisherman, sought to recover profits lost as a result
of the reduction in the commercial fish potential of the Santa
Barbara channel which may have been caused by the oil spill from
moved for partial summary judgment, contending that no cause of
action exists against a defendant whose negligence prevents a
plaintiff from obtaining a prospective pecuniary advantage.
The court disagreed;
holding that negligent interference
with economic advantage was actionable.
The right of
plaintiffs to recover for injuries to their business caused by
pollution of public water was recognized,
even though they experienced no
were under a duty to plaintiffs to conduct their drilling and
production in a reasonably prudent manner so as to avoid the
negligent diminution of aquatic life.
foreseeable that injury that negligently conducted drilling
operations might diminish aquatic life and thus injure the
business of plaintiffs.
order denying defendants'
motion for partial summary judgment was affirmed because
negligent interference with an
economic advantage is actionable
definitive ruling if maritime or CA law applies.
Pure Economic Loss in Negligence: The General Rule
No cause of
actions lies against a Df whose negligence prevents the Pl from
obtaining a prospective pecuniary [money] advantage.
Arguments/Defenses To Negligence
Df owes NO duty to Pl - seeking compensation for such injuries.
invoked the doctrine of proximate cause to reach the same
remoteness of the economic loss is relied upon directly to
Exceptions to the General Rule
if a Df will be held liable to a third person not in privity
with him is a matter of policy and involves the balancing of
various factors, among which are the
which the transaction was intended to affect the plaintiff,
foreseeability of harm to him,
of certainty that the plaintiff suffered injury,
closeness of the connection between the defendant's conduct and
the injury suffered,
blame attached to the defendant's conduct, and the policy of
preventing future harm.
A claim for
economic loss, unaccompanied by any physical injury to the
person or property of the claimant, has been recognized under
Injury Rule (relating to or located on the banks of a river or
for which damages were sought in each case was the loss of
anticipated profits -- a pure economic loss as that term is
To permit riparianship to transmute this loss into an ordinary
property loss for the purpose of allowing recovery does no harm.
harm would be done if the fact that the
plaintiffs in this case are not riparian
owners was held to deprive them of the comfort these authorities
owes a duty, in the sense of a potential liability for damages,
only with respect to those risks or hazards whose likelihood
made the conduct unreasonably dangerous, and hence negligent, in
the first instance.
obligation turns on whether
'the offending conduct
unreasonably great risk of harm
to the interests of someone
other than the actor.
obligation to refrain from the 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.
measured by the scope of the risk which negligent conduct
for losses occasioned by torts should be apportioned in a manner
that will best contribute to the achievement of an optimum
allocation of resources.
be achieved by a perfect market system.
would need to fix the identity of the party who can avoid the
costs most cheaply.
defendants are under a duty to commercial fishermen to conduct
their drilling and production in a reasonably prudent manner so
as to avoid the negligent
diminution of aquatic life is not foreclosed by the fact
that the defendants' negligence could constitute a public
nuisance under California law.
To do this
it must be shown that the oil spill
did in fact diminish aquatic life, and that this
the profits the plaintiffs would have realized
from their commercial fishing in the absence of the spill.
reduction of profits must be established with certainty and
must not be remote, speculative or conjectural.
The Pl -
are allowed to prove their case and to reject the Df - idea
economic recovery is barred from negligent interference.