Fifth Circuit expands “physical damage” requirement for economic loss recovery in maritime tort claims.

In Catalyst Old River Hydroelectric Limited Partnership v. Ingram Barge Co., 639 F.3d 207 (5th Cir. 2011), the Fifth Circuit revisited the long-standing rule which prohibits recovery for pure economic loss in a maritime tort action; physical damage or invasion to a proprietary interest is required.  Louisiana ex. rel. Guste v. M/V TESTBANK, 752 F. 2d 1019 (5th Cir. 1985)(en banc), cert. denied, 477 U.S. 903 (1986); Robbins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927).    

In Catalyst, the Fifth Circuit held that “physical damage” occurred when a runaway barge blocked the water flow  of an intake channel off the Mississippi River, which Catalyst owned and relied on to fuel its hydroelectric facility.  Although no other part of Catalyst’s facility was damaged, the physical presence of the barge “damaged the ability of the intake channel to safely deliver water from the Mississippi River to the turbine/generators of the electric power generation facility, requiring a reduction in the flow in the intake channel to prevent the barge from sinking and allow safe access to the barge for its removal.” 

 The decision did nothing to expand the “proprietary interest” requirement, however.  The court distinguished Reserve Mooring, Inc. v. American Commercial Barge Line, LLC, 251 F.3d 1069 (5th Cir.2001), where a barge sank near the plaintiff’s dock causing business interruption, but no physical damage to plaintiff’s pier, buoys, or any other “proprietary interest.”  In contrast, the Catalyst court treated the intake channel like a giant pipe attached to Catalyst’s facility.  The outcome would likely differ if the barge had grounded just outside of Catalyst’s intake channel.