People Express Airlines, Inc. v. Consol. Rail Corp. - 194 N.J. Super. 349, 476 A.2d 1256 (Super. Ct. App. Div. 1984)

Rule:

One is not liable to another for pecuniary harm not deriving 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.

Facts:

On July 27, 1981 fire broke out in a railroad tank car at the freight yard of defendant Consolidated Rail Corporation ("Conrail") in Port Newark, New Jersey. According to the complaint, a tank car manufactured and owned by defendant Union Tank Car Company and leased to defendant BASF Wyandotte Company was punctured during a negligently performed coupling operation, causing its contents, ethylene oxide manufactured by BASF, to escape and ignite. An order was then issued  to evacuate the surrounding area, which included People Express Airlines’ principal business operation in the North Terminal building at Newark Airport. People Express sought to recover losses caused by the interruption of its business. It claimed that most of its flights were cancelled and that it could not receive telephone calls, its major source of passenger reservations, during the 12 hours the evacuation order was in effect. The Law Division granted defendants’ motion for summary judgment on the ground that, absent property damage, economic loss was not recoverable.

Issue:

Was the grant of summary judgment proper?

Answer:

No.

Conclusion:

It can be seen that the judicial function herein is to strike a fair balance between the risk of damages grossly disproportionate to defendant's negligence and a rule of non-liability equally inapposite to plaintiff's complete freedom from fault. "Each case stands upon its own factual situation." Indeed, as the court in Rickards forebodingly noted at the outset of its opinion, there was nothing in the record before it to show defendant's foreknowledge that the bridge constituted the only vehicular access to the island. The suggestion is discernible therein that proof of such knowledge, with its implications to the foreseeability of harm, might have dictated a different result of policy. The necessary sorting out of facts pertinent to liability in this case cannot be undertaken on a motion for summary judgment. The legal issues which the parties seek to present carry important implications and they should not be determined in a vacuum or in academic fashion; the preferable procedure is to permit the matter to be tried and determined in regular course. The ruling reaches "far beyond the particular case" and a maximum of caution is necessary. Disposition of the case by application to the pleadings of the Restatement's hard and fast rule barring recovery of negligently caused economic losses in the absence of property damage was clearly not required by relevant principles of tort law in this state. 

On the remand the trial judge will determine under the authorities discussed whether the evidence can support the finding of a foreseeable risk of harm to plaintiff in the coupling operation such as to result in the imposition of a duty of care. Basically, the analysis should weigh the likelihood, either known to defendants or of which they should have known, that their conduct would ignite a fire with a potential for so great an explosion as reasonably to require prolonged evacuation of plaintiff's building. But also to be considered is whether plaintiff's loss was a direct or remote consequence of defendants' conduct. In this evaluation the lack of any actual property damage may be a significant factor, but not, as we now hold, one which is controlling either upon the question of remoteness or upon the ultimate issue of liability.