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DISTRICT OF COLUMBIA COURT OF APPEALS
No. 13-CV-329
JOSE A. AGUILAR, ET AL., APPELLANTS,
v.
RP MRP WASHINGTON HARBOUR, LLC, ET AL., APPELLEES.
Appeal from the Superior Court
of the District of Columbia
(CAB-4698-11)
(Hon. Erik P. Christian, Trial Judge)
(Argued February 18, 2014 Decided September 4, 2014)
Gary E. Mason, with whom Nicholas A. Migliaccio and Jason S. Rathod
were on the brief, for appellants.
Christopher R. Costabile for appellees.
Before BLACKBURNE-RIGSBY, Associate Judge, and BELSON and STEADMAN,
Senior Judges.
BLACKBURNE-RIGSBY, Associate Judge: This case raises a matter of first
impression: whether the District of Columbia will follow the majority of
jurisdictions by adopting the ―economic loss doctrine,‖ which prohibits claims of
negligence where a claimant seeks to recover purely economic losses sustained as
2
a result of an interruption in commerce caused by a third party. We answer that
question in the affirmative.
I. Factual Background
On June 15, 2011, appellants1 filed a negligence claim in Superior Court
against appellees RP MRP Washington Harbour, LLC and RP MRP Real Estate
Services Group, LLC, seeking to recover lost wages that resulted from the closure
of their workplaces due to a flood at the Washington Harbour retail complex,
which is owned and managed by appellees. Appellants were cooks, servers,
bartenders, receptionists, hairstylists, and other employees of various
establishments at Washington Harbour, located on the Georgetown Waterfront in
Washington, D.C. Washington Harbour is adjacent to the Potomac River and was
built in 1986 with unique disappearing flood walls designed to protect the property
against floods as high as seventeen feet. RP MRP Washington Harbour, LLC
purchased the property in June 2010, and RP MRP Real Estate Services Group,
LLC has managed the property since that time. According to appellants, appellees
have sole control over the operation of the property‘s flood walls.
1
Appellant Jose Aguilar and forty-two other persons joined this action as
plaintiffs and now jointly appeal the trial court‘s order granting appellees‘ motion
to dismiss.
3
On April 18, 2011, the Potomac River surged, and ten to twelve feet of water
flooded the ground-level businesses, basement, and parking lot at Washington
Harbour. Appellants allege that at the time of the flood, the flood walls were only
partially raised or not raised at all, and that it was not until hours after the flood
that the flood walls were fully raised. As a result of the flood, appellants‘
employers were forced to close, most of them temporarily — in some cases days,
in other cases for several weeks — and, in at least one case, permanently. These
closures left appellants without a source of income for some time. Appellants
allege that they suffered lost income in amounts ranging from hundreds of dollars
to tens of thousands of dollars.
Their complaint claimed that appellees owed them a duty of care to ensure
the safe operation of Washington Harbour, which included raising the flood walls
when notified of an impending flood, and that by failing to do so before the April
2011 flood, appellees breached that duty. In support of this claim, appellants
allege that the flood walls have been raised sixty or seventy times since
Washington Harbour was built in 1986, and that never in Washington Harbour‘s
history has such a failure to raise the flood walls occurred. Appellants also
included a statement by District of Columbia Fire and Emergency Services
4
spokesman Pete Piringer, who said ―had the wall[s] been up, [they] would have
prevented a flood.‖
Appellants allege that appellees were alerted to rising water levels by virtue
of the Harper‘s Ferry, West Virginia water gauge, which is where the Potomac
River water level is measured. Typically, once the gauge indicates rising waters,
appellees would have thirty-two to thirty-six hours to raise the flood walls, which
take approximately five hours at a cost of $15,000. In this instance, the National
Weather Service issued flood warnings for Washington, D.C., on April 17, 2011.
Washington Harbour was flooded the next day, on April 18, 2011. Appellants
claim that appellees thus had adequate notice of the impending flood, based on the
Harper‘s Ferry water gauge and the National Weather Service flood warnings.
Appellants further allege that appellees knew, or should have known, that the
surging Potomac River presented a serious risk of flooding at Washington
Harbour, and that the flood walls needed to be raised in order to protect
Washington Harbour tenants, and these particular employees, from suffering
economic damages.
Appellees filed a motion to dismiss, see Super. Ct. Civ. R. 12 (b)(6),
arguing, inter alia, that appellants failed to state an actionable negligence claim
5
because the economic loss doctrine bars recovery of claims alleging solely
economic loss stemming from a defendant‘s negligence. Appellants‘ opposition
claimed that the District of Columbia has never applied the economic loss doctrine
to preclude non-contractual claims, and, therefore, urged the court to ignore the
economic loss doctrine in favor of a foreseeability test to determine whether
appellees owed them a duty of care to raise the flood walls to prevent economic
injury.
The trial court analyzed the motion to dismiss by looking to case law from
other jurisdictions. The trial court found that in cases with analogous facts, the
vast majority of jurisdictions applied the economic loss doctrine to bar recovery of
lost wages where a claimant suffered no other non-economic injury. The trial
court also scrutinized the minority ―foreseeability‖ test adopted in People Express
Airlines, Inc. v. Consolidated Rail Corp., 495 A.2d 107 (N.J. 1985) (―People
Express‖), concluding that it was ―outweighed‖ by Maryland precedent, the
consistent application of the economic loss doctrine to similar cases in other
jurisdictions, and the District of Columbia‘s general policy favoring limited
liability. Although the trial court rejected People Express, it observed that the
instant claim may be barred even under that test because that case precluded
―invitees such as sales and service persons,‖ i.e., appellants in this case, from
6
bringing negligence claims against third party landlords as any damages that they
suffer ―would be hopelessly unpredictable and not realistically foreseeable.‖ Id. at
116. Accordingly, the trial court dismissed appellants‘ lawsuit, and this appeal
followed.
II. Discussion
On appeal, appellants urge us to reverse the trial court‘s order because this
court has previously allowed recovery of purely economic losses in the analogous
negligent spoliation context, see Holmes v. Amerex Rent-A-Car, 710 A.2d 846
(D.C. 1998), and because application of the economic loss doctrine has been
limited to cases involving contract or products liability claims by courts
interpreting District of Columbia law. See Nat’l Tel. Coop. Ass’n v. Exxon Corp.,
38 F. Supp. 2d 1, 15 (D.D.C. 1998) (―Exxon Corp.‖). Further, in appellants‘ view,
and quoting Exxon Corp., adoption of the economic loss doctrine ―[would] not
vindicate any of the interests upon which the doctrine is based,‖ id. at 14–15,
because appellants and appellees did not have a contractual relationship and never
had an opportunity to allocate risk. Instead, appellants argue that the trial court
should have analyzed their claim under traditional elements of negligence by
looking to whether appellants‘ lost wages were ―reasonably foreseeable‖ to
7
appellees. Appellees, on the other hand, urge us to affirm the trial court‘s order by
applying the economic loss doctrine adopted in a majority of jurisdictions, which
they claim is consistent with our policy of ―limiting the potentially devastating
economic effect of extending tort liability to anyone who can claim an adverse
economic impact.‖
This court reviews the trial court‘s grant of a motion to dismiss de novo, and
―must construe all facts and inferences in favor of the plaintiff.‖ Daley v. Alpha
Kappa Alpha Sorority, Inc., 26 A.3d 723, 730 (D.C. 2011). ―The only issue on
review of a dismissal made pursuant to Rule 12 (b)(6) is the legal sufficiency of the
complaint; and a complaint should not be dismissed because a court does not
believe that a plaintiff will prevail on his claim.‖ Grayson v. AT & T Corp., 15
A.3d 219, 228–29 (D.C. 2011) (en banc) (citation, internal quotation marks, and
brackets omitted).
In order to maintain a legally sufficient negligence claim, a plaintiff must
demonstrate: ―(1) that the defendant owed a duty to the plaintiff, (2) breach of that
duty, and (3) injury to the plaintiff that was proximately caused by the breach.‖
Hedgepeth v. Whitman Walker Clinic, 22 A.3d 789, 793 (D.C. 2011) (en banc)
(citation omitted). ―The issue of whether a plaintiff can recover [a particular type
8
of] damages . . . is a question of policy for the court, not one to be determined on a
case-by-case determination of whether the injury was foreseeable.‖ District of
Columbia v. Beretta, U.S.A., Corp., 872 A.2d 633, 645 n.9 (D.C. 2005) (citation
omitted). In other words, ―whether the plaintiff‘s interests are entitled to legal
protection against the defendant‘s conduct,‖ Hedgepeth, supra, 22 A.3d at 793
(citations omitted), is a question of law for us to decide.
―Generally, under the ‗economic loss‘ rule, a plaintiff who suffers only
pecuniary injury as a result of the conduct of another cannot recover those losses in
tort.‖ Apollo Group, Inc. v. Avnet, Inc., 58 F.3d 477, 479 (9th Cir. 1995). This
means that in jurisdictions that have adopted the doctrine, claimants are barred
from recovering lost profits or lost wages due to the negligent interruption of
commerce caused by a third-party. 2 The rationale underlying these cases is a
2
See, e.g., Aikens v. Debow, 541 S.E.2d 576, 579-80 (W. Va. 2000)
(applying the economic loss doctrine to preclude recovery of lost profits in
negligence action following the closure of a bridge); see also Local Joint Exec. Bd.
v. Stern, 651 P.2d 637, 637-38 (Nev. 1982) (per curiam) (applying the economic
loss rule to bar recovery of lost wages in negligence action following a fire at the
hotel where plaintiff employees worked); Stevenson v. E. Ohio Gas Co., 73 N.E.2d
200, 203-04 (Ohio Ct. App. 1946) (applying the economic loss rule to bar recovery
of lost wages in a negligence action after business was forced to close due to a risk
of explosions at a neighboring business). But see People Express, supra, 495 A.2d
at 116 (declining to adopt in New Jersey the economic loss doctrine in favor of a
heightened foreseeability standard in case involving solely lost profits); see also
Tiara Condo. Ass’n, Inc. v. Marsh & McLennan Cos., Inc., 110 So. 3d 399, 407
(continued . . .)
9
determination by courts that ―[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,‖ see Aikens, supra note 2, 541
S.E.2d at 583 (citation omitted), and a recognition that ―[l]egal liability does not
always extend to all of the foreseeable consequences of an accident,‖ id. at 582
(citation omitted). More importantly, as a matter of longstanding policy in courts
around the country, ―[w]here pure economic loss is at issue[,] not connected with
any injury to one‘s body or property, . . . the reach of legal liability is quite
limited.‖ In re Exxon Valdez, A89-0095-CV (HRH), 1994 WL 182856, at *8 (D.
Alaska Mar. 23, 1994) aff’d, 104 F.3d 1196 (9th Cir. 1997); see also Robins Dry
Dock & Repair Co. v. Flint, 275 U.S. 303, 309 (1927) (―[A] tort to the person or
property of one man does not make the tort-feasor liable to another merely because
the injured person was under a contract with that other unknown to the doer of the
wrong.‖ (citation omitted)).
We find compelling the reasoning and policy considerations espoused by the
majority of jurisdictions that have adopted the economic loss doctrine and,
therefore, adopt the economic loss doctrine in the District of Columbia. In so
(. . . continued)
(Fla. 2013) (narrowing applicability of the economic loss rule to products liability
claims).
10
doing, we reject the alternative foreseeability analysis that appellants urge us to
apply. Although we have not had occasion to rule on this exact issue previously,
our adoption of the economic loss doctrine finds ample support from other
jurisdictions, and our rejection of a foreseeability test is firmly rooted in our case
law concerning the tort of negligent infliction of emotional distress.
In Williams v. Baker, 572 A.2d 1062, 1069 (D.C. 1990) (en banc), we
considered the question of whether a plaintiff could recover for negligent infliction
of emotional distress caused by witnessing harm to a third person, despite the fact
that the plaintiff was not in danger of suffering physical injury. In so doing, we
grappled with competing theories of recovery, including a ―zone of physical
danger‖ rule, which requires that a plaintiff fear for his or her own safety, and a
more permissive foreseeability test — similar to the argument that we are
presented with in this case. Id. at 1069-70. In adopting the zone of danger rule
over a foreseeability test, we balanced the need to hold negligent actors
accountable while still maintaining limits on liability. Id. at 1072-73. We found
―strong public policy considerations against imposing virtually infinite liability‖
for conduct that is merely negligent. Id. at 1069. Further, we examined the
experience of other jurisdictions that have adopted a foreseeability test, and
concluded that they imposed arbitrary limitations on recovery and eventually
11
retreated from the concept of foreseeability because it did not provide ―a socially
and judicially acceptable limit on recovery of damages‖ for emotional distress. Id.
at 1072 (quoting Thing v. La Chusa, 771 P.2d 814, 830 (Cal. 1989)). Accordingly,
we concluded that a foreseeability test would greatly expand the potential for
liability without a coherent limiting principle, and decided that ―this jurisdiction
should not cast itself adrift on a sea of infinite foreseeability, subject only to such
arbitrary limitation as we should impose.‖ Id.
More recently, in Hedgepeth, supra, 22 A.3d at 804, we adopted a limited
rule to supplement the zone of danger requirement set forth in Williams for
instances where a party is not in danger of physical injury, but there are compelling
policy reasons to permit recovery. That supplementary rule imposed a duty to
avoid negligent infliction of serious emotional distress when: (1) the defendant
had an obligation to care for the plaintiff‘s emotional well-being or the plaintiff‘s
emotional well-being was necessarily implicated by the nature of the defendant‘s
undertaking to or relationship with the plaintiff, and (2) serious emotional distress
was especially likely to be caused by the defendant‘s negligence. Id. at 792. In so
doing, we again rejected a foreseeability analysis, however, focusing instead on the
likelihood that the negligent conduct in question would cause the particular injury
suffered by the plaintiff, thus maintaining strong limits on liability while still
12
allowing meritorious claims to proceed by examining the special relationship
between the parties. See id. at 804. It was the special relationship between the
claimant and defendant, i.e., the doctor-patient relationship, in that case which
provided an independent duty of care, rather than a determination that the
claimant‘s emotional distress was merely foreseeable. See id at 813.
For the same reasons we rejected a foreseeability test in cases concerning
negligent infliction of emotional distress, we again decline to apply the
foreseeability test advocated by appellants in negligence cases involving purely
economic losses. Appellants seek support from the minority approach taken in
People Express, supra, 495 A.2d 107, but the People Express foreseeability
analysis appears to suffer from the same problems we detailed in Williams —
namely, the lack of a coherent limiting principle. See 572 A.2d at 1072. In fact,
the People Express court seemed to struggle with this very issue, taking pains to
place limitations on recovery by stressing that plaintiffs seeking to recover purely
economic damages had to satisfy a higher burden than simple foreseeability and
show they were ―particularly foreseeable.‖ 495 A.2d at 116 (emphasis added).
This notion of ―particular foreseeability‖ would require an intensive, fact-based
inquiry into every case where a claimant suffered purely economic damages, and
would go against our repeated declaration that recovery of a particular type of
13
damages in negligence depends on a legal determination by this court, rather than a
case-by-case determination of whether an injury was foreseeable. See Beretta,
supra, 872 A.2d at 645 n.9 (quoting Williams, supra, 572 A.2d at 1072).
Lastly, appellants contend that application of the economic loss doctrine
here would be in conflict with past cases where we have allowed recovery of
purely economic losses in negligence-related actions — specifically, Holmes,
supra, 710 A.2d 847, where we recognized the tort of negligent spoliation of
evidence, which allows a claimant to seek recovery of economic losses occasioned
by the negligent destruction of evidence that a defendant had a duty to preserve.
However, in that case, as in Hedgepeth, it was the ―special relationship‖ between
the parties that created an independent duty of care. Holmes, supra, 710 A.2d at
849.3
3
This special relationship exception conforms with similar exceptions to the
economic loss doctrine adopted in other jurisdictions. See Blahd v. Richard B.
Smith, Inc., 108 P.3d 996, 1001 (Idaho 2005) (recognizing special relationship
exception to the economic loss rule and explaining that it will only apply in ―an
extremely limited group of cases where the law of negligence extends its
protections to a party‘s economic interest.‖) (citations omitted); L & P Converters,
Inc. v. Alling & Cory Co., 642 A.2d 264, 267 (Md. 1994) (―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.‖ (citations omitted)); Paul v.
Providence Health Sys.-Oregon, 240 P.3d 1110, 1115, 1117 (Or. Ct. App. 2010)
(discussing a special relationship in the context of the economic loss doctrine and
(continued . . .)
14
We see no basis on which appellants can demonstrate such a special
relationship with appellees. Specifically, there was no obligation on the part of
appellees to care for appellants‘ economic well-being. Appellants argue that
appellees, as the property owners, have an obligation to provide a safe and secure
working environment for everyone on the property, see Standardized Civil Jury
Instructions for the District of Columbia, No. 10.03 (2010 ed. Rev.), but that
obligation does not necessarily implicate appellants‘ economic expectancies. At
oral argument, appellants so much as conceded this point when they stated that the
flood walls at Washington Harbour were especially and uniquely designed . . . for
the very purpose of preventing injury to the building.‖ If preventing property
damage was the primary purpose of the flood walls, then any protection of
appellants‘ income was merely an incidental benefit. Moreover, there was no
mutually agreed upon relationship between the parties in this case, unlike the
doctor-patient relationship in Hedgepeth or the contractual agreement in Holmes.
Rather, it was appellants‘ employers who had a direct relationship with appellees
as commercial tenants at Washington Harbour. It would be an extraordinary step
for us to conclude that a commercial landowner is in a special relationship with
(. . . continued)
negligent infliction of emotional distress); Aikens, supra note 2, 541 S.E.2d at 589
(―[A] 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.‖).
15
each of its tenants‘ employees, despite having no control over their presence on the
property.4
III. Conclusion
We hold that the trial court did not err in granting appellees‘ motion to
dismiss because appellants are precluded from pursuing a negligence action against
appellees for recovery of lost wages, standing alone absent any other injury, by
virtue of the economic loss doctrine. The economic loss doctrine in the District of
Columbia bars recovery of purely economic losses in negligence, subject to only
one limited exception where a special relationship exists. The facts alleged in
appellants‘ complaint do not fit within this exception. Consequently, appellants
have failed to state a claim upon which relief can be granted.
4
Other factors as well dictate against any special relationship. Appellants
were not especially likely to suffer serious economic loss as a result of appellees‘
conduct because too many variables beyond appellees‘ negligence, such as the
duration of the business closure and individual employee circumstances, could
prove determinative of the likelihood of serious economic harm. Moreover,
appellants have not demonstrated reliance on appellees‘ use of the flood walls.
First, the supposed undertaking was not a result of any agreement between
appellees and appellants. Second, there is no indication that appellants were even
aware of the flood walls‘ existence prior to this lawsuit. In fact, in their complaint,
appellants only allege that Washington Harbour relied on the flood walls to protect
the property and its tenants.
16
Affirmed.