Corpus Christi Oil & Gas Co. v. Zapata Gulf Marine Corp.

United States Court of Appeals,

Fifth Circuit.

No. 94-60537.

CORPUS CHRISTI OIL & GAS COMPANY and Corpus Christi Hydrocarbons
Company, Plaintiffs-Appellees,

v.

ZAPATA GULF MARINE CORPORATION, et al., Defendants.

GULF FLEET SUPPLY VESSELS INC., et al., Defendants-Third Party
Plaintiffs-Counter Defendants-Appellants,

v.

HOUSTON PIPE LINE CO., Defendant-Counter-Claimant-Third Party
Defendant-Appellee.

Dec. 27, 1995.

Appeal from the United States District Court for the Southern
District of Texas.

Before JOLLY and BENAVIDES, Circuit Judges, and FITZWATER*,
District Judge.

E. GRADY JOLLY, Circuit Judge:

In early November of 1989, the offshore towboat GULF STAR,

operated by Zapata Gulf Marine Operators and crewed by Zapata Gulf

Marine Services Corp., was tied to a docking platform in the Gulf

of Mexico, waiting for a storm from the north to pass. As the GULF

STAR prepared to maneuver, its mooring lines parted, and it and the

construction barge to which it was connected began drifting south

with the wind and waves toward a gas and condensate producing

*
District Judge of the Northern District of Texas, sitting
by designation.

1
platform, owned by Corpus Christi1. The tug and barge bore down on

the platform, while the GULF STAR's captain tried in vain to halt

the barge's drift with the tug's ailing engines, or to reel in the

barge with the tug's winch. Although the captain slowed the barge,

in the end he could not avert an allision between the barge and the

Corpus Christi platform. The allision damaged a gas riser

connected to the platform, owned by Houston Pipeline Company

("Houston"). Corpus Christi sued the Zapata defendants ("Zapata"),

and the district court found Zapata liable to Corpus Christi and

Houston for damages they incurred as a result of Zapata's

negligence. We affirm in part and reverse in part the award of

damages to Corpus Christi, affirm the award of damages to HPLC, and

affirm the award of prejudgment interest to Corpus Christi and

Houston, and the taxation of costs to Zapata.

I

The Corpus Christi platform is located in the Gulf of Mexico,

about eight miles from Port O'Connor, Texas. Attached to a leg of

the platform is a riser, a vertical pipe through which flows gas

and gas condensate. The riser is owned by Houston. The riser

connects to a pipeline, also owned by Houston, that runs eight

miles from the platform to the beach. Although other risers

attached to the platform were fitted with riser guards to prevent

damage from allisions, the riser damaged in the allision lacked any

1
"Corpus Christi" refers collectively to the plaintiffs
associated with the platform, including Corpus Christi
Hydrocarbons Co. and PG & E Resources Offshore Co., which was
formerly known as Corpus Christi Oil & Gas Co.

2
sort of protection.

Workers on the Corpus Christi platform foresaw the allision

and promptly shutdown operations to prevent a fire or explosion.

The force of the allision crushed the concrete riser coating and

damaged the riser. Houston ordered Corpus Christi to shut in its

wells so that it could inspect the riser and replace the damaged

section. The repair took two weeks, during which time Corpus

Christi could not use the riser to convey its gas. During the

repairs, Corpus Christi flared gas to prevent the loss of the

wells.

The district court conducted a bench trial. At its close, the

district court allocated fault for damage to the riser two-thirds

to Zapata, and the remaining one-third, collectively, to Corpus

Christi and Houston.2 Zapata argued at trial—and now argues on

appeal—that Corpus Christi did not sustain physical damage to any

proprietary interest; thus, under the "bright line" rule of this

circuit announced in Louisiana ex rel. Guste v. M/V TESTBANK, 752

F.2d 1019 (5th Cir.1985) (en banc), cert. denied, 477 U.S. 903, 106

S.Ct. 3271, 91 L.Ed.2d 562 (1986), may not recover its losses

incurred due to Zapata's negligence. In support of its argument,

Zapata notes that Corpus Christi did not own the damaged riser, and

that it voluntarily flared the gas, the cost of which it now seeks

2
The district court found Houston negligent for failing to
protect the riser from accidental vessel damage, and Corpus
Christi negligent either for failing to review plans for the
riser before allowing Houston to attach the riser, or failing to
require Houston adequately to protect its riser before allowing
Houston to attach the riser.

3
to recover. Zapata does not dispute, however, that Corpus Christi

would have incurred great harm to its wells if it had not flared

the gas during Houston's repair of its riser.

The district court held that the flaring of the gas

constituted physical damage to a proprietary interest of Corpus

Christi, thus permitting Corpus Christi to avoid the TESTBANK bar.

The court reasoned as follows:

8. [T]he gas flared by [Corpus Christi] when [Houston]
shut in the platform constitutes the physical damage necessary
for [Corpus Christi] to trump TESTBANK 's restrictive approach
to recovery in maritime tort. Because plaintiffs had to shut
in their wells and flare gas to keep from losing those wells
while [Houston] repaired its riser, the proprietary interest
of plaintiffs in their wells and gas is sufficient to enable
them to recover for their loss.

9. While the gas was flared voluntarily by plaintiffs
after the allision with [Houston's] riser, it was flared in
order to prevent the wells themselves from being lost. Had
plaintiffs done nothing, their wells would have sustained
perhaps permanent physical damage as a direct result of the
allision—such physical damages clearly would have enabled
plaintiffs to recover from the Zapata defendants. However,
had plaintiffs not flared gas and had they instead allowed
their wells to be lost, their damages would have been reduced
by the amount of damages which could have been mitigated by
flaring. Thus, the "voluntary" flaring does not bar recovery,
as defendants urge, but rather demonstrates that plaintiffs
mitigated their damages. * * *

10. * * * In the case at bar, ... the plaintiffs suffered
physical harm: plaintiffs were forced to burn, or flare, gas
in order to avert structural damage to their wells.

Second Amended Findings of Fact and Conclusions of Law at 4-5.

The district court thus awarded to Corpus Christi the value of

the gas and condensate that was flared. In addition, the district

court awarded Corpus Christi the revenue lost while its wells were

shut in for the repair of the riser. The proportionate share of

these items amounted to $232,628.64. With respect to Houston, the

4
district court awarded its actual costs of repair and the value of

gas that was lost. The proportionate share of these items amounted

to $203,999.97. Finally, the district court determined that Corpus

Christi and Houston both were entitled to prejudgment interest, and

it taxed litigation costs against Zapata.

II

A

In Pennzoil Producing Co. v. Offshore Express, Inc., 943 F.2d

1465, 1473 (5th Cir.1991), we reviewed a district court's

application of the rule of law announced in Robins Dry Dock &

Repair Co. v. Flint, 275 U.S. 303, 309, 48 S.Ct. 134, 135, 72 L.Ed.

290 (1927), and reaffirmed by this court in TESTBANK. Noting the

applicable standard of review, we wrote:

It is well settled law that, as in most federal actions,
in maritime actions the "clearly erroneous" rule applies to
the review of the factual findings of the trial court. Thus
we must accept the district court's findings of fact unless,
upon reading the record and examining the exhibits, we are
convinced that they are demonstrably incorrect. Fed.R.Civ.P.
52(a); Candies Towing Co., Inc. v. M/V B & C ESERMAN, 673
F.2d 91, 93 (5th Cir.1982).

Pennzoil, 943 F.2d at 1469.

B

The damages award in this case had three components—the cost

of gas flared by Corpus Christi to preserve the wells, the revenue

lost by Corpus Christi during the period of the riser's repair, and

the cost incurred by Houston of repairing the damage to the riser.

We address each award in turn.

(1)

Zapata argues that Corpus Christi suffered no physical damage

5
from the allision, and is therefore entitled to no damages award.

In the alternative, it argues that, if the flaring of the gas (in

order to save the wells) suffices as physical damage, then Corpus

Christi is entitled only to the costs incurred by the voluntary

flaring of gas, and not the purely economic loss in gas production

for the two weeks while Houston repaired its riser.

In this circuit, an admiralty plaintiff cannot recover

negligently inflicted economic losses where there is no physical

damage to the plaintiff's property. TESTBANK, 752 F.2d at 1020.

In TESTBANK, we reviewed a summary judgment entered against

numerous plaintiffs, each claiming purely economic losses arising

from a spill of a toxic chemical in the Mississippi River Gulf

outlet. Later, in Consolidated Aluminum Corp. v. C.F. Bean Corp.,

772 F.2d 1217 (5th Cir.1985), cert. denied, 486 U.S. 1055, 108

S.Ct. 2821, 100 L.Ed.2d 922 (1988) a panel of this court reviewed

TESTBANK, noting:

The "character of the interest harmed" for which the
plaintiffs sought relief in TESTBANK was solely economic.
Given this character of the interest harmed, the Court
reaffirmed the holding of this Court that physical damage to
a proprietary interest [is] a prerequisite to recovery for
economic loss in cases of unintentional tort. The Court
emphasized that to abandon the physical injury requirement
would impose a "limitless type of liability," and the result
would be wave upon wave of successive consequences. The Court
also noted the corresponding difficulty to courts in managing
such economic claims on a discrete basis under traditional
tort principles. Thus, where the character of the interest
harmed was solely economic, the Court held that no recovery
could be allowed under Robins as a "pragmatic limitation upon
the tort doctrine of foreseeability."

Consolidated, 772 F.2d at 1222 (internal citations and some

quotation marks omitted).

6
 Corpus Christi points out that in Consolidated, we held that

physical damage that was a consequence of an accident was

sufficient to satisfy TESTBANK 's requirement. In that case,

Consolidated Aluminum Corporation's plant machinery was damaged by

the slowing of the flow of gas that was caused by Bean's negligent

puncture to a pipeline some six miles from Consolidated's facility.

We held that Consolidated had stated a claim for physical damages

to its machinery as a result of Bean's negligence and that,

therefore, TESTBANK did not preclude Consolidated's recovery of

associated economic losses. Consolidated, 772 F.2d at 1222.

Corpus Christi also points to Pennzoil, a case factually

similar to the one at bar. There we held that damage to a well

resulting from the failure to flare gas after a well was shut in

following an allision constituted the kind of physical damage that

made the TESTBANK bar inapplicable. See Pennzoil, 943 F.2d at

1473. Corpus Christi argues that here, it did "what this Circuit

told Pennzoil it should have done"—flared the gas and prevented the

loss of its wells.

We think that it does no violence to TESTBANK or its

underlying principles to find recovery appropriate in the case

before us. Except for its acts in mitigation, Corpus Christi would

have suffered great physical damages to its wells as a result of

Zapata's negligence. TESTBANK must not be construed as mandating

the narrow and impractical result urged by Zapata: finding a

defendant free of liability when the plaintiff incurs losses,

although "voluntarily" so, that nevertheless are directly

7
attributable to its efforts to avoid the physical damages that

would have rendered that defendant liable for much larger sums. We

therefore agree with the district court that Corpus Christi's costs

incurred in flaring the gas to save its wells constitutes the

physical damage to a proprietary interest, i.e., its gas,

sufficient to satisfy the TESTBANK requirements. Corpus Christi is

thus entitled to $58,613, representing the economic loss it

suffered because of the flaring of the gas, to be reduced by

one-third (reflecting the amount of Corpus Christi's own

negligence), for a total award of $39,075.33.

(2)

We disagree, however, that Corpus Christi is further entitled

to damages resulting from its inability to produce and sell its gas

in the two weeks during which Houston repaired its riser. TESTBANK

denies recovery for pure economic losses not associated with

physical injuries. Although we hold that the recovery Corpus

Christi seeks for its flared gas is based upon injury to its

property—that is, its gas—no such argument can be made with respect

to the purely economic losses resulting from failure to sell its

gas during the two-week repair. That gas remains in the ground,

unaffected by the property damage suffered by Corpus Christi, that

is, the gas that was flared. The additional economic losses that

Corpus Christi seeks to recover occurred solely and only because of

the physical damage that was done to Houston's property, i.e., the

riser, which shut down Houston's pipeline. Corpus Christi lost its

gas sale profits because it could not use the pipeline, not because

8
it was flaring its own gas.

We recognize that, although TESTBANK suggests an association

between recovery sought and damage to the plaintiff's property, it

left undecided the degree of association required. Neither did

Consolidated clearly resolve this question. It simply made clear

that economic losses that flowed directly from the physical damage

to Consolidated's property were recoverable. In the present case,

however, we are squarely presented with the question of whether the

principle of TESTBANK —that is, a limitation on the doctrine of

foreseeability3—requires that recoverable economic damages have

some direct tie to the plaintiff's specific physical loss or

damage, or whether the TESTBANK principle simply requires a showing

of damage to some proprietary interest of the plaintiff, in order

to open the door to recovery for all purely economic damages that

were foreseeable from the initial tort. For help in answering this

question, we turn first to the principles underlying TESTBANK.

In TESTBANK, when considering the basis of the subject rule,

we explained as follows:

Robins broke no new ground but instead applied a principle ...
which refused recovery for negligent interference with
"contractual rights." Stated more broadly, the prevailing
rule denied a plaintiff recovery for economic loss if that
loss resulted from physical damage to property in which he had
no proprietary interest.

TESTBANK, 752 F.2d at 1022 (emphasis added). We concluded that

"Robins Dry Dock is both a widely used and necessary limitation on

3
In TESTBANK we wrote, "Denying recovery for pure economic
losses is a pragmatic limitation on the doctrine of
foreseeability, a limitation we find to be both workable and
useful." TESTBANK, 752 F.2d at 1032.

9
recovery for economic losses." Id. at 1027. Thus, TESTBANK

strongly suggests that recoverable losses somehow be tied to the

damage to the plaintiff's property, here the flared gas. Clearly,

TESTBANK sought to preclude wave upon wave of damages. For

example, assuming Corpus Christi were a vertically integrated

operation, TESTBANK's bright line rule serves to preclude not only

recovery for lost gas sales from the well, but also any damages

related to refineries that could not process the gas, or damages

related to trucking operations that could not transport the gas or

to retail outlets that could not sell the final product.

Although one might try to extrapolate an argument from

Consolidated that, once physical damage to any proprietary interest

is proven, all pure economic losses are recoverable, such a

reading, we think, is inconsistent with Consolidated 's holding.

In Consolidated, all the awarded damages flowed directly from the

destruction of Consolidated's production facilities. Consolidated

sued

not solely for any lost income or other economic loss from the
interruption of its supply of natural gas (e.g., due to being
forced to pay higher prices for an alternative supply) but
instead for physical losses, as well as attendant economic
damages, to its own property which occurred as a result of the
interruption of Consolidated's supply of gas "within minutes"
of the pipeline's rupture.

Consolidated Aluminum, 772 F.2d at 1221-22 (third emphasis added).

As we have emphasized, Corpus Christi's claimed economic loss

was not "attendant" to the physical damage to Corpus Christi's

proprietary interest; the loss was instead occasioned only by the

physical injury to Houston's riser, property in which Corpus

10
Christi had no proprietary interest. To allow recovery for those

losses plainly would abrogate the bright line rule of TESTBANK. To

insure that the principles underlying TESTBANK are preserved, we

hold that simply meeting the requirement of showing physical damage

to a proprietary interest does not automatically open the door to

all foreseeable economic consequences. We therefore reverse the

district court on this point, and deny Corpus Christi's recovery of

revenue lost while its wells were shut in for the repair of

Houston's riser.

(3)

As to Houston's recovery, Zapata takes the position that the

district court erred in finding Houston's damages to be $306,000,

because it "arbitrarily rejected the uncontradicted and

unchallenged testimony and evidence presented by Zapata's expert,

Richard Zimmerman," who testified that Houston's damages were

approximately $45,000 to $50,000. Although Zapata acknowledges

that we must review the district court's finding of damages only

for clear error, it cites Strachan Shipping Co. v. Dresser Indus.,

Inc., 701 F.2d 483, 487 (5th Cir.1983) for its contention that, in

cases where "no credibility choice has been made by the district

court, "the burden of proving the district court's findings clearly

erroneous is to some extent ameliorated.' " It argues that this is

just such a case, and that the district court violated precedent of

this Circuit by "arbitrarily reject[ing] the testimony of a witness

whose testimony appears credible." Gee Chee On v. Brownell, 253

F.2d 814, 817 (5th Cir.1958). Zapata admits that Houston is

11
entitled to an award for damage to its riser, but argues that the

award should be no more than the cost to which Zimmerman testified

at trial—the $45,000 to $50,000 cost of a metal sleeve fitted

around the damaged section of the riser. In a similar vein, Zapata

also argues that neither Corpus Christi nor Houston offered any

testimony or evidence to contradict Zimmerman's testimony that, had

a riser guard been placed around the pipe, there would have been no

damage to the riser. Zapata concludes that it should not have been

liable to either party, except for the cost of replacing the riser

guard.

Citing Freeport Sulphur Co. v. S/S HERMOSA, 526 F.2d 300, 304

(5th Cir.1976), Houston responds that actual cost of repairs is the

proper measure of damages. Houston contends that the court was not

bound to accept uncontroverted expert opinion testimony, and that

its refusal to do so was a permissible exercise of the district

court's discretion that should not be second-guessed on appeal.

Houston further points out that, although Zimmerman testified that

the platform was not damaged in the allision, the district court

found specifically that the platform's boat platform was in fact

damaged. Houston further notes the district court's finding that

the possibility remained that, even with a guard, the riser might

have sustained some damage. In the light of that fact, it argues,

the district court declined to speculate on the effect that less

severe damage to the riser would have had on Houston's damages.4

4
Corpus Christi also points out other weaknesses in
Zimmerman's testimony, including his admission that his opinion
depended upon an assumption that the barge would have struck the

12
 We are not persuaded that the district court's damages

findings are clearly erroneous. The district court simply chose

not to believe all of Zimmerman's testimony. Indeed, the Supreme

Court has observed that it is not error for the factfinder to

reject expert opinion evidence, even if uncontroverted. Sartor v.

Arkansas Natural Gas Corp., 321 U.S. 620, 627-28, 64 S.Ct. 724,

729, 88 L.Ed. 967, 973 (1944). Here, the factfinder acted within

his discretion. To be sure, it is clear from the district court's

finding of comparative fault on the part of Houston that it

considered—and accepted part of—the testimony of Zapata's expert;

it simply chose, within its discretion, not to adopt fully that

expert's view as the view of the court with respect to the

recoverable damages.

C

Zapata also challenges the district court's award of

prejudgment interest to Houston and Corpus Christi. The district

court found that the facts of this case were not sufficiently

"peculiar" to mandate denial of what is the norm in admiralty

cases—award of prejudgment interest to the prevailing party.

Zapata urges us to review de novo whether peculiar circumstances

existed in this case so as to abrogate the normal rule. Corpus

Christi and Houston argue that the award of prejudgment interest is

a matter committed to the district court's discretion, and that no

abuse of that discretion occurred in this case.

riser guard in a certain way, and that his diagram reflected that
he was unsure what part of the barge had struck the riser.

13
 As the district court correctly noted, in maritime cases the

award of prejudgment interest is the rule, rather than the

exception, and the trial court has discretion to deny prejudgment

interest only where peculiar circumstances would make such an award

inequitable. See Reeled Tubing, Inc. v. M/V CHAD G, 794 F.2d 1026,

1028 (5th Cir.1986) (holding that award of prejudgment interest is,

in practice, "well-nigh automatic."). We have further explained as

follows:

Whether such circumstances exist is a question of fact, and
the standard to be applied on review is the "clearly
erroneous" standard. But even if an appellant can demonstrate
that it would be clearly erroneous to say that there are no
peculiar circumstances, the appellant must further show that
when the trial court declined the request to deny prejudgment
interest, the trial court abused the discretion that was
created by the peculiar circumstances.

Noritake Co., Inc. v. M/V HELLENIC CHAMPION, 627 F.2d 724, 729 (5th

Cir.1980). Thus, we conclude that the factual findings leading to

the district court's decision concerning whether "peculiar

circumstances" exist so as to allow the court properly to consider

prejudgment interest should be reviewed for clear error. If

peculiar circumstances are found to exist, the decision whether

prejudgment interest should be awarded, should be reviewed for

abuse of discretion.

With this standard in mind, we think that the district court

did not clearly err in concluding that this case did not present

"peculiar circumstances" sufficient to justify denial of the award

of prejudgment interest to Corpus Christi and Houston. The

district court found no delay on the part of either of the

prevailing parties; it found no more evidence of a "good faith"

14
dispute than in any other admiralty case; and it found that

apportionment of liability in an offshore allision case was not a

"peculiarity" that would justify denial of the award of prejudgment

interest to Corpus Christi and Houston. We find no clear error in

these conclusions.5

CONCLUSION

We AFFIRM the award of damages to Houston, and AFFIRM the

award of damages to Corpus Christi in the amount attributable to

the flaring of gas to save its wells, of $58,613. We further

AFFIRM the award of prejudgment interest to Houston and Corpus

Christi, and the taxation of costs to Zapata. We REVERSE that

portion of the district court's decision granting to Corpus Christi

damages for its economic losses suffered during the period in which

Houston repaired its riser.

AFFIRMED in part and REVERSED in part.

BENAVIDES, Circuit Judge, concurring in part and dissenting in
part:

I join the majority in affirming the award of damages to

Corpus Christi for the flared gas and to Houston for the riser, as

5
Zapata also complains that costs of the action should not
have been taxed against it, for essentially the same reasons it
urges in its prejudgment interest argument. Federal Rule of
Civil Procedure 54(d)(1) states that, with exceptions not
relevant here, "costs other than attorneys' fees shall be allowed
as of course to the prevailing party unless the court otherwise
directs." A party that obtains a favorable judgment on at least
a fraction of its claims may be regarded as a prevailing party,
even though that party has not sustained all its claims. United
States v. Mitchell, 580 F.2d 789, 793 (5th Cir.1978). The
district court, finding Zapata two-thirds at fault—a finding we
do not disturb on appeal—acted well within its discretion when it
awarded Corpus Christi and Houston their costs of court.

15
well as the award of prejudgment interest and taxation of costs.

However, the majority's denial of Corpus Christi's delay damages

resulting from the shut-in under the guise of TESTBANK ignores

controlling authority in this Circuit and forges a new rule of law

unintended by TESTBANK and its progeny.1 I must dissent.

TESTBANK stands for a single proposition: physical damage to

a proprietary interest is a prerequisite to recovery for economic

loss. 752 F.2d 1019, 1020 (5th Cir.1985) (en banc), cert. denied,

477 U.S. 903, 106 S.Ct. 3271, 91 L.Ed.2d 562 (1986). We adopted

the "bright-line" TESTBANK rule to exclude entire categories of

potential plaintiffs who had suffered only economic harm. These

would-be plaintiffs, whose claims were potentially indeterminate

and indefinite, created the specter of wave upon wave of successive

economic consequences. We drew our bright line with full

recognition that some plaintiffs with foreseeable economic injury

would be denied recovery. Nonetheless, our rule of law is not only

consistent with established precedent, but also with the

appropriate adjudicative role of our courts.

Thus TESTBANK operates as a threshold to recovery. Those

plaintiffs with physical injury to a proprietary interest may

enter; those without may not. This gateway to recovery makes

sense. Having satisfied the prerequisite, the rationale for

foreclosing relief for economic harm does not apply because the

1
The delay damages were based upon the loss in present value
of the deferred production. No attack against these damages or
the amount thereof is made by the appellant except for the attack
based on TESTBANK.

16
plaintiff no longer belongs to the putative class of indeterminate

and indefinite claimants; the plaintiff now belongs to the finite

fold of those suffering some physical damage. Simply put, once a

plaintiff demonstrates physical damage to a proprietary interest,

TESTBANK is simply inapplicable.

Clearing the TESTBANK threshold, however, is not the end of

the matter. A plaintiff's right to recovery still hinges on

application of traditional tort principles including legal duty and

foreseeable injury. These principles, of course, include recovery

for foreseeable economic loss caused by a defendant's negligence.

These well-settled principles of negligence, not TESTBANK, control

the ultimate outcome.

In this case, we correctly hold that Corpus Christi's sensible

action in flaring gas to save its wells "constitutes the physical

damage to a proprietary interest, i.e., its gas, sufficient to

satisfy the TESTBANK requirements." Maj. op. at ----. At this

point, Corpus Christi meets the prerequisite; our TESTBANK inquiry

is over. General principles of negligence now govern whether

Corpus Christi can recover damages. The majority, however,

resurrects TESTBANK and fashions a new requirement that each

element of recoverable loss must satisfy TESTBANK. I cannot

condone this new rule because it ignores the lessons of our

previous authority in this area of law.

In crafting this new rule, the majority relies on Consolidated

Aluminum. However, the approach this Court took throughout the

Consolidated Aluminum litigation is inconsistent with the course

17
the majority chooses today. Consolidated Aluminum sought damages

for physical losses as well as attendant economic damages stemming

from interruption of gas supply after the defendant negligently

severed a pipeline. 772 F.2d 1217, 1222 (5th Cir.1985). The

district court granted summary judgment for the defendant based

upon TESTBANK. We reversed stating: "Consolidated plainly

suffered physical harm to property in which it has a proprietary

interest—i.e., its own equipment for deriving aluminum. Thus,

TESTBANK does not apply." Id. We further explained that the

TESTBANK rationale for foreclosing relief for economic harm was

simply inapplicable because the number of potential plaintiffs was

neither indeterminate nor infinite. Id. at 1223.

Having cleared the TESTBANK hurdle, we instructed the district

court to resolve the issue of Consolidated's right to recovery

under traditional tort principles. In reaching this conclusion, we

relied on the RESTATEMENT (SECOND) OF TORTS. We quoted in toto comment

b to section 766C that makes clear that if there is physical harm,

the general rule prohibiting recovery for negligent interference

with contractual relations does not apply and there may be recovery

subject to the general rules governing liability for negligence.2

2
This comment is as follows:

b. Physical harm to the other. The rule stated in this
Section applies when the plaintiff suffers only
pecuniary loss, such as the loss of the financial
benefits of a contract or of prospective trade or
financial loss through being put to additional expense.
If there is physical harm to the person or land or
chattels of the plaintiff, the rule stated in this
Section does not apply and there may be recovery for
negligence that results in physical harm because of the

18
See id. Furthermore, we erased any doubt about our approach in our

per curiam opinion denying rehearing. After reiterating that

TESTBANK was inapplicable because Consolidated suffered physical

harm, we "left the application of traditional tort principles,

including foreseeability and the related concept of legal duty, for

the trial court to determine on remand." Id. at 1224.

On remand, the district court found that the defendant was not

liable for the damage to Consolidated because it was an

unforeseeable consequence of the rupture of the pipeline. 639

F.Supp. 1173, 1183 (W.D.La.1986), aff'd, 833 F.2d 65 (5th

Cir.1987), cert. denied, 486 U.S. 1055, 108 S.Ct. 2821, 100 L.Ed.2d

922 (1988). The court relied on the peculiar facts of that case.

For example, Consolidated's plant was located six miles away from

the point of rupture, on a different body of water, and upstream in

the gas distribution system. Additionally, the defendant had no

knowledge of Consolidated's connexity to the pipeline. Finally,

Consolidated was so far outside the zone of obvious danger that no

reasonable person would have anticipated that a rupture of the

pipeline would cause damage to "such a remotely located plant."

Id.

On appeal after remand, a different panel of this Court, per

nonperformance of a contract with the plaintiff. (Cf.
§§ 435B, 499). This recovery is of course subject to
the usual rules governing liability for negligence.
When recovery is allowed, the loss of expected profits
or other pecuniary loss may, in an appropriate case, be
recovered as "parasitic" compensatory damages.

RESTATEMENT (SECOND) OF TORTS § 766C cmt. b (1979).

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then Judge Politz, now Chief Judge, affirmed. 833 F.2d 65 (5th

Cir.1987), cert. denied, 486 U.S. 1055, 108 S.Ct. 2821, 100 L.Ed.2d

922 (1988). We agreed with the district court that the defendant

could not have anticipated that its failure to follow safe dredging

practices would result in physical damage to a plant several miles

away. Id. at 68. Significantly, we did not resurrect TESTBANK and

use it to foreclose Consolidated's recovery. Rather, we reaffirmed

our commitment to a two-step approach. Initially, TESTBANK must be

applied. Once satisfied, application of traditional tort

principles then determines recovery.

We used a similar approach in Domar Ocean Transp. v. M/V

ANDREW MARTIN, 754 F.2d 616 (5th Cir.1985). Domar owned a tank

barge and leased a tug to tow it. While in tow, the Domar barge

was struck by another towed by the Andrew Martin. Domar recovered

delay damages for lost profits from the use of both the barge and

the leased tug. Andrew Martin appealed contending that TESTBANK

barred recovery for the loss of use of the tug because it suffered

no physical damage. This Court rejected this argument and affirmed

the damage award. We held that Domar had a proprietary interest in

the barge-tug unit noting that it was indisputable "that they

functioned as an integrated unit." Domar, 754 F.2d at 619.

Consequently, "TESTBANK is no bar to Domar's recovery for the loss

of use of the unit." Id. Finding no solace in TESTBANK, Andrew

Martin argued, as a matter of law, Domar's damages for loss of use

of the undamaged tug were too tenuous and remote to be reasonably

foreseeable. Again, we rejected the argument. Judge Higginbotham,

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author of TESTBANK, wrote for the panel: "On these facts, that

Domar's damages were foreseeable is implicit in the conclusion that

the test of TESTBANK is met." Id.

In the case before us today, Corpus Christi suffered two types

of economic damages: flared gas and delay damages from the

shut-in. Having satisfied the TESTBANK prerequisite, Consolidated

Aluminum and Domar instruct that fundamental negligence principles

determine Corpus Christi's recovery. Applying traditional tort

principles, these economic damages are recoverable unless they are

unforeseeable or casually unrelated to the allision. When Zapata's

barge collided with the Corpus Christi platform it damaged the gas

riser. This necessitated Corpus Christi's prudent action in

flaring gas to avoid permanent damage to the well. Is it

unforeseeable that Corpus Christi would also suffer economic

damages from a shut-in caused by a need to repair the gas riser?

Certainly not. The damages from both the flared gas and the

subsequent shut-in directly flow from the allision. This is not a

situation, as presented in Consolidated Aluminum, where the damages

occur in some remote location unknown and unseen by the tortfeasor.

The Zapata barge ran into the Corpus Christi platform and the

attached riser directly leading to both the flared gas and

necessary shut-in.

In stripping Corpus Christi of its recovery for delay damages

caused by the shut-in, the majority stresses that these losses were

not "tied" to damage to Corpus Christi's property. The majority

maintains that the only property of Corpus Christi that was damaged

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was the flared gas. Corpus Christi's ownership interest in the gas

riser, however, is not dispositive as Domar makes clear. The gas

riser, while owned by Houston, was permanently connected to the

northeast leg of Corpus Christi's platform. Thus the riser

operates as an integrated unit with the platform. Under Domar,

Corpus Christi, while not the owner of the riser, can recover its

foreseeable economic damages.

The new rule of recovery that the majority creates is not

dictated by either the holding or rationale of TESTBANK. It is

inconsistent with the approach this Court has used in both

Consolidated Aluminum and Domar. Having satisfied the TESTBANK

inquiry, Corpus Christi should be allowed to recover all

foreseeable economic damages that flow from the allision under

traditional tort principles. Contrary to the majority's claim,

allowing this recovery does not abrogate the bright line rule of

TESTBANK. Rather, it is the majority's new layer of TESTBANK

analysis that clouds the water TESTBANK and its progeny have made

clear. I would affirm the award of the foreseeable delay damages

to Corpus Christi.

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