loss of use

On July 22, 1981, a fire began in the Port Newark freight yard of defendant Consolidated Rail Corporation when ethylene oxide manufactured by defendant BASF Wyandotte Company escaped from a tank car owned by defendant Union Tank Car Company and leased to BASF. The tank car was punctured during a coupling operation with another rail car and ignited. The municipal authorities evacuated the area within a one-mile radius surrounding the fire, which included the North Terminal building of Newark International Airport where plaintiff People Express Airlines’ business operations are based. People Express employees were prohibited from using the North Terminal for twelve hours, although the feared explosion never occurred. The plaintiff contends that it suffered business-interruption losses as a result of the evacuation. These losses consisted of cancelled scheduled flights and lost reservations because employees were unable to answer the telephones to accept bookings. Fixed operating expenses allocable to the evacuation period were incurred and paid despite the offices being closed. No physical damage to airline property and no personal injury occurred. According to the original complaint, each defendant acted negligently and these acts proximately caused the plaintiff’s harm. An amended complaint alleged additional counts of nuisance and strict liability. Conrail moved for summary judgment. The trial court granted the motion on the ground that absent property damage or personal injury economic loss was not recoverable in tort. The trial court also granted summary judgment motions by BASF and Union Car on the same reasoning. The Appellate Division reversed the trial court’s order granting summary judgment and remanded the cause to the trial court. This Court granted defendant Union Car’s petition for certification, in which Conrail and BASF joined. Plaintiff asserted at oral argument that at least some of the defendants were aware from prior experiences that ethylene oxide is a highly volatile substance. Further, emergency response plans in case of an accident had been prepared. When the fire occurred that gave rise to this lawsuit, some of the defendants’ consultants helped determine how much of the surrounding area to evacuate.

The respondents, time charterers of the steamship Bjornefjord, filed a libel against Robins Dry Dock & Repair Co. to recover for the loss of use of the steamer between August 1 and August 15, 1917. By the terms of the charter party the steamer was to be docked at least once in every six months. Payment of the hire was to be suspended until she was again in proper state for service. In accordance with these terms the vessel was delivered to the petitioner and docked. While there the propeller was so injured by the petitioner’s negligence that a new one had to be put in, thus causing the delay for which this suit is brought. The petitioner seems to have had no notice of the charter party until the delay had begun. On August 10, 1917, it was formally advised by the respondents that they should hold it liable. It settled with the owners on December 7, 1917, and received a release of all their claims. The present libel in a cause of contract and damage seems to have been brought in reliance upon an allegation. The allegation stated that the contract for dry docking between the petitioner and the owners was made for the benefit of the libellants and was incidental to the aforesaid charter party. The District Court allowed recovery on the ground that the respondents had a property right in the vessel. It is not argued that there was a demise. The owners remained in possession. The libellants recovered in both Courts below. A writ of certiorari was granted by this Court.