DC Finally Joins the Majority of Jurisdictions by Adopting the “Economic Loss Doctrine”
October 1, 2014 By Cynthia M. Weisz
In the case of Jose A. Aguilar, et. al v. Rp MRP Washington Harbour, LLC., et. al., the D.C. Court of Appeals adopted the economic loss doctrine, barring recovery for solely economic losses stemming from alleged negligence.
This case raised a matter of first impression for the courts of the District of Columbia. The question presented: whether the District of Columbia would follow the majority of jurisdictions by adopting the “economic loss doctrine,” which prohibits claims of negligence where a claimant seeks recovery purely for economic losses sustained as a result of an interruption of commerce caused by a third party. The “economic loss doctrine” generally holds that a claim based solely on negligence, without any non-economic damages involved (such as personal injury), is invalid. The only exception to the rule is where there is a contract or a special relationship between the claimant and the tortfeasor.
On April 18, 2011, the Potomac River surged and flooded the ground-level businesses, basement, and parking lot at the Washington Harbour retail complex. As a result, many of the businesses had to close down. The plaintiffs in the case, various employees of the affected businesses, filed suit to recover the wages they lost while the stores were closed. The employees brought suit against the defendants, the owner and management company of the complex, claiming that the defendants were negligent in failing to fully raise specially constructed flood walls that would have protected the retail complex from the flood. As a result, the plaintiffs/employees claimed, their employers were forced to close which left the employees without a source of income. The complaint alleged that the complex owner and management company owed a duty of care to ensure the safe operation of Washington Harbour, and by failing to raise the flood walls, breached that duty.
In its analysis, the D.C. Court of Appeals found the reasoning and policy considerations espoused by the majority of jurisdictions that utilize the economic loss doctrine compelling and, therefore, adopted that policy in the District of Columbia. As a result, the employees were precluded from pursuing a negligence action against the owner and management company for recovery solely of lost wages. The court pointed out that while there was a duty, by way of contract (i.e., leases), running from the complex owner and management company to the store owners, there was no special relationship with the employees that would extend the owner’s and management company’s duty to the employees suffering purely economic losses.
The court stated that adoption of the economic loss doctrine was consistent with D.C. law because of its policy of “limiting the potentially devastating economic effect of extending tort liability to anyone who can claim an adverse economic impact.” This ruling makes immanent sense. Consider, for example, an accident on the Capitol Beltway at rush hour. How many thousands of individuals and businesses are negatively affected economically by being delayed in traffic for hours? The economic effect of allowing all those solely economic claims against the negligent driver would truly be devastating.
The lawyers at DeCaro Doran stand ready to assist you in sorting out these types of complicated issues in cases you may be involved in or handling. Just give us a call or send an email – we are here to help.