The opinion of the court was delivered by: Motley, District Judge.
ORDER AND MEMORANDUM OPINION
Defendant American Bureau of Shipping ("ABS") has moved for
summary judgment, requesting dismissal of the tort cause of
action brought against it by Plaintiff Shipping Corporation of
India, Ltd. ("SCI"). SCI, the purchaser of several vessels,
brought these tort claims, together with contractual claims,
against ABS alleging that ABS, a classification company, was
negligent 1) in formulating the rules and standards which it
applied to review and approve a) the design of the vessels, b)
the construction of the vessels, and c) the classification of
the vessels; 2) in applying its rules and standards in these
respects; 3) in specifying and approving corrosion control
procedures incorporated into the design and construction; and
4) in providing services, inspections, structural analyses,
investigations and recommendations both during construction and
after delivery of the vessels.
For the following reasons, defendant ABS's motion for summary
judgment as to the tort cause of action is granted.
Defendant ABS argues that SCI's negligence claims are not
cognizable in maritime tort.*fn1 ABS's position is based on
the Supreme Court's decision in East River S.S. Corp. v.
Transamerica Delaval, Inc., 476 U.S. 858, 106 S.Ct. 2295, 90
L.Ed.2d 865 (1986), and the Fifth Circuit's decision in
Employers Insurance of Wausau v. Suwannee River SPA Lines,
Inc., 866 F.2d 752 (1989). In East River, the Supreme Court
held that in a maritime context, "a manufacturer in a
commercial relationship has no duty under either a negligence
or strict products-liability theory to prevent a product from
injuring itself." 476 U.S. at 871, 106 S.Ct. at 2302. The Court
noted that it did not reach the question of whether one can
ever state a tort cause of action in admiralty when the only
damages sought are economic. Id. at 871 n. 6, 106 S.Ct. at 2302
n. 6. In Employers Insurance, the Fifth Circuit extended the
ruling in East River to hold that it also applied to contracts
for professional services rendered in connection with the
construction of a product by a party other than the builder.
866 F.2d at 766. The court did not decide whether a party not
in privity with the defendant may recover in negligence under
maritime law. Id. n. 27. In both cases, the courts based their
decisions on the principle that contract law provides adequate
remedies in a commercial setting where parties are of equal
enough bargaining power to allocate among themselves risks of
SCI seeks to distinguish the case at hand from both East
River and, to some extent,
Employers Insurance, while also arguing that the latter
decision was incorrect. SCI contends that the only similarity
between the case at hand and East River is that in both cases,
the economic losses incurred are those related to the vessel
itself, and not to a third party. SCI also contends
inaccurately that East River is inapplicable because the
Complaint here alleges negligence and not strict
liability.*fn2 SCI further argues 1) that since ABS is a
supplier of professional services and not goods, and,
specifically, not a manufacturer of consumer goods put in the
stream of commerce, East River is inapplicable (and the
Employers Insurance decision is wrong); 2) that, unlike both
East River and Employers Insurance, there was no privity of
contract between ABS and SCI and, therefore, the concept of
recouping the benefit of the bargain between the parties is
inapplicable here; 3) that the activities involved include both
pre-construction and post-delivery conduct; and 4) that SCI and
ABS are not of equal bargaining power, unlike the parties in
To the extent they are accurate, SCI's claims do not appear
relevant. First, there is no reason why it should matter
whether the defendant is a manufacturer of goods or a provider
of services essential to such production. Defendant Delaval in
East River provided supervision services as well as a product.
In any event, Employers Insurance seems a reasonable extension
of the principles enunciated in East River. As the Fifth
Circuit stated in Employers Insurance:
[w]hether the negligence alleged is in the
performance of a contract for services, or in a
contract for the sale of goods, the resulting
economic loss "is essentially the failure of the
purchaser to receive the benefit of its bargain
— traditionally the core concern of contract law."
866 F.2d at 765, citing East River, 476 U.S. at 870, 106 S.Ct.
at 2301. The defendant in Employers Insurance was not a
manufacturer of a product put into the stream of commerce. This
court sees no reason why the fact that ABS is also not such a
manufacturer should be any more material in the case at bar.
Second, although there was no privity of contract between ABS
and SCI for at least part of the relevant time, SCI admits to
being an intended third-party beneficiary of the classification
contracts between ABS and Split and has brought contractual
claims against ABS. In addition, SCI was in a position to
negotiate with Split, the manufacturer, over the risk of loss.
Third, as defendants argue, the rationale of Employers
Insurance is equally applicable to ABS's pre-delivery and
post-delivery professional services. Both were maritime
services, provided pursuant to a maritime contract. Plaintiff
has offered no reason to impose tort liability for economic
loss pursuant to post-delivery services where none is imposed
for pre-delivery services.
For the foregoing reasons, defendant ABS's motion for summary
judgment dismissing plaintiff's tort ...