Rivtow+Marine+Limited+v.+Washington+Iron+Works

Liability of respondents should not be rested on the one basis of a failure to warn of the probability of injury. It is absurd to think that physical harm had resulted, Washington’s liability would not be open to question. Why should they be held less liable simply because withdrawal of crane from service averted injury or damage? Manufacturer’s liability in negligence for physical harm extends to ensuing economic loss by the person who has suffered the physical harm. à Economic interests (ordinarily protected in K) were long protected in tort in only limited classes of cases (like in intentional torts). à Rationale of manufacturer’s liability for negligence should support recovery in case where there is threat of physical harm & the pf is in the class of those who are foreseeably so threatened.
 * FACTS:** During the busiest period of coastal operations, Rivtow’s log barge (B1) had to be removed from operation for extensive repairs to its crane that was virtually identical to one on a similar barge that had collapsed and killed its operator. Inspection afterward revealed cracks in the mountings of both cranes on B1. Washington been aware for some time that cranes of this type were subject to cracks due to negligence in design, but didn’t warn. At trial, the judge found Washington liable for economic loss suffered by appellant through inactivity of barge.
 * ISSUE**: Can negligence causing economic loss alone (i.e. not linked to physical injury) give rise to action in damages?
 * HOLDING**: No (contra Laskin dissent)
 * REASONING**: (Laskin J. dissenting in part)
 * NOTE:** Such recovery does not lead to Cardozo’s indeterminate liability. Rather, are concerned here with direct economic loss; economic loss resulting directly from avoidance of threatened physical harm to property of appellant if not also personal injuries to persons in its employ.
 * Restriction on liability for economic loss alone “has in it more of a concern to avoid limitless claims for economic loss from any kind of negligence than a concern for the particular basis upon which manufacturer’s liability for negligence rests.”**
 * RATIO**: Pure economic loss suffered as a __direct__ result of “alert avoidance” of reasonably foreseeable physical harm or property damage is recoverable.