E-Alert Case Updates

District of Columbia Recognizes Economic Loss Doctrine in Negligence Case for First Time

Aguilar v. RP MRP Washington Harbour, LLC
No. 13-CV-329 (District of Columbia Court of Appeals, September 4, 2014)
by Colleen K. O’Brien, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.dccourts.gov/internet/documents/13-CV-329.pdf

In Aguilar v. RP MRP Washington Harbour, LLC, No. 13-CV-329 (District of Columbia Court of Appeals, September 4, 2014), and in a case of first impression, the District of Columbia high court recognized the economic loss doctrine in a negligence case. The economic loss doctrine prohibits claims of negligence where a Plaintiff seeks to recover economic losses, absent personal injury evidence, or a special relationship between the parties.

This case arose when Plaintiffs (various service industry workers and other employees of establishments at Washington Harbour) filed a negligence claim against Defendants, RP MRP Washington Harbour, LLC and RP MRP Real Estate Services (“Defendants”), seeking to recover lost wages that resulted from the closure of their workplaces due to a flood at the Washington Harbour retail complex, which was owned and managed by Defendants. The Complaint alleged that Defendants owed them a duty of care to ensure the safe operation of Washington Harbour, which included raising the flood walls when notified of an impending flood, and that by failing to do so before an April 2011 flood, Defendants breached that duty. Plaintiffs lost wages due to the closure of their employers’ businesses as a result of the flood.

Defendants filed a motion to dismiss under Super. Ct. Civ. R. 12(b)(6), arguing, inter alia, that Plaintiffs failed to state an actionable negligence claim because the economic loss doctrine bars recovery of claims alleging solely economic loss stemming from a defendant’s negligence. Plaintiffs opposed the Motion to Dismiss, claiming that the District of Columbia has never applied the economic loss doctrine to preclude non-contractual claims, and, therefore, urged the Court to ignore the economic loss doctrine in favor of a foreseeability test to determine whether Defendants owed them a duty of care to raise the flood walls to prevent economic injury to the Plaintiffs. The trial court rejected the minority foreseeability test, concluded that it would not have applied in this case in any event, and applied the economic loss doctrine to dismiss Plaintiffs’ Complaint.

Plaintiffs appealed. The appellate court recognized that the District of Columbia had previously allowed recovery of purely economic losses in a negligence-related action—specifically by recognizing the tort of negligent spoliation of evidence—which allowed a plaintiff to seek recovery of economic losses occasioned by the negligent destruction of evidence that a defendant had a duty to preserve. In that prior case, Holmes v. Amerex Rent-A-Car, 710 A.2d 846 (D.C. 1998), however, there was a special relationship between the parties that created an independent duty of care. The special relationship exception to the economic loss doctrine conformed to similar exceptions to the economic loss doctrine as adopted in other jurisdictions—for instance, as in Maryland. See L & P Converters, Inc. v. Alling & Cory Co., 642 A.2d 264, 267 (Md. 1994) (recognizing an exception to the economic loss doctrine such that where the failure to exercise due care only creates a risk of economic loss, an intimate nexus between the parties is generally required, which is satisfied by contractual privity or its equivalent).

Here, there was no special relationship between Plaintiffs and Defendants so as to create an exception to the economic loss doctrine. There was no obligation on the part of Defendants to care for Plaintiffs’ economic well-being. While a property owner has an obligation to provide a safe and secure working environment for everyone on the property, that obligation does not necessarily implicate Plaintiffs’ economic expectancies. There was no mutually agreed upon relationship between the parties in the case either—rather, it was the Plaintiffs’ employers who had a direct relationship with Defendants as commercial tenants at Washington Harbour.

Accordingly, the appellate court held that the trial court did not err in granting Defendants’ Motion to Dismiss because Plaintiffs were precluded from pursuing a negligence action against Defendants for recovery of lost wages, standing alone, absent any other personal injury, pursuant to the economic loss doctrine. The economic loss doctrine in the District of Columbia bars recovery of economic losses in negligence cases, subject to only the limited exception where a special relationship exists. Because Plaintiffs’ Complaint did not fit within this exception, Plaintiffs failed to state a claim upon which relief could be granted, and the Complaint was properly dismissed.