Evra Corp. v. Swiss Bank Corp

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Evra Corp. v. Swiss Bank Corp Powered By Docstoc
					Pruitt v. Allied Chemical Corp, 523 F.Supp. 975, 1981 Can Пs recover prospective economic damages? Where do we draw the line of liability? Issue Reasoning
Rationale for GR: econ losses not foreseeable and too remote. o But under the test of duty, or remoteness, the damages would be recoverable. The difficulties in this case are how to measure o the cost of the chemical pollution – no property damage: costs were borne most directly by the wildlife. o Utility: Denial of liability serves no social utility. o Destruction of the wildlife should not be a costless activity. Fishermen entitled to compensation it would be on constructive-property-interest-in-the-Bay’sharvestable-species theory. o These professional watermen are entitled to recover despite any direct physical damage to their own property o But none of Пs are in this category. Commercial fishermen fit category established by Union Bay: they lawfully and directly make use of resource of the sea. o Use that marine and charterboat owners make of the water is less direct. o Less direct is the link b/w the Bay and the seafood dealers, restraurants, and tackle shops. Avoiding double counting in calc damages: any fish is sold several times. o Just a Δ should not be able to escape liability for destruction of publicly owned marine life, o Δ should not be caused to pay repeatedly for the same damage Re “investment:” the EEs had no physical investment in ERs’ bus. o If Пs allegations are proven, these EEs would be entitled to recover. o Parties who bought and sold to and from Пs also suffered losses in bus. o The set of potential Пs seems almost infinite!  b/c of this, it makes sense to limit liability. Sportsmen also suffered and can recover; but their losses and small and they are not likely to sue. Directness of harm to boat and marina owners is high enough: they operate on or at edge of waters.


GR: Cannot recover for indirect econ harm. o Minority Exceptions: o Loss of business opportunities due to pollution of steams adjoining П’s property. Purpose of Tort law is to maximize social utility: o where the costs of accidents exceeds the costs of preventing them, the law will impose liability. When the number of Пs is almost infinite, it make sense to limit liability even when damages are foreseeable. Δ should pay once and no more for damages inflicted. Recovery may be obtained for damage proximately caused by the Δ’s negeligence. Econ harm Rule: a negligence П who suffers no physical impact to person/property cannot recover for other losses – so-called economic harm.

Allied dumped chemicals in the James river causing economic injuries to different categories of Пs who harvest the River and its Bay. Пs claimed lost profits resulting from decline in demand for seafood from the affected areas. (These damages are indirect damages) Δ’s Motion to dismiss claims of all Пs except fishermen, shellfishermen, and lessors of oysterbeds. o None of the Пs were direct users of the Bay, commercial or personal. o None of the Пs suffered property damage.

Held Proc П argues Δ argues

Пs who purchased and marketed seafood from commercial fishermem suffered damages that are not legally cognizable because insufficiently direct. Fishermen themselves can recover. No double counting: the lost profits represented a return on the investment of each of the Пs. o Δ would not be expected to pay more than the replacement value of a П’s actual investment. The stream of profits has been interrupted; seeking compensation for the loss of the prospective profits we have been denied. Δ’s negligence entitles us to recover. Union Oil: compensation for fishermen for losses caused by pollution from oil spills. Concede that Union Oil correctly decided.

Evra Corp. v. Swiss Bank Corp, 673 F.2d 951, 1982 Is П entitled to consequential damages that it could’ve prevented? Issue Reasoning
Under Swiss and ILL laws, the bank has no liability except to its own customers and П was not its customer. When a bank fails to transfer funds, 2 possible losses: o Direct: The funds themselves + interest. o No such loss here. o Consequential: Costs + lost profit. o Dislocation of bus caused by failure to pay Siegel: Western union lost $ to be bet on horse. No liability for gains would’ve been realized on horse. o WU had no notice or knowledge of purpose $ was being wired. In here, Δ knew or should’ve known from the telexes that П was paying for boat rentals. But it didn’t know: o When payment was due; o terms of K; o Owner motivated to cancel; etc. o Δ had no notice that if it lost $27K would subject it to $2Mil liability. The notice requirement of Hadley is designed to assure that an improbable guarantee really is intended. П showed a lack of prudence: П is sophisticated and knew or should’ve known that even the Swiss are not infallible and that messages sometimes get lost! By not making duplicate payment, П was steering too close to the wind! Foreseeable damages of K ≡ limiting Δ’s liability to foreseeable consequences under tort law. If a person does not know prob or magnitude, it is not possible for him to know how much care to take  that’s position Swiss is in! o Swiss had no actual knowledge of the consequences


Hadley: Consequential damages will not be awarded unless Δ was put on notice of the special circs giving rise to them. K liability is strict. o Breach does not connote wrongdoing. o Could be caused by circs beyond Δ’s control (strike, fire, etc). The costs of untoward consequences of a course of dealings should be borne by that party who was able to avert the consequences at least cost and failed to do so. Affinity between Hadley’s rule and avoidable consequences. Only foreseeable damages are recoverable in breach of K. Foreseeable damages of K ≡ limiting Δ’s liability to foreseeable consequences under tort law. The amount of care that a person ought to take is a function of the probability and magnitude of the harm that may occur if he does not take care. General Foreseeability, present in virtually every case, does not justify an award of consequentials.

П chartered a boat from a 3rd party. П was to make semimonthly advance payments at the beginning of each chartering period. If payments were late, the 3rd party could terminate the K as the owner of the boat was very motivated to terminate the K (since the K price was well below new market rates.) The method of payment was as follows: П requests a bank in Chicago to wire transfer funds. The bank would debit П’s account and send a telex to London. London would then retransmit to Δ which would deposit the amount in the Owner’s account. One payment paid by check instead of the normal method almost led to cancellation of the K. But arbitration resolved the matter in П’s favor (O of the boat did not expressly tell П of its intent to withdraw from K as was required) Now, this case arises from another late payment caused by Δ’s losing or not getting the telex sent from London. When the payment was one day late, O sent a letter to П canceling the K. П told the bank to keep trying to effect payment which was finally received, by rejected, 7 days later. The case went to arbitration: П was found blameless but that he failed to do everything in its power to remedy the situation (like make immediate duplicate payment: K canceled. П now sues Δ. o (by this time, though, the K for which П chartered the boat was already terminated and П was sub-chartering it at market rates)

of the failure of funds and could not be liable for them.

Held Proc П argues Δ argues

(Siegel is controlling) – Δ is not liable for the consequences of negligently failing to transfer $. П as a matter of law is not entitled to recover consequential damages. DC: Swiss Bank liable in negligence for $2.1Mil for lost profits. o Hadley inapplicable and П’s imprudence irrelevant. o Damages foreseeable: this is an international bank and should know that failure to transfer $ could cause substantial damages. (general Foreseeability)

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