The M/V Testbank sails again

From first-year Torts comes XL Insurance Am., Inc. v. Turn Servcs., LLC, with a discussion of the economic loss rule and the physical injury exception to it.

• The en banc Fifth Circuit held in Louisiana ex rel. Guste v. M/V TESTBANK, 752 F.2d 1019 (5th Cir. 1985): “Denying recovery for pure economic losses is a pragmatic limitation on the doctrine of foreseeability, a limitation we find to be both workable and useful.”
• But only a few months later, the Fifth Circuit held that “owners of cargo aboard a ship involved in a collision could recover their economic losses, despite their cargo’s being undamaged,” noting that given “a risk-shifting provision in the cargo-owners’ agreement with the ship owner, there was no risk of ‘double recovery, much less runaway recovery.'” Amoco Transp. Co. v. S/S Mason Lykes, 768 F.2d 659 (5th Cir. 1985).

XL Insurance fell on the Amoco side of the line as to $1.254 million in repair costs after an allision. No. 21-30520 (June 10, 2022).