Skip to Main Content
Services Talent Knowledge
Site Search
Menu

Alert

Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

June 25, 2021

NY Appellate Court Dismisses Claim for Purely Economic Losses Arising From Motor Vehicle Accident

In a negligence case, economic damages generally cannot be recovered unless the plaintiff can show that the damages were a foreseeable consequence of the defendant’s alleged negligence and can be ascertained with certainty. Recently, the Appellate Division, Fourth Department issued a decision dismissing a claim for purely economic losses brought by a plaintiff alleging negligent maintenance of a vehicle.

The case, Able Med. Transp. v. Paragon Envtl. Constr., arose from a motor vehicle accident involving one vehicle driven by an employee of a medical transportation company and a second vehicle, a dump truck, driven by an employee of a construction company. The accident occurred when the driver of the dump truck pulled the vehicle to the side of the road because two wheels had fallen off of it. The transportation company’s van struck one of the wheels and then struck the driver of the dump truck, causing significant injuries.

The dump truck driver sued the transportation company, which resulted in a settlement of $900,000. The transportation company then sued the construction company, alleging that its negligent failure to maintain its vehicle in a safe condition caused the accident and that the settlement resulted in an increase in insurance premiums, which caused the company to close its business.

The construction company moved for summary judgment on the ground that the alleged economic damages were not proximately caused by its alleged negligence. The trial court denied the motion. On appeal, the Fourth Department reversed and granted the motion. The court found the transportation company’s alleged economic losses were not a foreseeable consequence of the construction company’s alleged negligent failure to maintain the dump truck. More particularly, the court held, the company’s theory of causation that the failure to maintain the truck resulted in the wheels to fall off, which resulted in the accident, lawsuit, and settlement, which then resulted in an increase in premiums and the closing of the business was too tenuous and remote to permit recovery. As such, the construction company was entitled to summary judgment dismissing the lawsuit.

The Able Med. Transp. decision is a reminder that in a negligence case, the plaintiff must prove that the alleged injuries and damages are proximately caused by the defendant’s alleged negligence. If the plaintiff cannot show that the damages were a foreseeable consequence of the alleged negligence, the claim will not be sustainable.

If you have any questions regarding the content of this alert, please contact Sanjeev Devabhakthuni, counsel, at sdevabha@barclaydamon.com, or another member of the firm’s Torts & Products Liability Defense Practice Area.

Subscribe

Click here to sign up for alerts, blog posts, and firm news.

Featured Media

Alerts

USFWS Issues Final Guidance on Northern Long-Eared Bat and Tricolored Bat

Alerts

IRS Guidance Excludes VA Service-Connected Disability Benefits From Certain Income Determinations for Qualified Residential Rental Projects

Alerts

Second Department: Objective Evidence Required to Establish Trivial Defect Defense

Alerts

NYS Department of Health Issues Consumer Protection Guidance on Payments for Health Care Services

Alerts

Stay Away From the Debtor? An Overview of the Automatic Stay in Bankruptcy

Alerts

Second Department: Defendants Are Entitled to Collateral Source Hearing for "To-Be Obtained" Insurance Coverage Under the ACA

This site uses cookies to give you the best experience possible on our site and in some cases direct advertisements to you based upon your use of our site.

By clicking [I agree], you are agreeing to our use of cookies. For information on what cookies we use and how to manage our use of cookies, please visit our Privacy Statement.

I AgreeOpt-Out