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Two spectacular building collapses in Manhattan resulted in street closings and business dislocations, but a New York state appellate court has declared in separate rulings this summer that business owners may seek recovery of economic damages without suffering physical property damage in one case but not the other. In a ruling last week, Goldberg Weprin & Ustin v. Tishman Construction Corp., 459, the Appellate Division, 1st Department, unanimously affirmed Justice Beatrice Shainswit’s grant of Tishman Construction’s motion to dismiss a purported class action brought by a law firm, Goldberg Weprin & Ustin. The firm brought the suit on behalf of itself and other businesses and individuals with offices or residences in Times Square that were closed for several weeks following the July 21, 1999, collapse of a construction elevator tower on West 43rd Street between Sixth and Seventh Avenues. One woman, a resident of the Woodstock Hotel, died in the hail of debris. At least four lawsuits from surrounding business owners were reportedly filed seeking damages from The Durst Organization, developer of the 48-story Conde Nast building, and Tishman Construction Corp., the construction manager. But the appellate court agreed with Shainswit that “in the absence of any alleged physical property damage, the connection between defendants’ activities and plaintiff’s economic losses alleged to have resulted from the city’s action is too tenuous and remote to permit recovery on any tort theory.” Goldberg Weprin, which specializes in real estate and tax law from its 22nd floor offices on Broadway and 42nd Street, had been seeking recovery on theories of gross negligence, strict liability for abnormally dangerous activity, public nuisance and private nuisance. In another partial building collapse case decided in July, however, the 1st Department voted 3-2 to allow to proceed to trial the damage claims of business owners on Madison Avenue who were shut down for two weeks during the peak holiday season. City officials had ordered Madison Avenue closed between 42nd and 57th Streets after a shower of bricks fell from an office building at 540 Madison Avenue on Dec. 7, 1997. Justice Betty Weinberg Ellerin, the only judge who sat on panels in the two different building collapse matters, explained that “unlike the situation in 5 th Ave. Chocolatiere, Ltd v. 540 Acquisition Co. … the economic damages sought by plaintiff [in the Goldberg Weprin case] are not limited to lost profits suffered by retail merchants whose livelihoods were dependent upon pedestrian traffic, but rather encompass almost all ancillary ‘inconvenience’ costs, such as the cost of temporarily relocating the named plaintiff’s law offices and the proposed class members’ private residences and businesses.” Ellerin quoted Shainswit as saying that the proposed class was so extensive that it would include even “taxi drivers and hot dog vendors.” “Accordingly, plaintiff has failed to demonstrate any ‘special’ or ‘peculiar’ injury of a kind different from that suffered by other persons exercising the same public right, a necessary prerequisite to maintaining a private cause of action for nuisance,” she wrote last week. Ellerin and Justice Angela M. Mazzarelli had written opinions in companion cases stemming from the Madison Avenue closing that the “economic loss” rule as common law standard that bars recovery for losses in the absence of proof that a defendant’s action caused physical injury or property damage should be abandoned when the alleged negligence of the defendant building owners or contractors was egregious and the injuries were a reasonably foreseeable consequence of the collapse.( 5th Avenue Chocolatiere Ltd. and 532 Madison Avenue Gourmet Foods Inc. v. Finlandia Center Inc. were published on July 6.) “[T]he purported negligence of defendants herein, as pleaded in the complaint, in erecting the tower [on the Conde Nast building], was not as egregious as that alleged against the defendants in 5th Ave. Chocolatiere Ltd. and 532 Madison Ave. Gourmet Foods,” said Ellerin in her concurring opinion in the Goldberg Weprin case. Justices Eugene L. Nardelli, Milton L. Williams, Richard W. Wallach and David B. Saxe formed the rest of the Goldberg Weprin panel.

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