                    United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                  ___________

                                  No. 03-2069
                                  ___________

Audio Odyssey, Ltd., an Iowa         *
Corporation; Dogan A. Dincer;        *
Ann M. Dincer,                       *
                                     *
            Appellants,              * Appeal from the United States
                                     * District Court for the
      v.                             * Southern District of Iowa.
                                     *
United States of America; Small      *
Business Administration,             *
                                     *
            Appellees.               *
                                ___________

                             Submitted: October 23, 2003
                                Filed: July 1, 2004
                                 ___________

Before LOKEN, Chief Judge, LAY, and BOWMAN, Circuit Judges.
                              ___________

BOWMAN, Circuit Judge.

       This case, which has been before us previously, see Audio Odyssey, Ltd. v.
United States, 255 F.3d 512 (8th Cir. 2001), revolves around a loan that was made by
Brenton First National Bank (the Bank) to Audio Odyssey, Ltd. (Odyssey), a retail
electronics store owned by Dogan A. Dincer and Ann M. Dincer. The loan, which
was secured by, among other things, Odyssey's inventory, was guaranteed by the
Small Business Administration (the SBA) pursuant to a Loan Guaranty entered into
by the SBA and the Bank in 1978. The Bank, believing Odyssey to be in default of
its obligation to make timely repayment of the loan, filed a writ of replevin and seized
Odyssey's inventory. Odyssey and the Dincers then brought this action against the
United States and the SBA. The District Court,1 on motions for dismissal and
summary judgment, dismissed all of plaintiffs' claims. Plaintiffs appeal.

       Specifically, the District Court ruled that the individual plaintiffs, Dogan and
Ann Dincer, as distinguished from Odyssey, lack standing to assert claims against the
SBA. Accordingly, the court granted defendants' motion to dismiss the claims of
Dogan and Ann Dincer for lack of jurisdiction. In addition, the court held that
Odyssey cannot recover damages as a third-party beneficiary of the 1978 Loan
Guaranty between the SBA and the Bank, inasmuch as the provision of the Loan
Guaranty alleged to have been breached did not impose a duty on the SBA to provide
written consent before the Bank could take action to enforce its rights as a lender to
Odyssey; the Bank had waived its right to require written consent; and Odyssey,
having been unaware of the written-consent provision, could not and did not claim
detrimental reliance. Consequently, the District Court ruled that Odyssey had not
stated a contract claim on which relief may be granted, and dismissed the claim.

        Plaintiffs attack these rulings in a variety of ways. Having carefully considered
all of their arguments, we affirm the District Court's dismissal of the Dincers' claims
for lack of standing and the dismissal of Odyssey's contract claim for failure to state
a claim on which relief may be granted. We do so on the basis of the District Court's
thorough and well-reasoned opinion. See 8th Cir. R. 47B.

      The District Court also determined that, with respect to Odyssey's negligence
claims against the SBA, the relief sought (damages) is unavailable as a matter of law
under the Iowa economic-loss doctrine. The court therefore dismissed the negligence


      1
      The Honorable James E. Gritzner, United States District Judge for the
Southern District of Iowa.

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claim for failure to state a claim upon which relief may be granted. Having reviewed
this question of state law de novo, we sustain the court's holding, with a brief
discussion.

       Under the Federal Tort Claims Act, the government cedes its sovereign
immunity to the extent that it will allow itself to be sued "in the same manner and to
the same extent as a private individual under like circumstances." 28 U.S.C. § 2674
(2000). Thus, when a private party asserts a tort claim against the United States, the
United States, subject to certain exceptions not here in play, may be held liable to the
same extent as if it were an ordinary tortfeasor under state law. The District Court
ruled that Iowa law does not provide a remedy in tort for Odyssey. After de novo
review of this question of state law, we are persuaded that the District Court's ruling
is correct.

       Iowa has adopted the economic-loss doctrine with respect to cases of alleged
negligence. The doctrine simply states that "purely economic or business losses" are
not recoverable under negligence theories. Nebraska Innkeepers, Inc. v. Pittsburgh-
Des Moines Corp., 345 N.W.2d 124, 126 (Iowa 1984). The Iowa Supreme Court has
defined a "purely economic loss" as a loss not related to physical harm. Id. at 128,
see also Nelson v. Todd's Ltd., 426 N.W.2d 120, 123–25 (Iowa 1988). Odyssey
contends that because its inventory was seized and never returned, the loss was in fact
based on physical harm and the economic-loss doctrine does not apply. The District
Court disagreed with that contention, and so do we. No physical harm has been
alleged other than Odyssey's having been deprived of its inventory. Odyssey has not
directed our attention to any decision based on Iowa law that stands for the
proposition that seizure of an inventory, with resulting economic loss, is a physical
harm, and we have found no such decision.2 Though physical harm is not the sole


      2
      We note that the present case is distinguishable from Manning v. International
Harvester Co., 381 N.W.2d 376, 378–79 (Iowa App. 1985), where the Iowa Court of

                                          -3-
factor considered in determining whether the economic-loss doctrine bars recovery,
see Nelson, 426 N.W.2d at 123-25, it remains essential if there is to be a remedy
under Iowa law in negligence. Because Odyssey (and its property) suffered no
physical harm, the negligence claims in this case were properly dismissed.

     We have considered all of the issues and arguments plaintiffs have raised.
Having done so, we conclude that none of them has merit.

      The judgment of the District Court is affirmed.
                     ______________________________




Appeals treated actual damage to a crop resulting from the placement of the wrong
seed drum in a planter as property damage, not as pure economic loss that would not
be recoverable in a tort action. In contrast, Odyssey does not contend there was an
actual physical harm to its inventory, but merely contends that the seizure of the
inventory was ipso facto a physical harm.

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