Downs v. Panhandle Eastern Pipeline Co.

• Decision Date: 29 May 1998
• Docket Number: No. 61A05-9701-CV-14,61A05-9701-CV-14
• Citation: 694 N.E.2d 1198
• Parties: Kristy S. DOWNS, Individually, as Personal Representative of the Estate of Ivan Dean Downs, and as guardian of Suzanne and Matthew Downs, Appellant-Plaintiff, v. PANHANDLE EASTERN PIPELINE COMPANY and Vesta Energy Company, Appellees-Defendants.
• Court: Indiana Appellate Court

Page 1198

694 N.E.2d 1198

Kristy S. DOWNS, Individually, as Personal Representative of

the Estate of Ivan Dean Downs, and as guardian of

Suzanne and Matthew Downs, Appellant-Plaintiff, v. PANHANDLE EASTERN PIPELINE COMPANY and Vesta Energy Company,

Appellees-Defendants.

No. 61A05-9701-CV-14.

Court of Appeals of Indiana.

May 29, 1998.

George M. Plews, Jeffrey D. Claflin, Donna C. Marron, Plews Shadley Racher & Braun, Indianapolis, for Appellant-Plaintiff.

Thomas J. Costakis, Jeffrey C. McDermott, Linda J. Cooley, Krieg DeVault Alexander & Capehart, Indianapolis, for Panhandle Eastern Pipe Line Company.

Keith A. Kinney, Alan J. Irvin, Hill Fulwider McDowell Funk & Matthews, Indianapolis, Mark E. Christensen, Christensen & Ehret, Chicago, IL, for Vesta Energy Company.

OPINION

SHARPNACK, Chief Judge.

Kristy Downs, individually and as personal representative of Ivan Downs and guardian of Suzanne and Matthew Downs, appeals the trial court's grant of summary judgment in favor of the defendant-appellees, Panhandle Eastern Pipeline Company ("Panhandle") and Vesta Energy Company ("Vesta") (collectively "Appellees") determining that no duty was owed by either of them to the Downs. Downs asserts that the designated evidence establishes a genuine issue of material fact that precludes summary judgment. The case arises from a natural gas explosion at the Downs' home.

We affirm.

Standard of Review

The issue raised for our review is whether the trial court erred in granting summary judgment. When we review a trial court's grant of summary judgment, we apply the same standard as the trial court. Ayres v. Indian Heights Volunteer Fire Dep't, Inc., 493 N.E.2d 1229, 1234 (Ind.1986); see Indiana Trial Rule 56. The appellant bears the burden of proving the trial court erred in determining that there were no genuine issues of material fact and that the moving party was entitled to judgment as a matter of law. Rosi v. Business Furniture Corp., 615 N.E.2d 431, 434 (Ind.1993). Any doubt as to the existence of an issue of material fact, or an inference to be drawn from the facts, must be resolved in favor of the nonmovant. Cowe v. Forum Group, Inc., 575 N.E.2d 630, 633 (Ind.1991). "A genuine issue of material fact exists where facts concerning an issue which would dispose of the litigation are in dispute or where the undisputed facts are capable of supporting conflicting inferences on such an issue." Scott v. Bodor, Inc., 571 N.E.2d 313, 318 (Ind.Ct.App.1991).

Facts

The facts most favorable to Downs, the nonmovant, follow. Montezuma Municipal Gas Utility ("Montezuma") sold and delivered natural gas to customers, including the Downs, through a distribution system installed, maintained and owned by the Town of Montezuma. The gas, which Montezuma purchased from Vesta, was produced from gas fields in western states including Kansas. The gas was transferred by Vesta to Montezuma at Haven, Kansas, and reached Montezuma's distribution facility through a pipeline system operated by Panhandle. Montezuma contracted with Panhandle for the transportation of its gas through Panhandle's pipeline. The natural gas produced by Vesta and transported through Panhandle's pipeline was odorless. Montezuma, after receiving the gas from Panhandle's pipeline into its own system, added odorant to the gas, utilizing apparatus and odorant it purchased from Natural Gas Odorizing, Inc. ("NGO").

Montezuma's gas distribution system was installed in 1934 and consisted of bare steel pipe buried in the ground. The service line to the Downs' home was installed in 1942. Because bare steel pipe is susceptible to corrosion, federal regulations now prohibit installation of this type of pipe. However, bare steel pipe installed prior to 1971 do not have to be replaced. In 1992, Montezuma began a project to replace the bare steel pipe in its system with polyethylene pipe which is less susceptible to corrosion.

In the early morning of January 21, 1993, natural gas from a ruptured service line seeped into the foundation of the Downs' house in Montezuma, Indiana. During this time, Kristy and her two children, Suzanne and Matthew, were asleep. Around one o'clock in the morning, Downs' husband, Ivan, returned home from work. When Ivan added logs to a wood burning stove, the gas ignited. The subsequent explosion destroyed the house and fatally injured Ivan. Kristy, Suzanne, and Matthew survived, but received serious injuries from the explosion.

The National Transportation Safety Board ("NTSB") investigated the explosion and determined that the gas leak came from a corroded bare steel service line to the Downs' home. The steel line apparently had been ruptured by a growing tree root. Shortly after the explosion, a check for the presence of odorant at a nearby residence confirmed that the gas odorization system was functioning.

Procedural History

Downs brought this action for wrongful death, personal injury, and property damage resulting from the explosion against the Town of Montezuma, Montezuma Municipal Gas Utility, Utility Safety and Design, Inc. ("USDI"--the contractor hired by Montezuma to inspect and advise concerning the pipeline system), and Panhandle. In the complaint, Downs alleged that Montezuma negligently operated "an antiquated and unsafe pipeline system." Record, p. 10. Downs also alleged that both Montezuma and USDI negligently failed to inspect the service line to her home and failed to cathodically protect the line. ¹ In addition, she alleged that Panhandle negligently supplied natural gas to Montezuma and failed to odorize the gas. ²

Downs subsequently filed an amended complaint, adding Black Pipeline Construction, Inc. ("Black"--hired by Montezuma to perform work on the pipeline system), NGO, and Vesta as defendants. In the amended complaint, Downs alleged that Black damaged the service line to her house, that NGO failed to odorize the gas, and that Vesta negligently supplied the gas. Both Panhandle and Vesta denied the allegations against them.

Panhandle and Vesta each moved for summary judgment. Panhandle claimed that as an interstate transporter of natural gas, it merely carried the gas through its pipeline to Montezuma's service lines. As such, Panhandle contended that its liability ended once it delivered the gas to Montezuma and that it had no duty to investigate the conditions of the service lines or to odorize the gas. Vesta admitted that it provided the gas which was transported through Panhandle's pipelines. However, Vesta likewise claimed that its liability ended once the gas was delivered to Montezuma and that it had no duty to investigate the conditions of the service lines or to odorize the gas.

Downs responded to both motions for summary judgment. Downs reasserted that both Panhandle and Vesta negligently supplied natural gas to Montezuma and failed to odorize the gas. In addition, Downs raised a new claim that Panhandle and Vesta were liable under a product liability theory. Specifically, she argued that the natural gas was unreasonably dangerous.

Following a hearing on the motions for summary judgment, the trial court entered summary judgment in favor of Panhandle and Vesta.

Introduction

Before we turn to the merits of this appeal, we make some preliminary observations about the nature of natural gas as a background for our analysis. Natural gas is, as a matter of law, a dangerous substance. South Eastern Indiana Natural Gas Co., Inc. v. Ingram, 617 N.E.2d 943, 952 (Ind.Ct.App.1993). However, the utility of natural gas is derived from the very qualities that make it dangerous. It is gaseous and flammable. Because it is gaseous, it can be moved through pipes and apparatus as needed. Because it is flammable, it can burn and produce heat for various purposes. Natural gas is odorless, which makes it unreasonably dangerous because its unintended presence cannot be detected and it is explosive when mixed with air. Because natural gas is odorless, governmental regulations and common sense due care require that an odorant be added to it where it is to be used by ordinary consumers so that they will realize that gas is present when and where it should not be. Properly odorized natural gas is not unreasonably dangerous for use by ordinary consumers. See generally Jones v. Hittle Service, Inc., 219 Kan. 627, 549 P.2d 1383 (Kan.1976).

Because of the hazards associated with handling natural gas, a gas utility must function under the comprehensive system of state and federal regulations that govern gas distributors. See Ind.Code § 8-1-22.5-1 to 12 (Gas Pipeline Safety). As part of that regulation, a gas utility is required to comply with all safety standards, inspection and maintenance protocols, and record keeping and reporting requirements. I.C. § 8-1-22.5-6.

Discussion

Downs contends that the designated evidence establishes a genuine issue of material fact that precludes summary judgment. She asserts that the liability of the Appellees is established under several theories. Her application of these theories generally depends on her contentions that the Appellees knew or should have know that: 1) the gas was not or would not be properly odorized by Montezuma; 2) the type of pipe used by Montezuma for distribution was unsafe; or 3) there was a problem with the particular pipe that leaked and caused the explosion. She continues her argument by asserting that such actual or constructive knowledge imposed upon the Appellees a duty to inspect Montezuma's distribution system to determine its safety, to cease selling gas to Montezuma if its system was found to be unsafe, and to warn Montezuma and the Downs about the dangers previously noted. We will address these contentions in light of the several theories upon which she relies.

I. Negligence

Downs argues first that the Appellees did not establish that they were entitled to judgment as a matter of law on her common law negligence claim because the Appellees failed to demonstrate that they...