Bamberger & Feibleman v. Indianapolis Power & Light Co.

• Decision Date: 28 May 1996
• Docket Number: No. 49A02-9510-CV-590,49A02-9510-CV-590
• Citation: 665 N.E.2d 933
• Court: Indiana Appellate Court
• Parties: BAMBERGER & FEIBLEMAN and Cannavo & Ripley, Appellants-Plaintiffs, v. INDIANAPOLIS POWER & LIGHT COMPANY, Appellee-Defendant.

Page 933

665 N.E.2d 933

BAMBERGER & FEIBLEMAN and Cannavo & Ripley, Appellants-Plaintiffs, v. INDIANAPOLIS POWER & LIGHT COMPANY, Appellee-Defendant.

No. 49A02-9510-CV-590.

Court of Appeals of Indiana.

May 28, 1996.

D. Robert Webster, Bamberger & Feibleman, Indianapolis, for appellant.

Robert C. Crews II, Indianapolis Power & Light Co., Indianapolis, Edward O. Delaney, Stanley C. Fickle, Nicholas K. Kile, Barnes & Thornburg, Indianapolis, for appellee.

OPINION

NAJAM, Judge.

STATEMENT OF THE CASE

The law firms of Bamberger & Feibleman ("Bamberger") and Cannavo & Ripley ("Cannavo") appeal from the trial court's entry of summary judgment in favor of Indianapolis Power & Light Company ("IPL"). On September 16, 1994, Bamberger and Cannavo filed an action against IPL and sought damages resulting from the closure of their offices during an electrical power outage. They asserted two theories of liability against IPL: strict liability and negligence.

Bamberger and Cannavo moved for summary judgment on all issues. IPL filed a cross-motion for summary judgment based on the economic loss rule. Following a hearing, the trial court held that the economic loss rule precluded recovery on both the strict liability and negligence claims. The court granted IPL's cross-motion for summary judgment and dismissed the complaint with prejudice.

We affirm.

ISSUES

The parties present two issues for our consideration which we restate as:

1. Whether a claim arising from an electrical power outage that alleges only economic losses can be maintained against a public utility under the Indiana Product Liability Act.

2. Whether the economic loss rule precludes a customer from recovering economic losses arising from an electrical power outage under a negligence theory when there was no physical harm to persons or property.

FACTS

Bamberger and Cannavo are law firms practicing on Monument Circle in Indianapolis. IPL is a public utility that provides electrical service to Indianapolis and the surrounding areas. On or about June 6, 1994, electrical service to the law offices was interrupted due to a power outage allegedly caused by equipment failure in a conduit located beneath Market Street. The law firms were forced to close their offices on June 6 and 7, 1994. Cannavo avers that it was unable to reopen until June 9, 1994.

The only losses claimed by Bamberger and Cannavo are those that resulted from their inability to work while their law offices were closed. Specifically, Bamberger alleged damages of $9,788.54 for lost billable time by five lawyers, one consultant and a paralegal, lost time of staff employees, lost rental value of the law offices and lost value of access to the parking garage. Cannavo sought damages for lost billable hours amounting to $4,800.00. ¹

DISCUSSION AND DECISION

Standard of Review

Summary judgment is appropriate when the designated evidence demonstrates that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Ind.Trial Rule 56(C); Terra-Products, Inc. v. Kraft General Foods, Inc., 653 N.E.2d 89, 91 (Ind.Ct.App.1995), trans. denied. The purpose of summary judgment is to terminate litigation about which there can be no factual dispute and which can be determined as a matter of law. Terra-Products, Inc., 653 N.E.2d at 91. The trial court's grant of summary judgment is clothed with a presumption of validity and the appellant bears the burden of proving that the trial court erred. Rosi v. Business Furniture Corp., 615 N.E.2d 431, 434 (Ind.1993) (citation omitted). When reviewing a motion for summary judgment, this court applies the same standard utilized by the trial court, and we resolve any doubt as to a fact, or an inference to be drawn therefrom, in favor of the party opposing summary judgment. Gilliam v. Contractors United, Inc., 648 N.E.2d 1236, 1238 (Ind.Ct.App.1995), trans. denied. We will affirm a trial court's grant of summary judgment if it is sustainable on any theory found in the evidence designated to the trial court. Auffenberg v. Board of Trustees of Columbus Regional Hosp., 646 N.E.2d 328, 330 (Ind.Ct.App.1995). Cross-motions for summary judgment do not alter our standard of review; rather, our inquiry remains whether a genuine issue of material fact exists which requires a trial on the merits. Walling v. Appel Serv. Co., 641 N.E.2d 647, 649 (Ind.Ct.App.1994).

Issue One: Strict Product Liability

Bamberger and Cannavo maintain that IPL is liable under the Indiana Product Liability Act (the "Act") ² for damages caused by the power outage. The law firms contend that the statute can and should be construed to permit recovery for economic losses arising from the interruption of electrical service to their law offices. We cannot agree.

We first consider the Act which then provided in relevant part:

One who sells, leases, or otherwise puts into the stream of commerce any product in a defective condition unreasonably dangerous to any user or consumer or to his property is subject to liability for physical harm caused by that product to the user or consumer or to his property if that user or consumer is in the class of persons that the seller should reasonably foresee as being subject to the harm caused by the defective condition, and if:

(1) The seller is engaged in the business of selling such a product; and

(2) The product is expected to and does reach the user or consumer without substantial alteration in the condition in which it is sold by the person sought to be held liable under this chapter.

IND.CODE § 33-1-1.5-3(a) (emphasis added). Physical harm is defined in the statute as:

bodily injury, death, loss of services, and rights arising from any such injuries, as well as sudden, major damage to property. The term does not include gradually evolving damage to property or economic losses from such damage.

IND.CODE § 33-1-1.5-2. Here, the threshold question is whether the product has been placed into the stream of commerce. A plain reading of the statute suggests that it does not apply in this case because the allegedly defective product did not reach the user or consumer. Our courts have specifically addressed this question.

As the law firms contend, electricity can be a product under the Act. See Public Serv. Ind., Inc. v. Nichols, 494 N.E.2d 349, 355 (Ind.Ct.App.1986). However, the electricity must be in a marketable and marketed state at the time it causes the injury in order to be treated as a product under the strict liability doctrine. Id. Thus, it must be reduced from a transmission voltage to a consumption voltage. Id.

In deciding Nichols, we followed Petroski v. Northern Indiana Public Service Co., 171 Ind.App. 14, 354 N.E.2d 736 (1976), trans. denied. The plaintiff in Petroski had received injuries when he touched an electrical distribution line, and he brought an action against the public utility which owned and maintained the line. The utility company moved for judgment on the evidence after the plaintiff had presented his evidence to the jury, and the trial court granted the motion. In affirming the judgment on the issue of strict liability, we stated that a literal sale of goods is not necessary for application of the doctrine of strict liability. ³ Id. at 30, 354 N.E.2d at 747. Rather, the test is "whether the product has been placed in the stream of commerce," that is, whether the electricity has reached its destination. Id. Writing for the court in Petroski, Judge Staton observed:

Technically, until the electricity reaches its destination in a home or factory, it is transmitted by equipment over lines under the exclusive control of NIPSCO. The electric company's transmission and distribution lines are not a part of the end product which reaches the consumer as in the case of bottles and cans which are a part of the finished product.

Id.

Here, the electricity had not reached its destination and, therefore, had not been placed into the stream of commerce. Instead, the factual basis for the claim was the failure of the product to reach the user or consumer. The alleged "defect" existed in the underground power lines, which are not a part of the end product. See id.

Both the Indiana Product Liability Act and relevant case law establish that IPL cannot be liable under the Act for an electrical power outage where, as here, no product was delivered. Thus, on this issue we need not consider whether Bamberger and Cannavo could recover purely economic damages under the statute. The trial court properly granted summary judgment on the strict product liability claim.

Issue Two: Negligence

Bamberger and Cannavo next contend the trial court erred when it held as a matter of law that they could not recover on a negligence theory. IPL responds that summary judgment was properly entered in its favor because economic losses that do not result from physical harm to person or property are not recoverable in a negligence action. We agree that the damages which the law firms allege to have incurred are not recoverable.

Our analysis begins with the proposition that summary judgment is rarely appropriate in a negligence action. Colen v. Pride Vending Serv., 654 N.E.2d 1159, 1162 (Ind.Ct.App.1995), trans. denied. However, when the undisputed material facts negate at least one element of a claim, judgment as a matter of law is appropriate. Id. The elements of negligence are: (1) a duty; (2) failure to adopt the standard of care which is required by the duty; and (3) an injury resulting from a breach of the standard of care. Petroski, 171 Ind.App. at 18, 354 N.E.2d at 741. Whether a duty exists is a question of law to be determined by the court, but whether the defendant breached that duty and whether that breach proximately caused injury to the plaintiff are generally questions to be determined by the trier of fact. MacDonald v. Maxwell, 655 N.E.2d 1249, 1251 (Ind.Ct.App.1995).

A duty in negligence may arise by statute or by...