Beacon Bowl, Inc. v. Wisconsin Elec. Power Co.

• Decision Date: 09 June 1993
• Docket Number: No. 91-0862,91-0862
• Citation: 501 N.W.2d 788,176 Wis.2d 740
• Parties: BEACON BOWL, INC., a domestic corporation, Allen Krzykowski and Barbara Krzykowski, Plaintiffs, West Bend Mutual Insurance Company, a domestic corporation and Tower Insurance Company, Inc., a domestic corporation, Plaintiffs-Respondents-Cross Respondents-Cross Appellants, v. WISCONSIN ELECTRIC POWER COMPANY, a domestic corporation, Defendant-Appellant-Cross Respondent, Pinky Electric Incorporated, a domestic corporation, Defendant-Third Party Plaintiff-Respondent-Cross Appellant-Cross Respondent, v. CITY OF NEW BERLIN and Donald Steinbach, Third Party Defendants.
• Court: Wisconsin Supreme Court

Page 788

501 N.W.2d 788

176 Wis.2d 740

BEACON BOWL, INC., a domestic corporation, Allen Krzykowski

and Barbara Krzykowski, Plaintiffs,

West Bend Mutual Insurance Company, a domestic corporation

and Tower Insurance Company, Inc., a domestic

corporation, Plaintiffs-Respondents-Cross Respondents-Cross Appellants, v. WISCONSIN ELECTRIC POWER COMPANY, a domestic corporation,

Defendant-Appellant-Cross Respondent,

Pinky Electric Incorporated, a domestic corporation, Defendant-Third Party Plaintiff-Respondent-Cross Appellant-Cross Respondent, v. CITY OF NEW BERLIN and Donald Steinbach, Third Party Defendants.

No. 91-0862.

Supreme Court of Wisconsin.

Argued Feb. 1, 1993.

Decided June 9, 1993.

For the plaintiffs-respondents-cross respondents-cross appellants there were briefs by Terry J. Booth and Fellows, Piper & Schmidt, Milwaukee and oral argument by Terry J. Booth.

Amicus curiae brief was filed by Griffin G. Dorschel and Axley Brynelson, Madison for Wisconsin Utilities Ass'n, Inc.

CECI, Justice.

This case comes before the court on certification by the court of appeals, District II, pursuant to sec. (Rule) 809.61, Stats.

In 1985, a fire extensively damaged the Beacon Bowl restaurant, bar, and bowling alley. West Bend Mutual Insurance Company and Tower Insurance Company, Inc. (insurers) paid their insureds for damages caused by the fire and, as subrogated plaintiffs, sued Wisconsin Electric Power Company (WEPCO) and Pinky Electric Incorporated (Pinky) for property damage caused by the fire. A jury found WEPCO 85 percent negligent, Pinky 10 percent negligent, and the City of New Berlin 5 percent negligent. WEPCO appealed, and both Pinky and the insurers cross-appealed. The court of appeals certified the following issues to this court:

(1) In this tort action against a public utility, does Ransome v. Wisconsin Elec. Power Co., 87 Wis.2d 605, 275 N.W.2d 641 (1979), apply and, if so, what are the limits, if any, of Ransome regarding foreseeability of harm?

(2) May an industry code violation be the basis for recovery against a public utility without a concomitant finding of negligence?

(3) Is a subrogated insurer entitled to treble damages pursuant to sec. [196.64], Stats.?

(4) Should the law of preverdict interest be revisited in light of past supreme court comment?

(5) Does Ehlinger v. Sipes, 155 Wis.2d 1, 454 N.W.2d 754 (1990), apply outside the medical malpractice field?

This court accepted certification. We conclude that: (1) Ransome does not preclude courts from deciding on a case-by-case basis to deny recovery on the basis of public policy considerations; (2) the violation of an industry code section, National Electrical Safety Code (NESC) 281, which the Wisconsin Administrative Code adopts by reference, can be the basis of recovery against a public utility without a concomitant finding of negligence; (3) the subrogated insurers in this case are not entitled to treble damages; (4) the subject of preverdict interest is better left to the legislature; and (5) Ehlinger does not apply outside of medical omission and medical misdiagnosis cases. After discussing the certified issues, we address the other issues raised.

At 2:42 p.m. on May 19, 1985, a power outage occurred on WEPCO feeder X22262. A feeder is a high-voltage primary electrical line; it feeds a large area, larger than a particular building or block. The outage affected the Beacon Bowl, a restaurant, bar, bowling alley, and private residence owned by Allen and Barbara Krzykowski. Feeder X22262 served Beacon Bowl and West National Avenue in New Berlin. The outage lasted only several seconds. Around that time, the lights inside Beacon Bowl flickered on and off, and Mrs. Krzykowski noticed smoke pouring out of two automatic ball returns in the bowling alley.

Karen Kotar, a Beacon Bowl employee, and Mark Krzykowski, the Krzykowskis' son, went into the basement and discovered the main electrical distribution panel making a hissing sound and emitting flames and sparks. Mark went to get a fire extinguisher and handed it to another person who was present, but that person could not get close enough to the fire because of the smoke and sparks. Hot molten particles fell from the main distribution panel onto nearby combustibles, and the Beacon Bowl caught fire.

Witnesses testified that at approximately the same time that the outage occurred, they heard an explosion and saw a blue puff of smoke near WEPCO line X22262; that lights had just flickered; that they observed a flash of light coming from the electrical wires; and that arcing was also observed.

A WEPCO "troubleshooter" arrived at Beacon Bowl at approximately 3:48 p.m. and found that feeder X22262 had "locked out" and that trees had grown into and above the lines near Warehouse Shoes, across the street from Beacon Bowl. He also observed that the three lines that made up the primary line were pitted and discolored and that the pit marks and discoloration were caused by electricity arcing. A WEPCO lineman and a WEPCO tree trimmer also examined the lines after the fire and saw evidence of trees touching the lines and of arcing occurring between the trees and lines.

In 1978, Pinky had installed a 400 amp electrical service in the Beacon Bowl, supplying all the hardware for the interior work, including two electrical panels. Electricity entered Beacon Bowl through an exterior meter, went through a wall and into the main disconnect electrical panel, a main switch with two fuses which controlled the flow of electricity from the source.

Three conductors went from the main disconnect to the main distribution panel by way of a PVC pipe. Pinky admitted that the PVC it used was a nonconductor and that it failed to provide a proper ground between the main disconnect and the main distribution panels. The main distribution panel broke up electricity into smaller circuits which had circuit breakers.

Beacon Bowl had experienced problems with its electricity in 1982. At that time, a WEPCO tree trimmer discovered that trees had contacted the wires across the street, causing several short power outages and one "lock-out." One of the electrical lines had burned completely down because of the tree contact.

The Krzykowskis and the insurers filed a complaint, alleging that WEPCO and Pinky were responsible for the fire. WEPCO filed a cross-complaint against Pinky. Pinky filed a cross-complaint against WEPCO. Pinky also filed a third-party complaint against the City of New Berlin and its electrical inspector, Donald Steinbach. Pinky conceded it had been negligent in failing to properly ground the connection between the main disconnect and the main distribution panels. However, Pinky denied that its negligence caused plaintiffs' damages.

The Krzykowskis eventually settled their claims against the defendants. That release did not include the insurers' subrogated interests.

At trial, the insurers contended that on the day of the fire, trees contacted feeder X22262 near the Warehouse Shoes store, that the contact caused a succession of high-voltage transients to be transmitted into Beacon Bowl, and that these transients damaged insulation on a wire inside the main distribution box, resulting in arcing and the ensuing fire. The insurers and Pinky contended that WEPCO negligently failed to inspect and trim trees near feeder X22262; that the electricity was defective and unreasonably dangerous; and that WEPCO violated sec. 196.74, Stats., Wis.Admin.Code sec. PSC 114.04, and NESC 281 and 214. The insurers claimed treble damages under sec. 196.64, Stats., against WEPCO. The insurers additionally contended that Pinky's admitted negligence was a cause of the fire. WEPCO contended that Pinky's negligence caused the fire.

Each party called expert witnesses to testify about causation. Dr. Szews testified for the insurers. Dr. Szews said that both high-voltage spikes from WEPCO lines and the lack of proper grounding on the main distribution panel were "substantial factors" or "causes" of the fire. Dr. Szews explained that when trees contacted the primary lines, arcing faults occurred. The arcing faults caused a succession of high-voltage "transients" or "spikes" to travel along the line and through the transformers, and those spikes finally damaged insulation in the circuit breaker box. Arcing occurred at the point where the insulation was damaged, and that arcing melted the circuit breaker box and gave off high-voltage spikes and molten particles. The sparking and molten particles ignited nearby combustibles.

Dr. Szews also testified that the lack of proper grounding delayed the operation of a fuse.

Mr. Snedeker, WEPCO's expert, testified that voltage transients did not cause the fire. Instead, Snedeker testified that a loose connection in the sixth circuit breaker and an overcurrent caused arcing at the sixth circuit breaker, and this was followed by arcing at the bottom of the main distribution panel. Snedeker also said there was a connection between the fire and the lack of proper grounding.

Dr. Bernstein, Pinky's expert, corroborated Dr. Szews' testimony. According to Bernstein, trees contacting WEPCO's lines produced arcing faults which in turn produced transients. These transients caused "overvoltage spikes" which caused arcing in the distribution panel and eventually ignited nearby combustibles.

During the trial, Pinky settled with the City of New Berlin and Steinbach. Pinky agreed to release the city and indemnify it in the event that a judgment was obtained against the city.

At the close of the insurers' case, WEPCO and Pinky moved to dismiss. See sec. 805.14(3), Stats. The court denied WEPCO's motion, but deferred ruling on Pinky's motion.

The jury returned its verdict, finding that WEPCO did not violate PSC 114.04, but that it did violate NESC 214 and 281, and such violations were causal. The jury also found WEPCO negligent with respect With regard to Pinky, the jury found that Pinky's admitted...