Butler v. Advanced Drainage Systems, Inc.

• Decision Date: 26 April 2005
• Docket Number: No. 2004AP1991.,2004AP1991.
• Citation: 282 Wis.2d 776,2005 WI App 108,698 N.W.2d 117
• Parties: Thomas G. BUTLER, Mary J. Butler, Steven J. Grundahl, Nancy J. Grundahl, James A. Gallop, Maureen Gallop, Greg Kittelsen, Edith Kittelsen, Duane Schwartz, Joan Schwartz, Dewey Mullikin, Juanita Mullikin, Helen Brekke, Phillip Jones, Susan Jones, Allen Hall, Florence Hall, Michael Singer, Noel Singer, H. James Jacobsen, Debby Jacobsen, Scott Blanck, Dana Blanck and Larry Kinney and Karen Kinney, Plaintiffs-Appellants, Albert KEMPF, Pat Kempf, Dale E. Johnson, Joan L. Johnson, Harold M. Flolid, Karen A. Flolid, Carolyn Ousdigian, Ted Ousdigian, Jeremy Ferris, June Ferris, Suzanne Meland, Michael T. Meland, Estate of Maxine Lenz, Daryl Erdman, Audrey Erdman, Lawrence J. Jarvela, Patricia D. Jarvela, Joann Yohn, Stephen Yohn, Jerry Greeley, Karen Greeley, Niel R. Petersen, Marlys J. Petersen, Karen Ek, Bill Ek, Charles Peterson, Douglas J. Gallop, Shirley Gallop, Mike Evavold, Mark R. Parks, Art Kosieradzki, Jeanne Kosieradzki, Gary C. Boyum, Eleanor Kay Boyum and Beverly Gallop and Bud Gallop, Intervening-Plaintiffs-Appellants, Thomas E. FERRIS and Joy Linda Ferris, Intervening-Plaintiffs, v. ADVANCED DRAINAGE SYSTEMS, INC., Daniel Kling and ECG, Inc., Defendants-Respondents, CITY OF SHELL LAKE, Defendant, CINCINNATI INSURANCE COMPANY and Gulf Underwriters Insurance Company, Intervening-Defendants-Respondents, BOB THOMPSON & SONS and Thompson Sand & Gravel, Defendants-Third-Party Plaintiffs-Respondents, v. HOFFMAN CONSTRUCTION COMPANY and Wausau Insurance Companies, Third-Party Defendants-Respondents.
• Court: Wisconsin Supreme Court

282 Wis.2d 776

2005 WI App 108

698 N.W.2d 117

Thomas G. BUTLER, Mary J. Butler, Steven J. Grundahl, Nancy J. Grundahl, James A. Gallop, Maureen Gallop, Greg Kittelsen, Edith Kittelsen, Duane Schwartz, Joan Schwartz, Dewey Mullikin, Juanita Mullikin, Helen Brekke, Phillip Jones, Susan Jones, Allen Hall, Florence Hall, Michael Singer, Noel Singer, H. James Jacobsen, Debby Jacobsen, Scott Blanck, Dana Blanck and Larry Kinney and Karen Kinney, Plaintiffs-Appellants,¹ Albert KEMPF, Pat Kempf, Dale E. Johnson, Joan L. Johnson, Harold M. Flolid, Karen A. Flolid, Carolyn Ousdigian, Ted Ousdigian, Jeremy Ferris, June Ferris, Suzanne Meland, Michael T. Meland, Estate of Maxine Lenz, Daryl Erdman, Audrey Erdman, Lawrence J. Jarvela, Patricia D. Jarvela, Joann Yohn, Stephen Yohn, Jerry Greeley, Karen Greeley, Niel R. Petersen, Marlys J. Petersen, Karen Ek, Bill Ek, Charles Peterson, Douglas J. Gallop, Shirley Gallop, Mike Evavold, Mark R. Parks, Art Kosieradzki, Jeanne Kosieradzki, Gary C. Boyum, Eleanor Kay Boyum and Beverly Gallop and Bud Gallop, Intervening-Plaintiffs-Appellants,¹ Thomas E. FERRIS and Joy Linda Ferris, Intervening-Plaintiffs, v. ADVANCED DRAINAGE SYSTEMS, INC., Daniel Kling and ECG, Inc., Defendants-Respondents, CITY OF SHELL LAKE, Defendant, CINCINNATI INSURANCE COMPANY and Gulf Underwriters Insurance Company, Intervening-Defendants-Respondents, BOB THOMPSON & SONS and Thompson Sand & Gravel, Defendants-Third-Party Plaintiffs-Respondents, v. HOFFMAN CONSTRUCTION COMPANY and Wausau Insurance Companies, Third-Party Defendants-Respondents.

No. 2004AP1991.

Supreme Court of Wisconsin.

Submitted on briefs February 10, 2005.

Decided April 26, 2005.

On behalf of the plaintiffs-appellants and intervening plaintiffs-appellants, the cause was submitted on the briefs of Steven B. Goff and Tracy N. Tool, Bye, Goff & Rohde, Ltd., River Falls; and Matthew A. Biegert and Michael J. Brose, Doar, Drill & Skow, S.C., New Richmond.

On behalf of the defendants-respondents, the cause was submitted on the briefs of William J. Katt and Mark D. Malloy, Leib & Katt, S.C., Milwaukee, and Thomas J. Graham, Jr. and Christine A. Gimber, Weld, Riley, Prenn & Ricci, S.C., Eau Claire.

On behalf of the intervening defendant-respondent Cincinnati Insurance, the cause was submitted on the brief of Mark Rattan and James P. Odda, Litchfield Cavo, Brookfield.

On behalf of the defendants-third-party plaintiffs-respondents and third-party defendants-respondents, the cause was submitted on the brief of J. David Rice, Rice, Heitman & Davis, S.C., Sparta; Patrick H. O'Neill, Jr., O'Neill & Murphy, LLP, St. Paul, MN; and Timothy J. Muldowney, LaFollette Godfrey & Kahn, Madison.

Before Vergeront, Lundsten and Higginbotham, JJ.

¶ 1. VERGERONT, J.

This appeal arises out of a project undertaken by the City of Shell Lake to divert water from Shell Lake in order to lower the water level. The owners of property abutting the lake sued the City and others involved in the project, alleging that the project failed due to negligence and their property was damaged as a result. The circuit court granted summary judgment in favor of certain defendants who had worked on the project, respondents on this appeal, concluding that no evidence showed a basis for their liability to the property owners, and, alternatively, that public policy considerations precluded liability.

¶ 2. The property owners appeal the summary judgment.² We conclude that RESTATEMENT (SECOND) OF TORTS § 324A is the appropriate framework for analyzing the respondents' liability for negligence and, based on the undisputed facts, we conclude the respondents are entitled to judgment because none of the three alternative conditions for liability under § 324A has been met. We also conclude that, because the nuisance claim is based on allegedly negligent conduct and there is no liability for negligence under Milwaukee Metropolitan Sewerage District v. City of Milwaukee, 2005 WI 8, 277 Wis. 2d 635, 691 N.W.2d 658, there is also no liability for nuisance. Accordingly, we affirm the circuit court's dismissal of the negligence and nuisance claims.

BACKGROUND

¶ 3. Many of the background facts are not disputed for purposes of this appeal. Shell Lake is a 2580 acre landlocked lake located in Washburn County, Wisconsin. There are approximately 433 residential properties abutting the lake. For a number of years the water level in Shell Lake has been rising, with the result that it has reached the foundations of many of the buildings around the lake and covers much of the yards of many shoreline properties. The City made several attempts to alleviate the high water problems in the 1980's and 1990's, but none resolved the problem.

¶ 4. In June 2001, the City applied to the Department of Natural Resources (DNR) for a permit to place structures on the bed of the lake and on the bed of the Yellow River in order to divert water from the lake to the river. The DNR approved the application and issued the permit. The project called for constructing and installing a drainage pipe along an approximately 4.5 mile route from Shell Lake to the Yellow River. The project was estimated to cost more than 1.6 million dollars, funded in part by special assessments in the amount of $650,000 to be paid by the property owners.

¶ 5. The City entered into several contracts for work on the project: with ECG, Inc.³ for design and engineering; with Advanced Drainage System, Inc. for supplying the pipes; and with Bob Thompson & Sons and Thompson Sand & Gravel (collectively Thompson)⁴ for the installation and general contracting. When the pipeline was opened for the first time in November 2002, leaks developed immediately and it was shut down for repair. ECG, Advanced Drainage, and Thompson worked on repairs until June 2003, starting up the pipeline a number of times and, each time, having to shut it down again for further repairs.

¶ 6. While those repairs were being made, the City hired another engineering firm to evaluate the pipeline. This firm's report, issued in May 2003, concluded that the pipeline failed to perform as intended due to defects in the design of the pipeline and defects in the materials, manufacturing, and installation of the pipes, either individually or in combination. The report also made various recommendations to repair the pipeline. Eventually the City decided to "slipline" the existing pipe, that is, put a new pipe inside the existing pipe. After this modification, the pipeline began operating in November 2003.

¶ 7. Meanwhile, shortly after the report was issued, the owners of thirteen properties abutting Shell Lake filed this action, seeking certification of a class of persons owning property abutting the lake.⁵ The complaint alleged that ECG,⁶ Advanced Drainage, and Thompson were negligent in their work on the project and their negligence was "a substantial factor in the failure to curb and reverse the rising water level," causing damage to the property of the named plaintiffs and the proposed class. The complaint also alleged that the actions of those three defendants, along with the actions of the City and the DNR, resulted in a nuisance.⁷

¶ 8. Thompson moved for summary judgment on both the negligence and nuisance claims, and the other defendants joined in the motion. As to negligence, they argued two alternative theories. First, they contended that, because their contract was with the City and not with the property owners, they were not liable to the property owners unless the criteria in RESTATEMENT (SECOND) OF TORTS § 324A were met; and, they asserted, the property owners had submitted no evidence entitling them to a trial on whether those criteria were met. Second, they argued that, based on the undisputed facts, public policy precluded finding them liable. As to the nuisance claim, Thompson contended that not relieving a naturally occurring interference with the owners' use and enjoyment of their property did not, as a matter of law, constitute a nuisance.

¶ 9. The circuit court granted the motion and dismissed both claims. Regarding the negligence claim, the court decided that both an analysis under RESTATEMENT (SECOND) OF TORTS § 324A and public policy supported dismissal.

DISCUSSION

¶ 10. On appeal, the property owners contend that the court erred in dismissing the negligence claim for three reasons: (1) under negligence law in Wisconsin, ECG, Advanced Drainage, and Thompson (the respondents)⁸ owed a duty to the property owners to exercise due care and there is evidence they breached that duty; (2) even if RESTATEMENT (SECOND) OF TORTS § 324A applies, there is evidence entitling them to a trial; and (3) the circuit court should not have considered public policy at this stage. On their nuisance claim, the property owners assert there are factual disputes that entitle them to a trial.

¶ 11. In reviewing the grant or denial of a summary judgment, we employ the same methodology as the circuit court and our review is de novo. Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315, 401 N.W.2d 816 (1987). The moving party is entitled to summary judgment if there are no genuine issues of material fact and that party is entitled to judgment as a matter of law. WIS. STAT. § 802.08(2). When a defendant moves for summary judgment and its evidentiary submissions establish a prima facie basis for dismissal of the complaint, the plaintiff avoids summary judgment against it only by submitting evidence that, if believed, would entitle it to judgment. Transportation Ins. Co., Inc. v. Hunzinger Const. Co., 179 Wis. 2d 281, 291, 507 N.W.2d 136 (Ct. App. 1993); WIS. STAT. § 802.08(3). In deciding whether there are genuine issues of material fact, we view the evidence most favorably to the non-moving party, drawing all reasonable inferences from the evidence in that party's favor. Grams v. Boss, 97 Wis. 2d 332, 339, 294 N.W.2d 473 (1980). Whether an inference is reasonable and whether...