Costal Conduit v Norman Energy

• Decision Date: 14 September 2000
• Citation: 2000 WL 1289406,29 S.W.3d 282
• Parties: <!--29 S.W.3d 282 (Tex.App.-Houston 2000) COASTAL CONDUIT & DITCHING, INC., Appellant v. NORAM ENERGY CORP., d/b/a ENTEX, Appellee NO. 14-99-00273-CV In The Fourteenth Court of Appeals
• Court: Texas Court of Appeals

Page 282

29 S.W.3d 282 (Tex.App.-Houston[14th Dist.] 2000)

COASTAL CONDUIT & DITCHING, INC., Appellant v NORAM ENERGY CORP., d/b/a ENTEX, Appellee

NO. 14-99-00273-CV

In The Fourteenth Court of Appeals

September 14, 2000.

On Appeal from the 190th District Court Harris County, Texas Trial Court Cause No. 95-20072

Panel consists of Justices Amidei, Anderson, and Frost.

OPINION

John S. Anderson, Justice.

Coastal Conduit & Ditching, Inc. ("Coastal Conduit") appeals the summary judgment granted in favor of Noram Energy Corp. d/b/a Entex ("Entex") on Coastal Conduit's claims for negligence, negligence per se, and gross negligence, and its suit for declaratory judgment. In this case, we consider whether Texas law prohibits the recovery of purely economic damages in negligence in the absence of a claim for personal injury or property damage when the parties are contractual strangers. We affirm.

I. Background

Coastal Conduit provides services for the trenching and cutting of ditches to houses for the purpose of installing electrical connections. This activity involves Coastal Conduit's having to excavate in the vicinity of gas lines operated by Entex. At least 48 hours prior to excavating in an area, Coastal Conduit notifies the One Call Service Center ("One Call") of the area in which it is going to be excavating. One Call is responsible for notifying Entex that excavation activity will take place in the vicinity of Entex's gas lines. Upon receiving notification, Entex is responsible for marking the location of its underground gas lines to prevent contact with the lines.

Coastal Conduit claims that approximately 25% of the time that it has notified Entex via One Call that it is going to be excavating near Entex's gas lines, Entex either fails to mark or mismarks the location of its lines. Coastal Conduit further claims Entex's gas lines are also not buried at the proper depth. Coastal Conduit asserts that, as a result of these problems, it takes an additional twenty to thirty minutes to complete each job because its crew must use small hand tools to locate Entex's gas lines, thereby incurring additional overhead and expenses and putting its employees and the public at risk of injury.

Seeking to recover its increased expenses, Coastal Conduit brought claims against Entex for negligence, negligence per se, and gross negligence. Coastal Conduit also sought a declaratory judgment that Entex violated applicable federal regulations by failing to properly mark its lines and by failing to bury its lines at the proper depth. Entex moved for no evidence summary judgment on Coastal Conduit's negligence, negligence per se, and gross negligence claims on the ground Coastal Conduit's claims for economic losses resulting from Entex's alleged negligence are precluded in the absence of any accompanying claim for personal injury or property damage. Entex also moved for no evidence summary judgment on Coastal Conduit's declaratory judgment action on the ground that, because Coastal Conduit cannot maintain any cause of action against it, no justiciable controversy exists. The trial court granted Entex's no evidence motion for summary judgment. Coastal Conduit appeals the granting of summary judgment on its negligence, negligence per se, and gross negligence claims and its declaratory judgment action.¹

II. Standard of Review

Rule 166a(i) provides that "[a]fter adequate time for discovery, a party without presenting summary judgment evidence may move for summary judgment on the ground that there is no evidence of one or more essential elements of a claim or defense on which an adverse party would have the burden of proof at trial." Tex. R. Civ. P. 166a(i). On review of a "no evidence" summary judgment, the appellate court reviews the evidence in the light most favorable to the nonmovant and disregards all evidence and inferences to the contrary. See Blan v. Ali, 7 S.W.3d 741, 747 (Tex. App.-Houston [14th Dist.] 1999, no pet.). We sustain a no evidence summary judgment if: (1) there is a complete absence of proof of a vital fact; (2) the court is barred by rules of law or evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a scintilla; or (4) the evidence conclusively establishes the opposite of a vital fact. See id. Less than a scintilla of evidence exists when the evidence offered to prove a vital fact is so weak so as to do no more than create a mere surmise or suspicion of its existence, and in legal effect is no evidence. See Kindred v. Con/Chem, Inc., 650 S.W.2d 51, 63 (Tex. 1983). More than a scintilla of evidence exists when the evidence rises to a level that would enable reasonable and fair-minded people to differ in their conclusions as to the existence of the vital fact. See id.

Coastal Conduit contends that because the only ground upon which Entex based its motion for summary judgment on the negligence, negligence per se, and gross negligence claims is the economic loss rule, Entex's summary judgment may only be affirmed on that ground. We agree.

A summary judgment cannot be affirmed on grounds not expressly set forth in the motion or response. See Stiles v. Resolution Trust Corp., 867 S.W.2d 24, 26 (Tex. 1993); Powers v. Adams, 2 S.W.3d 496, 497 (Tex. App.-Houston [14th Dist.] 1999, no pet.). No caselaw addresses this particular contention with regard to no evidence motions for summary judgment. However, the commentary to Rule 166a(i) provides that "[t]he existing rules continue to govern the general requirements of summary judgment practice." See Tex. R. Civ. P. 166a(i) cmt. Therefore, Entex's summary judgment may only be affirmed on the ground that Coastal Conduit's claims are barred by the economic loss rule.

III. Elements of Negligence, Negligence Per Se, and Gross Negligence

Entex moved for summary judgment on Coastal Conduit's negligence, negligence per se, and gross negligence claims on the ground that those claims are barred by the economic loss rule in the absence of contractual privity and any accompanying claim for personal injury or property damage. Specifically, Entex argues that under the economic loss rule, it does not owe a duty to an excavator such as Coastal Conduit not to make the performance of its contracts more expensive or burdensome. Duty is an element of each of Coastal Conduit's claims. See Thapar v. Zezulka, 994 S.W.2d 635, 637 (Tex. 1999) (stating that without duty there is no liability in negligence); Perry v. S.N., 973 S.W.2d 301, 304 (Tex. 1998) (observing that the existence of a legally cognizable duty is a prerequisite to a finding of negligence per se); Shell Oil Co. v. Humphrey, 880 S.W.2d 170, 174 (Tex. App.-Houston [14th Dist.] 1994, writ denied) (stating that because a finding of ordinary negligence is a prerequisite to a finding of gross negligence, it must be found that the defendant owed a duty of care to the plaintiff). Therefore, Coastal Conduit must establish that Entex owed it a duty not to mismark the location of its gas lines or to bury its lines at improper depths in the absence of either a contractual relationship or a claim for personal injury or property damage.

IV. Economic Loss Rule

In its first issue, Coastal Conduit argues that the economic loss rule does not bar recovery on its negligence claims because Texas law expressly recognizes the preclusion of economic losses in negligence in only two instances, which are not present in this case. First, the economic loss rule precludes recovery of economic losses in negligence when the loss is the subject matter of a contract between the parties. See Southwestern Bell Tele. Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex. 1991); Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex. 1986); see also Essex Ins. Co. v. Blount, Inc., 72 F. Supp.2d 722, 724 (E.D. Tex. 1999); Coffey v. Fort Wayne Pools, Inc., 24 F. Supp.2d 671, 687 (N.D. Tex. 1998). Second, the economic loss rule bars recovery of economic losses in a negligence claim brought against the manufacturer or seller of a defective product where the defect results in damage only to the product and not to a person or to other property. See American Eagle Ins. Co. v. United Techs. Corp., 48 F.3d 142, 144 (5th Cir. 1995); Hininger v. Case Corp., 23 F.3d 124, 126-27 (5th Cir. 1994); Indelco, Inc. v. Hanson Indus. N. Am.-Grove Worldwide, 967 S.W.2d 931, 932-33 (Tex. App.-Houston [14th Dist.] 1998, pet. denied); Brewer v. General Motors Corp., 926 S.W.2d 774, 780 (Tex. App.-Texarkana 1996), aff'd as modified, 966 S.W.2d 56 (Tex. 1998). Therefore, we must determine whether Texas law precludes the recovery of economic damages in a negligence case such as this, where the parties are contractual strangers and there is no accompanying claim for damages to a person or property.

Coastal Conduit asserts that the general rule in Texas is that economic losses are recoverable in negligence. See Purina Mills, Inc. v. Odell, 948 S.W.2d 927, 940 n.12 (Tex. App.-Texarkana 1997, writ denied) (citing Nobility Homes of Texas, Inc. v. Shivers, 557 S.W.2d 77, 78, 80 (Tex. 1977)). Coastal Conduit's reliance on Purina Mills. Inc., however, is misplaced. Purina Mills, Inc. is a products liability case, which involved a claim for economic loss for lost milk production after the ingestation of contaminated feed by the plaintiff's cattle. See id. at 930. The court stated that such economic losses are not recoverable under strict liability, but, instead, are recoverable under negligence and the Uniform Commercial Code's ("UCC") implied warranties. See id. at 940 n.12 (citing Nobility Homes, 557 S.W.2d at 78, 80). Because Purina Mills, Inc. is a products liability case, it is inapplicable to the facts in this case.

Moreover, in support of its holding, the Purina Mills, Inc. court cited to the Texas Supreme Court case of Nobility Homes. This court, however, has previously determined that the...