Double M Const., Inc. v. State Corp. Com'n

• Decision Date: 06 February 2009
• Docket Number: No. 100,312.,100,312.
• Parties: DOUBLE M CONSTRUCTION, INC., Appellant, v. STATE CORPORATION COMMISSION, Appellee.
• Court: Kansas Supreme Court

202 P.3d 7

DOUBLE M CONSTRUCTION, INC., Appellant, v. STATE CORPORATION COMMISSION, Appellee.

No. 100,312.

Supreme Court of Kansas.

February 6, 2009.

Jay L. MowBray, of Wallace, Saunders, Austin, Brown & Enochs, Chtd., argued the cause, and Richmond M. Enochs, of the same firm, was with him on the briefs for appellant.

Patrice Petersen-Klein, advisory counsel, of Kansas Corporation Commission, argued the cause and was on the brief for appellee.

The opinion of the court was delivered by ROSEN, J.:

On transfer from the Court of Appeals, Double M Construction, Inc. appeals from a district court decision upholding a Kansas Corporation Commission (Corporation Commission) order imposing liability for failure to properly investigate the location of a natural gas pipeline before excavating.

The parties submitted stipulated facts to the Corporation Commission. In its responsive brief, the appellee Corporation Commission refers to a number of facts outside the stipulations. Parties are bound to their stipulations, however, and a trial court or appellate court must render judgment based on those stipulated facts. Klein v. Oppenheimer & Co., 281 Kan. 330, 336, 130 P.3d 569 (2006); Shade v. Wheatcraft Industries, Inc., 248 Kan. 531, 541, 809 P.2d 538 (1991).

The stipulated facts are as follows:

Double M is an Oklahoma corporation. Double M was acting as a subcontractor for Double J Pipeline, LLC from September 26, 2006, through September 29, 2006. Double M provided excavation service to Double J Pipeline in an area south of Mound Valley, Kansas, in rural Labette County.

Under the terms of the contract, Double J was the contractor. The contract provided that Double J was "to excavate under and around existing utilities." The contract also provided that Double J was to "spot and expose line crossing ahead of equipment." In addition, the contract contained the following clause: "Double M Construction Company, Inc. is not responsible for damage to any existing underground utility lines that have not been located and uncovered prior to our trenching."

On September 26, 2006, Double J Pipeline notified Kansas One Call that it would be excavating south of Mound City. Kansas One Call informed Double J Pipeline that all facilities would be marked by 12:01 A.M., September 29, 2006. Because of a mapping error in the Kansas One Call database, the facilities' owner did not receive notification of the intent to excavate. The error was discovered before Double M began any excavation.

Double J Pipeline placed a second call to Kansas One Call noting the error and notifying Kansas One Call of the proper excavation area. The mapping error was corrected, and Kansas One Call informed Double J Pipeline that all facilities would be properly marked by Tuesday, October 3, 2006. On September 29, 2006, Double J Pipeline directed Double M to excavate along the planned gas-gathering route.

Kansas One Call's records indicated that Double M did not independently contact Kansas One Call to request utility locations or to provide notification of its intent to excavate. During the excavation, equipment owned and operated by Double M struck and ruptured a 20-inch high-pressure natural gas transmission line. Natural gas escaped through the rupture and ignited, resulting in the death of a Double M employee and property damage.

The Corporation Commission issued an order directing Double M to show cause why it should not institute punitive proceedings against Double M. Double M filed a response denying liability. The Corporation Commission entered an order finding Double M at fault and assessing a $25,000 penalty against Double M, which was half the statutory maximum for two violations. Double M filed a timely petition for reconsideration under K.S.A. 66-118b and K.S.A. 77-529(a)(1), which the Corporation Commission denied. Double M then filed a timely petition for judicial review in Shawnee County District Court. The district court affirmed the Corporation Commission, and Double M took a timely appeal to the Court of Appeals. This court assumed jurisdiction on its own motion following Double M's motion to transfer.

Double M essentially raises two arguments in its brief. First, it contends that it was not the statutory excavator because it contractually delegated its liability to Double J Pipeline. Second, it contends that it is unfair to impose sanctions on Double M without also imposing sanctions on Double J Pipeline. It frames these arguments under a variety of headings, but they condense down to repetitions of the same issues, which are governed by basic rules of statutory interpretation.

Double M initially contends that the Corporation Commission and the district court erred in imposing statutory punitive measures against Double M after it had contractually assigned to Double J Pipeline responsibility for locating utilities and liability for any damages resulting from excavations.

This appeal asks the court to construe a statutory scheme in light of the stipulated facts. The standard of appellate review is de novo for cases decided by the district court based upon documents and stipulated facts. In re Harris Testamentary Trust, 275 Kan. 946, 951, 69 P.3d 1109 (2003). Interpretation of a statute is a question of law over which this court has unlimited review. Genesis Health Club, Inc. v. City of Wichita, 285 Kan. 1021, 1031, 181 P.3d 549 (2008). An appellate court's first task is to "ascertain the legislature's intent through the statutory language it employs, giving ordinary words their ordinary meaning." State v. Stallings, 284 Kan. 741, 742, 163 P.3d 1232 (2007).

"When a statute is plain and unambiguous, we do not speculate as to the legislative intent behind it and will not read the statute to add something not readily found in it. We need not resort to statutory construction. It is only if the statute's language or text is unclear or ambiguous that we move to the next analytical step, applying canons of construction or relying on legislative history construing the statute to effect the legislature's intent." In re K.M.H., 285 Kan. 53, 79, 169 P.3d 1025 (2007) cert. denied. ___ U.S. ___, 129 S.Ct. 36, 172 L.Ed.2d 239 (2008).

An administrative agency's interpretation of a statute is not binding, and the final construction of a statute always rests with the courts. Denning v. KPERS, 285 Kan. 1045, 1048, 180 P.3d 564 (2008).

As a general rule, a punitive statute should be strictly construed in favor of the accused, which simply means that words are given their ordinary meaning. Any reasonable doubt about their meaning is decided in favor of the accused. State v. Kleypas, 282 Kan. 560, 564, 147 P.3d 1058 (2006). This rule of strict construction, however, is subordinate to the rule that judicial interpretation must reasonably and sensibly give effect to the legislative design and intent. State v. Paul, 285 Kan. 658, 662, 175 P.3d 840 (2008).

The Kansas Underground Utility Damage Prevention Act, K.S.A. 66-1801 et seq., governs the procedures for excavating in areas containing underground natural gas pipelines. This Act creates a statutory duty to the public to ensure the safety and integrity of underground utilities.

K.S.A. 66-1802(d) defines an "excavator" to be "any person who engages directly in excavation activities within the state of Kansas, but shall not include any occupant of a dwelling who: (1) Uses such dwelling as a primary residence; and (2) excavates on the premises of such dwelling." A "person" includes "any individual, partnership, corporation, association, franchise holder, state, city, county or any governmental subdivision or instrumentality of a state and its employees, agents or legal representatives." K.S.A. 66-1802(m). "Excavation" means "any operation in which earth, rock or other material below the surface is moved or otherwise displaced by any means," excepting agricultural tilling, certain railroad, road or ditch maintenance, and fossil fuel exploration and production. K.S.A. 66-1802(c).

K.S.A. 66-1803 provides:

"An excavator shall not engage in excavation near the location of any underground facility without first having ascertained, in the manner prescribed in this act, a location of all underground facilities in the proposed area of the excavation."

K.S.A. 66-1804 requires that an excavator serve all operators of underground facilities in the area with advance notice of its intent to excavate, except in emergency situations. The notice must be served at least 2 full working days, but not more than 15 calendar days, before the scheduled excavation start date. K.S.A. 66-1804(a).

K.S.A. 66-1805 establishes a single notification center for the state of Kansas, which is Kansas One Call. Each operator of an underground facility is a member of the notification center. K.S.A. 66-1805(a). The K.S.A. 66-1804 notification of intent to excavate shall be given by telephone at a toll-free number or by other communication methods approved by the notification center. K.S.A. 66-1805(b). The notification center is required to document the receipt of notices from excavators. K.S.A. 66-1805(d).

Violators of the Underground Utility Damage Prevention Act are subject to civil penalties and injunctive relief under K.S.A. 66-1,151. Factors that the Corporation Commission must take into account include the size of the business, the gravity of the violation and the good faith in attempting to achieve compliance. K.S.A. 66-1,152.

The Corporation Commission concluded that Double M is clearly an "excavator" under the Underground Utility Damage Prevention Act. Double M challenged this conclusion in its appeal to the district court and renews that challenge in the current appeal. Double M apparently asks this court to find that it entered into a contract that transferred its statutory responsibilities to another party.

The statutory language applies clearly and unambiguously to Double M. Double M is a corporation, thus...