Entergy Mississippi, Inc. v. Burdette Gin Co.

• Decision Date: 06 August 1998
• Docket Number: No. 97-CA-00481-SCT.,97-CA-00481-SCT.
• Citation: 726 So.2d 1202
• Court: Mississippi Supreme Court
• Parties: ENTERGY MISSISSIPPI, INC., formerly Mississippi Power & Light Company v. BURDETTE GIN COMPANY.

726 So.2d 1202

ENTERGY MISSISSIPPI, INC., formerly Mississippi Power & Light Company v. BURDETTE GIN COMPANY.

No. 97-CA-00481-SCT.

Supreme Court of Mississippi.

August 6, 1998.

Rehearing Denied October 8, 1998.

John H. Dunbar, Oxford, for Appellant.

Paul V. Ott, Jackson, for Appellee.

Before SULLIVAN, P.J., and JAMES L. ROBERTS, Jr., and WALLER, JJ.

SULLIVAN, Presiding Justice, for the Court:

¶ 1. On July 5, 1988, Percy Harper, Perry Butler, and Stanley Poe were re-painting a seed house for their employer, Burdette Gin Co. The workers used a scaffold to paint the seed house, and the scaffold came into contact with uninsulated overhead power lines constructed and maintained by Entergy Mississippi, Inc. (then Mississippi Power & Light Co.). Harper and Butler brought suit against Entergy in the Washington County Circuit Court for the injuries they sustained from electrical shock caused by the contact between the scaffold and the power lines.

¶ 2. Entergy provided electrical service to Burdette Gin pursuant to an Agreement for Service originally signed by Burdette Gin's President, Rex A. Morgan, on August 23, 1971. The Agreement for Service includes an indemnity clause which reads:

Customer takes notice of the "8-Foot Statute" (Section 7015-11 to 7015-19, inclusive, Mississippi Code of 1942, as amended) making it unlawful to erect, operate, install or store any equipment, materials or other things within 8 feet of a high voltage overhead line, and covenants that he will not violate said statute nor permit such violation by any person under his control with respect to the Company's lines on or adjacent to Customer's premises. Should Customer violate this provision, or any other applicable provision of law as to safety around electric power lines, then Customer will defend, indemnify and save harmless the Company from and against any and all claims and expense on account of injury or damage to any person or property resulting from such violation.

The Mississippi Public Service Commission (MPSC) first approved the revision to Entergy's Agreement for Service including the indemnity clause in a February 2, 1971, order. The MPSC approved subsequent changes to Entergy's service agreement containing the same indemnity clause on December 18, 1972, December 11, 1973, January 24, 1978, and November 30, 1990. Although proper notice was given, no objections to any of Entergy's petitions were filed with the MPSC regarding the indemnity clause.

¶ 3. Entergy filed a third party claim and first amended third party claim on November 9, 1992, and July 8, 1993, respectively, against Burdette Gin, seeking to enforce the indemnity provision in the Agreement for Service. Burdette Gin filed its answers to the third party claim and amended third party claim on December 31, 1992, and July 19, 1993, respectively, asserting among other affirmative defenses that the indemnity clause was unconscionable and void as a matter of public policy, and therefore unenforceable. Burdette Gin also filed a motion for summary judgment on July 19, 1993, requesting that the circuit court dismiss the third party claim, because the contract was unconscionable and void as a matter of public policy. On August 10, 1993, Entergy filed a response to Burdette Gin's summary judgment motion and a cross-motion for partial summary judgment on the issue of the enforceability of the indemnity clause. Entergy asserted that the clause was neither unconscionable nor contrary to public policy, and merely reasonably obliged Burdette Gin to do what it was already required to do under Mississippi law.

¶ 4. On August 12, 1994, Circuit Court Judge Gray Evans granted Burdette Gin's motion for summary judgment and denied Entergy's cross-motion for partial summary judgment, thereby dismissing Burdette Gin from the cause with prejudice. Judge Evans entered final judgment in the case on March 24, 1997, approving a settlement between Entergy and Harper and Butler, and ordering that Entergy take nothing from Burdette Gin on its third party claim due to the summary judgment award. Entergy filed its notice of appeal to this Court on April 9, 1997, and assigns as error the circuit court's assertion of jurisdiction over this matter, and the court's award of summary judgment based upon its findings that the indemnity clause was unconscionable and void as a matter of public policy.

STATEMENT OF THE LAW

Standard of Review

¶ 5. Whether the circuit court had proper jurisdiction to hear a particular matter is a question of law, and this Court must therefore apply a de novo standard of review to this issue. Wright v. White, 693 So.2d 898, 900 (Miss.1997). "This Court applies a de novo standard of review to a grant of summary judgment by the lower court. The evidence must be viewed in the light most favorable to the party against whom the motion has been made." Russell v. Orr, 700 So.2d 619, 622 (Miss.1997).

I.

THE CIRCUIT COURT DID NOT HAVE JURISDICTION TO HEAR THE ATTACK ON THE INDEMNITY AGREEMENT APPROVED BY THE MISSISSIPPI PUBLIC SERVICE COMMISSION.

¶ 6. Although not addressed by either party, the circuit court had pendent jurisdiction to hear this matter. "A claim is pendent if it `arise[s] out of the same transaction or occurrence as the principal claim or, as others put it, out of a common nucleus of operative fact.'" McDonald's Corp. v. Robinson Indus., Inc., 592 So.2d 927, 934 (Miss. 1991) (quoting Hall v. Corbin, 478 So.2d 253, 255 (Miss.1985)

). "[W]here a circuit court has jurisdiction of an action at law, it may hear and adjudicate in that action all claims, including those with an equitable smell, arising out of the same transaction and occurrence as the principal claim." Hall, 478 So.2d at 255. It is undisputed that the Washington County Circuit had proper subject matter jurisdiction over the original personal injury claims in this case. Based upon the theory of pendent jurisdiction, therefore, the circuit court also had proper jurisdiction over the claims of unconscionability and void as a matter of public policy raised by Burdette Gin, because they arose out of the same transaction.

II.

THE LOWER COURT ERRED IN HOLDING THE INDEMNITY AGREEMENT IN VIOLATION OF PUBLIC POLICY.

¶ 7. Entergy contends that MPSC approval for inclusion of the indemnity clause in its Agreement for Service is sufficient to remove the contract from the definition of void as a matter of public policy. Under Section 77-3-2, the Mississippi Legislature created the MPSC in order to protect the public policy of Mississippi regarding the regulation of public utilities. Miss.Code Ann. § 77-3-2 (1991). The MPSC "acts on behalf of the public in regulating utilities." South Cent. Bell v. Epps, 509 So.2d 886, 891 (Miss. 1987). "[C]ertain administrative rules have the force of law." Tucker v. Hinds County, 558 So.2d 869, 875 (Miss.1990). This Court will not interfere with the rule-making power of an administrative agency, such as the MPSC, unless that agency exceeds the power granted to it by the legislature. Mississippi Pub. Serv. Comm'n v. Mississippi Power & Light Co., 593 So.2d 997, 1000 (Miss.1991). Entergy's position is that the circuit court's holding is the same as finding state law contrary to public policy. It asserts that the courts of this state should not interfere with the MPSC's power to that extent. The problem with this argument is that in approving Entergy's service agreement, the MPSC was not exercising its rule or public policy-making power.

¶ 8. However, even if the MPSC's order approving Entergy's contract language could be called a rule, we find that the MPSC exceeded its authority by approving the indemnity clause, because it violated Mississippi law regarding Entergy's responsibility in protecting the general public. Upholding the indemnity agreement could place the public in danger by allowing Entergy to escape liability for its own negligence in maintaining its power lines.

The degree of diligence which a distributor of electricity must observe in the distribution of the dangerous agency of electricity is a very high degree of care. When human life is at stake due care under the prevailing circumstances requires that everything that gives reasonable promise of preserving life must be done regardless of difficulty or expense. Moreover, the degree of care increases as the danger increases.

Mississippi Power & Light Co. v. Shepard, 285 So.2d 725, 729 (Miss.1973). We have previously held that violation of the eight-foot rule, now codified in Miss.Code Ann. § 45-15-1 et seq. and extended to ten feet, does not insulate the utility from liability for its own negligence in maintaining its electrical lines. White v. Mississippi Power & Light Co., 196 So.2d 343, 350 (Miss.1967); Mississippi Power & Light Co. v. Walters, 248 Miss. 206, 252-56, 158 So.2d 2, 20-22 (1963). Specifically, we have stated:

The statute in our opinion does not change the rule that persons operating electrical systems transmitting deadly currents of electricity are required to exercise the highest degree of care in their construction and maintenance. The statute in our opinion was not enacted for the purpose of relieving the Power Company from its duty to exercise due care to place its high-tension wires a sufficient distance above the ground to guard against contact of any nature directly or indirectly that might ordinarily be anticipated. The precautionary measures prescribed in the act are prescribed especially for the protection of workmen who, in the performance of lawful work on premises occupied by high-tension wires, may be exposed to the dangers incident to the performance of the work assigned to them.

Mississippi Power & Light Co. v. Walters, 248 Miss. 206, 254, 158 So.2d 2, 21 (1963). "It is the general rule that a public utility or common carrier cannot contract against liability for his own negligence, and it may not be doubted that such a tort feasor may not recover under an indemnity...