KMC, LLC v. E. Heights Utilities, Inc.

• Decision Date: 25 March 2020
• Docket Number: Court of Appeals Case No. 19A-CC-2665
• Citation: 144 N.E.3d 773
• Parties: KMC, LLC, Appellant-Defendant/Third-Party Plaintiff, v. EASTERN HEIGHTS UTILITIES, INC., Appellee-Third-Party Defendant
• Court: Indiana Appellate Court

144 N.E.3d 773

KMC, LLC, Appellant-Defendant/Third-Party Plaintiff,

v.EASTERN HEIGHTS UTILITIES, INC., Appellee-Third-Party Defendant

Court of Appeals Case No. 19A-CC-2665

Court of Appeals of Indiana.

FILED March 25, 2020

Attorneys for Appellant: Michael L. Carmin, Daniel M. Cyr, CarminParker, PC, Bloomington, Indiana

Attorneys for Appellee: Lonnie D. Johnson, Belinda R. Johnson-Hurtado, Stephanie A. Halsted, Clendening, Johnson & Bohrer, P.C., Bloomington, Indiana

Baker, Judge.

[1] KMC, LLC (KMC), owns a building that was damaged by flooding after water pipes leading to a sprinkler system froze and then burst. KMC filed a negligence complaint against Eastern Heights Utilities, Inc. (Eastern Heights), arguing that Eastern Heights was negligent for failing to shut off the water supply to the building when requested by KMC. The trial court entered summary judgment in favor of Eastern Heights. Finding as a matter of law that Eastern Heights did not have a duty to shut off the water supply to the fire suppression system because it was prohibited by law from doing so, we affirm.

Facts

[2] KMC is a real estate holding company that owns a building (the Building) located on North Main Street in Bloomfield. Eastern Heights is a private, nonprofit utility company providing water services to Bloomfield and the surrounding areas; it provides water services to the Building.

[3] In 2006, KMC learned that it was required by statute to put a fire suppression sprinkler system into the Building. After the system was installed, Eastern Heights provided the water supply to the fire suppression system. The main water valve, which provides general water service to the Building, is in the Building's basement. There are separate water valves, located outside the Building, that are connected to the fire suppression system and dedicated to that purpose.

[4] In 2017, KMC decided to winterize the Building because it was vacant. Among other things, it decided to disconnect the Building's heating system. Therefore, on November 2, 2017, KMC requested that Eastern Heights shut off the water supply to the Building to avoid frozen pipes during the winter. Eastern Heights visited the property the same day and turned off the main water valve in the basement. KMC did not specifically request that Eastern Heights disconnect the water supply to the fire suppression system; therefore, Eastern Heights did not shut off the separate valves located outside.

[5] Subsequently, cold weather conditions caused pipes connected to the Building's fire suppression systems to freeze. On January 9, 2018, upon thawing, the pipes burst, causing extensive flood damage. KMC hired Five Star Complete Restoration, Inc. (Five Star), to repair the flood damage. After completing its work, Five Star billed KMC over $300,000 for the extensive repairs needed. KMC failed to remit payment to Five Star.

[6] On June 25, 2018, Five Star filed a lawsuit against KMC for the money it alleged was owed by KMC for the flood damage repairs. On September 7, 2018, KMC filed a third-party complaint against Eastern Heights and KMC's property insurer. In relevant part, the third-party complaint alleges that Eastern Heights was negligent for failing to turn off the fire suppression system's water supply and that its negligence proximately caused the flood damage.

[7] On March 8, 2019, KMC filed a motion for partial summary judgment against Eastern Heights, asking that the trial court find as a matter of law that Eastern Heights was negligent for failing to shut off the water supply to the Building's fire suppression system. On May 6, 2019, Eastern Heights filed a cross-motion for summary judgment against KMC, asking that the trial court find as a matter of law that Eastern Heights was not negligent because (1) Eastern Heights had no duty regarding the fire suppression system; (2) Eastern Heights's actions did not proximately cause the damage; and (3) Eastern Heights is entitled to common law governmental immunity from liability for its fire protection services. Following briefing and a hearing, the trial court summarily entered summary judgment in favor of Eastern Heights on June 28, 2019. KMC now appeals.

Discussion and Decision

[8] KMC argues that the trial court erred by entering summary judgment in favor of Eastern Heights, contending that we should enter summary judgment in its favor or, in the alternative, that there are issues of material fact that must be considered by a factfinder.

[9] Our standard of review on summary judgment is well settled:

The party moving for summary judgment has the burden of making a prima facie showing that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Reed v. Reid , 980 N.E.2d 277, 285 (Ind. 2012). Once these two requirements are met by the moving party, the burden then shifts to the non-moving party to show the existence of a genuine issue by setting forth specifically designated facts. Id. Any doubt as to any facts or inferences to be drawn therefrom must be resolved in favor of the non-moving party. Id. Summary judgment should be granted only if the evidence sanctioned by Indiana Trial Rule 56(C) shows there is no genuine issue of material fact and that the moving party deserves judgment as a matter of law. Freidline v. Shelby Ins. Co. , 774 N.E.2d 37, 39 (Ind. 2002).

Goodwin v. Yeakle's Sports Bar & Grill, Inc. , 62 N.E.3d 384, 386 (Ind. 2016).

[10] To prevail on a theory of negligence, KMC must show that (1) Eastern Heights owed it a duty; (2) Eastern Heights breached that duty; and (3) KMC's damages were proximately caused by that breach. E.g. , Winchell v. Guy , 857 N.E.2d 1024, 1026 (Ind. Ct. App. 2006). Negligence cases tend to be fact sensitive and, as such, summary judgment is rarely appropriate. Id. at 1026-27. Nonetheless, summary judgment is appropriate when the undisputed material evidence negates one element of a negligence claim. Id. at 1027.

[11] We find the first element—duty—to be dispositive in this case. A duty of care is created in one of three ways—by statute, at common law, or by assuming the duty. Holtz v. J.J.B. Hilliard W.L. Lyons, Inc. , 185 F.3d 732, 740 (7th Cir. 1999) (applying Indiana law). Generally, whether a duty exists is a question of law. Buckingham Mgmt. LLC v. Tri-Esco, Inc. , 137 N.E.3d 285, 289 (Ind. Ct. App. 2019).

[12] We agree with KMC that "[w]ater utilities owe a duty of care to their customers." Appellant's Br. p. 11 (citing Pa....