Mid Continent Cas. Co. v. Engelke

• Decision Date: 30 August 2018
• Docket Number: CV 17-41-BLG-SPW
• Citation: 337 F.Supp.3d 933
• Parties: MID CONTINENT CASUALTY COMPANY, Plaintiff, v. Alan ENGELKE, Dry Prairie Rural Water Authority, and Does 1-10, Defendants.
• Court: U.S. District Court — District of Montana

337 F.Supp.3d 933

MID CONTINENT CASUALTY COMPANY, Plaintiff,

v.Alan ENGELKE, Dry Prairie Rural Water Authority, and Does 1-10, Defendants.

CV 17-41-BLG-SPW

United States District Court, D. Montana, Billings Division.

Signed August 30, 2018

Todd A. Stubbs, Stubbs Law PC, Manhattan, MT, for Plaintiff.

Calvin J. Stacey, Stacey, Funyak & Kautz, Martha Sheehy, Sheehy Law Firm, Billings, MT, for Defendants.

OPINION and ORDER

SUSAN P. WATTERS, United States District Judge

Before the court are Defendant Alan Engelke's Motion for Summary Judgment (Doc. 41), Defendant Dry Prairie Rural Water Authority's Motion for Summary Judgment (Doc. 45), and Plaintiff Mid Continent Casualty Company's Motion for Partial Summary Judgment (Doc. 49). For the following reasons, Defendants' motions are granted in part and denied in part, and Mid-Continent's Motion for Partial Summary Judgment is granted in part and denied in part.

I. Statement of Facts

In the fall of 2013, Dry Prairie hired Alan Engelke, an excavator in northeastern Montana, to assist in extending Dry Prairie's water lines to real property owned by Joseph Picard. (Doc. 55-5 at 12:18-23). Dry Prairie needed Engelke to dig a trench on Picard's property, in which Dry Prairie would place underground water lines for a new house on the property. (Id. at 15:10-17). At that time, Engelke had an independent contractor's exemption with the State of Montana. (Doc. 47-2 at 38:20-24).

After Dry Prairie marked the excavation route, Engelke spoke with Picard and looked over the property. (Doc. 50-1 at 26:2-4; Doc. 55-1 at 14:5-15:8). Picard advised Engelke that there were underground lines beneath the property, including a saltwater disposal line from an oil well (the Anvil Well) approximately three quarters of a mile away. (Id. ). Based on his work in the field, Engelke knew that a salt water disposal line is used to transfer salt water from the oil pump to a salt water recovery station during the oil pumping process. (Id. at 14:15-15:16). Based on Picard's description of where he thought the salt water line was located, Engelke believed his excavation trenching would not reach the salt water line. (Id. at 14:5-15:8). Picard also told Engelke that there would be some lines that may not be in use any more and not to worry about them. (Id. at 14:8-10; 14:25-15:3).

Engelke also contacted Montana's One-Call Notification Center to obtain information concerning the location of underground facilities on Picard's property. (Id. at 8:6-9). A One-Call ticket was generated on September 29, 2013, identifying those individuals or entities registered with the Notification Center with underground facilities in the area of Engelke's proposed work. (Id. ). While some lines were identified on the ticket, the saltwater disposal line was not, since the then-owner of the Anvil Well, Windy Butte, had not registered the location of the line with the Notification Center. (Doc. 47-3 at 65:10-19).

Shortly after obtaining the One-Call ticket, Engelke began his excavation. (Doc. 55-1 at 8:6-10). He provided his own equipment and insurance for the job. (Doc. 47-2 at 37:14-22). While excavating, Engelke felt a "pop," and both ends of a line came to the surface. (Id. at 8:8-17). The line was not in use and appeared to Engelke to be abandoned. (Id. at 10:8-15). After hitting the line, Engelke spoke with Picard. Picard told Engelke that he also believed the line was abandoned because a local construction company had previously hit a line fairly close to the one Engelke hit, which they determined had been abandoned. (Doc. 47-4 at 15:23-16:25). Picard went out to see the line and told Engelke he was pretty sure the line was abandoned and that any active line ran elsewhere. He told Engelke that if it were him, he would bury the line. (Id. at 25:20-23). Engelke buried the line and finished the project. (Doc. 50-2 at 23:25-24:5). He billed Dry Prairie a set amount for the job. (Doc. 47-2 at 38:11-15).

Unfortunately, Engelke had hit the saltwater disposal line, which was placed back into operation a few months later. (Doc. 50-3 at 39:11-14). Because of the damage to the line, salt water running through the line was discharged into the ground, causing damage. (Id. at 39:11-40:11). By the time the line was placed back into service, the Anvil Well with which the saltwater disposal line was associated, had transferred ownership twice. (Id. at 57-5 at ¶ 4). At the time the discharge occurred, the Anvil Well was, and still is, owned by Avery Bakken. (Id. at ¶¶ 3-4). It is disputed whether the saltwater disposal line at issue transferred with the Anvil Well during the ownership transfers. (Doc. 53-1 at 73:2-76:18).

Nevertheless, Avery Bakken was charged by the State Oil and Gas Commission to clean up the release. (Id. ) Mid-Continent insured Avery Bakken's loss. (Doc. 54-3). Mid Continent now stands in Avery Bakken's shoes seeking subrogation. The parties have stipulated that all previous owners of the Anvil Well during the relevant time frame are the same company for purposes of this lawsuit.

II. Applicable Law

Federal Rule of Civil Procedure 56(a) entitles a party to summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." A movant may satisfy this burden where the documentary evidence produced by the parties permits only one conclusion. Anderson v. Liberty Lobby Inc. , 477 U.S. 242, 251, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment." Id. at 247-48, 106 S.Ct. 2505. There must be a genuine dispute as to any material fact, which is a fact "that may affect the outcome of the case." Id. at 248, 106 S.Ct. 2505.

In considering a motion for summary judgment, the court may not weigh the evidence or make credibility determinations, and the court must construe all facts in the light most favorable to the non-moving party. Nelson v. City of Davis , 571 F.3d 924, 928 (9th Cir.2009) (citation omitted). When presented with cross-motions for summary judgment on the same matters, the court must "evaluate each motion separately, giving the non-moving party the benefit of all reasonable inferences." American Civil Liberties Union of Nevada v. City of Las Vegas , 333 F.3d 1092, 1097 (9th Cir. 2003).

III. Discussion

Under the Montana Dig Law, codified at Mont. Code. Ann. § 69-4-501, et seq. , owners of underground facilities like water lines or fiber optic cables register their underground lines with a One-Call Notification Center. Prior to excavating in a particular area, an excavator must call into the Notification Center and provide the location of their intended excavation operations. The Notification Center issues a ticket that identifies the registered underground lines in the area. The ticket is provided to the excavator and the registered owners of the underground lines existing in that particular location. The underground owners then have a period of time to go onsite and mark the location of their lines so that the excavator does not hit them. The Dig Law also provides direction in the event that an excavator encounters unmarked underground facilities during excavation.

Mid-Continent argues that once Engelke uncovered the saltwater disposal line, he had a duty, evidenced by certain sections of the Dig Law, to stop his excavation operations and advise the line owner or the One-Call Notification Center that he had damaged the line. (Doc. 45 at 8-9). Mid-Continent argues that summary judgment on liability is appropriate because Engelke did not stop excavating and instead buried the line, allowing the damage to remain, which ultimately resulted in property damage once the Anvil Oil well was placed back into service and saltwater leached out of the damaged line. (Doc. 49 at 8-13). Mid-Continent asserts this duty exists under both a common law negligence theory and a negligence per se theory. (Doc. 49, Doc. 54 at 27).

Dry Prairie asserts that Mid-Continent is not entitled to maintain this subrogation action because it has not made its insured/subrogor whole. Additionally, Defendants argue that Mid-Continent's negligence per se theory fails because Engelke did not breach the statute and Mid-Continent is not a member of the class the statute intends to protect. (Doc. 43 at 6-8; Doc. 45 at 4-8). Defendants argue that Mid-Continent's common law negligence claim is preempted by Montana's Dig Law, codified at Mont. Code Ann. 69-4-501, et seq. (Doc. 43 at 5; Doc. 45 at 4). Engelke argues that Mid-Continent, through its subrogors, acted negligently per se by failing to be a member of the One-Call Notification Center. (Doc. 42 at 8). Dry Prairie also argues that even if Mid-Continent's common law claim is not pre-empted, Mid-Continent cannot establish a prima facie case of negligence because it does not have an expert who can establish that Engelke's actions were negligent. (Doc. 52 at 6-9). The court addresses each of these arguments in turn.

1. Mid-Continent is Entitled to Pursue Subrogation

In Montana, an insured must be "totally reimbursed for all losses as well as all costs" before the insurer is entitled to seek subrogation against a third party. Swanson v. Hartford Ins. Co. of Midwest , 309 Mont. 269, 46 P.3d 584, 587 (2002). Dry Prairie argues that Mid-Continent has not reimbursed Avery Bakken for the full amount Avery Bakken paid out for property damage resulting from the saltwater release. (Doc. 52 at 4). As a result, Dry Prairie argues that Mid-Continent cannot pursue its claim for subrogation under Montana law. The undisputed facts before the court reflect otherwise.

Jeff Avery testified by affidavit that Mid-Continent fully paid Avery Bakken for all the amounts Avery Bakken paid in connection with the saltwater release. (Doc. 61-1 at 8). Additionally, in its discovery responses, Mid-Continent sets out all the amounts it...