Northern Utilities Div. of K N Energy, Inc. v. Town of Evansville

• Decision Date: 10 December 1991
• Docket Number: No. 89-30,89-30
• Citation: Northern Utilities Div. of K N Energy, Inc. v. Town of Evansville, 822 P.2d 829 (Wyo. 1991)
• Parties: NORTHERN UTILITIES DIVISION OF K N ENERGY, INC., a Kansas corporation, Appellant (Plaintiffs), v. The TOWN OF EVANSVILLE, Wyoming, a municipal corporation; Central Contractors Co., Inc., a Wyoming corporation; and John Does II and IV, Appellees (Defendants).
• Court: Wyoming Supreme Court

Page 829

822 P.2d 829

NORTHERN UTILITIES DIVISION OF K N ENERGY, INC., a Kansas corporation, Appellant (Plaintiffs), v. The TOWN OF EVANSVILLE, Wyoming, a municipal corporation; Central Contractors Co., Inc., a Wyoming corporation; and John Does II and IV, Appellees (Defendants).

No. 89-30.

Supreme Court of Wyoming.

Dec. 10, 1991.

Jeffrey C. Brinkerhoff and C. John Cotton, Brown & Drew, Casper, for appellant.

Cameron S. Walker and Judith A. Studer, of Schwartz, Bon, McCrary & Walker, and Robert Jerry Hand, Hand & Hand, P.C., Casper, for appellees.

Before CARDINE, C.J. ^* , THOMAS, URBIGKIT and GOLDEN, JJ., and ROONEY, J., Retired.

URBIGKIT, Chief Justice.

This appeal presents tort damage derived claims for contribution, indemnity, and subrogation. At issue is the public gas utility's status as a joint tort-feasor, its extent of potential liability, and whether it made a settlement payment as a volunteer after a consumer's house was blown up in a natural gas explosion. A parallel but separate issue examines whether an amendment to the complaint under the fictitious name rule substituting a named defendant for a "John Doe" defendant effectively relates back to the date of the original complaint after expiration of the statute of limitations.

Summary judgment in favor of Central Contractors Company, Inc. is affirmed on the basis of statute of limitations expiration, and the summary judgment in favor of The Town of Evansville, Wyoming on the issues of contribution, legal subrogation, conventional subrogation, and indemnity is reversed.

I. ISSUES

The public gas utility, Northern Utilities Division of K N Energy, Inc. (NUD), sued the franchisor, The Town of Evansville, Wyoming (Town), and the utility work contractor, Central Contractors Company, Inc. (Central). NUD's litigation effort was ended by an adverse summary judgment on all claims by which it attempted to recoup its $90,000 property damage and bodily injury settlement payment. An Evansville, Wyoming home was destroyed in a natural gas explosion and the owner, Agnes Ferron, suffered significant physical injury from being present in the house where natural gas had collected and then exploded. NUD settled the homeowner's property damage and physical injury claim for $90,000 and then sought contribution and subrogation from the Town and Central and indemnity from the Town.

By this appeal, NUD asserts that genuine issues of material fact exist regarding its status as a tort-feasor, and its liability to Ferron precludes summary judgment. In addition, Central contended that the cause of action against it on the contribution theory was barred by the statute of limitations, an issue not addressed by the trial court because of its decision that NUD was a volunteer.

NUD states the issues as follows:

A. Did the District Court Err As a Matter of Law in Granting Summary Judgment on Plaintiff's Claims Against Defendants for Contribution?

B. Did the District Court Err As a Matter of Law in Granting Summary Judgment on Plaintiff's Claims Against Defendants for Legal or Equitable Subrogation?

C. Did the District Court Err As a Matter of Law in Granting Summary Judgment on Plaintiff's Claims Against Defendants for Conventional Subrogation?

D. Did the District Court Err As a Matter of Law in Granting Summary Judgment on Plaintiff's Claims Against Defendant Town of Evansville for Indemnity?

The determinations by the trial court which are central to this appeal addressed first, the volunteer status of NUD in its gas explosion damage settlement and payment, and second, whether that payment was subject to an assignment sufficient to sustain subrogation recoupment.

II. FACTS

This litigation results from a February 13, 1985 public utility supplied natural gas explosion at the residence of Agnes Ferron, located at 1080 Oildale Street, Evansville, Wyoming, which destroyed both the home and her personal belongings. Not only was the property damage near complete, but the owner who was at home was injured and suffered a permanent hearing injury and reoccurring nightmares. Her litigative posture for damage recovery was overtly favorable. ¹

Following the explosion, the public utility excavated its gas line in the street to investigate the accident and discovered a gas leak coming from damage to its gas main at the intersection of Oildale Street and Gold Avenue. It was concluded the leaking gas had followed the house access line into the home where it collected before the explosion. NUD also established, at least to its satisfaction, that the damage to the gas main was caused by the action of one or more third-party utility contractors during their construction work on the Town's water system. In April 1979, a crew employed by the Town had excavated and replaced a water main segment in the vicinity of the intersection of Gold Avenue and Oildale Street. During the same time period, a Central crew under contract with the Town also excavated and installed another segment of the water main and attached a valve in the same vicinity. For purposes of this appeal in its summary judgment context, it is not disputed that either the Town or Central caused the natural gas line damage during city water system repair. Some entity in street excavation had hit and damaged the underground gas line and then did not report the potential danger to the gas utility.

The city utility franchise agreement had expired prior to 1973. Thereafter, NUD, as the public utility, continued to furnish natural gas service to the residents of Evansville by application of "an informal arrangement" with the Town. In conjunction with that informal agreement of practice and arrangement, the Town also followed the practice of repaying resulting costs for repair if damage to the buried lines of the utility occurred during street construction operations.

It was NUD's litigative posture before the trial court and now on appeal that during the time of the informal arrangement, W.S. 37-12-303 (1991) required any person damaging its underground facilities to notify them of the damage. In compliance, the Town's course of operation as a procedure also required utility service notification of any damage to the gas facilities, even if caused by hand tools. It is clearly shown in this record that neither the Town nor Central, as the excavating contractor, had ever contacted NUD regarding damage to NUD's gas main during the 1979 excavation.

During the period of these events, NUD conducted inspections to repair its natural gas system, but never discovered any damage to the gas main in the Oildale Street and Gold Avenue intersection. At some time prior to February 13, 1985, NUD had however received complaints of a gas odor at Ferron's home, but had not been able to identify the location of any gas leak and no corrective action was taken.

In June 1985, counsel for Ferron and her insurance carrier, State Farm Fire & Casualty Company, made a written pre-suit demand on NUD for $150,000 for the destruction of Ferron's home, her personal property, and personal injuries suffered as a result of the explosion and fire. That correspondence was followed by a letter of November 11, 1985, through which NUD advised the Town of its contention about liability and consequent obligation to settle the claims being submitted by Ferron for her personal injury and property damage. A defense was tendered to the Town by the letter which also discussed a proposed settlement with the injured homeowner in the sum of $90,000 and further stated that "[i]f you choose not to accept the defense, then we will assume that you agree * * * that the settlement proposal is reasonable."

Evansville declined the tendered defense or involvement in settlement negotiations. Its employees also refused to provide NUD with information concerning construction activities in the street intersection which may have caused the gas line damage. On February 1, 1986, NUD settled with Ferron for the $90,000 sum and followed somewhat later with a supplemental notice of claim seeking contribution and indemnity from the Town in that amount. On November 3, 1986, NUD filed its original complaint naming as defendants the Town and John Does I through IV, seeking indemnity and contribution. The Town first answered the complaint on November 24, 1986 and then filed variant motions for summary judgment in the succeeding litigative period.

Following the filing of factual material and briefing by the parties on the issues of contribution and indemnity, the trial court filed a summary judgment decision letter ruling on July 2, 1987 in favor of the Town on the issue of contribution, but denying the Town's summary judgment motion on the issue of indemnification. Partial summary judgment was consequently granted to the Town on the contribution claim only. NUD amended its original complaint to plead with more specificity allegations concerning indemnity and to include claims for breach of statutory duty, equitable subrogation, conventional subrogation, and negligence, specifically adding a line damage claim of $6,540.10. A further third amended complaint substituted Central for the entity previously identified as John Doe I.

In 1988 pleadings, Evansville again filed a motion to dismiss and/or for summary judgment and Central filed similar motions with its answer and affirmative defenses. The trial court filed a decision letter granting the Town's and Central's motions for summary judgment followed by the entry of the general order of summary judgment favoring both defendants on all claims. Appeal is taken from that summary judgment which denied the property settlement recovery claims based on contribution, indemnity, legal subrogation and conventional subrogation. There was no appeal from the summary judgment granted to the Town on the $6,540.10 line damage claim which had been determined by the trial court on improper claim filing and statute of limitation concepts.

III. TOWN OF...