Papp v. Rocky Mountain Oil and Minerals, Inc.

• Decision Date: 04 April 1989
• Docket Number: No. 88-87,88-87
• Citation: 769 P.2d 1249,236 Mont. 330
• Parties: , Prod.Liab.Rep. (CCH) P 12,095 Nancy PAPP, Individually and as Personal Representative of the Estate of Alex Papp, Plaintiff and Appellant, v. ROCKY MOUNTAIN OIL AND MINERALS, INC.; Petro-Lewis Corp., and Petro-Lewis Funds, Inc., and Partnership Properties Co.; Buckeye Energy Corp., and Balcron Oil Company, Defendants and Respondents.
• Court: Montana Supreme Court

Page 1249

769 P.2d 1249

236 Mont. 330, Prod.Liab.Rep. (CCH) P 12,095

Nancy PAPP, Individually and as Personal Representative of the Estate of Alex Papp, Plaintiff and Appellant, v. ROCKY MOUNTAIN OIL AND MINERALS, INC.; Petro-Lewis Corp. and Petro-Lewis Funds, Inc., and Partnership Properties Co.; Buckeye Energy Corp. and Balcron Oil Company Defendants and Respondents.

No. 88-87.

Supreme Court of Montana.

Submitted Jan. 12, 1989.

Decided March 2, 1989.

Rehearing Denied April 4, 1989,

Ugrin, Alexander, Zadick & Slovak, John D. Alexander and Neil E. Ugrin argued, Great Falls, for plaintiff and appellant.

Moses Law Firm, Charles F. Moses, Dorsey and Whitney, James L. Jones, Billings, argued for Rocky Mountain Oil.

McNamer and Thompson, Mark S. Werner, Billings, argued for Petro-Lewis.

Keefer, Roybal, Hanson, Stacey & Jarussi, Neil S. Keefer, Billings, argued for Buckeye & Balcron.

TURNAGE, Chief Justice.

This is an appeal from an order of the Thirteenth Judicial District, Yellowstone County, granting summary judgment to respondents, Rocky Mountain Oil, Petro-Lewis Corporation, and Buckeye Energy Corporation. Appellant, Nancy Papp, brought suit in strict liability in tort and negligence for the wrongful death of her husband. Alex Papp died of lethal inhalation of hydrogen sulphide (H sub2 S) gas while working for Balcron Oil Company. Appellant claims the facility in which Papp was working and its components were defective and unreasonably dangerous. The court granted summary judgment in favor of defendants. We affirm.

The issues here are:

(1) Whether the District Court properly found that respondents were entitled to summary judgment as a matter of law on the grounds that the claim for strict liability does not fulfill the requirements of Restatement (Second) of Torts, section 402A.

(2) Whether the negligence issue must be dismissed on the grounds that the builders of the separator facility are too remote.

(3) Whether Buckeye Energy Corporation and Balcron Oil are joint venturers in

the State B lease, thus immunizing Buckeye from appellant's negligence claim.

FACTS

In 1951, the State of Montana, State Board of Land Commissioners, entered into an oil and gas lease agreement with Phillips Petroleum Company and Ada Oil Company for property located southwest of Conrad, Montana. Known as the "State B" lease, it was assigned to Rocky Mountain Oil and Minerals, Inc. (Rocky Mountain) in August 1971. On September 1, 1978, Rocky Mountain sold its interest to the Petro-Lewis Corporation, Petro-Lewis Funds, Inc., and Partnership Properties Co. (Petro-Lewis), reserving a 50 percent interest in the leasehold estate. On October 4, 1981, Petro-Lewis sold by way of assignment, bill of sale, and conveyance, oil and gas leases in Pondera County, including the State B lease, to Buckeye Energy Corp. (Buckeye), who, in the same meeting, sold two-thirds interest in its Pondera County oil and gas leases to Balcron Oil Co. (Balcron).

In 1979, Alex Papp was hired by Balcron as an oil and gas pumper and worked for Balcron from 1979 until the date of his death, June 6, 1985. He spent up to 90 percent of his time in the gas fields and 10 percent working in the oil fields. On the State B lease southwest of Conrad was an oil "treater" or "separator" facility. The facility's purpose was to separate water and gas from the crude oil being pumped out of the ground. There are two tanks in the separator facility, the water knock-out tank and the gun barrel tank. An incoming flow line enters the facility from an underground pipe depositing oil into the knock-out tank. The tank separates salt water from the oil and allows hydrogen sulphide gas (H sub2 S) to separate from the crude oil and vent into the atmosphere. Once the initial impurities are separated and siphoned out, the oil is transferred to the gun barrel tank where it is heated to remove any remaining impurities. The treated oil is then put into storage.

Prior to the State B lease acquisition by Rocky Mountain, the treater facility had become worn from use. After the acquisition by Rocky Mountain, Rocky Mountain dismantled and rebuilt the facility and its components, completely enclosing it.

After Balcron took over the lease in 1985, it began replacing the flow pipes entering the facility. Balcron replaced PVC pipe, which was unflexible and brittle, with a more flexible poly pipe. Alex Papp and Larry Ranney were assigned to complete an auxiliary flow line in the facility. On June 6, 1985, shortly after lunch, Papp and Ranney went to finish the flow line. Later that afternoon, Jerry Griggs, another employee of Balcron, went to the facility and found both men overcome by H sub2 S inhalation.

Hydrogen sulphide is a deadly gas, exposure to which can quickly cause death. The building which houses the separator facility had at the time of Papp's death only one door for ingress and egress and no ventilation. There were no signs warning against the H sub2 S gas. Both decedents were aware of the presence of H sub2 S gas in the oil and at least some of its dangers. However, employees of Balcron were given no formal training concerning the dangers of H sub2 S gas.

When Griggs arrived at the treater facility, Papp was found sitting against the east wall with his feet under the steel flow line. Larry Ranney was found twelve feet from Alex Papp against the inside west wall, with a wrench in his hand. Griggs realized that there was the presence of H sub2 S gas in the air. Despite the presence of the gas, he went inside and pulled Alex Papp out. Another employee arrived and pulled out Larry Ranney.

Oil was steadily flowing out of the pipes into the facility and both Papp and Ranney were covered with dirt and oil which had apparently sprayed from a cracked PVC pipe.

After the deaths, employees of Balcron were given formal H sub2 S training. Furthermore, changes in the treater facility were made. These included constructing an additional entrance for cross-ventilation, erecting warning signs of H sub2 S gas, and finishing the replacement of the PVC pipe.

The Occupational Safety and Health Administration (OSHA) issued to Balcron Oil citations for violations of the Occupational Safety and Health Act. Specifically, Balcron was cited for inadequate warning of H sub2 S gas and for not providing respirators for the employees.

Decedent's wife, Nancy Papp, received workers' compensation benefits from the death of her husband, paid out by Balcron Oil. She later filed a complaint on behalf of herself and on behalf of the estate of Alex Papp, against Rocky Mountain, Petro-Lewis, Buckeye, and Balcron, alleging strict liability, negligence, and negligent failure to warn on the basis that the separator facility and its components were defective and unreasonably dangerous. After the defendants answered the complaint, plaintiff took the depositions of three of Papp's fellow employees and filed sets of interrogatories. In February, March, and April, 1987, defendants filed motions for summary judgment. Plaintiff thereafter moved to compel discovery, and filed briefs in opposition to the motions for summary judgment. On December 10, 1987, the District Court granted the motion for summary judgment on the grounds that no dispute as to material facts existed and that the defendants were entitled to summary judgment as a matter of law.

DISCUSSION

The first issue is whether the District Court properly granted summary judgment on the grounds that appellant failed to show that the treater facility was within the Restatement (Second) of Torts, § 402A definition of "product."

"PRODUCT" DEFINITION

The standard of review for granting or denying a motion for summary judgment is the same as that used by the trial court--that is, the moving party is entitled to judgment at law if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P.; Frigon v. Morrison-Maierle, Inc. (Mont.1988), 760 P.2d 57, 45 St.Rep. 1344; Sevalstad v. Glaus (Mont.1987), 737 P.2d 1147, 44 St.Rep 930; Kronen v. Richter (1984), 211 Mont. 208, 683 P.2d 1315; Reagan v. Union Oil Company of California (1984), 208 Mont. 1, 675 P.2d 953.

Appellant alleges that there are material facts in dispute--namely, whether the design and manufacture of the facility and its component parts were defective or whether it was negligent use or misuse of the equipment by Papp himself which caused his death. The reason for the death, according to appellant, was that the treater facility was defective and unreasonably dangerous. The facility lacked ventilation, there was insufficient ingress and egress, and there were no signs warning of the dangers of H sub2 S. Moreover, Papp had received no formal training regarding the dangers of the gas.

To prove that the respondents are liable under strict liability, appellant must demonstrate that the treater facility was a "product" within the § 402A definition, that this product was built and maintained by the respondents, and that the product was in a defective condition unreasonably dangerous. If the appellant is unable to show that the separator facility was a product, then § 402A is inapplicable to this case, and the summary judgment order will be affirmed. Respondents allege that the appellant has not met the requirements of the § 402A strict liability claim. To find strict liability of the seller of the facility, the facility and its component parts must be a "product" for § 402A purposes.

Restatement (Second) of Torts, § 402A states in pertinent part:

(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if (a) the seller is engaged in the business of selling such a product ...

From the time that the second Restatement was published in 1965, courts have...