US AIRWAYS, INC., Plaintiff/Appellant-Cross Appellee, v. QWEST CORPORATION, a Colorado corporation, Defendant/Appellee-Cross Appellant, Skyline Steel, Inc., an Arizona corporation; One Call Locators, Ltd., d/b/a Elm Locating & Utility Services, a Montana corporation, Defendants-Appellees.
No. 1 CA-CV 14-0226.
Court of Appeals of Arizona, Division 1.
Oct. 1, 2015.
361 P.3d 942
Ryley Carlock & Applewhite, PA By Rodolfo Parga, Jr., Andrea G. Lovell, Phoenix,
Audilett Kastner, PC By John J. Kastner, Jr., Tucson, Counsel for Defendant/Appellee One Call Locators, Ltd.
Presiding Judge MAURICE PORTLEY delivered the Opinion of the Court, in which Judge JOHN C. GEMMILL and Judge MICHAEL J. BROWN joined.
OPINION
PORTLEY, Judge:
¶ 1 In this case we address whether a provision in a public utility‘s tariff,1 which limits the utility‘s liability for negligence, may limit a non-customer‘s damages for negligent telecommunication service interruption. US Airways, Inc. (“US Airways“) claims that the superior court erred by granting Qwest Corporation‘s (“Qwest“) motion for summary judgment to limit the amount of damages US Airways could recover for а four-hour telecommunication service interruption. US Airways also appeals the summary judgment granted to One Call Locators, Ltd. dba ELM Locating & Utility Services (“ELM“), the contractor that failed to properly find and mark underground cables. Finally, Qwest cross-appeals the determination that it owed a duty of care to US Airways. For the following reasons, we affirm the judgments.
FACTS AND PROCEDURAL BACKGROUND
¶ 2 US Airways operates a data center in Tempe. In January 2009, the owner of a nearby building entered into a contract with Skyline Steel, Inc. (“Skyline“) to build carports in the parking lot adjacent to the data center. Skyline hired Arizona Blue Stake to locate and mark underground cables and power sources. Blue Stake notified Qwest, the owner of underground cable in the construction area, and Qwest hired ELM to search for and locate the cable.
¶ 3 ELM, however, was unable to locate Qwest‘s cable because Qwest‘s maps were inaccurate. Under its contract with Qwest, ELM was supposed to contact Qwest for further instructions, but did not. Instead, ELM marked the ground with а “no conflict” mark, which inaccurately indicated that the Qwest cable had been located and was outside the excavation site. Skyline saw the marking, began construction and promptly severed the cable serving the US Airways data center, causing a four-hour telecommunication service interruption at the center. The interruption was not to any services Qwest provided to the data center, but only from the telecommunication services of AT & T and Electronic Data Systems.
¶ 4 US Airways sued ELM, then added Qwest and Skyline as defendants. US Airways аlleged the defendants were negligent by failing to use reasonable care to locate, identify, mark, or supervise the excavation around its underground cable; claimed Qwest was vicariously liable for ELM‘s work; and sought nearly two million dollars in damages resulting from the service interruption. Skyline subsequently settled with US Airways.
¶ 5 Qwest moved to dismiss for failure to state a claim pursuant to
¶ 6 ELM subsequently filed a motion for summary judgment arguing it owed no duty to US Airways and that it was entitled to
¶ 7 At the request of US Airways and Qwest, the court entered a judgment in favor of US Airways against Qwest for $586.40, which represented the limited damages US Airways could receive under the federal tariff. The court entered a judgment in favor of ELM. US. Airways appealed both judgments and Qwest filed a cross-appeal.
DISCUSSION
I
¶ 8 US Airways challenges the rulings leading to both judgments. US Airways argues that the court erred by finding that Qwest‘s FCC tariff limited its liability to the $586.40. Specifically, US Airways contends that the tariff provision does not govern claims by non-customers, and its enforcement in this case is unconstitutional and violates public policy. US Airways also claims that the court erred in granting ELM‘s motion for summary judgment and finding that ELM‘s contractual duty to Qwest did not extend to US Airways because ELM voluntarily assumed Qwest‘s duty to identify and properly mark the underground facilities.
A. Motion to Dismiss
¶ 9 We independently review the grant of a motion to dismiss pursuant to
1.
¶ 10 US Airways contends that the tariff does not apply to its negligence claim because it is not a direct customer of Qwest. We disagree.
¶ 11 As a regulated public utility, Qwest‘s rates, rules, fees and responsibilities are governed by tariffs enacted and enforced by the FCC and the ACC.2 See
¶ 12 Generally, Arizona, and other states, have held that a provision in a tariff that limits a public utility‘s liability for ordinary
¶ 13 There are, however, no Arizona cases addressing whether a tariff provision limiting liability for service interruption may be enforced against non-customers.3 In ruling on Qwest‘s motion, the superior court favorably cited a California Court of Appeals case, Colich & Sons v. Pac. Bell, 198 Cal.App.3d 1225, 244 Cal.Rptr. 714 (1988). In Colich, аn excavation subcontractor damaged a telephone company‘s underground cable, which caused service interruption for several of the company‘s customers, including United Airlines. Id. at 1230, 244 Cal.Rptr. 714. United Airlines sued the subcontractor for negligence, and the subcontractor filed a cross-claim for indemnity against the telephone company for failing to properly mark the location of its underground cables. Id. at 1230-31, 244 Cal.Rptr. 714.
¶ 14 The telephone company moved to dismiss the action based on its tariff provision, which limitеd its liability to gross negligence or willful misconduct. Id. at 1231, 244 Cal.Rptr. 714. The trial court granted the motion. Id. On appeal, the court announced that the “limitation of liability provisions in a tariff are binding on the public generally,” including a party who “is not a customer of the telephone utility but instead is a stranger.” Id. at 1230, 244 Cal.Rptr. 714. After examining the tariff provision and California precedent, including Trammell v. Western Union Telegraph Co., 57 Cal.App.3d 538, 551-53, 129 Cal.Rptr. 361 (1976),4 the court held the tariff provision barred an action for ordinary negligence against the telephone company for interruptions “in any of the services or facilities furnished by the Utility,” and was binding on the public gеnerally as an “inherent” part of establishing reasonable
¶ 15 Moreover, Colich determined that the economic damages suffered by United Airlines arose “exclusively from an interruption to its telephone service,” and fell within the protection of the tariff because it fell within “damages arising from ordinarily negligent mistakes, omissions, interruptions, delays, errors or defects in any of the services or facilities furnished by the [u]tility.” Id. at 1235, 244 Cal.Rptr. 714 (internal quotation marks omitted). To hold otherwise, the court stated, would allow an end-run around the tariff and undermine the state‘s public policy to limit utilities’ negligence liability. Id. at 1236, 244 Cal.Rptr. 714. Based on the court‘s holding, there was little doubt that the tariff provision limiting the utility‘s liability for ordinary negligence barred the third-party contractor‘s claim for equitable indemnity. Id.
¶ 16 Here, Qwest‘s FCC tariff expressly limits its liability for service interruptions unless the interruption was the direct result of Qwest‘s willful misconduct. The tariff provision, in relevant part, provides:
2.1.3 LIABILITY
*
*
*
The Company‘s [Qwest‘s] liability, if any, for its willful misconduct is not limited by this Tariff. With respect to any other claim or suit, by a customer or by any others, for damages associated with the installation, provision, preemption, termination, maintenance, repair or restoration of service, the Company‘s liability shall not exceed an amount equal to the proportionate charge for the service for the period during which service was affected.
Qwest Corporation, Tariff F.C.C. No.1 § 2.1.3 (B)(1) (Oct. 2011) (emphasis added). The tariff provision applies to any claim, whether by customers “or by any others,” as long as the claim is for damages “associated with the installation, provision, preemрtion, termination, maintenance, repair or restoration of service.” Id. By including “any others,” the tariff provision includes US Airways. Consequently, because US Airways seeks damages exclusively arising out of an interruption of its telecommunications services, the tariff provision limits Qwest‘s liability for ordinary negligence to the proportionate service charge, even though US Airways was not Qwest‘s direct customer for the interrupted services.
2.
¶ 17 US Airways also argues that enforcement of Qwest‘s tariff provision is unconstitutional and violаtes public policy. Specifically, US Airways argues that enforcing the provision would violate the anti-abrogation clause of the Arizona Constitution.
¶ 18
¶ 19 Although negligence actions are part of Arizona‘s common law, a negligence action against a public utility for service interruption or other economic losses is not. The parties did not cite, and we did not find, any common law cases that allowed a party to sue a utility for negligence for service interruption. To the contrary, twenty years after the Gadsden Purchase, which reconciled
256 U.S. at 572, 41 S.Ct. 584.the outstanding consideration became that of uniformity and equality of rates. Uniformity demanded that the rate represent the whole duty and the whole liability of the company. It could not be varied by agreement; still less could it be varied by lack of agreement. The rate became, not as before а matter of contract by which a legal liability could be modified, but a matter of law by which a uniform liability was imposed. Assent to the terms of the rate was rendered immaterial, because when the rate is used, dissent is without effect.
¶ 20 Our review of the case law reveals that before Arizona became a state there was no common law claim for ordinary negligence against a telegraph company or other public utility for damages exceeding the cost of service. And in 1912, when Arizona became a state, our constitution included a provision creating the ACC and giving the commission the power to “make reasonable rules, regulations, and orders, by which such [public service] corporations shall be governed in the transaction of business within the state.”
¶ 21 Arizona courts have never recognized a common law right for a person to sue a public utility for its ordinary negligence resulting in only economic damage where the utility has a tariff limiting its liability. Thе parties have cited no authority, nor have we found any, for the proposition that a customer or user of a telecommunications line may sue the owner of that line for negligence for service interruption.5 Rather, the tariff‘s provision limiting liability is consistent with the decisions in other jurisdictions, public policy, and
¶ 22 Even if the anti-abrogation clause was applicable, enforcing the tariff provision limiting liability for ordinary negligence would not violate the anti-abrogation clause because the tariff prоvision does not abrogate US Airways’ negligence action, but only limits its damages. See Ramirez v. Health Partners of S. Ariz., 193 Ariz. 325, 334-35, ¶ 32, 972 P.2d 658, 667-68 (App.1998) (finding the Uniform Anatomical Gift Act did not unconstitutionally abrogate an action to recover damages for injuries); see also Cronin v. Sheldon, 195 Ariz. 531, 538, ¶ 34, 991 P.2d 231, 238 (1999) (“We have held that article 18, § 6 precludes abrogation, but not regulation.“); Jimenez v. Sears Roebuck & Co., 183 Ariz. 399, 407, 904 P.2d 861, 869 (1995) (“We long ago held that our constitution permits regulations effectively reducing
¶ 23 US Airways also maintains that Arizona public policy weighs against enforcing the tariff‘s provision limiting its damages. We disagree. “The courts have long recognized that limiting a public utility‘s liability benefits the public interest in the form of lower utility rates.” Re U.S. West, 131 P.U.R.4th at 505 (citing Pilot Indus., 495 F.Supp. at 361). State public utility commissions establish reasonable rates with limited liability exposure in mind. Id. Therefore, public policy does not preclude the enforcement of the tariff provision limiting a public utility‘s liability for ordinary negligence.
B. Motion for Summary Judgment
¶ 24 US Airways argues that the superior court erred by granting ELM‘s motion for summary judgment and finding that ELM owed no duty of care to US Airways. US Airways contends that, by entering into a contract with Qwest, ELM voluntarily assumed Qwest‘s duty to identify and mark Qwest‘s underground facilities.
¶ 25 We review a grant of summary judgment de novo and view the facts in the light most favorable to the non-moving party. Edwards v. Bd. of Supervisors of Yavapai Cty., 224 Ariz. 221, 222, ¶ 18, 229 P.3d 233, 234 (App.2010) (citing Andrews v. Blake, 205 Ariz. 236, 240, ¶ 12, 69 P.3d 7, 11 (2003)). A court may grant summary judgment “if the pleadings, deposition, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”
¶ 26 To establish a claim for negligence, a plaintiff must prove (1) a duty requiring the defendant to conform to a certain standard of care; (2) a breach of that standard of care by the defendant; (3) a causal connection between the defendant‘s conduct and the injury; and (4) actual damages. Gipson v. Kasey, 214 Ariz. 141, 143, ¶ 9, 150 P.3d 228, 230 (2007) (citing Ontiveros v. Borak, 136 Ariz. 500, 504, 667 P.2d 200, 204 (1983)). Whether a duty exists is a matter of law for the court to decide. Gipson, 214 Ariz. at 143, ¶ 9, 150 P.3d at 230 (citing Markowitz v. Ariz. Parks Bd., 146 Ariz. 352, 356, 706 P.2d 364, 368 (1985)). And “absent some duty, an action for negligence cannot be maintained.” Id. at ¶ 11.
¶ 27 Duty is defined as an “obligation, recognized by law, which requires the defendant to conform to a particular standard of conduct in order to protect others against unreasonable risks of harm.” Markowitz, 146 Ariz. at 354, 706 P.2d at 366 (citing Ontiveros, 136 Ariz. at 504, 667 P.2d at 204). A duty of care “may arise from special rеlationships based on contract, family relations, or conduct undertaken by the defendant” or from public policy considerations. Gipson, 214 Ariz. at 145, ¶¶ 18, 22, 150 P.3d at 232 (citing Stanley v. McCarver, 208 Ariz. 219, 221, ¶ 7, 8, 92 P.3d 849, 851 (2004)).
¶ 28 US Airways argues that ELM voluntarily assumed Qwest‘s duty to all users of the Qwest cable to properly locate and mark the location of the cable prior to Skyline‘s excavation. However, as the superior court noted in its ruling, US Airways conflates the issue of duty owed by ELM to Qwest as a direct beneficiary into one owed to US Airways as a third party beneficiary. ELM had no contractual or other relation- ship
¶ 29 Arizona law, following the Restatement, imposes a limited duty of reasonable care on a party who voluntarily undertakes to render services to another:
One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of the other‘s person or things, is subject to liability to the other for physical harm resulting from his failure to exercise reasonable care to perform his undertaking if
(a) his failure to exercise such care increases the risk of such harm, or
(b) the harm is suffered because of the other‘s reliance upon the undertaking.
Restatement (Second) of Torts § 323 (1965); see also Lloyd v. State Farm Mut. Auto. Ins. Co., 176 Ariz. 247, 250, 860 P.2d 1300, 1303 (App.1992) (finding that although section 323 speaks of “physical harm,” the “volunteer may be liable for economic harm as well“). And § 324A provides:
One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third persоn or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if
(a) his failure to exercise reasonable care increases the risk of such harm, or
(b) he has undertaken to perform a duty owed by the other to the third person, or
(c) the harm is suffered because of reliance of the other or the third person upon the undertaking.
Restatement (Second) of Torts § 324A (1965).
¶ 30 Section 323 does not apply because ELM did not undertake any action on behalf of US Airways.6 See Luce v. State Title Agency, Inc., 190 Ariz. 500, 503-04, 950 P.2d 159, 162-63 (App.1997) (finding that § 323 did not apply because defendant title company did not undertake an action on behalf of appellants). And if we assume, without deciding, that US Airways was a third party beneficiary of the agreement between ELM and Qwest, § 324A would not impose a duty on ELM because US Airways only suffered economic harm, not physical harm, as a result of the service interruption. See Gilbert Tuscany Lender, LLC v. Wells Fargo Bank, 232 Ariz. 598, 602, ¶ 18, 307 P.3d 1025, 1029 (App.2013) (declining to apply § 324A to impose a duty because plaintiff did not suffer any physical harm); see also Lips v. Scottsdale Healthcare Corp., 224 Ariz. 266, 268, ¶ 11, 229 P.3d 1008, 1010 (2010) (“Courts have not recognized a general duty to exercise reasonable care for the purely economic well-being of others, as distinguished from their physical safety or the physical safety of their property“) (citing Dan B. Dobbs, The Law of Torts § 452, at 329-31 (Supp. 2009)). Consequently, the superior court correctly found that ELM owed no duty to US Airways, and we affirm the ELM judgment.7
II
¶ 31 On cross-appeal, Qwest argues that the court erred in finding that it owed a duty to US Airways. We review that question of law de novo. Stanley, 208 Ariz. at 221, ¶ 5, 92 P.3d at 851.
¶ 32 In denying US Airways’ motion for partial summary judgment, the court held that Qwest, as the owner of the telecommunications cable, owed a duty to customers and users of the cable, including US Airways. The court relied on public policy considerations reflected in the Underground Facilities Act, commonly called Arizona‘s Blue Stake Law.
¶ 33 Public policy may support the recognition of a duty of care. Gipson, 214 Ariz. at 145, ¶ 23, 150 P.3d at 232. Public policy may be found in statutes and common law. Id. at 146 n. 4, ¶ 24, 150 P.3d at 233 n. 4; e.g., Ontiveros, 136 Ariz. at 509, 667 P.2d at 209 (finding duty based on dram shop statutes); Estate of Maudsley v. Meta Servs., Inc., 227 Ariz. 430, 436, ¶ 21, 258 P.3d 248, 254 (App.2011) (finding duty based on mental health services statutes). A statute may establish a duty of care if it “is designed to protect the class of persons, in which the plaintiff is included, against the risk of the type of harm which has in fact occurred as а result of its violation.” Gilbert, 232 Ariz. at 601, ¶ 14, 307 P.3d at 1028 (quoting Estate of Hernandez v. Ariz. Bd. of Regents, 177 Ariz. 244, 253, 866 P.2d 1330, 1339 (1994)) (quoting W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 36, at 229-30 (5th ed.1984) (internal quotation marks omitted)).
¶ 34 Arizona‘s Blue Stake Law imposes an affirmative obligation on an “underground facilities operator”8 to carefully locate and mark its buried lines within two days of receiving notice of an excavation.
[U]pon receipt of the excavator‘s inquiry, the underground facilities operator shall respond as promptly as practical, but in no event later than two working days, by carеfully marking such facility with stakes or paint or in some customary manner.... No person shall begin excavating before the location and marking are complete or the excavator is notified that marking is unnecessary.... An underground facilities operator may assign any marking or notification obligations required by this subsection to an agent or servant of the underground facilities operator.
Qwest does not dispute that the statute imposes an affirmative obligation to locate and mark its facilities, but argues that it did not оwe a duty to US Airways because the Blue Stake Law authorizes a civil action for damages in favor of only utilities and excavators. See
¶ 35 The question, as explained by our supreme court, is not “whether the legislature established a statutory cause of action, but whether there is a ‘duty’ or ‘obligation’ imposed” by the statute. Ontiveros, 136 Ariz. at 510, 667 P.2d at 210 (finding that a duty of care may be found in a statute silent on the issue of civil liability). Hеre, the Blue Stake Law explicitly imposes a duty on Qwest, as an underground facilities operator, to carefully mark its underground cable. Therefore, the legislation was enacted, in part, to protect end users like US Airways. Accordingly, the superior court did not err by determining that Qwest owed U.S. Airways a duty based on the Blue Stake Law.
CONCLUSION
¶ 36 Based on the foregoing, we affirm the judgments granting Qwest‘s motion to dismiss and ELM‘s motion for summary judgment, and denying US Airways’ cross-motion for summary judgment.