US Airways, Inc. v. Qwest Corp. ( 2015 )

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
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
FILED 10-01-2015
Appeal from the Superior Court in Maricopa County
No. CV2011-001859
The Honorable Arthur T. Anderson, Judge
AFFIRMED
COUNSEL
Gallagher & Kennedy, P.A., Phoenix
By Kevin D. Neal, Jennifer A. Cranston, Liana J. Garcia
Counsel for Plaintiff/Appellant-Cross Appellee
Ryley Carlock & Applewhite, PA, Phoenix
By Rodolfo Parga, Jr., Andrea G. Lovell
Counsel for Defendant/Appellee-Cross Appellant Qwest Corporation
Audilett Kastner, PC, Tucson
By John J. Kastner, Jr.
Counsel for Defendant/Appellee One Call Locators, Ltd.
US AIR v. QWEST et al.
Opinion of the Court
OPINION
Presiding Judge Maurice Portley delivered the Opinion of the Court, in
which Judge John C. Gemmill and Judge Michael J. Brown joined.
P O R T L E Y, 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 a 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
1 A “tariff” is a public document filed by a utility and accepted by a
regulatory commission detailing services being offered; rates and charges
for those services; and related governing rules, regulations, and practices.
64 Am. Jur. 2d (Public Utilities) § 61 (2011). The tariff for telephone utilities
in Arizona is similarly defined at Arizona Administrative Code R14-2-
501(20), and at Arizona Administrative Code R14-2-1102(14) for a
telecommunications company.
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US AIR v. QWEST et al.
Opinion of the Court
supposed to contact Qwest for further instructions, but did not. Instead,
ELM marked the ground with a “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 alleged 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 Arizona Rules of Civil Procedure (“Rule”) 12(b)(6), arguing that Section
2.1.3(B) of its Federal Communications Commission (“FCC”) tariff and
Section 2.4.1(A) of its Arizona Corporation Commission (“ACC”) tariff
barred or significantly limited any liability to US Airways. After briefing
and argument, the court granted Qwest’s motion in part, finding that the
FCC tariff applied and limited Qwest’s liability for its negligence to the
proportionate service charge as defined in the federal tariff. US Airways
filed an unsuccessful motion for reconsideration.
¶6 ELM subsequently filed a motion for summary judgment
arguing it owed no duty to US Airways and that it was entitled to protection
under Qwest’s tariffs. US Airways responded by filing a cross-motion for
partial summary judgment against Qwest and ELM on the issue of
negligence. After briefing, the court found that ELM did not owe US
Airways a duty, granted ELM’s motion for summary judgment, and denied
US Airways’ partial cross-motion as to ELM. The court also denied the
partial cross-motion as to Qwest, but found that as a matter of law Qwest
owed a duty to US Airways.
¶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.
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US AIR v. QWEST et al.
Opinion of the Court
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 Rule 12(b)(6). Coleman v. City of Mesa, 230 Ariz. 352, 355, ¶ 7,
284 P.3d 863, 866 (2012); N. Peak Constr., LLC v. Architecture Plus, Ltd., 227
Ariz. 165, 167, ¶ 13, 254 P.3d 404, 406 (App. 2011). “[W]e assume the truth
of the allegations set forth in the complaint and uphold dismissal only if the
plaintiff[ ] would not be entitled to relief under any facts susceptible of
proof in the statement of the claim.” ELM Ret. Ctr., LP v. Callaway, 226 Ariz.
287, 289, ¶ 5, 246 P.3d 938, 940 (App. 2010) (quoting Mohave Disposal, Inc. v.
City of Kingman, 186 Ariz. 343, 346, 922 P.2d 308, 311 (1996)).
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 47 U.S.C. § 203 (2012); Ariz. Rev. Stat. (“A.R.S.”) § 40-
365; Sommer v. Mountain States Tel. & Tel. Co., 21 Ariz. App. 385, 387, 519
P.2d 874, 876 (1974); Olson v. Mountain States Tel. & Tel. Co., 119 Ariz. 321,
323, 580 P.2d 782, 784 (App. 1978); see also Re U.S. West Comm’s, Inc., 131
2 Qwest’s FCC tariff regulates its interstate services, and its ACC tariff
regulates its intrastate services. The FCC tariff contains provisions limiting
Qwest’s negligence liability to the proportionate service charge. See infra
¶ 16. And section 2.4.1(A) of Qwest’s ACC tariff similarly limits its
negligence liability “in the absence of gross negligence or willful
misconduct.”
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Opinion of the Court
P.U.R.4th 486, 1992 WL 486416 (Ariz. Corp. Comm’n Mar. 27, 1992). Federal
courts examining federal tariffs have held that those tariffs have the force
of law and “conclusively and exclusively control the rights and liabilities
between a carrier and its customer.” MCI Telecomms. Corp. v. Graham, 7 F.3d
477, 479 (6th Cir. 1993); see also MCI Telecomms. Corp. v. Garden State Inv.
Corp., 981 F.2d 385, 387 (8th Cir. 1992). Likewise, we have held that state
public utility tariffs are binding on all customers. See Sommer, 21 Ariz. App.
at 387, 519 P.2d at 876 (“It is well established that where a telephone
company files rules and regulations with the Public Utilities Commission,
such rules and regulations are binding upon all customers w[he]ther or not
they agree to or have knowledge of their existence.”); Olson, 119 Ariz. at
323, 580 P.2d at 784 (upholding tariff limitation of liability).
¶12 Generally, Arizona, and other states, have held that a
provision in a tariff that limits a public utility’s liability for ordinary
negligence in the delivery of its services is reasonable and will be upheld.
See Sommer, 21 Ariz. App. at 387, 519 P.2d at 876; Olson, 119 Ariz. at 324, 580
P.2d at 785; see also Pilot Indus. v. S. Bell Tel. & Tel. Co., 495 F. Supp. 356,
361-62 (D.S.C. 1979) (upholding tariff provision limiting telephone
company’s liability for service interruptions absent gross negligence or
willful or wanton conduct); Warner v. Sw. Bell Tel. Co., 428 S.W.2d 596, 603
(Mo. 1968) (noting that “such limitation provisions are generally valid and
enforceable”); Bulbman, Inc. v. Nev. Bell, 825 P.2d 588, 590 (Nev. 1992)
(adopting position held by most jurisdictions; namely, “upholding validly
promulgated provisions of Public Service Commission tariffs and holding
that the liability limitations contained in such tariffs apply to claims for
simple negligence and breach of contract”); Landrum v. Fla. Power & Light
Co., 505 So. 2d 552, 554 (Fla. Dist. Ct. App. 1987) (same); S. Bell Tel. & Tel.
Co. v. Invenchek, Inc., 204 S.E.2d 457, 460 (Ga. Ct. App. 1974) (same);
Computer Tool & Eng’g v. N. States Power Co., 453 N.W.2d 569, 573 (Minn. Ct.
App. 1990) (same); Garrison v. Pac. Nw. Bell, 608 P.2d 1206, 1211 (Or. Ct.
App. 1980) (same); Sw. Bell Tel. Co. v. Rucker, 537 S.W.2d 326, 331–32 (Tex.
Civ. App. 1976) (same). Courts enforce a tariff provision limiting liability
because a public utility is strictly regulated, and, as a result, its liability
should be defined and limited so that it may be able to provide service at
reasonable rates. Re U.S. West, 131 P.U.R.4th at 505 (citing Pilot Indus., 495
F. Supp. at 361).
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US AIR v. QWEST et al.
Opinion of the Court
¶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 (1988). In Colich, an 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. 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.
¶14 The telephone company moved to dismiss the action based on
its tariff provision, which limited its liability to gross negligence or willful
misconduct. Id. at 1231. 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. After
examining the tariff provision and California precedent, including Trammel
v. Western Union Telegraph Co., 57 Cal. App. 3d 538, 551-53 (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
3 US Airways cites several cases to support its argument that general
principles of contract construction preclude the application of limitation of
liability provisions to non-customers. See Davis v. Prot. One Alarm
Monitoring, Inc., 456 F. Supp. 2d 243 (D. Mass. 2006) (plaintiff, who was not
a party to bank’s contract with alarm company, was not bound by its
limitation of damages clause); Young v. Tri-Etch, Inc., 790 N.E.2d 456 (Ind.
2003) (contractual limitation period did not bar claim of non-party to
contract); Kitz Corp. v. Transcon Shipping Specialists, Inc., 634 N.Y.S.2d 75, 76
(N.Y. App. Div. 1995) (“A party that is a stranger to a contract of carriage is
not bound by limitations of liability in that contract.”). Those cases,
however, are not persuasive because they deal with ordinary contracts
between private companies rather than public utility tariffs.
4 In Trammel, the addressee of a telegram allegedly lost his job because the
telegram recalling him to work was negligently delivered to the wrong
person. 57 Cal. App. 3d at 551-53. The court rejected the argument that a
tariff provision limiting the telegraph company’s liability did not apply to
a third party who had no knowledge of the tariff provision and had not
assented to it, by finding that the tariff provisions “are binding on the public
generally” because they “are an inherent part of the established rates and
have the force and effect of law.” Id. at 551.
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Opinion of the Court
furnished by the Utility,” and was binding on the public generally as an
“inherent” part of establishing reasonable rates for public utilities. Colich,
198 Cal. App. 3d. at 1234-35.
¶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 (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. 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, preemption, 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
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Opinion of the Court
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 violates public policy. Specifically, US
Airways argues that enforcing the provision would violate the anti-
abrogation clause of the Arizona Constitution.
¶18 Article 18, Section 6, of the Arizona Constitution states: “The
right of action to recover damages for injuries shall never be abrogated, and
the amount recovered shall not be subject to any statutory limitation.” The
anti-abrogation clause generally protects the right to file certain claims. In
Lerner v. DMB Realty, LLC, we stated that “to be protected by the anti-
abrogation clause, a cause of action must have existed at common law or
have found its basis in the common law at the time the constitution was
adopted.” 234 Ariz. 397, 406, ¶ 36, 322 P.3d 909, 918 (App. 2014) (quoting
Dickey v. City of Flagstaff, 205 Ariz. 1, 3, ¶ 9, 66 P.3d 44, 46 (2003)) (internal
quotation marks omitted). As a result, in assessing whether a claim is
protected under the anti-abrogation clause, we first must determine
whether the right to file a negligence claim was among “those wrongs
traditionally recognized at common law” including “the right of people to
seek remedy by due course of law for injury to their lands, goods, person, or
reputation.” Boswell v. Phoenix Newspapers, Inc., 152 Ariz. 9, 17-18, 730 P.2d
186, 194-95 (1986) (quoting Proposed Constitution of 1891, art. 2, § 15)
(internal quotation marks omitted).
¶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 border issues between the U.S. and Mexico
following the Treaty of Guadalupe Hildago and created Arizona’s southern
border, the United States Supreme Court determined that a telegraph
company could not be liable for any resulting damages caused by a mistake
in transmission. Primrose v. W. Union Tel. Co., 154 U.S. 1, 12 (1894). After
examining a host of state court decisions which discussed the rules limiting
a telegraph company’s liability for any mis-transmission of messages, the
Court found that any error in the transmission of the plaintiff’s ciphered
message was nothing more than ordinary negligence, and he could only
recover the cost of sending the message but not any lost profits or other
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US AIR v. QWEST et al.
Opinion of the Court
damages because the true message was lost in translation. Id. at 14-34. This
limitation, which had been one of contract, became one of law as a result of
Congressional action in 1910. See W. Union Tel. Co. v. Esteve Bros. & Co., 256
U.S. 566, 571-72 (1921); W. Union Tel. Co. v. Griffin, 41 Ariz. 387, 390-91, 18
P.2d 653, 654 (1933). In fact, in Esteve Bros. the Court stated that for all
telegraph messages sent:
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 a 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.
256 U.S. at 572.
¶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.” Ariz. Const. art. 15, § 3; see State
v. Tucson Gas, Elec. Light & Power Co., 15 Ariz. 294, 138 P. 781 (1914); see also
Ariz. Corp. Comm’n v. State ex rel. Woods, 171 Ariz. 286, 290-94, 830 P.2d 807,
811-15 (1992) (discussing ACC history ). And we have upheld public utility
provisions limiting the utility’s liability for ordinary negligence. Sommer,
21 Ariz. App. at 387-88, 519 P.2d at 876-77; Olson, 119 Ariz. at 323, 580 P.2d
at 784.
¶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. The
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
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Opinion of the Court
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 Article 15, section 3 of the Arizona
Constitution.
¶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 provision 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 a plaintiff’s recovery.”). Because the tariff provision does not bar
US Airways’ negligence claim but only limits its damages, and the
provision does not prevent Qwest from being sued for willful conduct or
gross negligence, see Lindsay v. Cave Creek Outfitters, L.L.C., 207 Ariz. 487,
493, ¶ 21, 88 P.3d 557, 563 (App. 2003) (“[L]imiting recovery does not violate
the anti-abrogation clause unless it ‘completely abolishe[s]’ the cause of
action.”) (quoting Barrio v. San Manuel Div. Hosp., Magma Copper, 143 Ariz.
101, 106, 692 P.2d 280, 285 (1984)), the tariff provision does not violate the
constitutional anti-abrogation provision.
¶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.
5 Although US Airways cites Sprint Communications Co. v. Western
Innovations, Inc. and Mountain States Telephone & Telegraph Co. v. Kelton,
those cases are inapplicable because they involve actions by a line owner
against an excavator for damages. See Sprint, 618 F. Supp. 2d 1101, 1108 (D.
Ariz. 2009); Mountain States, 79 Ariz. 126, 127-28, 285 P.2d 168, 169 (1955).
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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, ¶ 8, 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.” Ariz. R. Civ. P. 56(c)(1) (2012). The determination of whether a
genuine issue of material fact exists is based on the record made in the trial
court. See Edwards, 224 Ariz. at 222, ¶ 8, 229 P.3d at 234 (citing Phoenix
Baptist Hosp. & Med. Ctr., Inc. v. Aiken, 179 Ariz. 289, 292, 877 P.2d 1345, 1348
(App. 1994)).
¶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 relationships 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)).
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¶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 relationship with US Airways
that would establish a duty to protect US Airways from economic harm.
¶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 person 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
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Opinion of the Court
(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. 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.6
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.
6 The economic loss doctrine does not apply here because there was no
contractual relationship between Qwest and US Airways. See Flagstaff
Affordable Hous. Ltd. P’ship v. Design Alliance, Inc., 223 Ariz. 320, 321, 327-28,
¶¶ 1, 39, 223 P.3d 664, 665, 671-72 (2010).
7 Because we find that ELM did not owe a duty to US Airways, we need not
address US Airways’ argument that ELM is not entitled to protection under
Qwest’s FCC and ACC tariffs.
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US AIR v. QWEST et al.
Opinion of the Court
¶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. A.R.S. §§ 40-360.21 to -360.32; see generally Gunnell v. Ariz.
Pub. Serv. Co., 202 Ariz. 388, 390-91, ¶¶ 7-11, 46 P.3d 399, 401-02 (2002).
¶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. Mesa 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 a 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. Section
40-360.22(B) provides, in pertinent part:
[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 carefully marking
such facility with stakes or paint or in some
customary manner. . . . No person shall begin
8 The Act defines “underground facilities operator” in relevant part as:
[A] public utility, municipal corporation, landlord or other
person having the right to bury underground facilities in any
public street, alley, right-of-way dedicated to the public use
or public utility easement . . . .
A.R.S. § 40-360.21.
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US AIR v. QWEST et al.
Opinion of the Court
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 owe a duty to US
Airways because the Blue Stake Law authorizes a civil action for damages
in favor of only utilities and excavators. See A.R.S. § 40-360.28(B).9
However, in order to support a common law duty, a statute need not
explicitly authorize a claim for damages. Gipson, 214 Ariz. at 146, ¶ 27, 150
P.3d at 233.
¶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). Here, 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.
9 Section 40–360.28(B) states:
If a violation of this article results in damage to an
underground facility, the violator is liable to all affected
underground facilities operators and excavators for all
resulting damages proximately caused by the violations,
including economic loss.
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US AIR v. QWEST et al.
Opinion of the Court
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.
:ama
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