veolia-water-indianapolis-llc-city-of-indianapolis-dept-of-waterworks ( 2012 )

FOR PUBLICATION
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEES:
VEOLIA WATER INDIANAPOLIS LLC:
ROBERT A. SMITH
MATTHEW W. MELTON ARY AVNET
PETER A. SCHROEDER Smith & Wade, LLP
CYNTHIA E. LASHER Noblesville, Indiana
Norris Choplin Schroeder LLP
Indianapolis, Indiana
ATTORNEYS FOR APPELLANTS
CITY OF INDIANAPOLIS
DEPARTMENT OF WATERWORKS
AND CITY OF INDIANAPOLIS: FILED
Aug 03 2012, 9:03 am
KARL L. MULVANEY
BRIAN W. WELCH CLERK
of the supreme court,
CARL A. HAYES court of appeals and
tax court
Bingham Greenebaum Doll LLP
Indianapolis, Indiana
ATTORNEYS FOR AMICI CURIAE
INDIANA ASSOCIATION OF CITIES
AND TOWNS AND INDIANA
MUNICIPAL LAWYERS ASSOCIATION:
KAREN L. ARLAND
Ice Miller LLP
Indianapolis, Indiana
JO ANGELA WOODS
Indiana Association of Cities and Towns
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
VEOLIA WATER INDIANAPOLIS LLC, )
CITY OF INDIANAPOLIS DEPARTMENT OF )
WATERWORKS, and CITY OF )
INDIANAPOLIS, )
)
Appellants-Defendants, )
)
vs. ) No. 49A04-1108-PL-412
)
NATIONAL TRUST INSURANCE COMPANY )
and FCCI INSURANCE COMPANY a/s/o )
ULTRA STEAK, INC. d/b/a TEXAS )
ROADHOUSE, )
)
Appellees-Plaintiffs. )
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable Heather A. Welch, Judge
Cause No. 49D12-1010-PL-44624
August 3, 2012
OPINION - FOR PUBLICATION
CRONE, Judge
Case Summary
On January 4, 2010, there was a fire at a Texas Roadhouse restaurant (―the
Restaurant‖) in Indianapolis.1 The Indianapolis Fire Department responded promptly, but
discovered that the fire hydrants in the surrounding four blocks were frozen. This allegedly
1
The Restaurant is owned by Ultra Steak, Inc.
2
caused a delay of forty-five minutes in fighting the fire. Due to the delay, the Restaurant
building was a total loss.
The Restaurant was insured by National Trust Insurance Company and FCCI
Insurance Company (collectively, ―the Insurers‖). On October 7, 2010, the Insurers filed suit
against the City of Indianapolis and its Department of Waterworks (collectively, ―the City‖),
as well as Veolia Water Indianapolis LLC (―Veolia,‖ collectively with the City, ―the
Appellants‖), which at the time had a contract to operate the City‘s waterworks. The
complaint alleged that the fire hydrants were frozen because the Appellants sold water from
the hydrants to private companies, which had failed to properly close the hydrants after using
them. The City filed a motion to dismiss, and Veolia filed a motion for judgment on the
pleadings. Both motions claimed that the Appellants were entitled to immunity. The trial
court denied the motions in part, concluding that the Appellants‘ commercial sale of water
took their actions outside the scope of the common law immunity for firefighting. The trial
court also found that the Insurers were third-party beneficiaries of Veolia‘s contract with the
City.
We conclude that both the City and Veolia are entitled to common law immunity,
because the common law rule turns on the purpose for which the water is being used, not the
underlying cause of the lack of water. We further conclude that the explicit language of the
City‘s contract with Veolia disavows any intent to create third-party beneficiaries. Therefore,
we reverse.
3
Facts and Procedural History
The Insurers filed a seventeen-count complaint against the Appellants, all based on
the allegation that the hydrants froze due to use by private companies and/or unauthorized
individuals who failed to properly close the hydrants.2 The Insurers alleged that the
Appellants did not supervise third-party use of the hydrants. The Insurers further alleged that
the Appellants were aware that unauthorized individuals would steal water from the hydrants,
yet failed to take measures to prevent unauthorized use. The Insurers also alleged that they
are third-party beneficiaries to the City‘s contract with Veolia, which the parties refer to as
the ―Management Agreement.‖
In a recent case involving Veolia, we described Veolia‘s contractual relationship
with the City as follows:
For over one hundred years, the City of Indianapolis‘s (―City‘s‖) water
utility was operated by the Indianapolis Water Company (―IWC‖), a private
company, through a franchise granted by the City. In 2001, the City created
the Department of Waterworks (―the Department‖); that same year, the City
purchased IWC‘s assets and transferred management of the water utility to the
Department.
On March 21, 2002, the Department and U.S. Filter Operating Services,
Inc., entered into a Management Agreement, transferring responsibility for the
operation, management, and maintenance of the water utility to U.S. Filter.
U.S. Filter later assigned the Management Agreement to USFilter Indianapolis
Water, LLC, and this company later changed its name to Veolia. Under the
Management Agreement, the City pays Veolia approximately $40 million per
year, plus additional sums if Veolia meets certain incentives. Veolia,
2
Count 1 alleged that Veolia was negligent in renting and in failing to supervise use of the hydrants.
Count 2 alleged that Veolia breached its contract with the City. Count 3 alleged that Veolia breached the
implied warranty of merchantability. Count 4 alleged that Veolia breached the implied warranty of fitness for a
particular purpose. Count 5 alleged that Veolia breached a special duty. The remaining counts stated the same
claims against the Department of Waterworks and the City and also alleged that the Department of Waterworks
and the City were vicariously liable for Veolia‘s actions.
4
incorporated in Delaware, is a wholly-owned subsidiary of Veolia Water North
America …, which in turn is a subsidiary of Veolia Environment …, a French
corporation with multi-billion dollar annual revenues.
Harrison v. Veolia Water Indianapolis, LLC, 929 N.E.2d 247, 248-49 (Ind. Ct. App. 2010),
trans. denied.3
The City describes the process for selling water from the hydrants as follows:
In the ordinary course of operating the water utility, Veolia licensed access to
the City‘s hydrants to the City‘s customers who had a need for bulk water
[such as pool or landscaping companies] so that those customers could
purchase water by accessing hydrants located throughout the waterworks
system. Sales through the hydrants were accomplished via temporary meters
issued to the City‘s customers by Veolia. This program permitted licensees
with proper equipment to access hydrants and draw off water from the
hydrants for commercial purposes.
City‘s Br. at 5 (citations and footnotes omitted).4
On January 3, 2011, the City filed a motion to dismiss the Insurers‘ complaint on the
basis that the City was entitled to statutory immunity for the performance of a discretionary
function and common law immunity for firefighting. On the same date, Veolia filed an
answer and motion for judgment on the pleadings, which argued that Veolia was entitled to
3
According to Veolia‘s brief, in 2011, the City sold its water utility to Citizens Energy Group and
passed an ordinance dissolving the Department of Waterworks.
4
The City and Veolia both assert that all revenue, from the hydrants or otherwise, went to the City and
not Veolia. See Veolia‘s Br. at 3 n.4 (―Although all allegations in the Insurers‘ Complaint are taken as true for
purposes of this appeal, all revenue from the sale of water regardless of the point of sale at all times relevant to
this action went to the [City] and not to [Veolia].‖); City‘s Br. at 5 n.6 (―While licensing of access to hydrants
generated revenue, it is not correct, as Plaintiffs allege, that Veolia made a profit from these activities. All
revenue from the sale of water went to the [City]. Veolia was paid a base fee, a performance bonus, and was
given the opportunity to make money on capital improvements.‖).
5
common law immunity to the same extent as the City.5 On March 11, 2011, the trial court
heard arguments on the motions. On June 10, 2011, the trial court issued an order partially
granting and partially denying the City‘s motion to dismiss, as well as an order partially
granting and partially denying Veolia‘s motion for judgment on the pleadings. The court
found that the City was not entitled to immunity under the Indiana Tort Claims Act (―the
ITCA‖), which immunizes the ―performance of a discretionary function.‖ Ind. Code § 34-
13-3-3(7). Specifically, the court found that the City‘s policy had been established by the
Management Agreement, which required Veolia to maintain the hydrants, and the City had
simply failed to execute that policy. The court further found that the City was not entitled to
common law immunity because the ―commercial sale of water [was] alleged to be the
proximate cause for the failure of the infrastructure,‖ and that activity is ―outside the narrow
scope of common law immunity granted … for firefighting purposes.‖ Appellants‘ App. at
27. However, the court concluded that the City was entitled to common law immunity to the
extent that the complaint was based on allegations of unauthorized use of the hydrants.
The trial court likewise found that Veolia had common law immunity as to the
unauthorized use of hydrants, but not with respect to the commercial sale of water. In the
order on Veolia‘s motion, the trial court highlighted several portions of the Management
Agreement, then summarized them as follows:
5
Veolia does not contend that it is entitled to immunity under ITCA. See Harrison, 929 N.E.2d at
252 (holding that Veolia was not a governmental entity or political subdivision for purposes of ITCA); accord
Metal Working Lubricants Co. v. Indianapolis Water Co., 746 N.E.2d 352, 355 (Ind. Ct. App. 2001) (stating
in dicta that Indianapolis Water Co. was not a governmental entity as defined by ITCA).
6
The Court, after reviewing the contract, finds that Veolia contracted
specifically to: 1) provide full and complete; 2) accurate and safe water
services to the citizens; 3) to purchase insurance to provide against all property
damage that results from their failure to do so for property of others; and 4) to
purchase insurance that has a waiver of governmental immunity. All of these
contract terms could only be, and are intended to be, for the benefit of third
parties.
Id. at 52. Thus, the court concluded that the Insurers were third-party beneficiaries to the
Management Agreement.
The City and Veolia each filed motions to reconsider, and alternatively, motions to
certify the trial court‘s June 10, 2011 orders for interlocutory appeal. The trial court denied
the motions to reconsider, but granted the motions to certify the orders for interlocutory
appeal. On September 21, 2011, we accepted jurisdiction of the appeal.6
Discussion
On appeal, the City argues that it is entitled to immunity pursuant to both the ITCA
and the common law. Veolia argues that it is entitled to common law immunity and that the
trial court erred by determining that the Insurers were third-party beneficiaries to the
Management Agreement. ―The party seeking immunity bears the burden of establishing the
immunity. If the evidence permits conflicting reasonable inference as to material facts, the
6
We have also permitted the Indiana Association of Cities and Towns and the Indiana Municipal
Lawyers Association to file a brief in support of the Appellants. According to their brief, the Indiana
Association of Cities and Towns is a voluntary association of most of the State‘s cities and towns, and the
Indiana Municipal Lawyers Association is a voluntary organization of approximately 348 municipal, county,
and local government lawyers.
We held oral argument on June 19, 2012, in Indianapolis. We commend counsel on the quality of
their advocacy.
7
governmental unit has failed to establish immunity.‖ Bules v. Marshall Cnty., 920 N.E.2d
247, 250 (Ind. 2010) (citation omitted).
Standards of Review
The City appeals from the denial of a motion to dismiss for failure to state a claim
upon which relief can be granted. Our review of a trial court‘s grant or denial of a motion to
dismiss pursuant to Indiana Trial Rule 12(B)(6) is de novo. Putnam Cnty. Sheriff v. Price,
954 N.E.2d 451, 453 (Ind. 2011). A motion to dismiss tests the legal sufficiency of the
complaint; that is, whether the allegations in the complaint establish any set of circumstances
under which a plaintiff would be entitled to relief. Trail v. Boys & Girls Clubs of Nw.
Indiana, 845 N.E.2d 130, 134 (Ind. 2006). We accept as true the facts alleged in the
complaint, and consider the pleadings in the light most favorable to the plaintiff, drawing
every reasonable inference in favor of the non-moving party. Id. However, we need not
accept as true allegations that are contradicted by other allegations or exhibits attached to or
incorporated in the pleading. Id.Veolia appeals from a motion for judgment on the pleadings pursuant to Indiana Trial
Rule 12(C). For purposes of the motion, Veolia is deemed to have admitted all well-pleaded
facts. Nat’l R.R. Passenger Corp. v. Everton by Everton, 655 N.E.2d 360, 363 (Ind. Ct. App.
1995), trans. denied. ―Like a motion to dismiss for failure to state a claim pursuant to Trial
Rule 12(B)(6), a Trial Rule 12(C) motion attacks the legal sufficiency of the pleadings.‖ Id.The standard of review is also de novo, and we draw all reasonable inferences in favor of the
non-moving party. Id. ―A judgment on the pleadings is proper only when there are no
8
genuine issues of material fact and when the facts shown by the pleadings clearly establish
that the non-moving party cannot in any way succeed under the facts and allegations therein.‖
Eskew v. Cornett, 744 N.E.2d 954, 956 (Ind. Ct. App. 2001), trans. denied. To the extent
that interpretation of a contract is involved, ―we may look to both the complaint and the
attached contract for purposes of determining the appropriateness of the court‘s ruling on the
motion for judgment on the pleadings.‖ Id. at 957 (noting that Ind. Trial Rule 9.2(A) requires
a written document upon which the action is premised to be attached to the complaint).
When allegations of a pleading are inconsistent with terms of a written contract attached as
an exhibit, the terms of the contract must prevail over a contrary allegation. Id.Immunity: Historical Background
The original common law rule in Indiana was that governmental units were immune
from liability for their torts unless the court had recognized an exception. Gates v. Town of
Chandler, 725 N.E.2d 117, 118 (Ind. Ct. App. 2000), opinion on reh’g, trans. denied. As
early as 1867, our supreme court recognized the government‘s immunity for claims relating
to the adequacy of fire protection. See Brinkmeyer v. City of Evansville, 29 Ind. 187, 193
(1867) (―It could not have been intended by the legislature, in conferring on the common
council power to organize a fire department, that they should thereby undertake, absolutely,
to prevent loss by fire in all cases, or become responsible as insurers in case of failure.‖).
This included immunity from claims that there was an insufficient supply of water or water
pressure. Fitch v. Seymour Water Co., 139 Ind. 214, 218, 37 N.E. 982, 983-84 (1894).
9
In 1972, our supreme court decided Campbell v. State, 259 Ind. 55, 284 N.E.2d 733(1972), in which it ―reversed the common law presumption to provide that governmental
units would be liable for any ‗breach of a duty owed to a private individual,‘ that is to say, the
duty to use ordinary and reasonable care under the circumstances.‖ Gates, 725 N.E.2d at 118(quoting Benton v. City of Oakland City, 721 N.E.2d 224, 227 (Ind. 1999)). However,
Campbell identified three situations under which common law immunity would be retained:
(1) where a city or state fails to provide adequate police protection to prevent
crime; (2) where a state official makes an appointment of an individual whose
incompetent performance gives rise to a suit alleging negligence on the part of
the state official for making such an appointment; and (3) where judicial
decision-making is challenged.
Id. at 118-19. In Benton, our supreme court clarified Campbell by stating:
We hold that Campbell is properly applied by presuming that a governmental
unit is bound by the same duty of care as a non-governmental unit except
where the duty alleged to have been breached is so closely akin to one of the
limited exceptions (prevent crime, appoint competent officials, or make correct
judicial decisions) that it should be treated as one as well.
721 N.E.2d at 230.
In 1974, the General Assembly responded to Campbell by enacting the ITCA. The
ITCA identifies twenty-four situations in which the State, its agencies, and its political
subdivisions enjoy immunity. Ind. Code § 34-13-3-3. At issue in this case is paragraph 7,
which provides immunity for the ―performance of a discretionary function.‖
I. Immunity under ITCA
―Ordinarily, the first step in determining governmental immunity is to look at the Tort
Claims Act and decide if the entity is entitled to statutory immunity.‖ Metal Working
10
Lubricants Co. v. Indianapolis Water Co., 746 N.E.2d 352, 358 (Ind. Ct. App. 2001). If it is
determined that the governmental defendant is not immune under the ITCA, the court then
considers whether common law immunity exists. Id. The ITCA was enacted in derogation
of the common law as established by Campbell, and therefore must be strictly construed
against limitations on a claimant‘s right to bring suit. Harrison, 929 N.E.2d 247, 251 (Ind.
Ct. App. 2010).
Veolia concedes that it is not entitled to immunity under the ITCA. The City,
however, claims that it is immune pursuant to Indiana Code Section 34-13-3-3(7), which
provides immunity for the ―performance of a discretionary function.‖ In Peavler v. Board of
Commissioners of Monroe County, our supreme court adopted the planning/operational test
for determining whether an act is discretionary:
Under the planning/operational dichotomy, the type of discretion which may
be immunized from tort liability is generally that attributable to the essence of
governing. Planning activities include acts or omissions in the exercise of a
legislative, judicial, executive or planning function which involves formulation
of basic policy decisions characterized by official judgment or discretion in
weighing alternatives and choosing public policy. Government decisions
about policy formation which involve assessment of competing priorities and a
weighing of budgetary consideration or the allocation of scarce resources are
also planning activities.
528 N.E.2d 40, 45 (Ind. 1988) (citations omitted). ―The critical inquiry is not merely whether
judgment was exercised but whether the nature of the judgment called for policy
considerations.‖ Id. (internal quotation omitted).
The City compares this case to Lamb v. City of Bloomington, 741 N.E.2d 436 (Ind. Ct.
App. 2001). Lamb concerned a fire at a Bloomington apartment complex that resulted in one
11
fatality and substantial property damage. The residents filed a complaint against the city, the
mayor, the fire chief, and the fire department. The defendants filed a motion to dismiss,
which the trial court granted. The residents appealed and we affirmed. After a lengthy
discussion of common law immunity, we noted the pertinent provisions of the ITCA, and
then found that each claim was barred by the ITCA, the common law, or both. Specifically,
the following claims were found to be barred by Indiana Code Section 34-13-3-3(7):
Count III, obstruction of firefighters‘ ability to act, alleges that before
the fire, [the mayor and the fire chief] were informed that one of the fire trucks
had ―serious defects,‖ yet neither remedied the ―dangerous situation.‖ The
allegedly defective truck was one of the vehicles sent to the … fire. This count
was properly dismissed as pertaining to a discretionary function under Indiana
Code Section 34-13-3-3(7)[7].… Likewise, Count IV, which alleges that
Bloomington, [the fire department], and [the fire chief] provided negligent
instruction and/or training of the firefighters, was properly dismissed as
relating to a discretionary function.
….
Count VI, negligent maintenance of equipment, and Count VII,
intentional failure to maintain equipment, allege that Bloomington and BFD
―purchased certain and specific equipment to be used in the performance of
‗fire protection‘ and ‗fire suppression‘ in and around the City of
Bloomington.‖ These counts further allege that the Appellees ―undertook a
policy decision not to make needed repairs‖ to the equipment, hence resulting
in damages to the Appellants. Both the common law, see Gates, 725 N.E.2d at
119-20, and Indiana Code Section 34-13-3-3(7) provide immunity to the
Appellants for this discretionary policy decision.
….
Count X, negligent performance of duties as fire chief, alleges that [the
fire chief] failed to arrive on the scene of the … fire in a timely manner, should
have removed defective equipment from active duty, made ill-advised
7
At the time that Lamb was decided, the discretionary function provision was codified as subsection
6. We have replaced the outdated citations with current citations for ease of reading.
12
expenditures on training, clothing, and vehicles, and has been ineffective in
increasing the number of firefighters. [The fire chief] is immune from suit for
these actions in part by the common law and in part by Indiana Code Section
34-13-3-3(7). That is, some of the actions constitute the failure to provide
adequate fire protection, while others represent discretionary acts.
Id., 741 N.E.2d at 441-42.
The City argues that the Insurers‘ claims are similar to the Lamb plaintiffs‘ claim that
the city was negligent in its failure to maintain and repair equipment. The City argues that,
however characterized, the plaintiffs‘ claims relate to the formulation of policy, weighing of
competing priorities, and allocation of scarce government resources.
The Insurers distinguish Lamb as follows:
This is not a policy decision as in Lamb, where the City may decide [that it]
cannot, in tough economic times, maintain the waterworks infrastructure,
which is necessary to the core government function of fire protection. Here,
the City did not consciously make a decision to disregard the third-party
vendor use of the hydrants due to lack of funds or any other reason. To the
contrary, the City actually contracted for a high standard of care regarding its
infrastructure from Veolia, as evidenced by the terms of the Management
Agreement…. Thus the City simply failed to require Veolia to follow the
terms of the Management Agreement or pre-determined policy. The City‘s
negligence relates only to the failed execution of pre-determined policy;
therefore, the City has failed to show that it is entitled to immunity under IC
34-13-3-3(7).
Appellees‘ Br. in Response to the City at 13.8
The reasoning of Lamb provides us with little guidance. Although Lamb was decided
after Peavler, it does not mention the planning/operational test, but summarily labels certain
8
The Insurers have filed two appellees‘ briefs, one in response to the City and one in response to
Veolia. The Appellate Rules do not explicitly allow or prohibit the filing of separate briefs to respond to
different parties. Our preference would have been for the Insurers to file a single brief and to request
permission to file an oversized brief if necessary.
13
actions as ―discretionary,‖ referencing the ITCA. Although the issue of statutory immunity is
generally resolved before considering common law immunity, in this case, there is a wealth
of authority concerning the common law issue and very little guidance on the statutory issue.
In this case, we feel it is prudent to resolve the case under the common law rather than the
ITCA.
II. Common Law Immunity
A. Immunity for the City
As discussed above, our supreme court abolished common law immunity with three
exceptions:
(1) where a city or state fails to provide adequate police protection to prevent
crime; (2) where a state official makes an appointment of an individual whose
incompetent performance gives rise to a suit alleging negligence on the part of
the state official for making such an appointment; and (3) where judicial
decision-making is challenged.
Gates, 725 N.E.2d at 118-19 (citing Campbell, 259 Ind. at 62-63, 284 N.E.2d at 737)). There
is also common law immunity for the breach of duties that are so closely akin to one of the
limited exceptions that they should be treated as exceptions as well. Id. at 119 (citing
Benton, 721 N.E.2d at 230).
The first appellate decision after Campbell to address common law immunity for fire
protection was Boyle v. Anderson Fire Fighters Ass’n Local 1262, AFL-CIO, 497 N.E.2d
1073 (Ind. Ct. App. 1986), trans. denied. That case concerned a fire that occurred in
Anderson while the city‘s firefighters were on strike. A few non-striking firefighters
responded, but were unable to control the fire. They called for assistance from nearby fire
14
departments, but the striking firefighters initially prevented them from arriving at the site of
the fire. Further adding to the chaos, one of the hydrants near the site of the fire was
inoperable. While the fire was blazing, most of the property owners in the area were not
allowed to enter to retrieve personal property. In the end, the fire destroyed half a city block.
The landowners sued the city, the striking firefighters, and their unions. The trial court
granted summary judgment for the city, and we affirmed, holding that the City was entitled to
both statutory and common law immunity.9 497 N.E.2d at 1077-78. As to common law
immunity, the Boyle court stated:
Although the issue has not been addressed in many years, the common law in
Indiana has long recognized that a municipality is not liable to an owner of
property destroyed by fire even though the destruction may have resulted from
the City‘s failure to provide suitable equipment or an adequate supply of water
with which to fight the fire, i.e., insufficient water pressure, insufficient
lengths of hose, or improperly functioning hydrants. Larimore v. Indianapolis
Water Co.[,197 Ind. 457, 151 N.E. 333 (1926)]; Trustees v. New Albany
Waterworks[, 193 Ind. 368, 140 N.E. 540 (1923)]; Robinson v. City of
Evansville[, 87 Ind. 334 (1882)]. Nor is a city subject to liability for
negligently failing to timely provide an adequate number of fire fighters who
are competent to fight the fire and fit for duty. Robinson, supra. Thus, under
the common law, the City cannot be held liable for its failure to maintain the
fire hydrant or for its failure to provide an adequate alternative method for
fighting the fire ….
Id. at 1077.
The next decision to consider common law immunity for firefighting was Gates. In
that case, Dennis and Shelley Gates filed suit against the Town of Chandler Water
Department based on the department‘s failure to maintain an adequate supply of water and
9
As to statutory immunity, the Boyle court employed an analysis based on the
discretionary/ministerial test, which our supreme court later rejected in favor of the planning/operational test.
15
water pressure to extinguish a fire at their home. The trial court granted summary judgment,
and we affirmed. Gates framed the issue as ―whether the duty is so closely akin to one of the
limited exceptions (prevent crime, appoint competent officials, or make correct judicial
decisions) identified in Campbell that it should also be recognized as an exception.‖ 725
N.E.2d at 119. Gates held that fire protection was closely akin to police protection:
Both services are essential for public safety, which is the primary function of
government. Both are required to sustain a well-ordered society that values
and protects the lives and property of its citizens. Police and fire protection
rank together in the essential nature of the services provided. Government
provides fire protection as an essential public service because fire, like crime,
is a common enemy.
Our decision today is consistent with Indiana common law as it existed
both before and after Campbell which recognized that some vestige of
governmental immunity must be retained. Essentially, we affirm the long
recognized common law rule that a municipality is not liable to an owner of
property destroyed by fire even though the destruction may have resulted from
the failure to provide suitable equipment or an adequate supply of water with
which to fight the fire, i.e., insufficient water pressure, insufficient lengths of
hose, or improperly functioning hydrants. Nor is a municipality subject to
liability for negligently failing to timely provide an adequate number of fire
fighters who are competent to fight the fire and fit for duty.
16
Id. (citations omitted).10
The Lamb case discussed above quoted this portion of Gates with approval and held
that several claims were barred by common law immunity: negligence in failing to timely
respond to a fire alert, negligence in failing to extinguish the fire, failing to maintain
equipment, negligence in failing to seek assistance from other fire departments, negligence
on the part of the fire chief in the performance of her duties, and negligent staffing
procedures and numbers. 741 N.E.2d at 441- 42.
Gates was again cited with approval in O’Connell v. Town of Schererville, 779 N.E.2d
16 (Ind. Ct. App. 2002). O’Connell concerned a fire that occurred in an apartment complex.
Firefighters attempted to connect to three different hydrants, but none of them had sufficient
water pressure to fight the fire. As a result, one building was completely destroyed, and
another was partially destroyed. The residents sued the town. The trial court granted the
10
Gates also relied on the following dicta in Benton that the provision of emergency services was
similar to the exception in Campbell for crime prevention:
We continue to believe that the duty to provide emergency services implicated in
Mullin [v. Municipal City of South Bend, 639 N.E.2d 278 (Ind. 1994) (adopting the reasoning
of City of Rome v. Jordan, 426 S.E.2d 861, 863 (Ga. 1993))] is sufficiently similar to the
―prevent crime‖ exception in Campbell to raise the possibility of immunity. And we continue
to believe that the City of Rome test is appropriate for determining whether a governmental
unit qualifies for immunity for failure to dispatch emergency services (but only for that
purpose).
We acknowledge that this point appears to have been rendered moot by the passage of
subsection (18) of Ind. Code § 34-4-16.5-3 [now Ind. Code § 34-13-3-3(19)], which grants a
governmental entity immunity under the Tort Claims Act for the operation of ―an enhanced
emergency communication [or ‗911‘] system.‖ Accord Barnes v. Antich, 700 N.E.2d 262,
266 n.6 (Ind. Ct. App. 1998) (holding that ―a plain reading of Ind. Code 34-4-16.5-3(18)
leads inescapably to the conclusion that the legislature intended to afford immunity from
claims arising out of a municipality‘s operation and use of [a ‗911‘ service]‖), transfer denied.
Benton, 721 N.E.2d at 231 n.12.
17
town‘s motion for summary judgment on the basis of common law immunity for firefighting,
and we affirmed. The O’Connell panel found that the case was ―strikingly similar‖ to Gates.
Id. at 20.
The residents attempted to frame the issue in terms of the town‘s maintenance of
infrastructure:
Relying on City of Huntingburg v. Morgen, 90 Ind. App. 573, 162 N.E. 255(1928), they contend that because the negligence complained of was not the
result of emergency personnel or firefighters extinguishing the fire, but instead
was inadequate pressure from actual fire hydrants, this case concerns the
Town‘s infrastructure.
Id. at 19.
In City of Huntingburg, the plaintiff owned commercial greenhouses, and the city
failed to supply him with sufficient water pressure for his business needs. The plaintiff sued
the city for the resulting damage to his plants. The city claimed that it was immune, but we
disagreed, distinguishing between water supplied for fire protection and water supplied for
consumption:
It is generally held that a municipal corporation, in enacting an
ordinance for protection against fire and in the maintenance of a fire
department and system of water works for that purpose, acts in a governmental
capacity in the general interest of the community, and that the municipality is
not liable to a property owner for damages caused by fire. Nor is a public
utility company, owning and operating a system of water works for the
furnishing of water to private consumers, and for the protection of the public
from fire, under a franchise or contract with the municipality, liable to a
property owner for loss of property by fire caused by insufficient water
pressure. A city maintains waterworks for the twofold purpose of fire
protection and for supplying water to its inhabitants for daily consumption. As
to the city‘s liability for the default or negligence of its employees in
maintaining such waterworks, there is a clear line of demarcation between its
liability, depending on the purpose for which the water system is being used.
18
The first purpose, that of fire protection, is clearly a discretionary or
governmental act. For the default or negligence of the city‘s employees in
relation to fire protection the city is not liable. However, in supplying water to
the inhabitants of the city for daily consumption, the well-established rule is
that the city is liable on the same principle that a private corporation engaged
in the same business is liable.
City of Huntingburg, 90 Ind. App. at 577-78, 162 N.E. at 257.
O’Connell distinguished City of Huntingburg, stating: ―[T]he malfunctioning
hydrants do not present an issue of private, commercial use of water. Rather, our facts are
the opposing comparison used by the City of Huntingburg court as an example of well-settled
immunity: supplying water to the public for fire protection.‖ 779 N.E.2d at 19. Therefore,
we held that the town had common law immunity. Id. at 21.
In City of Peru v. Lewis, 950 N.E.2d 1 (Ind. Ct. App. 2011), trans. denied, we again
followed Gates. In that case, Tracy Lewis called 911 and reported that her house was on fire
and that she and her children were inside, but would attempt to get out of the house. When
the fire department arrived, it did not immediately search for people inside the burning house.
One child died in the fire, and Lewis and the rest of her children were injured. Lewis sued
the city, and the city moved for summary judgment on the grounds that it was immune from
suit. The trial court denied summary judgment, but we reversed. After discussing Gates and
Lamb, we stated:
When examining the various circumstances that were presented in these cases,
we acknowledge that there is virtually no limit to the types of claims that
citizens might advance concerning municipal inadequacies in providing
adequate fire protection, such as adequate staffing, inadequate training, etc.
As discussed above, the Lewises contend that the fire department was
negligent in supplying fire protection without making a search for fire victims
19
a priority; by favoring ventilation of the house instead of searching for victims;
and by not communicating to firefighters that people might be in the house,
which communication might have caused them to make potential rescue a
more urgent priority once the first floor fire was under control. In our view,
these allegations—however characterized—fall within the ambit of the failure
to provide adequate fire protection and are subject to common law immunity in
accordance with Lamb and Gates….
Id. at 6. Therefore, we held that the trial court should have granted the city‘s motion for
summary judgment. Id.The Insurers assert that their precise argument – that the lack of water was caused by
commercial activity – has not been addressed before. Although they appear to be technically
correct, Indiana decisions regarding firefighting immunity have long drawn a clear line based
on the purpose for which the water is being used – for firefighting or for other purposes. See,
e.g., City of Huntingburg, 90 Ind. App. at 578, 162 N.E. at 257 (―As to the city‘s liability for
the default or negligence of its employees in maintaining such waterworks, there is a clear
line of demarcation between its liability, depending upon the purpose for which the water
system is being used.‖); Gates, 725 N.E.2d at 119 (noting that ―Campbell is properly applied
by presuming that a governmental unit is bound by the same duty of care as a non-
governmental unit‖ unless the duty allegedly breached ―is so closely akin to one of the
limited exceptions (prevent crime, appoint competent officials, or make judicial decisions)
that it should be treated as one as well‖ and concluding that firefighting was such an
exception); Metal Working, 746 N.E.2d at 359 (―It is not the provision of water per se that
entitles IWC to immunity; it is the narrow function of providing water and equipment for fire
protection services that entitles IWC to the limited common law immunity granted by
20
Campbell.‖); O’Connell, 779 N.E.2d at 19 (―Our case is distinguishable from City of
Huntingburg because the malfunctioning hydrants do not present an issue of private,
commercial use of water. Rather, our facts are the opposing comparison used by the City of
Huntingburg court as an example of well-settled immunity: supplying water to the public for
fire protection.‖); Lamb, 741 N.E.2d at 439 (rejecting plaintiffs‘ argument that ―many of the
counts in their complaint ‗pertained to matters set in place prior to the ―fire‖ in question and
are not, in and of themselves, pertaining to actions taken on the day of the fire‘‖). None of
these cases suggest that the underlying cause of the lack of water to fight a fire is pertinent to
the immunity analysis. We must agree with the City that the factual scenario in this case fits
squarely within the immunity that we have afforded to governmental entities for fire
protection services. Therefore, we reverse the trial court‘s ruling that the City is not entitled
to common law immunity.
B. Common Law Immunity for Private Entities
Relying on Metal Working, Veolia contends that it is entitled to common law
immunity to the same extent as the City. In Metal Working, a fire started at Metal Working‘s
facility. A nearby shut-off valve had been closed, leaving an inadequate supply of water to
fight the fire. Metal Working sued the Indianapolis Water Company for negligent failure to
inspect and maintain the water mains servicing the hydrants in the vicinity of Metal
Working‘s property. The water company filed a motion for summary judgment on the
grounds that it had immunity, which the trial court granted, and Metal Working appealed.
21
The water company conceded that it was not a governmental entity as defined by the
ITCA. Metal Working, 746 N.E.2d at 358. However, we observed that when private entities
are ―endowed by the state with powers or functions governmental in nature, they become
agencies or instrumentalities of the state and are subject to the laws and statutes affecting
governmental agencies and corporations.‖ Id. at 356 (quoting Ayres v. Indian Heights
Volunteer Fire Dep’t, Inc., 493 N.E.2d 1229, 1235 (Ind. 1986)). We noted that firefighting
―is a service that is uniquely governmental. The need to control, prevent, and fight fires for
the common good of the community has been universally accepted as a governmental
function and duty in this state.…‖ Id. (quoting Ayres, 493 N.E.2d at 1235). We further
noted that ―the business decisions that private companies can usually make without outside
interference, such as expansion plans and rate-making, are subject to governmental controls
when it comes to [the water company].‖ Id. at 357. We concluded that the water company
was entitled to common law immunity because if the water company did not provide water to
the city and its citizens, then the city itself would; in other words, the water company was
acting in the government‘s stead:
We note that considering [the water company] to be a governmental entity and
giving [it] immunity in this circumstance causes no harm to the citizens,
because if a private company did not provide the water services, then the
government would, and pursuant to Gates, the government would
unquestionably be immune under the same circumstances.
Id. at 359. See also Harrison, 929 N.E.2d at 252 (although holding that Veolia was not
entitled to statutory immunity, panel stated that it did ―not necessarily disagree with the
ultimate holding of the Metal Working case, namely that a water utility cannot be liable on a
22
claim that it failed to provide adequate water for firefighting purposes‖); Larimore, 197 Ind.
at 459, 151 N.E. at 334 (at common law, a water company with a contractual duty to supply
water to a city is not liable for fire losses due to lack of sufficient water to fight the fire); New
Albany Waterworks, 193 Ind. at 375, 140 N.E. at 543 (a water company is not ―an insurer of
any individual citizen and tax-payer against loss by fire‖ because ―the consideration for
[supplying water] is totally inadequate upon which to presume that any such duty was
contemplated by the parties‖).
The Insurers do not explicitly argue that Veolia is not entitled to common law
immunity even if the City is. Given the long-standing precedent that water companies have
immunity to the same extent as the municipality with which they have contracted, we must
agree with Veolia that it is also entitled to immunity.
Although we feel bound by settled precedent to hold that both the City and Veolia are
entitled to immunity, we must acknowledge that the Insurers have presented several cogent
reasons for reconsidering this policy. Although Veolia was acting in the City‘s stead, Veolia
is a for-profit company and is not directly accountable to voters and taxpayers. Veolia
presumably earned some profit from operating the waterworks; otherwise, it would have no
reason to be in business. Compare Ayres, 493 N.E.2d at 1237 (holding that volunteer fire
department was an instrumentality of the state, and therefore entitled to immunity, in part
because the contract price was nominal), with Harrison, 929 N.E.2d at 253 (in declining to
find Veolia a governmental entity covered by ITCA, we noted that ―one of the main concerns
ITCA intended to address clearly was protection of the public treasury from a multitude of
23
tort lawsuits,‖ a concern not applicable to Veolia, which is a for-profit enterprise that is ―part
of a multi-national, multi-billion dollar conglomerate‖). A city operating its own waterworks
would not necessarily seek to earn any profit. In addition, if the City operated the
waterworks itself, dissatisfied citizens could attempt to redress problems through the political
process; however, citizens cannot ―vote out‖ Veolia or any of its employees. On the
contrary, the Management Agreement was for a term of twenty years, potentially long after
the officials who granted Veolia the contract would be out of office.
Veolia had a contractual obligation to maintain the City‘s waterworks and also had
responsibilities to consumers, for example, to maintain appropriate water pressure, as in City
of Huntingburg. Veolia already had a responsibility vis-à-vis the City and consumers to keep
the waterworks system in good repair, and it is not obvious on the record before us that
substantial additional maintenance work would have been required to keep that same system
in good repair for firefighting purposes. Nor is it obvious that Veolia would face staggering
liability if it lacked immunity. The Management Agreement required Veolia to carry
insurance to cover ―all claims arising from injuries to members of the public or damage to
property of others.‖ Management Agreement at 61. The cost of this insurance presumably
was taken into account when the contract price was negotiated and when the rates were set by
the Indiana Regulatory Commission. Moreover, the specter of liability would provide
incentive to keep hydrants in good repair.
The commercial sale of water from hydrants is supposed to benefit consumers by
lowering rates. Veolia had a contractual obligation to monitor the use of and to maintain
24
those hydrants. The primary function of the hydrants is to provide water for fire suppression.
Immunity is intended to insure that the government can continue to provide essential safety
services, because exposing government entities to liability for fire damages could discourage
them from providing fire protection services. Insulating Veolia from liability for its alleged
failure to monitor or maintain in this case may actually create a disincentive to maintain
hydrants.
Our supreme court has not addressed immunity for firefighting in recent years.11 Since
then, public-private contracts have not only become more prevalent, but they are also much
more complex than contemplated by cases such as New Albany Waterworks. In this case, the
Management Agreement is a multi-million-dollar contract containing detailed provisions
spanning ninety-two pages, accompanied by a ninety-nine-page amendment and fifteen
exhibits. Although the common law rule is easy to apply, it takes the focus off whether the
government action is the type that ought to be immunized and instead places it on the type of
damage caused, i.e., damage from fire. Were we writing on a clean slate, we might adopt a
different rule; however, we are bound by supreme court precedent. See Jones v. State, 749
N.E.2d 575, 582 n.4 (Ind. Ct. App. 2001) (noting that ―we are not at liberty to ignore the
precedent of our Supreme Court‖), trans. denied. Therefore, we reverse the trial court‘s
ruling that Veolia is not entitled to common law immunity.
11
The most recent supreme court case to discuss immunity for firefighting is Ayres, which was
decided in 1986. In Ayres, the supreme court stated that it was ―in total accord with the Court of Appeals‖ on
the issue of statutory immunity and briefly discussed City of Hammond v. Cataldi, 449 N.E.2d 1184 (Ind. Ct.
App. 1983), a case which applied the now outdated discretionary/ministerial test; transfer was granted
primarily to address a different issue. Ayres, 493 N.E.2d at 1234. Prior to Ayres, the last supreme court to
address immunity for firefighting was Larimore, decided in 1926.
25
III. Third-Party Beneficiary
Veolia argues that the trial court erred by finding that the Insurers were third-party
beneficiaries to the Management Agreement and therefore could pursue a breach of contract
claim.
Generally, only parties to a contract or those in privity with the parties have
rights under the contract. However,
One not a party to an agreement may nonetheless enforce it by
demonstrating that the parties intended to protect him under the
agreement by the imposition of a duty in his favor. To be
enforceable, it must clearly appear that it was the purpose or a
purpose of the contract to impose an obligation on one of the
contracting parties in favor of the third party. It is not enough
that performance of the contract would be of benefit to the third
party. It must appear that it was the intention of one of the
parties to require performance of some part of it in favor of such
third party and for his benefit, and that the other party to the
agreement intended to assume the obligation thus imposed.
The intent of the contracting parties to bestow rights upon a third party ―must
affirmatively appear from the language of the instrument when properly
interpreted and construed.‖ However, it is not necessary that the intent to
benefit a third party be demonstrated any more clearly than the parties‘ intent
regarding any other terms of the contract.
OEC-Diasonics, Inc. v. Major, 674 N.E.2d 1312, 1314-15 (Ind. 1996) (citations omitted).
When interpreting a contract, we read the contract as a whole and attempt to construe
the contractual language so as not to render any words, phrases, or terms ineffective or
meaningless. Trustcorp Mortg. Co. v. Metro Mortg. Co., 867 N.E.2d 203, 213 (Ind. Ct. App.
2007). ―Likewise, we must accept an interpretation of the contract that harmonizes its
provisions, rather than one that places the provisions in conflict.‖ Id. Unless the terms of a
26
contract are ambiguous, they will be given their plain and ordinary meaning. Brockman v.
Brockman, 938 N.E.2d 831, 834 (Ind. Ct. App. 2010), trans. denied.
Terms are not ambiguous merely because the parties disagree as to the proper
interpretation of those terms. By contrast, contract terms may be ambiguous if
they are susceptible to more than one reasonable interpretation. If a written
instrument is ambiguous, we may consider all relevant evidence, including
extrinsic evidence, to discern the contract‘s meaning.
Id. (citations omitted).
Veolia argues that the third-party beneficiary issue is irrelevant because it has
immunity. In support, Veolia cites Giles v. Brown County, 868 N.E.2d 478 (Ind. 2007).
Annette Giles sued Brown County because her husband, Joey, died after the county failed to
dispatch an ambulance in response to his 911 call. The county had a contract with Columbus
Regional Hospital to provide emergency medical services to all Brown County residents.
However, when Joey called 911 and reported that he was experiencing chest pains and
shortness of breath, none of the ambulances reserved for Brown County were available.
Columbus Regional Hospital asked Bloomington Hospital to dispatch an ambulance. An
ambulance arrived from Bloomington about forty-five minutes later, and Joey died shortly
thereafter.
Giles‘s theory was that she was a third-party beneficiary of the contract between
Brown County and Columbus Regional Hospital. Brown County sought immunity under the
ITCA on the ground that Joey‘s death resulted from the ―operation‖ or ―use‖ of an enhanced
emergency communications system. Ind. Code § 34-13-3-3(19). Our supreme court agreed,
27
and further held that this immunity trumped Giles‘s claim that she was a third-party
beneficiary to the contract:
Immunity assumes negligence but denies liability. Thus, the issues of duty,
breach and causation are not before the court in deciding whether the
government entity is immune. If the court finds the government is not
immune, the case may yet be decided on the basis of failure of any element of
negligence. This should not be confused with the threshold determination of
immunity.
Giles, 868 N.E.2d at 480 (quoting Peavler, 528 N.E.2d at 46-47).
The Insurers counter by arguing that Veolia waived its right to immunity in the
Management Agreement.12 In support, the Insurers point to Section 8 of the Management
Agreement, which requires Veolia to purchase certain types of insurance coverage, including
comprehensive general liability insurance with a provision for waiver of immunity:
Section 8.01 Insurance Procurement; Duty to Maintain; Obligation to Provide
Continuous Coverage.
(a) Procurement. Throughout the term of this Agreement the Company, on
its own behalf and on behalf of any one directly or indirectly employed by it
for whose acts or omissions it may be liable, shall secure, or cause to be
secured, and maintain, at its cost and expense, including premium payments,
the following insurance policies with the below specified policy limits. Cost
and expense, including premium payments, will be separately identified but
included in the Service Fee.
…
12
Veolia argues that the Insurers waived their argument that immunity was contractually waived by
not raising it in the trial court. ―Issues not raised at the trial court are waived on appeal. In order to properly
preserve an issue on appeal, a party must, at a minimum, show that it gave the trial court a bona fide
opportunity to pass upon the merits of the claim before seeking an opinion on appeal.‖ Cavens v. Zaberdac,
849 N.E.2d 526, 533 (Ind. Ct. App. 2006). Much of the Insurers‘ argument to the trial court on this issue was
not transcribed because the audio recording was unintelligible. Although it is unclear what the Insurers‘
precise argument was, it is clear that the trial court did consider the issue; therefore, we decline to find the issue
waived.
28
(3) Comprehensive General Liability. Commercial general liability
insurance to protect the Company against all claims arising from
injuries to members of the public or damage to property of others,
including loss of the use of tangible property damaged, arising out of
any act or omission of the Company or its agents, employees or
subcontractors.… Comprehensive general liability coverage shall
contain the following provisions:
…
(N) include waiver of government immunity;
Management Agreement at 55-57.13
While we are somewhat puzzled as to the intended purpose of this language, we must
agree with Veolia that it does not require Veolia to waive its immunity. Even if immunity
were waived, Section 13.18 of the Management Agreement explicitly disavows any intent to
create third-party beneficiaries:
Section 13.18 Third Party Beneficiary. This Agreement is intended to be solely
for the benefit of Company and Department and their successors and permitted
assigns and is not intended to and shall not infer any rights or benefits on any
third party not a signature hereto, except as specifically set forth herein.
Id. at 87.
In Indiana Gaming Co. v. Blevins, 724 N.E.2d 274 (Ind. Ct. App. 2000), trans. denied,
we held that a similar contractual provision trumped language that might otherwise be
construed to create third-party beneficiaries. In that case, the City of Lawrenceburg and
Indiana Gaming entered into a contract to develop and operate a riverboat gaming operation
13
The Management Agreement has been provided to us in PDF format on a disc. Because the first
few pages of the Management Agreement are numbered with romanettes, the numbers on the document do not
correspond with the page number that must be entered into the PDF reader to jump to the relevant text. We
will cite to the number needed to jump to the quoted text.
29
in Lawrenceburg. The contract stipulated that each laborer or mechanic shall be paid a wage
equal to the union contract wage in the Lawrenceburg area. Some archaeologists working on
the project and their union, United Archaeological Field Technicians International Union of
Operating Engineers, sued Indiana Gaming, contending that they were being paid less than
the contract required. They argued that they were third-party beneficiaries of the contract
between Indiana Gaming and the city.
Indiana Gaming filed a motion to dismiss, relying on Section 15.21 of the contract,
which stated, ―No Third-Party Beneficiaries. Nothing in this Agreement shall be construed
as creating any rights or entitlement that inure to the benefit of any person or entity not a
party of this Agreement (except Guarantor).‖ Id. at 278. The trial court denied the motion to
dismiss, but we reversed, stating, ―This language clearly and unambiguously precludes the
Technicians from being third-party beneficiaries under the Agreement.‖ Id. We stated that
our interpretation of the contract did not render the wage provisions meaningless, but merely
limited the enforcement of those provisions to certain individuals. Id. at 279. On the other
hand, allowing the suit to go forward would render Section 15.21 meaningless. Id.In Plummer v. Consolidated City of Indianapolis, 1:03-CV-00567-DFH-WT, 2004
WL 2278740 (S.D. Ind. Aug. 17, 2004), the Southern District of Indiana interpreted the same
Management Agreement at issue here. In Plummer, several USFilter Employees brought
ERISA claims against the City. The court rejected the employees‘ claim that was based on a
third-party beneficiary theory:
There is … no contradiction between having the City and USFilter agree on
one hand that … employees should be treated in a particular way, and having
30
the contracting parties also agree that they do not intend to confer legally
enforceable rights on those employees under the contract. Contracting parties
often recognize that their agreement may affect the interests of others who are
not parties to the contract. They may expressly acknowledge those effects in
the contract. They may even extract promises from one another concerning
those effects. But it is a very different thing for the contracting parties to
bestow upon those third parties the right to sue the contracting parties to
enforce those promises. That prospect of third-party enforcement is exactly
why disclaimers like Section 13.18 are inserted into contracts like the
Management Agreement, especially since courts might otherwise imply from
the agreement an intent to confer third-party benefits. See, e.g., Barth Elect.
Co. v. Traylor Bros., Inc., 553 N.E.2d 504, 506 (Ind. App. 1990) (reversing
dismissal of construction prime contractor‘s claim to be third party beneficiary
where contract lacked an explicit disclaimer of intent to confer such rights).
Id. at *17.
The Insurers rely on two cases that have held that members of the general public were
third-party beneficiaries of a city contract: Freigy v. Gargaro Co., 223 Ind. 342, 60 N.E.2d
288 (1945) (holding that a contractor‘s contract with the City of Fort Wayne to construct a
sewer authorized a homeowner damaged by the construction work to pursue a cause of action
against the contractor), and City of Indianapolis v. Kahlo, 938 N.E.2d 734 (Ind. Ct. App.
2010) (holding that citizens of Indianapolis were third-party beneficiaries of contract that
required a portion of the Pan Am Plaza to remain open to the public), trans. denied.
However, neither of the contracts at issue in those cases contained a specific provision
disavowing any intent to create third-party beneficiaries. Indiana Gaming is more directly on
point, and although we are not bound by Plummer, we find its reasoning to be persuasive.
Therefore, we conclude that the trial court erred by finding that the Insurers were third-party
beneficiaries of the Management Agreement.
31
Conclusion
Pursuant to long-standing precedent, common law immunity bars claims for fire
damages stemming from an inadequate supply of water or inoperable fire hydrants. This
immunity applies both to the City and to Veolia. We also conclude that Veolia did not waive
its immunity, and even if it had, the explicit terms of the contract indicate that the Insurers
are not third-party beneficiaries of the Management Agreement. We therefore reverse the
judgment of the trial court.
Reversed.
VAIDIK, J., and BRADFORD, J., concur.
32