Fife v. Kiawah Island Utilit

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
EUGENE V. FIFE; LU ANN L. FIFE,
Plaintiffs-Appellants,
v.
KIAWAH ISLAND UTILITY,
No. 97-1307
INCORPORATED; KIAWAH RESORT
ASSOCIATES, L.P., d/b/a Kiawah
Resort Associates,
Defendants-Appellees.
HENRY GARRETSON; MARIANNA
GARRETSON,
Plaintiffs-Appellants,
v.
KIAWAH ISLAND UTILITY,
INCORPORATED; KIAWAH RESORT
No. 97-1342
ASSOCIATES, L.P., d/b/a Kiawah
Resort Associates,
Defendants-Appellees,
NATIONWIDE MUTUAL INSURANCE
COMPANY,
Movant.
Appeals from the United States District Court
for the District of South Carolina, at Charleston.
David C. Norton, District Judge.
(CA-95-3778-2-18, CA-95-1843-18-2)
Argued: October 2, 1997
Decided: December 19, 1997
Before WILKINSON, Chief Judge, RUSSELL, Circuit Judge, and
BOYLE, Chief United States District Judge for the
Eastern District of North Carolina, sitting by designation.
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Affirmed by unpublished opinion. Chief Judge Boyle wrote the opin-
ion, in which Chief Judge Wilkinson and Judge Russell joined.
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COUNSEL
ARGUED: John L. Choate, COZEN & O'CONNOR, Atlanta, Geor-
gia; Henry Ellerbe Grimball, BUIST, MOORE, SMYTHE &
MCGEE, Charleston, South Carolina, for Appellants. Thomas Jack-
son Wills, IV, BARNWELL, WHALEY, PATTERSON & HELMS,
L.L.C, Charleston, South Carolina, for Appellees. ON BRIEF: Allan
Levin, COZEN & O'CONNOR, Atlanta, Georgia; Clara A. Robert-
son, III, ROBERTSON & ASSOCIATES, Charleston, South Caro-
lina, for Appellants. Warren W. Ariail, BARNWELL, WHALEY,
PATTERSON & HELMS, L.L.C., Charleston, South Carolina;
George T. Walker, PRATT-THOMAS, PEARCE, EPTING &
WALKER, P.A., Charleston, South Carolina, for Appellees.
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Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
BOYLE, Chief District Judge:
Appellants Eugene and Lu Ann Fife and Henry and Marianna Gar-
retson (collectively "Appellants") filed this action against Appellees
Kiawah Resort Associates, L.P. ("KRA") and Kiawah Island Utility,
Inc. ("KIU") in United States District Court for the District of South
Carolina. The complaint stated claims for breach of contract, negli-
2
gence and breach of warranty under South Carolina law. KRA and
KIU filed a Motion for Summary Judgment on all claims, which was
granted by the district court. The Fifes and Garretsons now appeal.
FACTS
Appellants are former adjacent homeowners on Kiawah Island
whose homes were destroyed by fire on July 20, 1994. KRA, a lim-
ited partnership, purchased Kiawah Island in 1988 and continued the
island's commercial and residential development. Pursuant to a Man-
agement Services Agreement, KRA provides general management
services to KIU, its wholly-owned subsidiary and the sole provider of
potable water and sewer services to island residents. The South Caro-
lina Public Service Commission ("PSC") regulates KIU's rates, and
the South Carolina Department of Health and Environmental Control
("DHEC") promulgates guidelines and minimum fire flow require-
ments for KIU.
In 1990 and 1991, Appellants purchased lots on the island and exe-
cuted a "Waiver and Real Property Agreement" by which they agreed
to receive water services from KIU. KIU was not obligated under this
agreement to provide water for fire protection, although on several
subsequent occasions KIU intimated that fire protection was in fact
one service it provided. On one occasion in 1992, KIU claimed in an
application to the PSC that a rate increase was essential to providing
ample water pressure for fire protection purposes. Then, in 1993, KIU
circulated a pamphlet entitled "Water Views," discussing the water
system's fire protection capabilities and correlation to reduced insur-
ance rates.
Less than one year later, a fire destroyed Appellants' homes. Dur-
ing the fire, the water flow ranged from 800-1000 gallons-per-minute
(gpm). Appellants recovered under their respective fire insurance pol-
icies for their losses and then brought this action to recover from
KRA and KIU for breach of contractual duties and common law
duties arising from statute, property interest, professional relationship
and assumption of responsibility.
DISCUSSION
Summary judgment disposes of factually unsupported claims or
defenses and requires the moving party to allege the absence of a gen-
3
uine issue of material fact in the pleadings of the other party. Fed. R.
Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986).
The opposing party must then go beyond the pleadings to show the
existence of a genuine issue of material fact for trial. Celotex, 477
U.S. at 324. If no genuine issue exists, summary judgment is proper.
A district court's grant of summary judgment is subject to de novo
review. Carbon Fuel Co. v. USX Corp., 100 F.3d 1124, 1132 (4th Cir.
1996).
1. Tort Liability for Breach of Contractual Duty
Appellants first claim that the district court erred in finding that
KRA and KIU were not liable for breach of a contractual duty. South
Carolina law requires that, to sue a utility in tort for breach of con-
tract, there must be an express contractual undertaking by the utility
and the plaintiff must be either a party to or an intended third party
beneficiary of that contract. Ancrum v. Camden Water, Light & Ice
Co., 64 S.E. 151, 155 (S.C. 1909); German Alliance Ins. Co. v. Home
Water Supply Co., 226 U.S. 220, 230-31 (1912).
Appellants argue that KRA and KIU owed a contractual duty to
provide water to Kiawah Island properties for fire protection based on
payment of KIU's utility bills. They argue further that water for fire
protection was an implied term of this contract, pointing to KIU's
application to the PSC and its "Water Views" article as evidence.
Finally, Appellants argue that a contractual duty arose from KRA's
management services agreement with KIU. These arguments are
without merit.
There was no contract, implied or otherwise, between Appellants
and KIU that required KIU to provide water for fire protection. KIU's
water bills covered landscape irrigation and its consumption charges
related to domestic use of the water, not fire protection. The "Waiver
and Real Property Agreement" between the parties did constitute a
contract but, while clearly and unambiguously identifying various
other services, it was silent on the issue of fire protection. As such,
the parol evidence rule precludes Appellants from now reading into
this contract new and unanticipated obligations. Gilliland v. Elmwood
Properties, 391 S.E.2d 577, 581 (S.C. 1990) (citing Iseman v. Hobbs,
351 S.E.2d 351 (S.C.Ct.App. 1986)).
4
Additionally, KRA's management services agreement with KIU
neither identifies Appellants as third party beneficiaries nor indicates
that KRA or KIU expressly assumed liability for any losses or dam-
ages resulting from negligent performance of their duties. Absent an
express contractual undertaking, neither KRA nor KIU is liable for
damages incurred by Appellants. See Ancrum, 64 S.E. at 155.
Accordingly, the district court properly granted summary judgment
on this issue.
2. Tort Liability for Breach of Statutory Duty
Appellants next contend that the district court erred in finding no
statutory duty obligating KIU and KRA to provide adequate fire flow.
South Carolina law provides that an express contractual undertaking
is not a prerequisite for suing in tort for breach of a duty arising inde-
pendently of a contract. In such cases, a duty may arise by statute,
property interest, relationship or other special circumstances. Miller
v. City of Camden, 451 S.E.2d 401 (S.C.Ct.App. 1994).
Appellants argue that KIU owed a statutory duty to provide ade-
quate fire flow pursuant to DHEC Regulations which provide: "If a
standard (4" to 6") hydrant is proposed, the fire flow requirements of
the Insurance Service Office [ISO] should be met; but in no case shall
the design flow be less than 500 gpm over and above domestic
requirements." DHEC Regulation § 61-58.4(D)(9). Prior to the fire,
the ISO1 evaluated the water system and concluded that 2500 gpm of
water were necessary to provide adequate fire protection. Notwith-
standing the ISO guidelines, KIU's water system provided only 800-
1000 gpm at the time of the fire. Appellants attempt to "borrow" the
ISO standard referenced here to show that KIU's noncompliance sat-
isfies the "class of harm, class of person" standard thereby constitut-
ing negligence per se. See Whitlaw v. Kroger Co. , 410 S.E.2d 251,
252 (S.C. 1991) (quoting Rayfield v. South Carolina Dep't of
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1 ISO is an organization utilized by insurance companies to evaluate the
fire delivery system of communities for insurance purposes. It is not a
governmental entity that promulgates regulations or guidelines with the
force of law.
5
Corrections, 374 S.E.2d 910, 914 (S.C.Ct.App. 1988) cert. denied,
379 S.E.2d 133 (1989)). Appellants' argument is without merit.
A statutory duty did exist but KIU did not breach that duty. The
DHEC regulation merely provides that water companies"should"
meet ISO standards, but "shall" not provide less than 500 gpm in
excess of domestic use requirements. DHEC's use of the words
"should" -- whose plain meaning denotes discretion -- and "shall" --
whose plain meaning denotes mandate -- makes clear that the ISO
guidelines are recommendations, not requirements, for water compa-
nies. This discriminating word choice pervades the statute,2 suggest-
ing it was not a product of inadvertence but rather a calculated
attempt to provide greater guidance for interpreting the statute and
complying with its provisions. Thus, KIU's statutory duty arose not
from the ISO guidelines but from the "500 gpm" requirement and the
800-1000 gpm of water flow at the time of the fire clearly satisfied
this duty.
Accordingly, the district court properly granted summary judgment
on this issue.
3. Tort Liability For Breach of Duty Arising From Property Inter-
est, Professional Relationship or Assumption of Responsibility
The remaining assignments of error are likewise without merit and
were thus properly disposed of by summary judgment.
CONCLUSION
The judgment of the district court is affirmed in its entirety.
AFFIRMED
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2 For example, paragraph (D)(1) ("Materials Standards") provides:
"Pipe, fittings, packing, jointing, materials, valves and fire hydrants shall
conform to Section C of the American Waterworks Association Stan-
dards. . . . In the absence of such standards, materials meeting applicable
product standards and acceptable to the Department may be selected." Id.(emphasis added).
6