Heritage Operating, L.P. d/b/a Empire Gas v. Lois A. Mauck and Ralph Thomas

Jun 23 2015, 1:19 pm
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEES
Richard T. Mullineaux Matthew J. Schad
Crystal G. Rowe George A. Budd
Kightlinger & Gray, LLP Schad & Schad, P.C.
New Albany, Indiana New Albany, Indiana
Thomas H. Davis
Stinson Leonard Street, LLP
Kansas City, Missouri
IN THE
COURT OF APPEALS OF INDIANA
Heritage Operating, L.P. d/b/a June 23, 2015
Empire Gas, Court of Appeals Case No.
88A01-1410-CT-440
Appellant-Defendant,
Appeal from the Washington
Superior Court.
v.
The Honorable Frank Newkirk, Jr.,
Judge.
Lois A. Mauck and Ralph
Cause No. 88D01-1304-CT-236
Thomas,
Appellees-Plaintiffs.
Riley, Judge
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STATEMENT OF THE CASE
[1] Appellant-Defendant, Heritage Operating, L.P. d/b/a Empire Gas (Empire
Gas), appeals the trial court’s denial of summary judgment in favor of
Appellees-Plaintiffs, Lois A. Mauck (Mauck) and Ralph D. Thomas (Thomas)
(collectively, Tenants).
[2] We affirm in part, reverse in part, and remand for further proceedings.
ISSUE
[3] Empire Gas raises three issues on appeal, which we consolidate and restate as
the following single issue: Whether Empire Gas is entitled to judgment as a
matter of law on the Tenants’ product liability claim.
FACTS AND PROCEDURAL HISTORY
[4] Edward E. Eiler and Ronda K. Eiler (the Eilers) are the owners of the real
property located at 6609 East Hurst Road in Pekin, Washington County,
Indiana (the Property). A mobile home was situated on the Property, which the
Eilers rented to Jesse Middleton (Middleton) from approximately the summer
of 2010 until Middleton passed away in July of 2011. On October 14, 2010,
Middleton entered into a Propane Supply Agreement with Empire Gas. At that
time, Empire Gas delivered 250 gallons of propane to the Property and
performed a safety inspection to check that there were no propane leaks and
that the furnace appeared to be operating normally. As part of the safety check,
the service technician, David Jenkins (Technician Jenkins), demonstrated to
Middleton how to turn off the gas in the event of an emergency, performed an
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odor test, and provided Middleton with a packet of safety information.
Throughout the following winter months, the furnace kept the mobile home
“[w]arm as toast” and functioned without incident. (Appellant’s App. p. 75).
[5] When Middleton passed away in July of 2011, the propane tank was 47% full.
On July 11, 2011, Empire Gas refunded the cost of the unused propane to
Middleton’s daughter, thereby resuming ownership of the propane left in the
tank. Empire Gas also placed a lock on the POL valve—which controls the
release of gas from the propane tank—in order to prevent any unauthorized
hookups or pilferage. A red tag on the POL lock cautioned any reader as to the
danger of propane and prohibited unauthorized individuals from tampering
with or removing the lock.
[6] In the spring of 2011, Thomas was released from prison, and he subsequently
moved in with his father, Benny Thomas (Benny). Soon thereafter, Thomas
began dating a co-worker, Mauck, and a few months later, they decided to
move in together. In mid-October of 2011, Thomas read a newspaper
advertisement announcing that the Property was available for lease. He
contacted the Eilers and, after inspecting the mobile home, agreed to rent the
Property for $400 per month. During Thomas’ initial visit to the Property, Mr.
Eiler showed him the propane tank and indicated that the gas service provider,
Empire Gas, had installed a lock on the tank and would need to be contacted to
hook up the gas line. It is undisputed that neither the Eilers nor the Tenants
ever contacted Empire Gas to remove the lock and initiate service, inspect the
tank, or pay for propane.
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[7] On the morning of October 23, 2011, the Tenants returned home from a
weekend trip to visit Mauck’s son. Up until that point, the Tenants had relied
on an electric heater, but the cooling weather prompted Mauck to ask Thomas
about using the furnace. That afternoon, Thomas went outside and discovered
that the lock had been removed from the propane tank, that the gas line had
been connected, and that the valve and been turned on. As such, he opened the
gas valve inside the mobile home and, with Mauck’s assistance, attempted to
light the pilot on the furnace. Their attempt was unsuccessful, so Thomas
drove over to Benny’s house and brought him back to help. After fifteen to
twenty minutes of holding the pilot switch, Thomas and Benny finally
succeeded in igniting the pilot light. During that time, the Tenants noticed “just
a little” odor of gas but did not smell anything once the furnace was operating.
(Appellant’s App. pp. 61, 131).
[8] By 4:00 p.m., the furnace had been running for about three hours. Benny and
the Tenants were in the living room when Mauck walked over to the counter to
retrieve her pack of cigarettes. As soon as she lit one, the trailer exploded.
Thomas shoved Mauck out the front door and helped extinguish the flames
engulfing her body. Moments later, Benny—who had been hurled out of his
wheelchair—came crawling out of the trailer. Thomas summoned for help, and
emergency personnel responded. Mauck was air-lifted to a hospital in
Louisville, Kentucky, and Thomas and Benny were transported by ambulance.
Mauck was hospitalized for six weeks, during which time she received skin
grafts on her arms, hands, and neck to treat her third degree burns. Thomas
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sustained severe burns on his hands. Empire Gas investigated the scene and
concluded that the lock on the POL valve had been tampered with.
Additionally, the propane tank did not explode, and Empire Gas found that the
gas line out of the tank did not fail.
[9] On April 9, 2013, the Tenants filed a Complaint against Empire Gas, asserting
product liability claims of negligence, strict liability, and breach of warranties.1
On April 11, 2014, Empire Gas filed a motion for summary judgment, claiming
that there were no genuine issues of material fact and that it was entitled to
judgment as a matter of law because it owed no legal duty to the Tenants; it
does not manufacture propane; and because the propane it sells is presumed
non-defective based on compliance with applicable codes and standards. On
June 12, 2014, the trial court conducted a hearing and issued an Order on June
23, 2014, summarily denying Empire Gas’ motion.
[10] Empire Gas now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
I. Standard of Review
[11] Empire Gas appeals from the trial court’s denial of its motion for summary
judgment. “The purpose of summary judgment is to terminate litigation which
can be determined as a matter of law.” Bloemker v. Detroit Diesel Corp., 720
1
The Eilers were also named as defendants in the Tenants’ lawsuit. On November 24, 2014, the trial court
dismissed the Tenants’ Complaint against the Eilers with prejudice. Although not a party to this appeal, facts
pertaining to the Eilers have been included where appropriate.
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N.E.2d 753, 756 (Ind. Ct. App. 1999), reh’g denied, trans. denied. On appeal, our
court reviews a grant or denial of summary judgment de novo, utilizing the same
standard applied by the trial court. Williams v. Tharp, 914 N.E.2d 756, 761 (Ind.
2009). We will find that summary judgment is appropriate “if the designated
evidentiary matter shows 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.” Ind.
Trial Rule 56(C). “A fact is ‘material’ if its resolution would affect the outcome
of the case, and an issue is ‘genuine’ if a trier of fact is required to resolve the
parties’ differing accounts of the truth, or if the undisputed material facts
support conflicting reasonable inferences.” Williams, 914 N.E.2d at 761
(citation omitted).
[12] The party moving for summary judgment bears the initial burden of
demonstrating “the absence of any genuine issue of fact as to a determinative
issue.” Id. Thereafter, the burden shifts to the non-movant to present “contrary
evidence showing a triable issue for the trier of fact.” Id. at 761-62 (internal
quotation marks omitted). On review, we consider only the materials
designated to the court by the parties, and we do not assess evidentiary weight
or witness credibility. Webb v. Jarvis, 575 N.E.2d 992, 994 (Ind. 1991), reh’g
denied. We will accept as true any “[r]ational assertion of fact and reasonable
inferences therefrom” and will resolve any doubt as to the existence of a fact or
inference in favor of the non-moving party. Id. at 994-95.
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II. Product Liability Act
[13] Indiana’s Product Liability Act (Act) governs any action that is “brought by a
user or consumer . . . against a manufacturer or seller . . . for physical harm
caused by a product[,] regardless of the substantive legal theory or theories
upon which the action is brought.” Ind. Code § 34-20-1-1. In particular, the
Act provides that
a person who sells, leases, or otherwise puts into the stream of
commerce any product in a defective condition unreasonably
dangerous to any user or consumer or to the user’s or consumer’s
property is subject to liability for physical harm caused by that product
to the user or consumer or to the user’s or consumer’s property if:
(1) that user or consumer is in the class of persons that the seller should
reasonably foresee as being subject to the harm caused by the defective
condition;
(2) the seller is engaged in the business of selling the product; and
(3) the product is expected to and does reach the user or consumer
without substantial alteration in the condition in which the product is
sold by the person sought to be held liable under [the Act].
I.C. § 34-20-2-1. A product may be considered defective due to “a
manufacturing flaw, a design defect, or a failure to warn of dangers in the
product’s use.” Cook v. Ford Motor Co., 913 N.E.2d 311, 319 (Ind. Ct. App.
2009), trans. denied; see I.C. §§ 34-20-4-1; -2.
[14] In this case, the Tenants proceeded under the theories of negligence, strict
liability, and breach of express and/or implied warranties, and Empire Gas
moved for summary judgment on all three theories.2 A negligence action
2
Regarding the Tenants’ breach of warranties claim, we note that a defective product may give rise to claims
under both the Act and the Uniform Commercial Code (UCC). See Hitachi Constr. Mach. Co. v. AMAX Coal
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focuses on “the reasonableness of the [seller’s] action in selling the article
without a warning[,]” whereas a strict liability case concerns “the condition
(dangerousness) of an article which is sold without any warning.” Ortho Pharm.
Corp. v. Chapman, 388 N.E.2d 541, 550 (Ind. Ct. App. 1979).
A. Negligence
[15] In Count II of their Complaint, the Tenants alleged that their injuries stemmed
from Empire Gas’ negligence. Specifically, the Tenants asserted that Empire
Gas failed “to adequately and reasonably warn users” regarding “the
propensities and deficiencies of propane odorized with ethyl mercaptan” and
the need to purchase a propane gas detector. (Appellant’s App. pp. 17-19). For
a product liability action grounded in the failure to provide adequate warnings
or instructions, the duty to warn is two-fold: (1) to provide adequate
instructions for safe use, and (2) to provide a warning as to dangers inherent in
improper use.” Natural Gas Odorizing, Inc. v. Downs, 685 N.E.2d 155, 161 (Ind.
Ct. App. 1997), reh’g denied, trans. denied; see I.C. §§ 34-20-2-2; -4-2.
[16] In order to prevail on the negligence claim, the Tenants must establish: (1) a
duty owed by Empire Gas to the Tenants; (2) a breach of that duty by Empire
Co., 737 N.E.2d 460, 465 (Ind. Ct. App. 2000), reh’g denied, trans. denied. The UCC, which has been codified
at Indiana Code article 26-1, provides a remedy for a seller’s breach of implied warranties of merchantability
and fitness for a particular use. See I.C. §§ 26-1-2-314; -315. Yet, several decisions by our court and Indiana
federal courts have determined “that tort-based breach-of-warranty claims have been subsumed into the
[Act].” Kovach v. Caligor Midwest, 913 N.E.2d 193, 197 (Ind. 2009), reh’g denied. Whereas a breach of
warranty claim that is based on contract may be raised under the UCC independently of the Act, a warranty
claim that sounds in tort is “redundant with strict liability claims under the [Act].” Atkinson v. P&G-Clairol,
Inc., 813 F. Supp. 2d 1021, 1024 (N.D. Ind. 2011). Because the Tenants have not pleaded contract-based
warranty breaches, the warranties claim must be merged into the issue of strict liability.
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Gas; and (3) an injury to the Tenants proximately caused by the breach. See
Ford Motor Co. v. Rushford, 868 N.E.2d 806, 810 (Ind. 2007). It is well
established that negligence cases are particularly fact sensitive and, therefore,
not typically suitable for summary judgment. Cook, 913 N.E.2d at 320.
Nonetheless, a party may prevail on a summary judgment motion by
establishing “that the undisputed material facts negate at least one element of
[the negligence claim].” Goldsberry v. Grubbs, 672 N.E.2d 475, 477 (Ind. Ct.
App. 1996), trans. denied. Here, Empire Gas contends that it is entitled to
judgment as a matter of law because it has negated the duty element. “Absent a
duty, there can be no breach of duty and thus no negligence or liability based
upon the breach.” Rushford, 868 N.E.2d at 810.
[17] “Whether the law recognizes any obligation on the part of a particular
defendant to conform his conduct to a certain standard for the benefit of the
plaintiff is a question of law[,]” which may be resolved by the court. Webb, 575
N.E.2d at 995. However, determining whether a duty exists “is not without
difficulty” as “no universal test for it ever has been formulated.” Gariup Const.
Co. v. Foster, 519 N.E.2d 1224, 1227 (Ind. 1988) (quoting PROSSER & KEETON
ON TORTS § 53 (5th ed. 1984)). Historically, courts have found that a duty
exists where “reasonable persons would recognize it and agree that it exists.”
Id. (quoting PROSSER & KEETON, supra). In Webb, 575 N.E.2d at 995, our
supreme court developed a useful tool for analyzing whether a duty exists,
which requires the balancing of three factors: “(1) the relationship between the
parties, (2) the reasonable foreseeability of harm to the person injured, and (3)
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public policy concerns.” In the present case, the parties agree that the three-part
Webb test is the proper analysis for determining whether Empire Gas owed a
duty of care to the Tenants. We disagree.
[18] The Webb test is applicable “only in those instances where the element of duty
has not already been declared or otherwise articulated.” N. Ind. Pub. Serv. Co. v.
Sharp, 790 N.E.2d 462, 465 (Ind. 2003). A long line of Indiana case law holds
that gas companies have a duty “to use reasonable care in the distribution of
gas” because it is “a dangerous instrumentality.” Palmer & Sons Paving, Inc. v. N.
Ind. Pub. Serv. Co., 758 N.E.2d 550, 554 (Ind. Ct. App. 2001) (further noting that
the gas company’s duty requires using “reasonable care in operating its lines so
as to prevent the escape of gas in such quantities as to become dangerous to life
and property”). As Technician Jenkins explained, one risk of liquid propane is
that “[i]t’s combustible.” (Appellant’s App. p. 145). A gas company’s duty
extends to “the public generally, its customers, and third persons who might
reasonably be foreseen to be affected by the utility’s provision of service.” S. E.
Ind. Natural Gas Co. v. Ingram, 617 N.E.2d 943, 951 (Ind. Ct. App. 1993).
Embodied within this duty of care is “the so-called duty to warn.” Id. at 953.
[19] The case at hand presents a unique inquiry because it is undisputed that the
Tenants never requested service or purchased any propane from Empire Gas.
Furthermore, the designated evidence establishes that when Empire Gas
contracted with Middleton, the previous tenant, it provided him with the
necessary safety information and warnings and also conducted a safety check.
Thereafter, the Property became vacant, and Empire Gas barred access to the
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propane left in the tank by placing a lock on the POL valve. Unbeknownst to
Empire Gas, the Tenants subsequently moved in, and an unauthorized party
tampered with the lock and reconnected the gas line to the mobile home.
Accordingly, because the Tenants were not customers, and the public at large
was not affected by the propane supply to the mobile home, the existence of any
duty is contingent upon whether it was reasonably foreseeable that the Tenants
“might be injured by the [propane] gas.” Richmond Gas Co. v. Baker, 45 N.E.
1049, 1050 (Ind. 1897).
[20] Foreseeability is a component of both the duty and proximate cause elements of
negligence, and each element requires a separate and distinct foreseeability
analysis. For proximate cause, foreseeability entails a hindsight evaluation of
“the particular circumstances of an incident after the incident occurs.”
Goldsberry, 672 N.E.2d at 479. Thus, negligent conduct “is the proximate cause
of an injury if the injury is a natural and probable consequence which, in light of
the circumstances, should reasonably have been foreseen or anticipated.” Id.Proximate cause is usually a question of fact for the jury. Id. In turn,
foreseeability for the purpose of finding a legal duty permits only “a general and
broad analysis of the plaintiff and the harm involved, without regard to the facts
of the actual occurrence.” Id. This appeal concerns solely the “lesser inquiry”
of foreseeability in the context of a duty. Id.[21] Ordinarily, the foreseeability that is required to invoke a duty “depends upon
the power to prevent injury.” Tibbs v. Huber, Hunt & Nichols, Inc., 668 N.E.2d
248, 250 (Ind. 1996). In this case, Empire Gas was not afforded an opportunity
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to administer warnings or to conduct its usual safety inspection prior to the
explosion. See I.C. § 34-20-4-2 (instructing that a seller has a duty to provide
reasonable warnings and instructions insofar as such warnings can be given in
the exercise of reasonable diligence). Nevertheless, Empire Gas maintained a
propane tank—which it knew to be approximately half full—on the vacant
Property. Without considering the specific facts of the case, we find that it was
reasonably foreseeable that a new tenant would eventually occupy the Property,
and that the future occupant could be injured by misuse of the propane or other
undetected defect.
[22] As a distributor of gas, we hold that Empire Gas owed a general duty of
reasonable care to any persons who might be injured by its propane, which
includes the Tenants occupying the Property. However, we note that the mere
existence of a duty does not guarantee that the Tenants will prevail on their
negligence claim at trial. Our analysis does not take into account, in part, the
fact that a third party tampered with the lock and reconnected the gas line or
that the Tenants misappropriated Empire Gas’ propane; these factors implicate
the other elements of negligence—i.e., breach of duty and proximate cause.
Whether Empire Gas exercised the requisite degree of care and caution in light
of all of the particular circumstances is a question that is best-suited for a jury or
fact-finder to decide. See S. Ind. Gas Co. v. Tyner, 97 N.E. 580, 585 (Ind. App.
1912). Because we conclude that Empire Gas did not negate the duty element,
the trial court properly denied summary judgment on the issue of negligence.
We remand for a resolution of this issue on the merits.
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B. Strict Liability
[23] Count IV of the Tenants’ Complaint alleges that Empire Gas is strictly liable for
their injuries because its propane gas and odorant “were in an unreasonably
dangerous and defective condition at the time Empire [Gas] manufactured
and/or distributed and/or offered for sale and use.” (Appellant’s App. p. 20).
In order to prevail on a strict liability action, a plaintiff must demonstrate that
“(1) the product was defective and unreasonably dangerous; (2) the defective
condition existed at the time the product left the defendant’s control; and (3) the
defective condition was the proximate cause of the plaintiff’s injuries.”
Rushford, 868 N.E.2d at 810; see I.C. § 34-20-4-1. “The requirement that the
product be in a defective condition focuses on the product itself while the
requirement that the product be unreasonably dangerous focuses on the
reasonable expectations of the consumer.” Welch v. Scripto-Tokai Corp., 651
N.E.2d 810, 814 (Ind. Ct. App. 1995), reh’g denied.
[24] Notwithstanding whether the propane gas at issue was defective or
unreasonably dangerous for its expected use, Empire Gas argues that, “as a gas
retailer,” it cannot be held strictly liable under the Act. (Appellant’s Br. p. 25).
Pursuant to Indiana Code section 34-20-2-3, “[a] product liability action based
on the doctrine of strict liability in tort may not be commenced or maintained
against a seller . . . unless the seller is a manufacturer of the product or of the
part of the product alleged to be defective.” See Kennedy v. Guess, Inc., 806
N.E.2d 776, 780 (Ind. 2004), reh’g denied.
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[25] For purposes of the Act, a “seller” is defined as “a person engaged in the
business of selling or leasing a product for resale, use, or consumption.” I.C. §
34-6-2-136. On the other hand, a “manufacturer” is defined as “a person or
entity who designs, assembles, fabricates, produces, constructs, or otherwise
prepares a product or a component part of a product before the sale of the
product to a user or consumer.” I.C. § 34-6-2-77. A “manufacturer” may also
include a seller who:
(1) has actual knowledge of a defect in a product;
(2) creates and furnishes a manufacturer with specifications relevant to
the alleged defect for producing the product or who otherwise
exercises some significant control over all or a portion of the
manufacturing process;
(3) alters or modifies the product in any significant manner after the
product comes into the seller’s possession and before it is sold to the
ultimate user or consumer;
(4) is owned in whole or significant part by the manufacturer; or
(5) owns in whole or significant part the manufacturer.
I.C. § 34-6-2-77.
[26] In its motion for summary judgment, Empire Gas asserted that it is “not a
‘manufacturer’ of the propane” and is, therefore, not strictly liable. (Appellant’s
App. p. 31). Although Empire Gas’ designated evidence does not provide any
support for this claim, the Tenants’ designated evidence includes the deposition
of Technician Jenkins. According to Technician Jenkins, Empire Gas is in the
business of “sell[ing] and distribut[ing] propane.” (Appellant’s App. p. 142).
No evidence to the contrary was presented, nor was any evidence produced to
demonstrate any of the statutory exceptions under which a seller could be
deemed a manufacturer. See I.C. § 34-6-2-77. In fact, Technician Jenkins
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clarified that Empire Gas does not add the odorant to the propane; rather, the
odorant is added by the manufacturer before it is delivered to Empire Gas for
resale. See I.C. § 34-6-2-77(3). Because the undisputed designated evidence
establishes that Empire Gas is solely a retailer of propane—not a manufacturer,
we conclude that there is no genuine issue of material fact. Accordingly,
Empire Gas is entitled to judgment as a matter of law on the Tenants’ claim of
strict liability. 3
CONCLUSION
[27] Based on the foregoing, we conclude that Empire Gas is not entitled to
summary judgment on the Tenants’ claim of negligence because a gas company
owes a common law duty of reasonable care in the distribution of its product.
We further conclude that Empire Gas is entitled to summary judgment on the
Tenants’ claim of strict liability because the undisputed material facts establish
that Empire Gas is not a propane manufacturer.
[28] Affirmed in part, reversed in part, and remanded for further proceedings.
[29] Vaidik, C. J. concurs in result without separate opinion
[30] Baker, J. concurs in part and dissents in part with separate opinion
3
Having determined that the Tenants cannot maintain a product liability action based on strict liability in
tort because Empire Gas is not a manufacturer, we need not address whether the propane was presumed non-
defective due to compliance with applicable codes, standards, and regulations. See I.C. § 34-20-5-1.
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IN THE
COURT OF APPEALS OF INDIANA
Heritage Operating, L.P. d/b/a Court of Appeals Case No.
88A01-1410-CT-440
Empire Gas,
Appellant-Defendant,
v.
Lois A. Mauck and Ralph
Thomas,
Appellees-Plaintiffs.
Baker, Judge, concurring in part and dissenting in part.
[31] I respectfully dissent from the majority on the issue of negligence. To affirm the
denial of summary judgment on this issue is, in my opinion, to elevate form
over substance to an untenable degree.
[32] To put the facts plainly, Empire Gas contracted with Middleton in 2010 to
supply propane to the mobile home he was renting. It is undisputed that
Empire Gas provided Middleton with all relevant instructions and safety
information. Middleton passed away in July 2011, leaving the propane tank
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approximately half full. After his death, Empire Gas placed a lock on the POL
valve to prevent any unauthorized use. It also placed a red tag on the lock
cautioning any reader regarding the danger of propane. Entirely unbeknownst
to Empire Gas, the plaintiffs began renting the mobile home in October 2011.
Although the landlord directed the plaintiffs to call Empire Gas to hook up the
gas line, the plaintiffs never did so. After the lock was mysteriously removed
and the gas line mysteriously reconnected, the tragedy occurred.
[33] As the majority notes, a gas company’s duty to use reasonable care extends to
the public, its customers, “and third persons who might reasonably be foreseen
to be affected by the utility’s provision of service.” S.E. Ind. Natural Gas Co.,
617 N.E.2d at 951. In this case, only the latter category of third parties even
arguably applies.
[34] Here, Empire Gas did not know that the property was occupied after July 2011.
Indeed, Empire Gas did not know that the plaintiffs existed. As a matter of
law, I do not believe it is reasonably foreseeable that a new tenant would
occupy the property without ever contacting Empire Gas to hook up the gas line. In
my view, Empire Gas owed the plaintiffs no duty under these circumstances.
Consequently, I would reverse the trial court’s denial of Empire Gas’s summary
judgment motion on the issue of negligence.
[35] I concur with the majority on the issue of strict liability.
[36]
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