Heritage Tractor, Inc. v. Evergy Kansas Central, Inc.

CourtCourt of Appeals of Kansas
DecidedJuly 19, 2024
Docket126005
StatusPublished

This text of Heritage Tractor, Inc. v. Evergy Kansas Central, Inc. (Heritage Tractor, Inc. v. Evergy Kansas Central, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Heritage Tractor, Inc. v. Evergy Kansas Central, Inc., (kanctapp 2024).

Opinion

No. 126,005

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

HERITAGE TRACTOR, INC., Appellant,

v.

EVERGY KANSAS CENTRAL, INC., Appellee.

SYLLABUS BY THE COURT

1. The Electric Public Utilities Act, K.S.A. 66-101 et seq., vests the Kansas Corporation Commission with jurisdiction and the authority necessary to control those electric public utilities doing business in Kansas.

2. The Kansas Corporation Commission has the right to adopt tariffs which outline the terms and conditions governing the relationship between a utility provider and its customers.

3. A public utility's tariff structure may contain provisions which are intended to limit the utility's liability to its customers provided such tariffs are neither unreasonable nor unjust.

4. Legally established tariffs are construed in the same manner as statutes. When a court sets out to determine the plain meaning of a tariff it looks not only to the language

1 used, but also the specific context in which it appears, as well as the broader context of the tariff provision in its entirety.

5. A tariff provision drafted so broadly as to insulate a public utility from liability for every conceivable act of misfeasance, including ordinary negligence which results in catastrophic property damage, is unreasonable and unenforceable.

6. A party seeking to establish wanton conduct bears a two-pronged burden: (1) demonstrate that the act complained of was conducted with a realization of the imminence of danger; and (2) that the act was performed with a reckless disregard for or complete indifference to its probable consequences. The conduct at issue may be either broad or specific but each component of the inquiry must address the same conduct.

7. Whether a public utility's inspection program comprehensively encompasses the due care demanded by the extreme risk inherent to the services it provides is a question on which reasonable minds could differ, and therefore, it should be submitted to a jury for resolution.

Appeal from Douglas District Court; JAMES R. MCCABRIA, judge. Oral argument held November 14, 2023. Opinion filed July 19, 2024. Reversed and remanded.

Court T. Kennedy, of Gates Shields Ferguson Swall Hammond, P.A., of Overland Park, and Michelle D. Hurley, pro hac vice, of Yost & Baill, LLP, of Minneapolis, Minnesota, for appellant.

John T. Bullock, J. Eric Weslander, and Whitney L. Casement, of Stevens & Brand, LLP, of Lawrence, for appellee.

2 Before HILL, P.J., MALONE and ISHERWOOD, JJ.

ISHERWOOD, J.: Heritage Tractor, Inc. (Heritage), a tractor dealership, suffered over $3 million in catastrophic damage when a utility pole owned by Evergy Kansas Central, Inc. (Evergy), collapsed onto the business and started a fire. Heritage sued Evergy to recover its losses, but the district court granted Evergy's motion for summary judgment.

In a written ruling, the district court explained that Evergy was insulated from liability by virtue of its tariff structure, specifically, section 7.02(B) of its limited liability provisions. That subsection purports to limit Evergy's liability in a vast array of contexts unless Heritage makes an affirmative showing of willful or wanton conduct. The district court also found that Heritage failed to bring forth any evidence which demonstrated that Evergy acted with wanton disregard in that it was aware of the precise impending risk posed by the pole at issue and chose to disregard the same.

Heritage brings this appeal and requests our analysis of whether the district court's grant of summary judgment was erroneous. Following a careful review of the record, scrutiny of Evergy's tariff, and a thorough analysis of the governing law, we agree with the district court's implicit finding that subsections (A) and (C) of tariff 7.02 are inapplicable to this case. However, we disagree with its conclusion that subsection (B) of the tariff provides Evergy with an avenue for the immunity from liability it seeks and instead find that this subsection is overly broad and unreasonable. Finally, contrary to the district court, we are satisfied there was ample evidence from which reasonable minds could differ regarding whether Evergy's preventative measures were sufficient to materially lessen the risk of a catastrophic pole failure and conclude that the proper course of action is to submit that evidentiary dispute to a jury for resolution. Accordingly, the district court's decision granting Evergy's request for summary judgment is reversed, and this case is remanded for further proceedings.

3 FACTUAL AND PROCEDURAL BACKGROUND

The Pole Falls

In early May 2018, a utility pole owned by Evergy fell onto the roof of the Heritage tractor dealership and caused a fire. The subsequent investigation determined that the cause was accidental.

Two years later, Heritage filed suit against Evergy and alleged that Evergy was negligent in its maintenance of the pole by failing to inspect, repair, or replace it. Heritage further asserted that Evergy breached both express and implied warranties and committed trespass.

The Pole and its History

At the time of the incident, the wooden utility pole at issue was approximately 50 years into its estimated 53-year lifespan. We recognize that age should not be relied on, in isolation, as an accurate measure of pole integrity. The equipment attached to the pole accounted for 41% of the pole's strength capacity, as designated under the National Electrical Safety Code (NESC).

Evergy never experienced any problems with the pole prior to the incident, and Tim Deneke, Heritage's on-site manager who was charged with the task of managing any significant problems that arose with the business, never personally observed or fielded any concerns about the pole. In the week leading up to the fire, Deneke walked or drove past the pole almost every day and it "'[l]ooked like every other pole that was around there.'" That is, it never swayed, wobbled, or otherwise exhibited unusual movement. To Deneke's knowledge, there was never a time when Evergy failed to address issues reported by the business.

4 About six weeks prior to the pole's collapse, Heritage notified Evergy that the building's electrical service line appeared to be touching its roof. David Shockley, a journeyman lineman for Evergy, responded to the call and despite finding the service line was not actually in contact with the roof, he still removed some slack from the line. Nothing indicated to Shockley that the pole was unstable.

Evergy's Inspection Procedures

The Kansas Corporation Commission's (KCC) Electric Reliability Requirements did not include a specific inspection process or cycle for these poles. The NESC directs that inspection of utility equipment may be performed '"as experience has shown to be necessary.'" The record reveals that Evergy limited regular patrol-type inspections to only that equipment located within what it considered to be critical points in the community infrastructure and those installed in higher traffic areas such as parks, schools, or fairgrounds. Heritage did not meet either of those classifications. There is also evidence that Evergy limited its inspections to poles within circuits that were lesser performing. The subject pole was associated with a high performing circuit; thus, it was not scheduled for inspection.

During discovery, Nelson Bingel was deposed. He is the current NESC chairman and former Vice President of Product Strategy for Osmose Utilities, the company that performed inspections for Evergy.

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