Pennsylvania Superior Court Holds Gas Utility Company Not Subject to Negligent Misrepresentation Claim for Improperly Marking Underground Lines Under “One Call” Act

Excavation Technologies, Inc. v. Columbia Gas Co.
2007 PA Super 327; 2007 Pa. Super LEXIS 3845 ( Super. Ct., Nov. 7, 2007)

The Pennsylvania Superior Court held that a public utility asked under the Pennsylvania “One-Call” Act to mark the location of its underground gas lines in the vicinity of a work site could not be sued for economic losses suffered by an excavation contractor which struck gas lines which it had erroneously failed to mark or mismarked.

Excavation Technologies, Inc. (ETI) was hired to perform excavation work for a the extension of a waterline. Pursuant to Pennsylvania’s “One Call” Act, ETI requested Columbia Gas, a public utility company, to mark any gas lines near the work sites. ETI alleged that Columbia improperly marked some and altogether failed to mark others. As a result, ETI struck eleven lines, and incurred $74,502.06 in damages for manpower and equipment downtime.

ETI sued Columbia Gas for negligence and breach of contract. Columbia filed preliminary objections, which were sustained by the trial court. The trial court held that ETI’s claim could not be maintained because its losses were solely economic in nature.

On appeal, ETI argued that it had stated a cause of action against Columbia based on a negligent misrepresentation theory under Section 552 of the Restatement (Second) of Torts. ETI argued that it fell into the Bilt-Rite exception adopted by the Pennsylvania Supreme Court for economic loss under Section 552. In Bilt-Rite, an architectural firm that negligently supplied information to a contractor was held subject to suit for purely economic losses in the nature of cost overruns. Columbia Gas countered by arguing that it could not be equated to a design professional – it was not in the business of furnishing information to contractors, but rather was in the business of supplying utility services to its customers. It further argued that to impose liability on a utility company for purely economic loss would be contrary to the policy of the One Call Act.

Following a review of the Court’s reasoning in the Bilt-Rite decision, the Court affirmed the dismissal of the Complaint. Critical to the Court’s decision not to extend Bilt-Rite was the fact that the Columbia Gas was a public utility company that was statutorily bound to provide information. It was in the business of providing public utility gas service, not a professional as in Bilt-Rite providing information in a professional capacity. The relationship of ETI, a contractor, and Columbia Gas, a public utility company, bore no resemblance to that of an architect and contractor.

As the court stated, “[a] utility responding pursuant to its obligations under the One Call Act stands on a completely different footing than that of an architect, or other design professional, as its only contractual relationship with any party to the project is to supply gas to its customers, not information for the guidance of others in their business.”

The Court went on to further state that the “One Call” Act neither permits recovery for economic damages nor would the Court expand permissible recovery beyond the statute without the express direction of the legislature. It was not the purpose of One Call Act to protect against economic loss. Rather, the purpose of the “One Call” Act is to have a centralized notification system that prevents immediate harms to the public. Private contractors will not receive protection in the form of an extension of Bilt-Rite at the expense of public utilities.

Click here to view full opinion as PDF (provided with the permission of LexisNexis).

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