Pennsylvania Supreme Court Holds Utility Not Liable to Excavation Contractor for Economic Loss Resulting from Inaccurately Marking Location of Gas Lines

Excavation Technologies, Inc. v. Columbia Gas Co. of PA
2009 Pa. LEXIS 2794 (Pa., December 29, 2009)

The Pennsylvania Supreme Court held that a utility company’s failure to properly mark the location of its lines under the Pennsylvania One-Call Act did not render it liable to an excavation contractor who struck the lines and suffered purely economic losses. It rejected the argument that the utility should be liable under § 552(3) of the Restatement (Second) of Torts because of its public duty to mark the lines.

The contractor for a waterline extension project, Excavation Technologies, Inc. (“Excavation Technologies”), requested that Columbia Gas Company of Pennsylvania (“Columbia Gas”) mark the location of its gas lines around the work sites pursuant to the One Call Act, 73 P.S. § 177(5)(i). The One Call Act requires facility owners to mark the position of underground lines upon request. Columbia improperly marked some lines and failed to mark others. As a result, Excavation Technologies struck various gas lines, which delayed its work and resulted in economic damages of $74,502.06. No physical injury or property damage resulted from striking the gas lines.

Excavation Technologies sued Columbia Gas for negligent misrepresentation under § 552 of the Restatement (Second) of Torts. Among other arguments, Excavation Technologies claimed that Columbia Gas’s negligence constituted a failure to comply with a public duty to provide information about the location of its underground lines under the One Call Act so that it should be liable for negligent misrepresentation under § 552(3). Columbia Gas demurred arguing that the economic loss doctrine precluded liability. The trial court sustained the objections and Excavation Technologies appealed.

On appeal, the Superior Court affirmed the decision finding that the economic loss doctrine generally precludes recovery in negligence actions for injuries which are solely economic. The Superior Court recognized that the Pennsylvania Supreme Court had carved out an exception to the economic loss rule in Built-Rite Contractors, Inc. v. Architectural Studio, 581 Pa. 484 (Pa. Super 2007). In that case, the Pennsylvania Supreme Court recognized a negligence cause of action against a design professional for purely economic losses, adopting § 552(1) and § 552(2). The Superior Court held that § 552(1) and § 552(2) did not apply to current case because unlike the architect in Bilt-Rite, Columbia Gas was not in the business of supplying information for pecuniary gain. Further, the Superior Court declined to adopt § 552(3), reasoning that the legislature did not intend to impose liability on utility companies for economic harm occasioned by an inaccurate response to the One Call Act.

The Supreme Court of Pennsylvania accepted an appeal from the Superior Court’s decision. The Supreme Court first found that the Superior Court correctly distinguished the case from Bilt-Rite. Accordingly § 552(1) and § 552(2) did not apply. The Court next turned to the novel issue of whether the One Call Act creates a public duty under § 552(3) so that violation of that duty could imposes liability for purely economic losses. The Supreme Court agreed with the Superior that the One Call Act does not impose such liability. The Court reasoned:

We find it apparent our legislature did not intend utility companies to be liable for economic harm cause by inaccurate response under the Act, because it did not provide for a private cause of action for economic losses. The economic loss doctrine was well-established in tort law when the Act was enacted, and when the Act was amended in 1986. The legislature was presumably aware of the economic loss doctrine when it established the statutory scheme governing the relationship among the entities required to participate under the Act.

The Court held that there was no statutory basis to impose liability for economic harm under the circumstances of the case.

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