Case Title: D&D TRANSPORT, LTD., a Wyoming Corporation V. INTERLINE ENERGY SERVICES, INC., a Wyoming Corporation, a wholly-owned subsidiary company of INTERLINE RESOURCES CORPORATION, a Utah Corporation, and BASIN WESTERN, INC., a Utah Corporation

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 2005-08-04T00:00:00Z

Document:
D&D TRANSPORT, LTD., a Wyoming Corporation V. INTERLINE ENERGY SERVICES, INC., a Wyoming Corporation, a wholly-owned subsidiary company of INTERLINE RESOURCES CORPORATION, a Utah Corporation, and BASIN WESTERN, INC., a Utah Corporation2005 WY 86117 P.3d 423Case Number: 04-206Decided: 08/04/2005
APRIL 
TERM, A.D. 2005

 
 

D&D 
TRANSPORT, LTD.,

a 
Wyoming Corporation,

Appellant

(Plaintiff),

 
 
v.

 
 

INTERLINE 
ENERGY SERVICES, INC.,

a 
Wyoming Corporation, a wholly-owned

subsidiary 
company of INTERLINE

RESOURCES 
CORPORATION, aUtah

Corporation, 
and BASIN WESTERN, INC.,

a Utah 
Corporation,

Appellees

(Defendants).

 
 

Appeal 
from the DistrictCourtofConverseCounty

The 
Honorable John C. Brooks, Judge 

 
 

Representing 
Appellant:

Ronald 
E. Triggs, Cheyenne, 
Wyoming

 
 

Representing 
Appellee Interline Energy Services, Inc.:

Timothy 
G. Williams, Alpine, Utah

 
 

Representing 
Appellee Basin Western, Inc.:

Cameron 
S. Walker and Judith Studer of Schwartz, Bon, Walker & Studer, LLC, 
Casper, Wyoming.  
Argument by Mr. Walker.

 
 
Before 
HILL, C.J., and GOLDEN, KITE, VOIGT, and BURKE, 
JJ.

 
 
GOLDEN, 
Justice.

 
 
[¶1]      D&D 
Transportation, Ltd. appeals the district court's grant of summary judgment in 
favor of Interline Energy Services, Inc. and Basin Western, Inc.  D&D sued Interline and Basin Western 
in negligence for damages caused as a result of a fire at Interline's processing 
plant.  D&D sought damages 
including approximately $3.6 million dollars for lost profits.  We affirm.

 
 
ISSUES

 
 

[¶2]      The three parties 
each state the issues differently.  
D&D phrases the issue as:

Did the 
court err in granting the motions for summary judgment of Basin Western, Inc., 
and Interline Energy Services, Inc., as to consequential economic damages 
sustained by the plaintiff? 

 

Interline 
states the issues as:

 
 

1.                  
Is 
Tolar v. [Amax] Coal 
Co., 862 P.2d 144 (Wyo. 1993) the controlling precedent in Wyoming which allows D&D to 
maintain its tort action for consequential economic damages it claims to have 
suffered [?]

 
 

2.                  
Did 
Interline owe D&D a duty to protect its economic interests by keeping its 
Plant in operation [?]

 
 
Lastly, 
Basin Western asserts the following issues:

 
 

A.        
Did the 
court err when it granted summary judgment for "economic damages" that had no 
relation to the property loss sustained by D&D?

 
 

B.        
Can a 
business (D&D) claim damages for prospective lost profits and/or loss of 
business value for inconvenience to its operations allegedly caused by injury to 
a third party's property?

 
 

C.       
Did 
Interline or Basin Western owe a legal duty to D&D not to damage the Well 
Draw Gas Plant?

 
 

D.       
Did 
D&D present competent evidence to support its claim of economic loss?  

 
 
FACTS

 
 
[¶3]      Interline owned a 
processing facility in Converse 
County, Wyoming, known 
as the Well Draw Gas Plant. Interline processed natural gas liquids at this 
facility. Basin Western and D&D are trucking companies that hauled natural 
gas liquids to the Well Draw Gas Plant.  
D&D also hauled product from the Well Draw Gas Plant to other 
facilities. During the relevant times, D&D was in Chapter 11 bankruptcy 
working to execute its approved bankruptcy plan.  

 
 
[¶4]      On June 22, 2002, 
a D&D trucking unit was at the Well Draw Gas Plant delivering product.  Two Basin Western trucking units were 
also at the plant.  D&D parked 
its truck at the plant's loading facility and waited for the opportunity to 
unload.  At this time, one of the 
Basin Western drivers was in the process of unloading the product he had hauled 
to the plant.  During the unloading 
process, a coupling began to leak.  
The Basin Western driver attempted to stop the leak by striking the 
coupling.  The connection 
de-coupled, and the product rapidly escaped toward the other Basin Western 
truck, which had been left running in violation of Interline's rules and 
regulations for loading and unloading. When the escaping product reached the 
running truck there was an explosion and fire. The fire spread to and destroyed 
D&D's trucking unit, which included a tractor, a full size trailer, and a 
"pup" trailer.  The fire also 
substantially damaged the Well Draw Gas Plant.  Some time after the fire, Interline was 
able to resume a small portion of its previous operations and separated some 
natural liquids into natural gasoline and liquefied petroleum.  The lighter ends were sent down the 
pipeline, and the remainder was hauled by Interline's own trucks. 

 
 
[¶5]      On July 8, 2003, 
D&D filed suit in negligence against Interline and Basin Western, seeking to 
recover damages as a result of that fire. D&D claimed $130,000 in 
compensatory damages related to the loss of its equipment. D&D also sought 
$3.6 million in consequential economic damages for prospective lost profits and 
loss of business value. In essence, D&D argued that due to Basin Western's 
and Interline's negligence, D&D was unable to emerge from bankruptcy and the 
business failed.  Basin Western 
filed a motion for partial summary judgment on D&D's claim for consequential 
economic damages.  The district 
court denied this motion on March 11, 2004, stating "this court lacks power to 
enter a partial summary judgment on one element of damages under the holding of 
Errington v. Zolessi, 9 P.3d 966 (Wyo. 2000)." 

 
 
[¶6]      Thereafter, on 
March 12, 2004, the parties participated in mediation.  At mediation the parties settled all the 
issues related to D&D's loss of the tractor and two trailers as well as the 
lost income that could have been earned by those units before they were 
replaced. However, the parties were not able to settle the issues related to the 
consequential economic damages or agree on language for a release following the 
mediation.  The matter was then 
presented to the district court for resolution.  Because the uninsured damages and lost 
income for injury to D&D's truck and trailers had been settled, Basin 
Western filed another motion for summary judgment. Basin Western argued that all 
of D&D's damage claims had been resolved by settlement or were disallowable 
as a matter of law. The district court granted summary judgment against D&D 
in favor of Basin Western finding that the damages were not recoverable as a 
matter of law.  The claims against 
Interline were similarly resolved.  
D&D now appeals.   

  

STANDARD 
OF REVIEW

            

[¶7]                              
Summary judgment is appropriate when there are no genuine issues of 
material fact and the moving party is entitled to judgment as a matter of law. 
Owsley v. Robinson, 2003 WY 33, ¶7, 65 P.3d 374, ¶7 (Wyo. 
2003). See also W.R.C.P. 56(c). This 
Court considers the record in the perspective most favorable to the party 
opposing the motion and gives that party the benefit of all the favorable 
inferences which may be fairly drawn from the record. Hasvold v. Park Cty. 
Sch. Dist. No. 6, 2002 
WY 65, ¶11, 45 P.3d 635, ¶11 (Wyo. 2002); Anderson v. Solvay Minerals, Inc., 3 P.3d 236, 238 (Wyo. 
2000). We review questions of law de 
novo without giving any deference to the district court's determinations. Hasvold, ¶11.

Castleberry 
v. Phelan, 2004 WY 
151, ¶8, 101 P.3d 460, ¶8 (Wyo. 2004).

 
 
DISCUSSION

 
 
[¶8]      In short terms, 
the issue before this Court is whether the district court erred in granting 
summary judgment.  When resolving 
this issue it is important to recognize that the parties settled D&D's claim 
for physical damage to its equipment and lost profits resulting from the 
inability to use that equipment before it was replaced.  Only D&D's consequential economic 
loss claim remained for trial.  

 
 
[¶9]      It is also 
important to understand the basis of D&D's economic loss claim.  D&D's two claims are described in 
D&D's responses to Basin Western interrogatories:

 
 

5.      
Please 
describe with specificity the compensatory damages D&D Transport alleges in 
the Complaint including:

 
 

(a) the 
amount of such loss;

(b) the 
manner by which such loss was computed;

(c) identify 
all documents and witnesses tending to substantiate your answer to this 
interrogatory and subparts.

 
 
ANSWER: 
$15,000 for deductible, $30,000 for downtime and $85,000 for equipment, subject 
to a subrogation demand by Great West Casualty.

 
 

6.      
Please 
describe with specificity the lost profits of D&D Transport stated in the 
Complaint, including:

 
 

(a) the 
amount of such loss;

(b) the 
manner by which such loss was computed;

(c) identify 
all documents and witnesses tending to substantiate your answer to this 
interrogatory and subparts.

 
 
ANSWER:  Well Draw Gas Plant, hauled two loads 
per day, seven days a week, 13,000 gallons per load at .03¢ per gallon equals 
$390.00 per load times two loads per day equals $780.00 per day, times 365 days 
per year equals $284,700 per year, plus lost profit from back hauls.  Leah Thompson and David Thompson.  Invoices.  The complete report, being prepared by 
Dr. Jerome Sherman, will be forwarded upon completion. 

 
 
Dr. 
Jerome Sherman's report projected lost profits for D&D, which shut down 
approximately three months after the Well Draw Gas Plant fire.  Dr. Sherman calculated this loss at 
$3,628,970 based on two years and three months of lost profits plus the value of 
the business at five times the earnings.  

 
 
[¶10]   An affidavit from D&D's 
president further explained that D&D intended to do business with Hinze Inc. 
& Affiliates and Plains Marketing L.P.  
The plan for this business arrangement was described as follows: 

 
 
B.        It is 
common practice for trucking companies to run their trucks loaded all of the 
time to avoid "empty" miles.  
D&D did this to make sure that the trucks were making money.  If trucks can be kept loaded at all 
times, competitive rates can be offered to customers.  

 
 
C.        
D&D was to use the Well Draw facility as a hub for the hauling with 
Hinze and Plains as it was only 75 miles from D&D's terminal, which shortens 
the "empty" miles

 
 
D.        
D&D's plan was that after it hauled a load of [natural gasoline] to 
Cheyenne, it would then haul a load from Cheyenne to a customer in Rock Springs, 
unload the fuel and run 74 miles empty to Opal, Wyoming, where D&D would 
load the [natural gasoline] for Plains, haul it to the rail spur at Hinze in 
Cody, where D&D had the option to either haul fuel out of Cody and take it 
to Casper or Rock Springs, or drive 46 empty miles to Elk Basin, Wyoming, where 
D&D would then load [natural gasoline] to take to Cheyenne, then re-load in 
Cheyenne and bring it back to Casper, then drive the 75 miles back to Well 
Draw.  

 
 
E.        After 
the explosion at Well Draw, that forced D&D to drive further to pick up 
loads.  For instance, instead of 
driving 75 miles to load, D&D had to drive 185, 295, 147 or 261 miles to get 
a load.  Because of this, the 
economics of the intent to do business with Hinze and Plains was no longer 
feasible. 

 
 
At the 
time of the fire, D&D did not have a contract with Interline.  D&D merely picked up loads of 
product and hauled them to and from Interline for third parties. Thus, it 
appears D&D's economic loss claim is based on D&D's inability to haul to 
and from the Well Draw Gas Plant following the fire due to the fact that the 
Well Draw Gas Plant was not operational or safe.   

 
 
[¶11]   D&D begins by arguing that 
economic damages are recoverable in tort generally, and in this case 
specifically, under the principles established by this Court in Tolar v. Amax 
Coal Co., 862 P.2d 144 (Wyo. 1993).  D&D 
asserts that the issue in Tolar was whether the economic losses of the 
plaintiff were recoverable in an action sounding in negligence and this Court 
found that they were.  Therefore, 
D&D maintains this case is "on all fours corners" with Tolar.  We do not agree with D&D's analysis 
of the Tolar case. 

 
 
[¶12]   In Tolar, the owners of a 
convenience store sued a mine developer following the forced evacuation of their 
convenience store, which was allegedly caused by the mine's release of poisonous 
methane and hydrogen sulphide gases into the atmosphere.  Tolar, 862 P.2d  at 145.   The Tolars argued the evacuation 
caused their business to fail, and they sought consequential economic damages 
for this failure.  The mine 
developer argued the business failed because of the economy. Id. The district 
court granted summary judgment to the mine developer finding the convenience 
store's failure was a result of a downturn in the economy, not the forced 
evacuation.  Id. at 144.  We reversed.  We held that the cause of the 
convenience store's failure was hotly disputed, and as such, the case was not 
appropriate for summary judgment.  
Instead, the cause of the damages must be resolved by the fact finder, 
unless reasonable persons could not disagree. Id. at 146.  Indeed, Tolar simply stands for 
the proposition that the general rule in Wyoming is that the proximate cause of harm is 
a question for the trier of fact. Proximate cause is not the issue presented by 
the instant case, and therefore the analysis in Tolar is not applicable. 

 
 
[¶13]   Additionally, even if Tolar 
could be read in some limited manner to stand for the proposition that these 
types of economic losses are recoverable in tort, this case is distinguishable 
in another important respect.  In 
Tolar, the Tolars owned the business whose operations were impaired as a 
result of the mine operator's negligence, and it was that business's failure 
that allegedly caused the Tolars' future economic loss.  In other words, there was a direct link 
between the property damaged and the economic loss claimed.  In this case there is no such link.  D&D bases its claim for economic 
losses on damage to the Well Draw Gas Plant and the cessation of the plant's 
normal operations.  D&D does not 
own the Well Draw Gas Plant.  In 
fact, D&D does not even have a contractual relationship with the Well Draw 
Gas Plant.  D&D did own a truck 
that was damaged, but the damage to the truck did not cause the economic loss 
D&D seeks to recover.  Thus, 
D&D's claim for economic damages in this case is distinguishable from the 
economic damages claimed in Tolar.  

 
 
[¶14]   D&D next points out that 
Wyoming 
follows the economic loss rule, which bars recovery in tort when a plaintiff 
claims purely economic damages unaccompanied by physical injury to persons or 
property.  Rissler & McMurry 
Co. v. Sheridan Area Water Supply Joint Powers 
Bd., 929 P.2d 1228, 
1234 (Wyo. 
1996).  D&D argues that because 
D&D's property was damaged, the economic loss rule is satisfied, and 
therefore D&D is entitled to recover the economic damages they claim.  Wyoming does indeed follow the economic loss 
rule.  We have adopted the rule in 
products liability cases based on negligence and strict liability theories.  Rissler, at 1234 n.1 (citing 
Schneider v. Holland Hitch, 843 P.2d 561, 586 (Wyo. 
1992); Continental Insurance v. Page Engineering, 783 P.2d 641, 647-9 (Wyo. 
1989); Buckley v. Bell, 703 P.2d 1089, 1095 (Wyo. 
1985); Cline v. Sawyer, 600 P.2d 725, 732 (Wyo. 
1979)).  We have also applied this 
same rule where an employer sued a third party in negligence for the loss of his 
employee's services.  See 
Champion Well Service, Inc. v. NL Industries, 769 P.2d 382 (Wyo. 1989). 

 

[¶15]   In Champion, Champion Well 
Service claimed that NL Industries negligently injured one of Champion's key 
employees.  Champion argued that, as 
a result of the employee's injury, Champion suffered economic loss even though 
Champion suffered no direct injury.  
Id. at 382.  In concluding that Champion was not 
entitled to the damages claimed we noted:

 
 

We agree 
that NL owed a duty of care to Champion to avoid the risk of causing economic 
damages.  But the economic damages 
recoverable in these circumstances are those that result from injury to, or loss 
of use of, property, not injury to third persons.  Thus, NL owed a duty of care to Lang to 
avoid negligently causing him injury.  
But to hold that NL owed a duty to diverse third persons, including 
Champion, to avoid injury to Lang would be to adopt a rule that is too broad, 
unwieldy, and impractical in present day society.  Surely Lang's injury might impact his 
friends, his fishing buddies, his business partners, his employer, his grocery 
man, or his cleaning lady. They might have suffered damages, or they might not. 
None had any assurance that their relationship with Lang would continue for any 
particular period of time. Even personal service contracts are practically 
unenforceable insofar as they seek to force an employee to work. Claimed damages 
would be a product of total speculation and conjecture. If we adopted 
appellant's theory, every multi-national corporation whose employee was 
negligently injured by a third party in an auto accident, a ball game, at work, 
or at a party, would have a claim for damage. We decline appellant's invitation 
to adopt this theory for recovery.

* * * 
*

We 
are convinced that the cause of action argued by Champion would erase the bright 
line which "has traditionally marked negligence claims for economic harm as off 
limits." Prosser & Keeton, Law of Torts, § 129, p. 1001 (5th Ed. 1984). 
Therefore, we hold the district court properly dismissed Count II of Champion's 
complaint for failure to state a claim upon which relief can be 
granted.

 
 

Id. at 
384-85.  Similar reasoning is 
applicable in this case.  Basin 
Western and Interline owe a duty of care to avoid the risk of causing economic 
damages.  However, the economic 
damages recoverable in this circumstance are those that result from loss of the 
use of D&D's property, not injury to a third persons property.  Indeed, the damages D&D seeks to 
recover are as remote as those claimed in Champion.  D&D had no assurance its 
relationship with Interline would continue for any particular time.  D&D's damages are therefore the 
product of speculation and conjecture and would similarly erase the bright line 
which has traditionally marked negligence claims for economic harm as off 
limits.  Id. at 385.

 
 

[¶16]   Furthermore, one of the policies 
behind the economic loss rule is the recognition that the economic consequences 
of any single accident are virtually limitless.  Accordingly, the economic loss rule 
recognizes this and seeks to avoid the consequence of open-ended tort 
liability.  In Re Chicago Flood Litigation, 680 N.E.2d 265, 274 
(Ill. 
1997).  Beyond seeking to avoid the 
policy behind the economic loss rule by arguing it suffered property damage and 
therefore complies with the letter of the rule, D&D has skipped a critical 
step in making its negligence claim.  
Specifically, as with all negligence claims, D&D must show four 
elements:  1) a duty owed to the 
plaintiff, 2) a breach, or violation of that duty, 3) which is the proximate 
cause of 4) plaintiff's injuries.  
Century Ready-Mix Co. v. Campbell Cty. Sch. Dist., 816 P.2d 795, 802 (Wyo. 1991).   In this instance, D&D has 
failed to show the first element that Basin Western and Interline had a duty to 
D&D and without a legal duty, there can be no negligence claim.  "Duty focuses on the relationship of 
individuals and imposes on one an obligation for the benefit of the other." 
Erpelding v. Lisek, 2003 WY 80, ¶14, 71 P.3d 754, ¶14 (Wyo. 
2003).  A duty exists if the facts 
show there is a relationship between the parties such that the community will 
impose a legal obligation on one party for the benefit of the other.  Stated differently, a duty exists if the 
interest of the plaintiff which has suffered invasion was entitled to legal 
protection at the hands of the defendant. Id. (citing Prosser and Keeton on the 
Law of Torts §37, at 236 (5th ed. 1984)).  If no such relationship exists, then an 
obligation for the benefit of another is not imposed.  Erpelding, ¶14.     

   

[¶17]   For D&D's claim, the question 
is whether either Interline or Basin Western owed a duty to D&D not to 
injure the Well Draw Gas Plant. D&D fails to identify any such duty imposed 
on Basin Western or Interline for D&D's benefit.  We too are unable to identify such a 
duty.  Certainly Interline and Basin 
Western had no contractual obligation to continue operating the Well Draw Gas 
Plant.  Interline and Basin Western 
did owe a duty to D&D not to negligently damage D&D's equipment while it 
was at the plant and that duty was breached.  The breach of that duty proximately 
caused the damages to D&D's truck, and Interline and Basin Western are 
therefore liable to compensate D&D for those damages.  However, Interline and Basin Western did 
not owe D&D a duty to continue operating the plant so D&D trucks could 
earn revenue by hauling in and out of the plant. In this instance, the 
relationship between D&D and Interline was simply a mutually advantageous 
business relationship.1 Consequently, Interline and Basin 
Western owed D&D no duty to keep the Well Draw Gas Plant in operation or 
even to do business with D&D.  

 
 

[¶18]   We therefore conclude that no 
contractual or legal relationship existed which would support a duty to D&D 
in this instance.  A duty of care 
must be established first, and D&D has failed to make such a showing. 
"Without duty, negligence is not actionable.  The existence of duty is a question of 
law, making an absence of duty the surest route to summary judgment in 
negligence actions."  
Erpelding, ¶13.  Thus, 
we hold that the district court did not err in granting summary judgment in 
favor of Basin Western and Interline.

  

CONCLUSION

 
 
 [¶19]  D&D failed to show that Basin Western 
and Interline had a duty to not injure the Well Draw Gas Plant for D&D's 
benefit.  Without a duty a 
negligence claim will fail.  
Accordingly, we affirm the district court's grant of summary judgment in 
favor of Basin Western and Interline.  

 
 
FOOTNOTES

 
 

1Wyoming does recognize a cause of action for tortuous 
interference with business expectancy.  
However, D&D did not make this claim, and the circumstances of this 
case do not appear to support such a claim.  See Ahrenholtz v. Laramie Econ. Dev. Corp., 
2003 WY 149, ¶17, 
79 P.3d 511, ¶17 (Wyo. 
2003).  Instead, this is a pure 
negligence claim and these damages are not damages that can be recovered in 
negligence in this instance.