Title: Champion Well Service, Inc. v. NL Industries

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Champion Well Service, Inc. v. NL Industries1989 WY 47769 P.2d 382Case Number: 88-150Decided: 02/21/1989Supreme Court of Wyoming
CHAMPION 
WELL SERVICE, INC., APPELLANT (PLAINTIFF),

 
 
v.

 
 
NL 
INDUSTRIES, A NEW JERSEY CORPORATION, NL McCULLOUGH, A SUBSIDIARY OF NL 
INDUSTRIES, INC., APPELLEE (DEFENDANT).

 
 
Petition 
for review from the District Court of Campbell County, Timothy J. Judson, 
J.

 
 
Michael N. 
Patchen of Morgan, Price & Arp, Gillette, for appellant.

 
 
Michael K. 
Davis of Redle, Yonkee & Arney, Sheridan, for appellee.

 
 
Before CARDINE, C.J., and THOMAS, URBIGKIT, MACY 
and GOLDEN, JJ.

 
 

CARDINE, Chief 
Justice.

 
 

[¶1.]     Appellant, Champion 
Well Service, Inc. (Champion), seeks review of an order of the district court 
which dismissed its complaint for failure to state a claim upon which relief can 
be granted. Champion claimed that appellee, NL Industries (NL), negligently 
injured one of Champion's key employees and, as a result, it suffered economic 
loss although it suffered no direct injury. In this appeal, Champion asserts its 
complaint contained averments which were sufficient to survive NL's motion to 
dismiss.

 
 

[¶2.]     We 
affirm.

 
 

[¶3.]     The facts relevant to 
the consideration of this appeal, and which were pled in Champion's complaint, 
are these. Champion hired Rod Lang as an employee in 1979. Lang had both a 
bachelor's and a master's degree and was highly intelligent and energetic. 
Champion spent a considerable sum of money training Lang. Eventually Lang became 
Champion's key employee. The following information, gleaned from the briefs, 
serves to flesh out the nature of Champion's claim. Both Champion and NL were 
hired by Prenalta Corporation to work over an oil rig. Champion's role was to 
complete the well and NL's was to perforate it. As a part of its job, NL would 
load or arm the perforating gun. Champion would put the gun in the well. NL 
would set off the charge after the gun was placed in the well by Champion. In 
1985, while working on an oil rig alongside an NL employee, Lang was severely 
injured when the NL employee negligently discharged a casing gun. Champion 
asserts that NL was negligent in improperly training NL's employee; the 
perforating gun was not properly assembled; safety procedures were not properly 
followed in clearing the rig floor area of personnel such as Lang; and/or that 
the perforating gun was defective.

 
 

[¶4.]     Champion asserts that 
it was unable to find an employee to replace Lang who could work up to Lang's 
standards. Some Champion clients complained that Champion's work was no longer 
as good as it was when Lang worked for it. As a result, Champion lost a number 
of jobs and expended significant monies trying to find and train employees who 
could capably handle the work Champion was doing when Lang was its employee. 
Lang's injuries rendered him permanently physically incapable of performing his 
duties for Champion. Lang recovered a substantial award for his personal 
injuries. Champion lost the services of Lang as a direct and proximate result of 
NL's negligence and now seeks to recover damage because it lost Lang's 
services.

 
 

[¶5.]     When considering a 
dismissal under Rule 12(b)(6), W.R.C.P., for failure to state a claim upon which 
relief can be granted, we accept the facts alleged in the complaint as true and 
view the allegations in the light most favorable to Champion. Carbon County 
School Dist. No. 2 v. WyomingStateHospital, 680 P.2d 773, 773-774 
(Wyo. 1984); McClellan v. Tottenhoff, 666 P.2d 408, 414 (Wyo. 
1983). Such motions should be granted sparingly, and Champion is only required 
to plead the operative facts involved in the litigation so as to give fair 
notice of the claim to the defendant. Johnson v. Aetna Cas. & Sur., 608 P.2d 1299, 1302 (Wyo. 1980). As shall be 
borne out by the remainder of this opinion, Champion's failing was not one of 
failure to plead operative facts, but rather that the facts pled do not 
constitute a cause of action which is cognizable in this 
state.

 
 

[¶6.]     Champion divided its 
complaint into two counts. In Count I, it relied upon the common law rule that a 
master may maintain an action for injuries to his servant resulting from 
negligent acts of third persons which damage the master through loss of the 
servant's services. 57 C.J.S. Master and Servant, § 622, p. 424 (1948). This 
common law rule has never been recognized in Wyoming and, although W.S. 8-1-101 adopts the 
common law as the law of this state, we have held that we will recognize the 
common law as modified by judicial decisions and will adopt that interpretation 
which seems best. Krug v. Reissig, 488 P.2d 150, 152 (Wyo. 1971); In re Smith's Estate, 55 Wyo. 181, 97 P.2d 677, 
681 (1940). Moreover, we have previously expressed a reluctance to recognize, or 
continue a recognition of, a common law rule that had its genesis in a social, 
economic and political climate entirely foreign to Wyoming in current times. 
Weaver v. Mitchell, 715 P.2d 1361, 1369 (Wyo. 1986).

 
 

[¶7.]     In reality, only a few 
rather dated cases support the rule espoused by Champion. See Annotation, 
Employer's Right of Action for Loss of Services or the Like Against Third Person 
Tortiously Killing or Injuring Employee, 4 A.L.R.4th 504 (1981). We agree with 
the Superior Court of Connecticut that the weight of authority and the better 
reasoned decisions deny the existence of such a cause of action even though a 
defendant is aware of the employee's relationship with a plaintiff. Steele v. J 
and S Metals, Inc., 32 Conn. Sup. 17, 335 A.2d 629, 630 (1974); and 
see Mattingly v. SheldonJacksonCollege, 743 P.2d 356, 361-63 (Alaska 1987). The 
suggested remedy is a reflection of an outdated social concept and is an anomaly 
in today's society in which employer/employee relationships are based on 
contract rather than ownership. Hartridge v. State Farm Mutual Auto. Ins. Co., 
86 Wis.2d 1, 271 N.W.2d 598, 600, 4 A.L.R.4th 495 (1978). We conclude that, 
under present social circumstances, the rule which permitted recovery by an 
employer for the services of an employee is neither well suited to the times nor 
accepted in modern jurisprudence. The dismissal of Count I of the complaint is 
affirmed.

 
 

[¶8.]     For Count II of its 
complaint, Champion relies on two modern cases which have adopted rules which 
Champion claims permit its cause of action. In People Express Airlines, Inc. v. 
Consolidated Rail Corp., 100 N.J. 246, 495 A.2d 107, 65 A.L.R.4th 1105 (1985), 
the Supreme Court of New Jersey was asked to overturn a summary judgment in a 
case in which a fire began in the freight yard of Consolidated Rail (Conrail) 
when a tank car was punctured during a coupling operation. The fire had the 
potential to produce toxic fumes and necessitated evacuation of a one-mile 
radius from the fire. The evacuation area included an airline terminal building 
used by People Express Airlines (Airline). Airline contended it suffered 
business-interruption losses (e.g., employee time, cancelled flights, lost 
reservations) because of the evacuation, although there was no physical damage 
to Airline or its personnel. The trial court granted summary judgment in favor 
of Conrail (and other associated defendants) on the ground that, absent property 
damage or personal injury, economic loss was not recoverable in tort. Id., 495 A.2d  at 108-109. 
In reversing the summary judgment, the court held:

 
 
"[A] 
defendant owes a duty of care to take reasonable measures to avoid the risk of 
causing economic damages, aside from physical injury, to particular plaintiffs 
or plaintiffs comprising an identifiable class with respect to whom defendant 
knows or has reason to know are likely to suffer such damages from its conduct. 
A defendant failing to adhere to this duty of care may be found liable for such 
economic damages proximately caused by its breach of duty." Id., 495 A.2d  at 
116.

 
 
Further, 
the court held:

 
 
"[A] 
defendant who has breached his duty of care to avoid the risk of economic injury 
to particularly foreseeable plaintiffs may be held liable for actual economic 
losses that are proximately caused by its breach of duty. In this context, those 
economic losses are recoverable as damages when they are the natural and 
probable consequence of a defendant's negligence in the sense that they are 
reasonably to be anticipated in view of defendant's capacity to have foreseen 
that the particular plaintiff * * * is demonstrably within the risk created by 
defendant's negligence." Id., 495 A.2d  at 118.

 
 
The court 
concluded Airline had set forth a cause of action under these standards and was 
entitled to have the matter proceed to a plenary trial. The case is easily 
distinguished. Recovery is not for loss of employee services due to injury to 
the employees. Recovery permitted here is for loss of the injured party's 
property or loss of use of its property needed in the conduct of business. For 
this case to be authority supporting appellant's position, we would be required 
to recognize the injured employee as property of the employer. This we decline 
to do.

 
 

[¶9.]     The People Express 
decision was relied upon, and in large part adopted by, the Alaska Supreme Court 
in its decision in Mattingly v. Sheldon Jackson College, 743 P.2d 356. In that 
case, three of Mattingly's employees were dispatched to SheldonJacksonCollege (College) to clear a drain pipe on 
the college campus. College's employees had excavated and braced a trench to 
expose the drain pipe so Mattingly's employees could perform their work. The 
trench collapsed, and Mattingly's employees were seriously injured. One count of 
Mattingly's complaint asserted a cause of action for economic damages to his 
company despite a lack of physical harm or injury to the company. Under these 
circumstances the Alaska court held:

 
 
"[W]e are 
satisfied that Mattingly has set forth a cause of action and is entitled to have 
the matter proceed on the issue of negligently caused economic losses, if any. * 
* * Mattingly maintained that the College had a duty to refrain from conduct 
which would foreseeably interfere with his ability to conduct his business. He 
is certainly a foreseeable and particularized plaintiff - the trench was dug so 
that his employees could work in it - who might predictably suffer economic 
losses if the College negligently caused harm to his business. Mattingly still 
faces a difficult task in proving his damages, particularly lost profits, to the 
degree of certainty required in negligence cases. He will also have to 
demonstrate that he could not have reasonably replaced his injured employees and 
thereby continued his business." Id., 743 P.2d  at 361.

 
 
The 
Mattingly case, presented by Champion in support of Count II of its complaint, 
is unsupported in law insofar as it allows an employer to recover damages for 
personal injury to its employees. The People Express case is not authority for, 
nor does it support, Mattingly.

 
 

[¶10.]  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.

 
 

[¶11.]  In Saffels v. Bennett, 630 P.2d 505 
(Wyo. 1981), 
we held that a decedent's former wife to whom decedent had an obligation to pay 
alimony was not a person who could maintain a wrongful death claim under W.S. 
1-38-101 et seq. In holding that the former wife could not maintain her wrongful 
death action we stated:

 
 
"If the 
words `every person' were interpreted to include all who have suffered damage, 
the list would be endless. A person may have his professional or business life 
invested in a partner and suffer great damages if his partner is wrongfully 
killed. An employer may have a large investment in a key employee. A university 
may be damaged by the wrongful death of a professor. Even the milkman or newsboy 
conceivably suffer damage upon the death of a customer. All of us suffer damage, 
even financial loss, because of the death of a close friend." Saffels, 630 P.2d  
at 510.

 
 
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.

 
 

[¶12.]  AFFIRMED.