Opinion
Case No. 03-4187-RDR
February 17, 2004
MEMORANDUM AND ORDER
This matter is presently before the court upon defendant Southwestern Bell Telephone Company's (SWBT) motion to dismiss and amended motion to dismiss. Having carefully reviewed the arguments of the parties, the court is now prepared to rule.
This action arises from a fire that destroyed the plaintiff Ottawa County Lumber and Supply, Inc.'s (Ottawa County) business office on October 13, 2001. In its original complaint, which was filed on October 13, 2003, Ottawa County alleged that the fire was caused by the negligence of SWBT and Sharp Electronics Corporation. Specifically, Ottawa County contended that the fire occurred because of wiring performed by SWBT and a faulty fax machine manufactured by Sharp. The complaint contained four counts, two counts against SWBT (negligence and breach of implied warranty of workmanlike performance) and two counts against Sharp (negligence and breach of implied warranty of merchantability).
In response to the complaint, SWBT filed a motion to dismiss. SWBT argued that it was protected from liability by its General Exchange Tariffs. On December 18, 2003, Ottawa County filed an amended complaint against SWBT. The amended complaint added Federated Mutual Insurance Company (Federated Mutual) as a plaintiff and new allegations against SWBT. In its negligence claim against SWBT, Ottawa County alleged that SWBT acted with "wanton negligence" in wiring Ottawa Lumber's telephone system. Federated Mutual made the same allegations of negligence against SWBT and indicated that it was "responsible pursuant to a contract for a portion of plaintiff Ottawa County Lumber's damages and paid damages in excess of $75,000." Plaintiffs also filed a response to the motion to dismiss. Plaintiffs asserted that the amended complaint rendered SWBT's motion to dismiss moot. Plaintiffs also suggested that the new plaintiff, Federated Mutual, was not bound by the General Exchange Tariffs. SWBT responded with an amended motion to dismiss. SWBT makes four arguments: (1) Federated Mutual is subject to SWBT's General Exchange Tariffs; (2) plaintiffs have failed to state a claim for wanton negligence against SWBT because plaintiffs have provided no factual support for this assertion; (3) plaintiffs have failed to state a claim for implied warranty of workmanlike performance against SWBT because no such duty is owed plaintiffs under the General Exchange Tariffs; and (4) Federated Mutual has failed to state a claim because its claim is untimely and does not relate back to the original filing of the complaint.
The court will dismiss a cause of action for failure to state a claim only when it appears beyond a doubt that the plaintiff can prove no set of facts in support of the theory of recovery that would entitle him or her to relief, Conley v. Gibson, 355 U.S. 41, 45-46 (1957);Maher v. Durango Metals, Inc., 144 F.3d 1302, 1304 (10th Cir. 1998), or when an issue of law is dispositive, Neitzke v. Williams, 490 U.S. 319, 326 (1989). The court accepts as true all well-pleaded facts, as distinguished from conclusory allegations,Maher, 144 F.3d at 1304, and all reasonable inferences from those facts are viewed in favor of the plaintiff, Witt v. Roadway Express, 136 F.3d 1424, 1428 (10th Cir. 1998). The issue in resolving a motion such as this is not whether the plaintiff will ultimately prevail, but whether plaintiff is entitled to offer evidence to support the claims. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds, Davis v. Scherer, 468 U.S. 183 (1984).
The court shall begin by agreeing with plaintiffs that SWBT's original motion to dismiss is moot. The arguments contained in that motion lack any force in light of the filing of plaintiffs' amended complaint. The court shall then proceed to consider SWBT's amended motion to dismiss.
The court must initially consider the issue of the addition of Federated Mutual as a plaintiff in the amended complaint. SWBT argues that Federated Mutual's claim should be dismissed because it is untimely. SWBT points out that, if the amended complaint does not relate back to the filing of the original complaint, then Federated Mutual's claim is untimely because it was filed after the running of the applicable two-year statute of limitations, K.S.A. 60-513(a)(2). SWBT argues that, given the circumstances, the amended complaint should not relate back to the filing of the original complaint.
When a complaint is filed in federal court, the matter of relation back of amendments to pleadings is generally governed by the Federal Rules of Civil Procedure. See Myelle v. Am. Cyanamid Co., 57 F.3d 411, 416 (4th Cir. 1995) (holding that, although capacity to sue is governed by state law, the Federal Rules of Civil Procedure govern relation back). The court will therefore turn to the Federal Rules of Civil Procedure to determine whether plaintiffs' amended complaint relates back to the date of the filing of the original complaint.
Fed.R.Civ.P. 15(c) provides as follows:
An amendment of a pleading relates back to the date of the original pleading when
. . .
(2) the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, or
(3) the amendment changes the party or the naming of the party against whom a claim is asserted if the foregoing provision (2) is satisfied and . . . the party to be brought in by amendment (A) has received such notice of the institution of the action that the party will not be prejudiced in maintaining a defense on the merits, and (B) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party.
The goal of relation-back principles is "to prevent parties against whom claims are made from taking unjust advantage of otherwise inconsequential pleading errors to sustain a limitations defense." Fed.R.Civ.P. 15, Advisory Committee Notes (1991). Although Rule 15(c) refers only to an amendment that "changes the party or the naming of the party against whom a claim is asserted," the rule clearly applies to amendments substituting or adding a plaintiff as well. Fed.R.Civ.P. 15, Advisory Committee Notes (1966).
In the present case, the claim of Federated Mutual in the amended complaint is exactly the same as the claim of Ottawa County. The only difference is that a new party has been added as an additional plaintiff. The plaintiffs are not seeking any additional damages. There is no indication that defendants will be prejudiced by the lack of earlier notice of the addition of another plaintiff. Under these circumstances, the court concludes that the date of the amended complaint should relate back to the date of the original complaint. See 6A Wright Miller,Federal Practice and Procedure: Civil § 1501 (2d ed. 1990) ("As long as defendant is fully apprised of a claim arising from specified conduct and has prepared himself to defend the action, his ability to protect himself will not be prejudicially affected if a new plaintiff is added, and he should not be permitted to invoke a limitations defense."); see also American Banker's Insurance Co. of Florida v. Colorado Flying Academy, Inc., 93 F.R.D. 135, 136-37 (D.Colo. 1982) (amended complaint adding insurance carrier subrogated to plaintiff's claim relates back to date of original complaint).
The court shall next turn to SWBT's arguments concerning the application of the tariffs in this case. SWBT is a tele-communications public utility subject to the jurisdiction of the Kansas Corporation Commission (KCC). See K.S.A. 66-104, 66-1,188. The KCC is vested with full power and authority to regulate SWBT. See K.S.A. 66-1,188. Under Kansas law, a public utility must file tariffs with the KCC. K.S.A. 66-101b, 66-101c, 66-117, 66-1,189 and 66-1,190. Tarifffs are those terms and conditions which govern the relationship between a utility and its customers. Southwestern Bell Telephone Co. v. Kansas Corporation Comm., 233 Kan. 375, 664 P.2d 798, 800 (1983). Tariffs may be, and usually are, the handiwork of the regulated utility, but when duly filed with the KCC, they generally bind both the utility and the customer. Id.
In this case, SWBT points to two of the General Exchange Tariffs that have been filed with and approved by the KCC as limiting its liability in the provisioning of telephone service. These tariffs provide as follows:
The customer/patron assumes all risk for damages arising out of mistakes, omissions, interruptions, delays, errors or defects in transmission, failures or defects in equipment and facilities furnished by SWBT occurring in the course of furnishing service, in the telephone service or other communication services furnished by SWBT, or of SWBT failing to maintain proper standards of maintenance and operation and to exercise reasonable supervision, whether the patron is receiving resold SWBT service or service through SWBT unbundled network elements. . . .
General Exchange Tariff 20.11.3.
SWBT shall be liable for damage arising out of mistakes, omissions, interruptions, delays, errors or defects in transmission or other injury, including but not limited to injuries to persons or property from voltages or currents transmitted over the service of SWBT, whether (1) caused by customer-provided equipment (except where a contributing cause is the malfunctioning of a SWBT-provided connecting arrangement, in which event the liability of SWBT shall not exceed an amount equal to a proportional amount of SWBT billing for the period of service during which such mistakes, omission, interruptions, delays, errors, defects in transmission or injury occur), or (2) not prevented by customer-provided equipment. This paragraph applies whether the customer/patron is receiving service directly from SWBT, resold SWBT services or service through unbundled network elements.
General Exchange Tariff 20.11.5.
SWBT argues, based upon the language of these tariffs, that it is not liable for any damage claims made by the plaintiffs. Plaintiffs, in response, suggest that SWBT remains liable for claims of wanton negligence, the claim made by them in this case.
In Danisco. Ingredients USA, Inc. v. Kansas City Power Light Co., 267 Kan. 760, 986 P.2d 377 (1999), the Kansas Supreme Court considered the application of utility tariffs limiting liability to claims for damages arising from power outages. The Court concluded that it was reasonable for the KCC to allow a tariff that relieved a utility of liability for damages resulting from its own simple negligence in regard to the supply of its service. 985 P.2d at 385. The Court, however, determined that it was not reasonable for the KCC to allow a tariff which would relieve a utility of its liability for damages resulting from its wanton or willful misconduct. Id.
Therefore, in accord with Danisco. Ingredients, we find that the disclaimers of liability contained in General Exchange Tariffs 20.11.3 and 20.11.5 are valid and enforceable insofar as they disclaim liability for simple negligence, but we find them to be void and unenforceable, as against public policy, insofar as they purport to limit SWBT's liability for its own willful and wanton misconduct. Here, plaintiffs have alleged that SWBT engaged in wanton negligence. In their amended complaint, they allege that SWBT "failed to properly ground its telephone system and acted with waton (sic) disregard by failing to properly operate and maintain its telephone system when it had knowledge or should have had knowledge of an unsafe condition." At the pleading stage, plaintiffs' allegations of wanton conduct by SWBT are more than sufficient to survive a motion to dismiss, and SWBT cites no authority indicating otherwise. Therefore, this aspect of SWBT's motion to dismiss must be denied.
The court finds no merit to plaintiffs' argument that Federated Mutual is not bound by the tariffs because it was not a customer of SWBT. Federated Mutual's sole claim of alleged negligence against SWBT stems from its contractual relationship with its insured, Ottawa County. As accurately pointed out by SWBT, Mutual Federated, as the insurer, stands in the shoes of its insured. See Western Motor Co., Inc. v. Koehn, 242 Kan. 402, 748 P.2d 851, 853 (1988) ("An insurer claiming the right of subrogation stands in the shoes of its insured, and any defenses against the insured are likewise good against the insurer."). Therefore, Federated Mutual is subject to SWBT's General Exchange Tariffs.
The court shall, however, grant SWBT's motion to dismiss Ottawa County's claim based upon an implied warranty of workmanlike performance. The court finds that the aforementioned tariffs do preclude this claim. Ottawa County has provided no argument to the contrary. Accordingly, this aspect of the defendant SWBT's motion shall be granted.
IT IS THEREFORE ORDERED that defendant Southwestern Bell Telephone Company's motion to dismiss (Doc. # 8) be hereby denied as moot.
IT IS FURTHER ORDERED that defendant Southwestern Bell Telephone Company's amended motion to dismiss (Doc. # 19) be hereby granted in part and denied in part. Plaintiff Ottawa County Lumber Supply, Inc.'s claim against Southwestern Bell Telephone Company for breach of implied warranty for workmanlike performance shall be dismissed for failure to state a claim upon which relief can be granted. The remainder of the amended motion shall be denied.
IT IS SO ORDERED.