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Stars Investment Group, LLC v. AT&T Corp.

United States District Court, E.D. Missouri, Eastern Division

February 27, 2017

STARS INVESTMENT GROUP, LLC and STAR'S DESIGN GROUP, INC., Plaintiffs,
v.
AT&T CORP., MASTEC NORTH AMERICA, INC., and FOUR WINDS CONSTRUCTION, LLC, Defendants.

          MEMORANDUM AND ORDER

          AUDREY G. FLEISSIG UNITED STATES DISTRICT JUDGE

         This matter is before the Court on the motions (Doc. No. 69 & 70) for summary judgment filed by Defendants AT&T Corp. (“AT&T”) and MasTec North America, Inc. (“MasTec”). Plaintiffs' claims against these Defendants (two of the three Defendants in this case) arise out of a gas line explosion, which occurred during the installation of underground fiber optic cable lines on or near Plaintiffs' property and which destroyed Plaintiffs' property. For the reasons set forth below, Defendants' motions will be granted in part and denied in part.

         BACKGROUND

         For purposes of these summary judgment motions, the record establishes the following. In 2013, Plaintiff Star's Design Group, Inc. (“SDG”) contracted with AT&T to install underground fiber optic cable lines into its headquarters office, located in a building owned by Plaintiff Stars Investment Group, LLC (“SIG”), [1] at 2222 Menard Street, St. Louis, Missouri. The contract between SDG and AT&T provided that “AT&T may . . . subcontract work to be performed under the Agreement, but AT&T will in each such case remain financially responsible for the performance of such obligations.” (Doc. No. 69-4 at 5.) The contract also included a “Limitation of Liability” provision, limiting AT&T's liability for damages arising out of a breach of the contract to “the applicable credits specified in the service publication or, if no credits are specified, an amount equal to the total net charges to the customer for service to which such breach relates during the period in which such breach occurs and continues.” Id. at 4. However, the Limitation of Liability provision stated that it did “not apply to bodily injury, death or damage to real or tangible property directly caused by AT&T's negligence or intentional misconduct.” Id.

         In affidavits submitted in response to Defendants' motions, two of SDG's executive officers attested that, in approving and executing the contract with AT&T, they interacted exclusively with AT&T personnel and relied on AT&T's representations that “AT&T would be conducting the project and ensuring its proper completion.” (Doc. Nos. 80-4 & 80-5.)

         AT&T subcontracted the SDG project to MasTec for a flat fee of $6, 900, pursuant to a contract AT&T had previously entered into with MasTec to provide fiber optic cable installation services for AT&T's customers. MasTec, in turn, subcontracted the SDG project to Defendant Four Winds Construction, LLC (“Four Winds”), also for a flat fee.[2]AT&T's corporate representatives testified by deposition that they did not know that MasTec would be hiring Four Winds to complete the project and that they did not learn of Four Winds' existence until after the gas explosion at issue in this lawsuit.

         AT&T's Contract With MasTec

         In its contract with AT&T, MasTec agreed to perform all work “as an independent contractor and not as the agent or employee of AT&T.” MasTec further agreed that its personnel “shall be considered solely the employees or agents of [MasTec] and not employees or agents of AT&T”; that MasTec was responsible for payment of all compensation and benefits to its employees; and that MasTec retained “full control and supervision over the performance” of the contract. (Doc. No. 69-2.) Although the contract allowed AT&T to “have inspectors at the job site to inspect the performance and quality of the Work and to ensure [MasTec's] compliance” with order specifications and the contract's terms, the contract stated that “[a]ny AT&T inspectors, employees or agents . . . shall have no authority to direct or advise [MasTec] concerning the manner by which the Work is to be performed.” Id. The contract provided that MasTec had “sole authority, responsibility and control over the Work.” Id.

         William Galluzzo, a contract coordinator for AT&T, testified by deposition as AT&T's corporate representative regarding how AT&T handled fiber optic cable installation projects performed by contractors such as MasTec during the relevant time period. According to Galluzzo, AT&T designed the placement of fiber optic cables, and AT&T's contractors “simply follow[ed] the design that [AT&T] provide[d].” (Doc. No. 79-6 at 2.) Galluzzo testified that designing the cable placement involved “[k]nowing where the customer location is, knowing where our existing facilities are where we have to connect to, and . . . finding a feasible route, whether it be aerial, buried or underground, to get the facilities from our main infrastructure to the customer.” Id. AT&T looked for existing utilities when plotting their cable routes and made adjustments if existing utilities were exposed after the initial route was plotted. These design adjustments had to be approved by AT&T.

         Galluzzo further testified that AT&T was responsible for evaluating which permits were necessary for cable installation projects. For projects in the City of St. Louis, AT&T would apply for a permit from the City of St. Louis and after a permit was obtained, the AT&T contractor would use the city permit number to apply for a separate excavation permit. Galluzzo testified that AT&T provided materials such as “[c]ables, cabinets, terminals, conduit, inner duct, and manholes” for cable installation jobs. Id. at 16.

         According to Galluzzo, once a fiber optic cable installation project began, AT&T's contractors were to report to AT&T employees known as contract coordinators, such as Galluzzo. These contract coordinators were considered “field managers, ” and their job was to confirm that AT&T's contractors were following proper safety and quality procedures, including procedures to locate any existing utilities. Galluzzo testified that contractors were supposed to notify AT&T when they or their subcontractors started a particular job, and were supposed to send AT&T a daily work log of what they or their subcontractors were going to be working on the following day. Galluzzo testified that AT&T had “all kinds of guidelines” for its contractors, including guidelines for the “[d]epth that fiber cable should be buried at, recommended depth.” Id. at 21. Galluzzo further testified that AT&T had authority to tell contractors not to start work on a particular day if, for example, the proper permits had not been obtained. According to Galluzzo, AT&T contract coordinators not only evaluated the finished result of projects for quality control, but also “visit[ed] jobs every day” and were “out in the field every day.” Galluzzo testified that “every active project that we have going on we're going by and we're making sure that, you know, [contractors] have the proper work area protection, you know, signage on their trucks that they're representing AT&T properly.” Id. at 9.

         MasTec's Contract With Four Winds

          Like the contract between AT&T and MasTec, the contract between MasTec and Four Winds provided that Four Winds was “engaged as an independent contractor and is not an agent or employee of [MasTec].” (Doc. No. 69-3.) The contract provided that Four Winds would have “full control and supervision of the performance of the Work, ” but that MasTec “may deny access to the Work site to any employee or other agent of [Four Winds] who is not in compliance with the requirements of the [contract].” Id. Under the contract, Four Winds was responsible for payment of all compensation and benefits to its employees, and was required to supply all labor, tools, equipment, vehicles, fuel, and other materials necessary to complete the work. Id.

         MasTec's corporate representative, Randall Butler, testified by deposition regarding MasTec's performance of fiber optic cable installation for AT&T, including MasTec's use of subcontractors. Butler, a project coordinator for MasTec who worked exclusively on AT&T contracts, testified that MasTec typically walked through cable installation projects with its subcontractors, including by instructing its subcontractors where to place the cable lines. Butler indicated that MasTec communicated with subcontractors regularly to get updates on projects, and also performed quality control checks after subcontractors completed projects.

         SDG Cable Installation Project

         According to Galluzzo, AT&T set the start date for the SDG cable installation project as February 3, 2014, and the completion date as February 10, 2014. Although AT&T had not received a permit from the City of St. Louis by February 3, 2014, AT&T never adjusted the project start date.

         On January 30, 2014, MasTec contacted the Missouri One Call System to locate existing underground utilities or facilities in the area of installation for the SDG project. On February 3, 2014, employees from United States Infrastructure Corporation marked the existing underground utilities in the area, including a gas line which was marked with yellow paint according to industry standards.

         Later in the day on February 3, 2014, after all utilities in the area had been marked, MasTec's Butler met with Jim McElveen, a Four Winds supervisor, at the dig site. During this meeting, Butler identified the utility location marks for McElveen and “walked over” the job with McElveen, including by instructing McElveen where to place the cable lines. Butler instructed McElveen that Four Winds should not start the installation until AT&T had received proper permits from the City of St. Louis, and until Four Winds obtained a license to perform work in City of St. Louis[3] and called in a request for its own “utility line locates.” Butler testified that he informed McElveen during the February 3rd meeting that AT&T had not yet obtained a city permit. Butler directed McElveen to bring all required permits and licenses, once obtained, to MasTec before starting the installation.

         On February 5, 2014, snow covered the job site and obscured the utility markings. AT&T also had not yet secured a permit from the City of St. Louis by that day, and Four Winds had not obtained a license or excavation permit to perform work in St. Louis. Nevertheless, Four Winds proceeded with the cable installation. No one from AT&T or MasTec was on the job site on February 5, 2014, and neither AT&T nor MasTec was aware that Four Winds was beginning work on that day. All members of the installation crew were Four Winds employees, and Four Winds owned the directional drill, mini excavator, trailer, and trucks used to complete the installation. During the course of the installation, the drill Four Winds was using struck the gas line running to Plaintiffs' building, causing a fire and an explosion. The fire and explosion on February 5, 2014, destroyed Plaintiffs' building and caused other property damage.

         Butler testified that, had he known that Four Winds was starting the installation on February 5, 2014, he or anyone else at MasTec who had known of the circumstances would have called McElveen and stopped Four Winds from performing the installation. Butler testified that he believed the explosion on February 5, 2014, happened because Four Winds “screwed up.” (Doc. No. 80-6 at 38.)

         Butler further testified that he was not personally involved in any evaluation of Four Winds before beginning the project for SDG. However, he testified that Four Winds had previously done subcontract work for MasTec in Minnesota, that he believed that Four Winds was competent and experienced, and that he had not had any issues with Four Winds until the February 5, 2014 incident.

         Plaintiffs filed suit in state court on July 31, 2015. On September 3, 2015, Defendants removed the case to this Court, invoking the Court's diversity jurisdiction. In their amended complaint, both Plaintiffs assert various types of negligence claims against AT&T and MasTec.[4] Specifically, Plaintiffs assert direct negligence claims against MasTec (Counts II and X), [5] and Plaintiffs assert several claims which seek to hold AT&T and MasTec vicariously liable for Four Winds' and Four Winds' employees' conduct. Plaintiffs label these vicarious liability claims as: Respondeat Superior against AT&T and MasTec (Counts III, IV, XI, and XII), Res Ipsa Loquitur against AT&T and MasTec (Counts V and XIII), Negligent Performance of Statutory Duty against AT&T, based on Missouri statutes applying to public utilities (Counts VIII and XVIII), and Recklessness against AT&T and MasTec (Count XIX). Plaintiffs also assert claims of Negligent Hiring/Retention (Counts VI and XIV) and Negligent Supervision (Counts VII and XV) against AT&T and MasTec. Finally, SDG asserts Breach of Contract (Count XVI) and Negligent Misrepresentation (Count XVII) claims against AT&T. In each of these counts, Plaintiffs seek “actual and consequential damages, special damages including lost profits and business interruption damages, punitive damages, and [costs and attorney's fees].” (Doc. No. 30.)

         ARGUMENTS OF THE PARTIES

         AT&T and MasTec argue that summary judgment is warranted on Plaintiffs' vicarious liability claims because Four Winds and its employees were not agents of AT&T or MasTec as a matter of law. Both Defendants argue that the undisputed facts demonstrate that Four Winds was an ...


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