Excavator Is Liable for Damaging Unmarked Buried Pipe Even After Owner Denies Ownership


June 10, 2002

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Thelen Reid Brown Raysman & Steiner LLP

The Arizona Court of Appeals has found an excavating contractor liable for damages it caused to an unmarked pipe even after the utility that owned the pipe denied ownership. Gunnell v. Arizona Public Service Company, 199 Ariz. 382, 18 P.3d 176 (Ariz.Ct.Ap. 2001).

The excavating contractor, Gunnell Construction, contracted to perform excavation work for installation of a sewer line in Cottonwood, Arizona. Before beginning excavation, Gunnell notified the local Blue Stake Center and the Arizona Public Service Company so they could mark the location of their underground facilities near the sewer line.

After the Blue Stake Center and Arizona Public Service had a chance to stake existing underground utilities, Gunnell began excavating and encountered an unmarked, unidentified galvanized steel pipe. Believing the steel pipe was a water pipe, Gunnell contracted both water companies in Cottonwood. Both water companies denied ownership.

Based on his experience that electric lines are not encased in steel pipes and the denial of ownership by the water companies, Gunnell concluded that the pipe was abandoned and continued excavation. Gunnell's coworker, Jim Knox, cut into the pipe, and an explosion occurred. The explosion seriously and permanently injured both Gunnell and Knox.

Gunnell informed Arizona Public Service that he had cut into an unmarked, unidentified electric line. Arizona Public Service responded that if the line was encased in a steel pipe, it could not possibly belong to the utility. Arizona Public Service later admitted that it owned the electric line and that its employee in charge of blue staking had "just missed it."

Gunnell sued Arizona Public Service, alleging that the utility negligently installed the electric line, failed to warn of the line's location and inadequately blue-staked the area, injuring Gunnell. Knox also sued the utility. Arizona Public Service denied liability and counterclaimed, alleging that Gunnell was liable for damage to the electric line and that Gunnell should indemnify the utility in the suit filed by Knox.

The Court of Appeals addressed two issues:

First, Gunnell contended that because Arizona Public Service failed to properly mark its underground line, even after Gunnell repeatedly requested that it do so, the utility was liable for the resulting damages. The utility asserted that because Gunnell failed to notify it when he encountered the unidentified pipe, Gunnell was liable.

The Court of Appeals found Gunnell liable because he failed to find the true owner of the pipe. An excavator that encounters an unmarked pipe should notify the owner and may not treat the unmarked pipe as abandoned unless and until it complies with the Underground Facilities Act's procedure for verifying that an underground facility really has been abandoned. Therefore, when the water companies disclaimed ownership, Gunnell either should have contacted other utilities to determine the owner of the pipe or should have contacted the Blue Stake Center and followed its established method for verifying whether the pipe was abandoned.

Second, Gunnell contended that Arizona Public Service should be held partially responsible for its failure to identify the pipe. The Court of Appeals rejected the argument. If an owner or the owner's agent fails to locate, mark or identify an underground facility after a request and an excavator encounters the facility, causing damage, liability rests with the owner of the facility. If, as here, the excavator encounters an unmarked facility without damaging it but continues to excavate without further investigation, the excavator does so at its own peril. Liability falls squarely on the excavator's shoulders.

Accordingly, Gunnell was responsible for all damages to the pipe. He also was required to indemnify Arizona Public Service for any damages suffered by third parties. Gunnell also was held liable for the utility's attorney fees and costs.

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For more information about the issues covered in this report, please contact Paul Berning in our San Francisco office at 415-369-7229 or at pwberning@thelen.com or contact your Thelen attorney. For more information about Thelen's Construction and Government Contracts Department, click here.





©2002 Thelen Reid Brown Raysman & Steiner LLP