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Lazy E L Ranch, Inc. v. Northwestern Corp.

United States District Court, D. Montana, Billings Division

April 18, 2018

LAZY E L RANCH, INC.; FOOTHILLS COMPANY; GEORGE BENEDICT; REBECCA SPENCER; AL SPENCER; ROBERT TIMMERMAN; DOROTHY TIMMERMAN; CATHERINE TOBIN; RICHARD SHOLLEY; THOMAS MORROW; ROBERT CIRI; ANN CIRI, Plaintiffs,
v.
NORTHWESTERN CORPORATION; NORTHWESTERN ENERGY; NORTHWESTERN ENERGY INC.; NORTHWESTERN ENERGY, LLC; JOHN DOES 1-10; JOHN DOE CORPORATIONS A-Z, or other business entities, subsidiaries and affiliates, Defendants.

          FINDINGS AND RECOMMENDATION OF U.S. MAGISTRATE JUDGE

          TIMOTHY J. CAVAN UNITED STATES MAGISTRATE JUDGE.

         Plaintiffs Lazy E L Ranch, Inc., Foothills Company, George Benedict, Rebecca & Al Spencer, Robert & Dorothy Timmerman, Catherine Tobin & Richard Sholley, Thomas Morrow, and Robert & Ann Ciri (“Plaintiffs”) bring this action against Defendants Northwestern Corporation, Northwestern Energy, Northwestern Energy Inc., and Northwestern Energy, LLC (“Northwestern”) for damage to their properties resulting from a fire known as the East Rosebud Fire. (Doc. 6.) Plaintiffs' complaint alleges three counts against Northwestern: (Count I) strict liability; (Count II) negligence; and (Count III) negligence per se. (Id.)

         Presently before the Court is Northwestern's Motion to Dismiss Count I, which has been referred to the undersigned under 28 U.S.C. § 636(b)(1)(B). (Doc. 3.) The motion is fully briefed and ripe for the Court's review. (Docs. 4, 9, 11.)

         Having considered the parties' submissions, the Court RECOMMENDS Northwestern's Motion to Dismiss Count I be GRANTED.

         I. BACKGROUND

          Plaintiffs are the owners of rural properties located in Carbon County, Montana. (Doc. 6 at ¶ 4.) Northwestern owns, operates, controls and maintains electrical power equipment, poles, and lines in the vicinity of Plaintiffs' property. (Id. at ¶ 3.) On or about August 28, 2012, a fire ignited in Northwestern's utility right-of-way on or near the property of Plaintiffs Catherine Tobin and Richard Sholley. (Id. at ¶ 5.) The fire is referred to as the East Rosebud Fire. (Id.) Plaintiffs contend they suffered property damage and diminution of the value of their properties as a result of the fire. (Id. at ¶ 7.)

         Plaintiffs allege the East Rosebud Fire was caused by “a live electrical malfunction from equipment owned, controlled, maintained and operated by [Northwestern].” (Id. at ¶ 6.) Plaintiffs assert Northwestern breached its duty to properly “control, maintain, operate, install and replace its electrical lines, poles and equipment, ” which directly caused the fire. (Id. at ¶ 13.) Plaintiffs further allege in Count I of their complaint that Northwestern is strictly liable under Mont. Code Ann. §§ 50-63-103 and 50-63-104 as the responsible party. (Id. at ¶ 9.)

         II. ANALYSIS

         “Dismissal under Rule 12(b)(6) is proper when the complaint either (1) lacks a cognizable legal theory or (2) fails to allege sufficient facts to support a cognizable legal theory.” Zixiang Li v. Kerry, 710 F.3d 995, 999 (9th Cir. 2013) (quoting Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008)). The Court's standard of review under Rule 12(b)(6) is informed by Rule 8(a)(2), which requires that a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 677-678 (2009) (quoting Fed. R. Civ. P 8(a)).

         To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. A plausibility determination is context specific, and courts must draw on judicial experience and common sense in evaluating a complaint. Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014).

         Northwestern argues Plaintiffs have failed to allege a cognizable strict liability claim. (Doc. 4.) Northwestern contends § 50-63-103 only imposes strict liability where the facts show the fire was deliberately and intentionally set, and points out that Plaintiffs do not allege it intentionally set the East Rosebud Fire. (Id.) Northwestern further argues § 50-63-104 is merely a limitation on damages in cases where fires are caused by a negligent or unintentional act, and is not a strict liability statute. (Id.) Northwestern therefore argues Count I should be dismissed.

         Plaintiffs counter that they have asserted a facially plausible claim under § 50-63-103 because they alleged Northwestern failed to control, maintain, operate, install and replace its electrical power lines, poles and equipment, which directly caused the fire. (Doc. 9.) Plaintiffs further argue it is premature to dismiss Count I until after discovery of information regarding Northwestern's knowledge of its electrical equipment malfunctions, and its actions/inactions on the day of the fire and the days leading up to the fire. (Id.) Plaintiffs concede that § 50-63-104 is only a limitation on damages, and not a basis for strict liability. (Id.)

Turning to the operative statute, § 50-63-103 provides in relevant part:
Except as provided in 50-63-104, a person who sets or leaves a fire that spreads and damages or destroys property of any kind not belonging to the person is liable for all damages caused by the fire, and an owner of property damaged or destroyed by the fire may ...

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