CenturyLink Communications, LLC v. B & B Foundation Service Incorporated
ORDER granting 14 Motion for Summary Judgment. Signed by Chief Judge Jeffrey L. Viken on 8/30/17. (SB)
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
LLC, a Delaware Limited Liability
B & B FOUNDATION SERVICE,
INCORPORATED, a South Dakota
ONE CALL LOCATORS, LTD, d/b/a
ELM LOCATING & UTILITY SERVICES,
Plaintiff CenturyLink Communications, LLC, (“CenturyLink”) filed this
action against defendant B & B Foundation Service Incorporated (“B&B”).
In responding to CenturyLink’s complaint, B&B filed a third-party
complaint against One Call Locators, LTD., d/b/a ELM Locating & Utility
ELM then filed a motion for summary judgment
STANDARD OF REVIEW
Under Fed. R. Civ. P. 56(a), a movant is entitled to summary judgment if
the movant can “show that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a).
Once the moving party meets its burden, the nonmoving party may not rest on
the allegations or denials in the pleadings, but rather must produce affirmative
evidence setting forth specific facts showing that a genuine issue of material fact
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986).
disputes over facts that might affect the outcome of the case under the governing
substantive law will properly preclude summary judgment.
Id. at p. 248.
“[T]he mere existence of some alleged factual dispute between the parties will not
defeat an otherwise properly supported motion for summary judgment; the
requirement is that there be no genuine issue of material fact.”
Id. at 247-48
(emphasis in original).
If a dispute about a material fact is genuine, that is, if the evidence is such
that a reasonable jury could return a verdict for the nonmoving party, then
summary judgment is not appropriate.
However, the moving party is
entitled to judgment as a matter of law if the nonmoving party failed to “make a
sufficient showing on an essential element of her case with respect to which she
has the burden of proof.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
In such a case, “there can be ‘no genuine issue as to any material fact,’ since a
complete failure of proof concerning an essential element of the nonmoving
party’s case necessarily renders all other facts immaterial.”
Id. at p. 323.
In determining whether summary judgment should issue, the facts and
inferences from those facts must be viewed in the light most favorable to the
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587-88 (1986).
The key inquiry is “whether the evidence presents a
sufficient disagreement to require submission to a jury or whether it is so
one-sided that one party must prevail as a matter of law.”
Anderson, 477 U.S.
at pp. 251-52.
The following recitation consists of the material facts developed from
CenturyLink’s complaint (Docket 1), B&B’s answer and third-party complaint
against ELM (Docket 8), ELM’s answer to the third-party complaint (Docket 11),
ELM’s statement of undisputed material facts (Docket 16) and B&B’s response.
B&B also filed a supplemental response to ELM’s statement of
facts (Docket 41), and ELM submitted a response.
statement of fact is admitted by the opposing party, the court will only reference
the initiating document.
These facts are “viewed in the light most favorable to
the [party] opposing the motion.”
Matsushita Elec. Indus. Co., 475 U.S. at 587.
CenturyLink “is a telecommunications company which provides interstate
telecommunications services to individual and commercial users.”
(Docket 1 at
It provides these services in part through “a nationwide network of
[underground] fiber-optic cable[s] . . . .”
CenturyLink’s complaint against
B&B alleges damage done to CenturyLink’s cables located at the intersection of
St. Patrick Street and South Valley Drive in Rapid City, South Dakota.
pp. 2-6; (Docket 16 ¶ 1).
Muth Electric (“Muth”) entered a contract with the City of Rapid City to
complete traffic light installation at the intersection of St. Patrick Street and
South Valley Drive. (Dockets 16 ¶ 2 & 41 ¶ 16). Muth obtained a locate ticket
to permit excavation at the intersection.
(Docket 16 ¶ 3; Docket 21 ¶ 3).
locate ticket names Muth as the excavator.
with B&B to perform the excavation.
(Docket 16 ¶ 3).
Id. ¶¶ 4-5.
Before excavation started,
ELM placed markings on the ground at the intersection identifying the location
for the excavation.
Id. ¶ 14; (Dockets 21 ¶ 14 & 41 ¶ 18).
B&B performed the excavation at the intersection specified in Muth’s
(Docket 16 ¶¶ 9-11).
(Docket 41 ¶ 33).
While excavating, B&B made contact with a
B&B was informed the telephone line was
Id. ¶ 34; (Docket 45 ¶ 34).
struck fiber optic cables.
Later, B&B continued excavating and
(Docket 41 ¶ 56; Docket 8 at p. 6).
claims it owns the fiber optic cables B&B damaged.
(Docket 1 at p. 3).
PROCEDURAL, STATUTORY AND REGULATORY BACKGROUND
CenturyLink’s complaint against B&B consists of three counts: trespass,
negligence and a violation of South Dakota utilities law.
(Docket 1 at pp. 2-6).
As CenturyLink states, the court has diversity jurisdiction over the case because
the parties are diverse and the amount in controversy exceeds $75,000.
pp. 1-2; 28 U.S.C. § 1332.
B&B’s answer to CenturyLink’s complaint and third-party complaint
against ELM sets forth its claims against ELM for equitable relief in the form of
indemnification or contribution.
(Docket 8 at p. 6).
ELM’s summary judgment
motion as to B&B’s claims argues B&B is not entitled to the equitable relief it
(Dockets 14 & 15).
In SDCL § 49-7A-2, the South Dakota legislature established the One-Call
Notification Board for excavation projects.
“The one-call notification center
shall provide a service through which a person can notify the operators of
underground facilities of plans to excavate and to request the marking of the
“The mission of the South Dakota One Call Board is to prevent
damage to underground facilities and promote public safety, through public
awareness, education, and a cost effective, efficient, dependable one-call
2017 Operations Manual for Facility Operators and Excavators, South
Dakota One Call/South Dakota 811 Notification Center, at p. 2, available at
http://www.sdonecall.com/excavator/ (referred to as 2017 Operations Manual);
see also Docket 27-1 (the 2015 Operations Manual).
A “[r]outine locate request” is defined as “a communication between an
excavator and the one-call center in which [the excavator makes] a request for
locating underground facilities for excavation activity . . . .”
A “[t]icket” is “a document issued by the one-call notification
center to operators and excavators for the purpose of locating an underground
ELM argues summary judgment is proper because B&B is barred from
(Docket 15 at pp. 4-8).
ELM asserts because B&B’s third
party complaint advances claims based in equity, B&B must abide by the “clean
Id. at p. 4.
ELM contends B&B’s actions during the
excavation violated South Dakota law requiring the actual excavator to obtain a
locate ticket, which gives B&B unclean hands and precludes it from receiving
Id. at p. 5 (citing SDCL § 49-7A-5).
According to B&B, summary judgment is not proper because the case
involves genuine disputes of material facts.
(Docket 23 at pp. 3-7).
argues any statutory violation it may have committed does not warrant summary
judgment because there is a factual dispute over the accuracy of ELM’s markings
at the excavation site.
Id. at pp. 3-4 (citing SDCL § 49-7A-9).
there are disputed facts surrounding whether it violated South Dakota law in
excavating when the locate ticket named Muth as the excavator.
Id. at pp. 5-7.
As noted earlier, B&B’s third party complaint is based on indemnification
or, alternatively, contribution.1 (Docket 8 at p. 6).
“The law of indemnity is
well settled in [South Dakota law]: indemnification arises when a party
discharges a liability that equitably should have been discharged by another.”
Weiszhaar Farms, Inc. v. Tobin, 522 N.W.2d 484, 492 (S.D. 1994); see Jorgensen
Farms, Inc. v. Country Pride Corp., 824 N.W.2d 410, 414 n.2 (S.D. 2012).
South Dakota indemnity is an ‘all-or-nothing’ proposition where the party
seeking indemnification must show an absence of proportionate fault to shift the
entire liability . . . .”
Weiszhaar Farms, 522 N.W.2d at 492; see Parker v.
Stetson-Ross Mach. Co., 427 F. Supp. 249, 251 (D.S.D. 1977) (“To be entitled to
indemnity, one must show ‘a proportionate absence of contributing fault.’ ”)
is, of course, well-settled that in a suit based on diversity of citizenship
jurisdiction the federal courts apply federal law as to matters of procedure but
the substantive law of the relevant state.” In re Baycol Prods. Litig., 616 F.3d
778, 785 (8th Cir. 2010) (internal quotation marks omitted). Because the court
has diversity jurisdiction over this case, and indemnification and contribution
are matters of substance and not procedure, the court must apply South Dakota
law. See id.
(quoting Degen v. Beyman, 200 N.W.2d 134, 137 (S.D. 1972), overruled on other
grounds by First Premier Bank v. Kolcraft Enters., Inc., 686 N.W.2d 430 (S.D.
While indemnity completely shifts liability from one party to another,
“[c]ontribution, as authorized by [SDCL §] 15-8-12, is a device through which a
portion of liability can be shifted . . . .”
Parker, 427 F. Supp. at 251.
“Contribution requires the parties to share the liability or burden, whereas
indemnity requires one party to reimburse the other entirely.
appropriate where there is a common liability among the parties, whereas
indemnity is proper where one party has a greater liability or duty which justly
requires him to bear the whole of the burden as between the parties.”
Fort Pierre Moose Lodge No. 1813, 312 N.W.2d 119, 122 n.1 (S.D. 1981) (citing
Degen, 200 N.W.2d at 136) (internal quotation marks omitted).
The core of B&B’s claims against ELM is that ELM is responsible for the
damage allegedly inflicted on CenturyLink’s fiber optic cables.
(Docket 8 at pp.
B&B believes this is because ELM made markings at the intersection
directing B&B’s excavation.
Id.; (Dockets 21 ¶ 14 & 41 ¶ 18).
B&B, based on the inaccuracy of ELM’s markings at the excavation site, ELM
and not B&B is liable for any damage done to CenturyLink’s cables.
at pp. 4-6).
“Contribution and indemnity are both based in equity.”
Avera St. Luke’s
Hosp. v. Karamali, 848 F. Supp. 2d 1017, 1023 (D.S.D. 2012) (applying South
“Before [a court] can apply an equitable doctrine, [it] must
determine ‘whether he who seeks equity has done equity.’ ”
Smith v. World Ins.
Co., 38 F.3d 1456, 1462 (8th Cir. 1994) (quoting Prow v. Medtronic, Inc., 770
F.2d 117, 122 (8th Cir. 1985)).
“This is part of the doctrine of unclean hands.”
Id. (internal quotation marks omitted).
“A party seeking equity in the court
must do equity, including entering the court with clean hands.”
Strong v. Atlas
Hydraulics, Inc., 855 N.W.2d 133, 139 (S.D. 2014) (internal quotation marks
“Well-accepted general principles of equity support [the] contention that a
statutory violation gives a party unclean hands.”
Metro Motors v. Nissan Motor
Corp. in U.S.A., 339 F.3d 746, 750 (8th Cir. 2003) (collecting cases).2 Under
South Dakota law, “the maxim that he who comes into equity must come with
clean hands, is most often utilized where granting affirmative equitable relief
would run contrary to public policy or lend the court’s aid to fraudulent, illegal or
Himrich v. Carpenter, 569 N.W.2d 568, 573 (S.D.
1997) (internal quotation marks omitted).
Because “[p]ublic policy is found in
the letter or purpose of a constitutional or statutory provision or scheme, or in a
judicial decision[,]” Law Capital, Inc. v. Kettering, 836 N.W.2d 642, 645 (S.D.
2013) (internal quotation marks omitted), violating a South Dakota statute may
give a party unclean hands.
See Himrich, 569 N.W.2d at 573.
in the [United States Court of Appeals for the] Ninth Circuit [also]
follow this precept.” POM Wonderful LLC v. Coca Cola Co., 166 F. Supp. 3d
1085, 1099 (C.D. Cal. 2016) (collecting cases).
ELM argues B&B has unclean hands for violating SDCL § 49-7A-5.
(Docket 15 at p. 5).
That statute provides:
No excavator may begin any excavation without first notifying the
one-call notification center of the proposed excavation. The
excavator shall give notice by telephone or by other methods
approved by the board pursuant to rules promulgated pursuant to
chapter 1-26 to the one-call notification center at least forty-eight
hours prior to the commencement of the excavation, excluding
Saturdays, Sundays, and legal holidays of the state. The board may
promulgate rules to reduce the forty-eight-hour interval for
emergency or subsequent inquiries to the original locate request and
may lengthen the forty-eight-hour interval for nonexcavation
SDCL § 49-7A-5.
The locate ticket permitting excavation at the intersection names Muth
and not B&B.
(Docket 17-1; Docket 16 ¶ 3).
Because B&B and not Muth
performed the excavation in this case, ELM contends B&B violated the
requirement in SDCL § 49-7A-5 that “[n]o excavator may begin any excavation
without first notifying the one-call notification center of the proposed
(Docket 15 at p. 5) (quoting SDCL § 49-7A-5).
Muth completed the process for contacting the one-call board to obtain a
locate ticket pursuant to South Dakota statutes and regulations.
Docket 16 ¶ 3).
When a company submits a locate request leading up to an
excavation, it must include “[t]he name, address, and telephone number of the
excavator doing the work . . . .”
Under SDCL § 49-7A-1,
“excavator” is defined as “any person who performs excavation . . . .”
ARSD 20:25:01:01 (“Terms defined in SDCL 49-7A-1 have the same meaning
when used in this article.”).
Only Muth is named in the locate ticket authorizing
excavation for the traffic light project at the intersection of St. Patrick Street and
South Valley Drive in Rapid City, South Dakota.
ticket states, “Excavator: MUTH ELECTRIC, INC.” Id.
Reading the definition of
“excavator” into SDCL § 49-7A-5, it is prohibited for “any person who performs
excavation” to “begin any excavation without first notifying the one-call
notification center of the proposed excavation.”
the excavation in this case.
Muth—not B&B—notified “the
(Docket 16 ¶ 11).
one-call notification center of the proposed excavation” and obtained a locate
ticket in its name.
SDCL § 49-7A-5.
Viewing the facts surrounding the
excavation in a light most favorable to B&B, the court finds B&B violated SDCL
B&B contends it did not violate SDCL § 49-7A-5.
under Muth’s ticket.
(Docket 23 at pp. 5-6).
“jointly . . . as a single excavator.”
B&B claims it excavated
B&B asserts it acted with Muth
B&B points out Muth “was present at
the location at all times B&B was performing the excavation.”
argument is unconvincing.
excavation . . . .”
Id. at p. 6.
An “excavator” here is “any person who performs
SDCL § 49-7A-1.
Under South Dakota regulations,
“[e]mergency tickets issued to the facility operator with the emergency condition
may be assigned to an excavator assisting in resolving an emergency situation,
but all other tickets shall be issued in the excavator’s name who may not transfer
or assign them . . . .”
Muth’s locate ticket was not
assignable because it was not an emergency ticket and there was not an
See ARSD 20:25:03:04.03 (detailing the locate request
process in emergency situations).
The definition of “excavator” and the
prohibition on assigning non-emergency locate tickets proves B&B did violate
SDCL § 49-7A-5.
B&B argues there is no SDCL § 49-7A-5 violation because the statute
provides, “[n]o excavator may begin any excavation[,]” and B&B did not “begin”
(Docket 23 at p. 6).
B&B claims Muth “identified the precise
location where B&B was going to dig and began by performing some potholing, or
non-destructive digging with a jet vacuum.
excavation with equipment.”
excavation” is an “excavator.”
B&B performed the heavier duty
As noted above, “any person who performs
SDCL § 49-7A-1.
B&B itself states the following:
“B&B performed the excavation based on Muth Electric’s potholing.”
23 at p. 6).
Despite any preliminary work Muth did at the site, the facts
establish only Muth had a locate ticket and B&B excavated.
does not save B&B from a statutory violation.
B&B asserts it may still seek equitable relief even if it violated SDCL
B&B states it lacks unclean hands in violating the statute because
“its conduct was not unconscionable, based on a bad motive, or done only to
benefit itself to the harm of [ELM.]”
(Docket 23 at p. 7).
B&B argues the United
States Court of Appeals for the Eighth Circuit requires conduct of that nature to
bar a party from equitable relief.
Id. at pp. 6-7 (citing Metro Motors, 339 F.3d at
However, a party can have unclean hands “where granting affirmative
equitable relief would run contrary to public policy . . . .” Himrich, 569 N.W.2d
Here, violating a South Dakota statute equals violating public policy.
See supra at p. 8 (citing Law Capital, 836 N.W.2d at 645; Himrich, 569 N.W.2d at
SDCL § 49-7A-5 represents South Dakota’s public policy on excavations,
and B&B’s violation of the statute constitutes a violation of public policy.
bad motive can give a party unclean hands, that is not required in this case
because B&B’s breach of SDCL § 49-7A-5 is sufficient.
The bulk of B&B’s argument opposing ELM’s summary judgment motion
focuses on SDCL § 49-7A-9.
That statute provides:
If location markings requested by an excavator are not provided
within the time specified by § 49-7A-8 or any rule promulgated
pursuant to § 49-7A-8, or if the location markings provided fail to
identify the location of the underground facilities in accordance with
statute and rule, any excavator damaging or injuring underground
facilities is not liable for such damage or injury except on proof of
SDCL § 49-7A-9.
This provision limits an excavator’s potential liability when
markings at the excavation site “fail to identify the location of the underground
facilities . . . .”
B&B argues summary judgment is not proper because there
is a genuine dispute of material fact regarding the accuracy of ELM’s markings at
the excavation site.
(Dockets 23 at pp. 3-5 & 40 at pp. 5-7).
B&B claims “the
record consists of sufficient testimony and exhibits to question the accuracy of
[ELM’s] location markings.”
(Docket 40 at p. 5).
According to B&B, the
excavator at this site “was required [to] keep a distance of at least 18 inches from
the locate markings for the dig site . . . .”
“Despite digging at least 24
inches from the markings, [B&B] struck CenturyLink’s facilities.”
Accordingly, B&B asserts “ELM’s measurements are not determinative, and
[B&B] has raised a genuine dispute about the accuracy of ELM’s location
Id. at pp. 5-6.
Even if B&B is correct that this is a “genuine dispute” over facts, id., it is
not a dispute material to ELM’s summary judgment motion.
“To be a material
fact, the factual issue must potentially affect the outcome of the suit under the
Kuntz v. Rodenburg LLP, 838 F.3d 923, 925 (8th Cir. 2016)
(internal quotation marks omitted).
supra at p. 6 n.1.
South Dakota law governs this suit.
The suit involves B&B seeking affirmative equitable relief
Id.; (Docket 8 at p. 6).
equity, it must have “clean hands.”
Because B&B brings claims based in
Strong, 855 N.W.2d at 139.
The point of
ELM’s summary judgment argument is B&B lacks clean hands because its
conduct violated South Dakota law.
(Docket 15 at pp. 4-7).
If a factual dispute
does not affect whether B&B enters the court with clean hands, it is not material
because it does not “affect the outcome of the suit under the governing law.”
Kuntz, 838 F.3d at 925; see Black v. Moneygram Payment Sys., Inc., No.
4:15-CV-01767, 2016 WL 3683003, at *3 (E.D. Mo. July 12, 2016).
dispute regarding the accuracy of ELM’s markings is not material because it
does not affect whether B&B has clean hands.
The court found B&B violated SDCL § 49-7A-5, and B&B’s arguments
cannot overcome that finding.
See supra at pp. 9-10.
The court finds B&B
does not have clean hands because B&B fails to demonstrate how it could
despite its violation of South Dakota law.
See Himrich, 569 N.W.2d at 573.
Since a party must have clean hands to seek equitable relief, B&B may not bring
its claims for indemnification or contribution against ELM.
N.W.2d at 139.
See Strong, 855
Viewing the facts in a light most favorable to B&B, ELM is
entitled to summary judgment.
Based on the above reasoning, it is
ORDERED that ELM’s summary judgment motion (Docket 14) is granted.
IT IS FURTHER ORDERED that B&B’s third party complaint against ELM
(Docket 8) is dismissed with prejudice.
Dated August 30, 2017.
BY THE COURT:
/s/ Jeffrey L. Viken
JEFFREY L. VIKEN
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