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Kansas Supreme Court Selected Opinion Summaries
Smith et al. v. Kansas Gas Service Co. et al., Appeal No. 94,602 and Gilley et al. v. Kansas Gas Service Co. et al., Appeal No. 94,570
October 26, 2007

Summaries and press releases are prepared by Ron Keefover, Office of Judicial Administration, Kansas Judicial Center, 301 West 10th, Topeka, KS 66612-1507 (785-296-2256), e-mail: keefoverr@kscourts.org.

RE: Appeal No. 94,602: Smith et al. v. Kansas Gas Service Co. et al. and Appeal No. 94,570: Gilley et al. v. Kansas Gas Service Co. et al.

The Supreme Court today reversed a Reno County jury verdict that resulted in a $7.7 million award for damages and attorney fees for natural gas explosions in which two Hutchinson residents were killed.

The damages and attorneys fees had been assessed against Kansas Gas Service Co., at the time a division of ONEOK, and Mid-Continent Market Center Inc., a ONEOK subsidiary, the owner/operators of an area natural gas storage facility northwest of Hutchinson as a result of a series of explosions experts testified were caused by the escape of 143 million cubic feet of natural gas from the Yaggy storage facility.

Two class action lawsuits-one on behalf of business owners and one on behalf of private property owners-were filed against the companies, as well as Westar Energy, which owned the facility prior to 1997. Westar, then Western Resources, was found to have had no fault in the gas leak. Although treated as separate cases and appeals, the class action lawsuits were tried together. The jury found the businesses collectively suffered no damages, but found in favor of the private property owner class, and awarded $5 million damages plus attorney fees, for a total of approximately $7.7 million against the two corporations.

Writing for a unanimous Supreme Court, Justice Lee A. Johnson, said the business owners claimed that the gas explosions caused an interruption in Reno County business and that the business owners as a group suffered a loss of revenue. The class action lawsuits were separate from other proceedings and settlements pursued by individual business owners as a result of the incident. Thus, the businesses had to prove that they suffered total, class-wide damages, rather than the individual damages to each business owner.

Justice Johnson wrote that the jury correctly determined that the "business class as a whole had not sustained a recoverable loss."

In reversing the award in the appeal by private property owners, the Court determined that they did not show there was physical damage to their individual properties but contended their property values were collectively lowered from the marketplace stigma they said was created by the companies' negligence.

The Supreme Court reversed, saying the Court sees "no reason to apply a different rule to property claims than is applied to personal injury claims." Justice Johnson wrote that "in order to recover for the diminution in value of real property resulting from the marketplace fear or stigma alleged to have been created by a defendant's negligence, the plaintiff must establish that the property sustained a physical injury" as a direct result of negligent conduct, or that the plaintiff suffered an interference with the use and enjoyment of the property separate and distinct from the diminution in property value. "Here, the plaintiff class did not meet that burden," he said.

The Court directed the district court to enter judgment in both cases in favor of the gas companies.