FOR PUBLICATION


ATTORNEYS FOR APPELLANT                   ATTORNEYS FOR APPELLEES:
VEOLIA WATER INDIANAPOLIS LLC:
                                          ROBERT A. SMITH
MATTHEW W. MELTON                         ARY AVNET
PETER A. SCHROEDER                        Smith & Wade, LLP
CYNTHIA E. LASHER                         Noblesville, Indiana
Norris Choplin Schroeder LLP
Indianapolis, Indiana

ATTORNEYS FOR APPELLANTS
CITY OF INDIANAPOLIS
DEPARTMENT OF WATERWORKS
AND CITY OF INDIANAPOLIS:                         FILED
                                               Aug 03 2012, 9:03 am
KARL L. MULVANEY
BRIAN W. WELCH                                         CLERK
                                                     of the supreme court,
CARL A. HAYES                                        court of appeals and
                                                            tax court


Bingham Greenebaum Doll LLP
Indianapolis, Indiana

ATTORNEYS FOR AMICI CURIAE
INDIANA ASSOCIATION OF CITIES
AND TOWNS AND INDIANA
MUNICIPAL LAWYERS ASSOCIATION:

KAREN L. ARLAND
Ice Miller LLP
Indianapolis, Indiana

JO ANGELA WOODS
Indiana Association of Cities and Towns
Indianapolis, Indiana




                             IN THE
                   COURT OF APPEALS OF INDIANA
VEOLIA WATER INDIANAPOLIS LLC,                            )
CITY OF INDIANAPOLIS DEPARTMENT OF                        )
WATERWORKS, and CITY OF                                   )
INDIANAPOLIS,                                             )
                                                          )
       Appellants-Defendants,                             )
                                                          )
                 vs.                                      )   No. 49A04-1108-PL-412
                                                          )
NATIONAL TRUST INSURANCE COMPANY                          )
and FCCI INSURANCE COMPANY a/s/o                          )
ULTRA STEAK, INC. d/b/a TEXAS                             )
ROADHOUSE,                                                )
                                                          )
       Appellees-Plaintiffs.                              )


                        APPEAL FROM THE MARION SUPERIOR COURT
                             The Honorable Heather A. Welch, Judge
                               Cause No. 49D12-1010-PL-44624



                                             August 3, 2012


                                  OPINION - FOR PUBLICATION


CRONE, Judge


                                            Case Summary

       On January 4, 2010, there was a fire at a Texas Roadhouse restaurant (―the

Restaurant‖) in Indianapolis.1 The Indianapolis Fire Department responded promptly, but

discovered that the fire hydrants in the surrounding four blocks were frozen. This allegedly




       1
           The Restaurant is owned by Ultra Steak, Inc.

                                                     2
caused a delay of forty-five minutes in fighting the fire. Due to the delay, the Restaurant

building was a total loss.

        The Restaurant was insured by National Trust Insurance Company and FCCI

Insurance Company (collectively, ―the Insurers‖). On October 7, 2010, the Insurers filed suit

against the City of Indianapolis and its Department of Waterworks (collectively, ―the City‖),

as well as Veolia Water Indianapolis LLC (―Veolia,‖ collectively with the City, ―the

Appellants‖), which at the time had a contract to operate the City‘s waterworks. The

complaint alleged that the fire hydrants were frozen because the Appellants sold water from

the hydrants to private companies, which had failed to properly close the hydrants after using

them. The City filed a motion to dismiss, and Veolia filed a motion for judgment on the

pleadings. Both motions claimed that the Appellants were entitled to immunity. The trial

court denied the motions in part, concluding that the Appellants‘ commercial sale of water

took their actions outside the scope of the common law immunity for firefighting. The trial

court also found that the Insurers were third-party beneficiaries of Veolia‘s contract with the

City.

        We conclude that both the City and Veolia are entitled to common law immunity,

because the common law rule turns on the purpose for which the water is being used, not the

underlying cause of the lack of water. We further conclude that the explicit language of the

City‘s contract with Veolia disavows any intent to create third-party beneficiaries. Therefore,

we reverse.




                                              3
                                    Facts and Procedural History

            The Insurers filed a seventeen-count complaint against the Appellants, all based on

the allegation that the hydrants froze due to use by private companies and/or unauthorized

individuals who failed to properly close the hydrants.2 The Insurers alleged that the

Appellants did not supervise third-party use of the hydrants. The Insurers further alleged that

the Appellants were aware that unauthorized individuals would steal water from the hydrants,

yet failed to take measures to prevent unauthorized use. The Insurers also alleged that they

are third-party beneficiaries to the City‘s contract with Veolia, which the parties refer to as

the ―Management Agreement.‖

        In a recent case involving Veolia, we described Veolia‘s contractual relationship

with the City as follows:

                For over one hundred years, the City of Indianapolis‘s (―City‘s‖) water
        utility was operated by the Indianapolis Water Company (―IWC‖), a private
        company, through a franchise granted by the City. In 2001, the City created
        the Department of Waterworks (―the Department‖); that same year, the City
        purchased IWC‘s assets and transferred management of the water utility to the
        Department.

                On March 21, 2002, the Department and U.S. Filter Operating Services,
        Inc., entered into a Management Agreement, transferring responsibility for the
        operation, management, and maintenance of the water utility to U.S. Filter.
        U.S. Filter later assigned the Management Agreement to USFilter Indianapolis
        Water, LLC, and this company later changed its name to Veolia. Under the
        Management Agreement, the City pays Veolia approximately $40 million per
        year, plus additional sums if Veolia meets certain incentives. Veolia,

        2
           Count 1 alleged that Veolia was negligent in renting and in failing to supervise use of the hydrants.
Count 2 alleged that Veolia breached its contract with the City. Count 3 alleged that Veolia breached the
implied warranty of merchantability. Count 4 alleged that Veolia breached the implied warranty of fitness for a
particular purpose. Count 5 alleged that Veolia breached a special duty. The remaining counts stated the same
claims against the Department of Waterworks and the City and also alleged that the Department of Waterworks
and the City were vicariously liable for Veolia‘s actions.

                                                       4
        incorporated in Delaware, is a wholly-owned subsidiary of Veolia Water North
        America …, which in turn is a subsidiary of Veolia Environment …, a French
        corporation with multi-billion dollar annual revenues.

Harrison v. Veolia Water Indianapolis, LLC, 929 N.E.2d 247, 248-49 (Ind. Ct. App. 2010),

trans. denied.3

        The City describes the process for selling water from the hydrants as follows:

        In the ordinary course of operating the water utility, Veolia licensed access to
        the City‘s hydrants to the City‘s customers who had a need for bulk water
        [such as pool or landscaping companies] so that those customers could
        purchase water by accessing hydrants located throughout the waterworks
        system. Sales through the hydrants were accomplished via temporary meters
        issued to the City‘s customers by Veolia. This program permitted licensees
        with proper equipment to access hydrants and draw off water from the
        hydrants for commercial purposes.

City‘s Br. at 5 (citations and footnotes omitted).4

        On January 3, 2011, the City filed a motion to dismiss the Insurers‘ complaint on the

basis that the City was entitled to statutory immunity for the performance of a discretionary

function and common law immunity for firefighting. On the same date, Veolia filed an

answer and motion for judgment on the pleadings, which argued that Veolia was entitled to




        3
          According to Veolia‘s brief, in 2011, the City sold its water utility to Citizens Energy Group and
passed an ordinance dissolving the Department of Waterworks.
        4
           The City and Veolia both assert that all revenue, from the hydrants or otherwise, went to the City and
not Veolia. See Veolia‘s Br. at 3 n.4 (―Although all allegations in the Insurers‘ Complaint are taken as true for
purposes of this appeal, all revenue from the sale of water regardless of the point of sale at all times relevant to
this action went to the [City] and not to [Veolia].‖); City‘s Br. at 5 n.6 (―While licensing of access to hydrants
generated revenue, it is not correct, as Plaintiffs allege, that Veolia made a profit from these activities. All
revenue from the sale of water went to the [City]. Veolia was paid a base fee, a performance bonus, and was
given the opportunity to make money on capital improvements.‖).

                                                         5
common law immunity to the same extent as the City.5 On March 11, 2011, the trial court

heard arguments on the motions. On June 10, 2011, the trial court issued an order partially

granting and partially denying the City‘s motion to dismiss, as well as an order partially

granting and partially denying Veolia‘s motion for judgment on the pleadings. The court

found that the City was not entitled to immunity under the Indiana Tort Claims Act (―the

ITCA‖), which immunizes the ―performance of a discretionary function.‖ Ind. Code § 34-

13-3-3(7). Specifically, the court found that the City‘s policy had been established by the

Management Agreement, which required Veolia to maintain the hydrants, and the City had

simply failed to execute that policy. The court further found that the City was not entitled to

common law immunity because the ―commercial sale of water [was] alleged to be the

proximate cause for the failure of the infrastructure,‖ and that activity is ―outside the narrow

scope of common law immunity granted … for firefighting purposes.‖ Appellants‘ App. at

27. However, the court concluded that the City was entitled to common law immunity to the

extent that the complaint was based on allegations of unauthorized use of the hydrants.

        The trial court likewise found that Veolia had common law immunity as to the

unauthorized use of hydrants, but not with respect to the commercial sale of water. In the

order on Veolia‘s motion, the trial court highlighted several portions of the Management

Agreement, then summarized them as follows:




        5
           Veolia does not contend that it is entitled to immunity under ITCA. See Harrison, 929 N.E.2d at
252 (holding that Veolia was not a governmental entity or political subdivision for purposes of ITCA); accord
Metal Working Lubricants Co. v. Indianapolis Water Co., 746 N.E.2d 352, 355 (Ind. Ct. App. 2001) (stating
in dicta that Indianapolis Water Co. was not a governmental entity as defined by ITCA).

                                                     6
        The Court, after reviewing the contract, finds that Veolia contracted
        specifically to: 1) provide full and complete; 2) accurate and safe water
        services to the citizens; 3) to purchase insurance to provide against all property
        damage that results from their failure to do so for property of others; and 4) to
        purchase insurance that has a waiver of governmental immunity. All of these
        contract terms could only be, and are intended to be, for the benefit of third
        parties.

Id. at 52. Thus, the court concluded that the Insurers were third-party beneficiaries to the

Management Agreement.

        The City and Veolia each filed motions to reconsider, and alternatively, motions to

certify the trial court‘s June 10, 2011 orders for interlocutory appeal. The trial court denied

the motions to reconsider, but granted the motions to certify the orders for interlocutory

appeal. On September 21, 2011, we accepted jurisdiction of the appeal.6

                                              Discussion

        On appeal, the City argues that it is entitled to immunity pursuant to both the ITCA

and the common law. Veolia argues that it is entitled to common law immunity and that the

trial court erred by determining that the Insurers were third-party beneficiaries to the

Management Agreement. ―The party seeking immunity bears the burden of establishing the

immunity. If the evidence permits conflicting reasonable inference as to material facts, the




        6
           We have also permitted the Indiana Association of Cities and Towns and the Indiana Municipal
Lawyers Association to file a brief in support of the Appellants. According to their brief, the Indiana
Association of Cities and Towns is a voluntary association of most of the State‘s cities and towns, and the
Indiana Municipal Lawyers Association is a voluntary organization of approximately 348 municipal, county,
and local government lawyers.
         We held oral argument on June 19, 2012, in Indianapolis. We commend counsel on the quality of
their advocacy.


                                                    7
governmental unit has failed to establish immunity.‖ Bules v. Marshall Cnty., 920 N.E.2d

247, 250 (Ind. 2010) (citation omitted).

                                    Standards of Review

       The City appeals from the denial of a motion to dismiss for failure to state a claim

upon which relief can be granted. Our review of a trial court‘s grant or denial of a motion to

dismiss pursuant to Indiana Trial Rule 12(B)(6) is de novo. Putnam Cnty. Sheriff v. Price,

954 N.E.2d 451, 453 (Ind. 2011). A motion to dismiss tests the legal sufficiency of the

complaint; that is, whether the allegations in the complaint establish any set of circumstances

under which a plaintiff would be entitled to relief. Trail v. Boys & Girls Clubs of Nw.

Indiana, 845 N.E.2d 130, 134 (Ind. 2006). We accept as true the facts alleged in the

complaint, and consider the pleadings in the light most favorable to the plaintiff, drawing

every reasonable inference in favor of the non-moving party. Id. However, we need not

accept as true allegations that are contradicted by other allegations or exhibits attached to or

incorporated in the pleading. Id.

       Veolia appeals from a motion for judgment on the pleadings pursuant to Indiana Trial

Rule 12(C). For purposes of the motion, Veolia is deemed to have admitted all well-pleaded

facts. Nat’l R.R. Passenger Corp. v. Everton by Everton, 655 N.E.2d 360, 363 (Ind. Ct. App.

1995), trans. denied. ―Like a motion to dismiss for failure to state a claim pursuant to Trial

Rule 12(B)(6), a Trial Rule 12(C) motion attacks the legal sufficiency of the pleadings.‖ Id.

The standard of review is also de novo, and we draw all reasonable inferences in favor of the

non-moving party. Id. ―A judgment on the pleadings is proper only when there are no


                                               8
genuine issues of material fact and when the facts shown by the pleadings clearly establish

that the non-moving party cannot in any way succeed under the facts and allegations therein.‖

Eskew v. Cornett, 744 N.E.2d 954, 956 (Ind. Ct. App. 2001), trans. denied. To the extent

that interpretation of a contract is involved, ―we may look to both the complaint and the

attached contract for purposes of determining the appropriateness of the court‘s ruling on the

motion for judgment on the pleadings.‖ Id. at 957 (noting that Ind. Trial Rule 9.2(A) requires

a written document upon which the action is premised to be attached to the complaint).

When allegations of a pleading are inconsistent with terms of a written contract attached as

an exhibit, the terms of the contract must prevail over a contrary allegation. Id.

                            Immunity: Historical Background

       The original common law rule in Indiana was that governmental units were immune

from liability for their torts unless the court had recognized an exception. Gates v. Town of

Chandler, 725 N.E.2d 117, 118 (Ind. Ct. App. 2000), opinion on reh’g, trans. denied. As

early as 1867, our supreme court recognized the government‘s immunity for claims relating

to the adequacy of fire protection. See Brinkmeyer v. City of Evansville, 29 Ind. 187, 193

(1867) (―It could not have been intended by the legislature, in conferring on the common

council power to organize a fire department, that they should thereby undertake, absolutely,

to prevent loss by fire in all cases, or become responsible as insurers in case of failure.‖).

This included immunity from claims that there was an insufficient supply of water or water

pressure. Fitch v. Seymour Water Co., 139 Ind. 214, 218, 37 N.E. 982, 983-84 (1894).




                                              9
       In 1972, our supreme court decided Campbell v. State, 259 Ind. 55, 284 N.E.2d 733

(1972), in which it ―reversed the common law presumption to provide that governmental

units would be liable for any ‗breach of a duty owed to a private individual,‘ that is to say, the

duty to use ordinary and reasonable care under the circumstances.‖ Gates, 725 N.E.2d at 118

(quoting Benton v. City of Oakland City, 721 N.E.2d 224, 227 (Ind. 1999)). However,

Campbell identified three situations under which common law immunity would be retained:

       (1) where a city or state fails to provide adequate police protection to prevent
       crime; (2) where a state official makes an appointment of an individual whose
       incompetent performance gives rise to a suit alleging negligence on the part of
       the state official for making such an appointment; and (3) where judicial
       decision-making is challenged.

Id. at 118-19. In Benton, our supreme court clarified Campbell by stating:

       We hold that Campbell is properly applied by presuming that a governmental
       unit is bound by the same duty of care as a non-governmental unit except
       where the duty alleged to have been breached is so closely akin to one of the
       limited exceptions (prevent crime, appoint competent officials, or make correct
       judicial decisions) that it should be treated as one as well.

721 N.E.2d at 230.

       In 1974, the General Assembly responded to Campbell by enacting the ITCA. The

ITCA identifies twenty-four situations in which the State, its agencies, and its political

subdivisions enjoy immunity. Ind. Code § 34-13-3-3. At issue in this case is paragraph 7,

which provides immunity for the ―performance of a discretionary function.‖

                                  I. Immunity under ITCA

       ―Ordinarily, the first step in determining governmental immunity is to look at the Tort

Claims Act and decide if the entity is entitled to statutory immunity.‖ Metal Working


                                               10
Lubricants Co. v. Indianapolis Water Co., 746 N.E.2d 352, 358 (Ind. Ct. App. 2001). If it is

determined that the governmental defendant is not immune under the ITCA, the court then

considers whether common law immunity exists. Id. The ITCA was enacted in derogation

of the common law as established by Campbell, and therefore must be strictly construed

against limitations on a claimant‘s right to bring suit. Harrison, 929 N.E.2d 247, 251 (Ind.

Ct. App. 2010).

       Veolia concedes that it is not entitled to immunity under the ITCA. The City,

however, claims that it is immune pursuant to Indiana Code Section 34-13-3-3(7), which

provides immunity for the ―performance of a discretionary function.‖ In Peavler v. Board of

Commissioners of Monroe County, our supreme court adopted the planning/operational test

for determining whether an act is discretionary:

       Under the planning/operational dichotomy, the type of discretion which may
       be immunized from tort liability is generally that attributable to the essence of
       governing. Planning activities include acts or omissions in the exercise of a
       legislative, judicial, executive or planning function which involves formulation
       of basic policy decisions characterized by official judgment or discretion in
       weighing alternatives and choosing public policy. Government decisions
       about policy formation which involve assessment of competing priorities and a
       weighing of budgetary consideration or the allocation of scarce resources are
       also planning activities.

528 N.E.2d 40, 45 (Ind. 1988) (citations omitted). ―The critical inquiry is not merely whether

judgment was exercised but whether the nature of the judgment called for policy

considerations.‖ Id. (internal quotation omitted).

       The City compares this case to Lamb v. City of Bloomington, 741 N.E.2d 436 (Ind. Ct.

App. 2001). Lamb concerned a fire at a Bloomington apartment complex that resulted in one


                                              11
fatality and substantial property damage. The residents filed a complaint against the city, the

mayor, the fire chief, and the fire department. The defendants filed a motion to dismiss,

which the trial court granted. The residents appealed and we affirmed. After a lengthy

discussion of common law immunity, we noted the pertinent provisions of the ITCA, and

then found that each claim was barred by the ITCA, the common law, or both. Specifically,

the following claims were found to be barred by Indiana Code Section 34-13-3-3(7):

                Count III, obstruction of firefighters‘ ability to act, alleges that before
        the fire, [the mayor and the fire chief] were informed that one of the fire trucks
        had ―serious defects,‖ yet neither remedied the ―dangerous situation.‖ The
        allegedly defective truck was one of the vehicles sent to the … fire. This count
        was properly dismissed as pertaining to a discretionary function under Indiana
        Code Section 34-13-3-3(7)[7].… Likewise, Count IV, which alleges that
        Bloomington, [the fire department], and [the fire chief] provided negligent
        instruction and/or training of the firefighters, was properly dismissed as
        relating to a discretionary function.

                ….

               Count VI, negligent maintenance of equipment, and Count VII,
        intentional failure to maintain equipment, allege that Bloomington and BFD
        ―purchased certain and specific equipment to be used in the performance of
        ‗fire protection‘ and ‗fire suppression‘ in and around the City of
        Bloomington.‖ These counts further allege that the Appellees ―undertook a
        policy decision not to make needed repairs‖ to the equipment, hence resulting
        in damages to the Appellants. Both the common law, see Gates, 725 N.E.2d at
        119-20, and Indiana Code Section 34-13-3-3(7) provide immunity to the
        Appellants for this discretionary policy decision.

                ….

                Count X, negligent performance of duties as fire chief, alleges that [the
        fire chief] failed to arrive on the scene of the … fire in a timely manner, should
        have removed defective equipment from active duty, made ill-advised

        7
        At the time that Lamb was decided, the discretionary function provision was codified as subsection
6. We have replaced the outdated citations with current citations for ease of reading.

                                                   12
        expenditures on training, clothing, and vehicles, and has been ineffective in
        increasing the number of firefighters. [The fire chief] is immune from suit for
        these actions in part by the common law and in part by Indiana Code Section
        34-13-3-3(7). That is, some of the actions constitute the failure to provide
        adequate fire protection, while others represent discretionary acts.

Id., 741 N.E.2d at 441-42.

        The City argues that the Insurers‘ claims are similar to the Lamb plaintiffs‘ claim that

the city was negligent in its failure to maintain and repair equipment. The City argues that,

however characterized, the plaintiffs‘ claims relate to the formulation of policy, weighing of

competing priorities, and allocation of scarce government resources.

        The Insurers distinguish Lamb as follows:

        This is not a policy decision as in Lamb, where the City may decide [that it]
        cannot, in tough economic times, maintain the waterworks infrastructure,
        which is necessary to the core government function of fire protection. Here,
        the City did not consciously make a decision to disregard the third-party
        vendor use of the hydrants due to lack of funds or any other reason. To the
        contrary, the City actually contracted for a high standard of care regarding its
        infrastructure from Veolia, as evidenced by the terms of the Management
        Agreement…. Thus the City simply failed to require Veolia to follow the
        terms of the Management Agreement or pre-determined policy. The City‘s
        negligence relates only to the failed execution of pre-determined policy;
        therefore, the City has failed to show that it is entitled to immunity under IC
        34-13-3-3(7).

Appellees‘ Br. in Response to the City at 13.8

        The reasoning of Lamb provides us with little guidance. Although Lamb was decided

after Peavler, it does not mention the planning/operational test, but summarily labels certain



        8
           The Insurers have filed two appellees‘ briefs, one in response to the City and one in response to
Veolia. The Appellate Rules do not explicitly allow or prohibit the filing of separate briefs to respond to
different parties. Our preference would have been for the Insurers to file a single brief and to request
permission to file an oversized brief if necessary.

                                                    13
actions as ―discretionary,‖ referencing the ITCA. Although the issue of statutory immunity is

generally resolved before considering common law immunity, in this case, there is a wealth

of authority concerning the common law issue and very little guidance on the statutory issue.

In this case, we feel it is prudent to resolve the case under the common law rather than the

ITCA.

                                II. Common Law Immunity

                                  A. Immunity for the City

        As discussed above, our supreme court abolished common law immunity with three

exceptions:

        (1) where a city or state fails to provide adequate police protection to prevent
        crime; (2) where a state official makes an appointment of an individual whose
        incompetent performance gives rise to a suit alleging negligence on the part of
        the state official for making such an appointment; and (3) where judicial
        decision-making is challenged.

Gates, 725 N.E.2d at 118-19 (citing Campbell, 259 Ind. at 62-63, 284 N.E.2d at 737)). There

is also common law immunity for the breach of duties that are so closely akin to one of the

limited exceptions that they should be treated as exceptions as well. Id. at 119 (citing

Benton, 721 N.E.2d at 230).

        The first appellate decision after Campbell to address common law immunity for fire

protection was Boyle v. Anderson Fire Fighters Ass’n Local 1262, AFL-CIO, 497 N.E.2d

1073 (Ind. Ct. App. 1986), trans. denied. That case concerned a fire that occurred in

Anderson while the city‘s firefighters were on strike. A few non-striking firefighters

responded, but were unable to control the fire. They called for assistance from nearby fire


                                              14
departments, but the striking firefighters initially prevented them from arriving at the site of

the fire. Further adding to the chaos, one of the hydrants near the site of the fire was

inoperable. While the fire was blazing, most of the property owners in the area were not

allowed to enter to retrieve personal property. In the end, the fire destroyed half a city block.

The landowners sued the city, the striking firefighters, and their unions. The trial court

granted summary judgment for the city, and we affirmed, holding that the City was entitled to

both statutory and common law immunity.9 497 N.E.2d at 1077-78. As to common law

immunity, the Boyle court stated:

        Although the issue has not been addressed in many years, the common law in
        Indiana has long recognized that a municipality is not liable to an owner of
        property destroyed by fire even though the destruction may have resulted from
        the City‘s failure to provide suitable equipment or an adequate supply of water
        with which to fight the fire, i.e., insufficient water pressure, insufficient
        lengths of hose, or improperly functioning hydrants. Larimore v. Indianapolis
        Water Co.[,197 Ind. 457, 151 N.E. 333 (1926)]; Trustees v. New Albany
        Waterworks[, 193 Ind. 368, 140 N.E. 540 (1923)]; Robinson v. City of
        Evansville[, 87 Ind. 334 (1882)]. Nor is a city subject to liability for
        negligently failing to timely provide an adequate number of fire fighters who
        are competent to fight the fire and fit for duty. Robinson, supra. Thus, under
        the common law, the City cannot be held liable for its failure to maintain the
        fire hydrant or for its failure to provide an adequate alternative method for
        fighting the fire ….

Id. at 1077.

        The next decision to consider common law immunity for firefighting was Gates. In

that case, Dennis and Shelley Gates filed suit against the Town of Chandler Water

Department based on the department‘s failure to maintain an adequate supply of water and


        9
             As to statutory immunity, the Boyle court employed an analysis based on the
discretionary/ministerial test, which our supreme court later rejected in favor of the planning/operational test.

                                                       15
water pressure to extinguish a fire at their home. The trial court granted summary judgment,

and we affirmed. Gates framed the issue as ―whether the duty is so closely akin to one of the

limited exceptions (prevent crime, appoint competent officials, or make correct judicial

decisions) identified in Campbell that it should also be recognized as an exception.‖ 725

N.E.2d at 119. Gates held that fire protection was closely akin to police protection:

       Both services are essential for public safety, which is the primary function of
       government. Both are required to sustain a well-ordered society that values
       and protects the lives and property of its citizens. Police and fire protection
       rank together in the essential nature of the services provided. Government
       provides fire protection as an essential public service because fire, like crime,
       is a common enemy.

               Our decision today is consistent with Indiana common law as it existed
       both before and after Campbell which recognized that some vestige of
       governmental immunity must be retained. Essentially, we affirm the long
       recognized common law rule that a municipality is not liable to an owner of
       property destroyed by fire even though the destruction may have resulted from
       the failure to provide suitable equipment or an adequate supply of water with
       which to fight the fire, i.e., insufficient water pressure, insufficient lengths of
       hose, or improperly functioning hydrants. Nor is a municipality subject to
       liability for negligently failing to timely provide an adequate number of fire
       fighters who are competent to fight the fire and fit for duty.




                                               16
Id. (citations omitted).10

        The Lamb case discussed above quoted this portion of Gates with approval and held

that several claims were barred by common law immunity: negligence in failing to timely

respond to a fire alert, negligence in failing to extinguish the fire, failing to maintain

equipment, negligence in failing to seek assistance from other fire departments, negligence

on the part of the fire chief in the performance of her duties, and negligent staffing

procedures and numbers. 741 N.E.2d at 441- 42.

        Gates was again cited with approval in O’Connell v. Town of Schererville, 779 N.E.2d

16 (Ind. Ct. App. 2002). O’Connell concerned a fire that occurred in an apartment complex.

Firefighters attempted to connect to three different hydrants, but none of them had sufficient

water pressure to fight the fire. As a result, one building was completely destroyed, and

another was partially destroyed. The residents sued the town. The trial court granted the


        10
            Gates also relied on the following dicta in Benton that the provision of emergency services was
similar to the exception in Campbell for crime prevention:

                 We continue to believe that the duty to provide emergency services implicated in
        Mullin [v. Municipal City of South Bend, 639 N.E.2d 278 (Ind. 1994) (adopting the reasoning
        of City of Rome v. Jordan, 426 S.E.2d 861, 863 (Ga. 1993))] is sufficiently similar to the
        ―prevent crime‖ exception in Campbell to raise the possibility of immunity. And we continue
        to believe that the City of Rome test is appropriate for determining whether a governmental
        unit qualifies for immunity for failure to dispatch emergency services (but only for that
        purpose).

                We acknowledge that this point appears to have been rendered moot by the passage of
        subsection (18) of Ind. Code § 34-4-16.5-3 [now Ind. Code § 34-13-3-3(19)], which grants a
        governmental entity immunity under the Tort Claims Act for the operation of ―an enhanced
        emergency communication [or ‗911‘] system.‖ Accord Barnes v. Antich, 700 N.E.2d 262,
        266 n.6 (Ind. Ct. App. 1998) (holding that ―a plain reading of Ind. Code 34-4-16.5-3(18)
        leads inescapably to the conclusion that the legislature intended to afford immunity from
        claims arising out of a municipality‘s operation and use of [a ‗911‘ service]‖), transfer denied.

Benton, 721 N.E.2d at 231 n.12.

                                                      17
town‘s motion for summary judgment on the basis of common law immunity for firefighting,

and we affirmed. The O’Connell panel found that the case was ―strikingly similar‖ to Gates.

Id. at 20.

       The residents attempted to frame the issue in terms of the town‘s maintenance of

infrastructure:

       Relying on City of Huntingburg v. Morgen, 90 Ind. App. 573, 162 N.E. 255
       (1928), they contend that because the negligence complained of was not the
       result of emergency personnel or firefighters extinguishing the fire, but instead
       was inadequate pressure from actual fire hydrants, this case concerns the
       Town‘s infrastructure.

Id. at 19.

       In City of Huntingburg, the plaintiff owned commercial greenhouses, and the city

failed to supply him with sufficient water pressure for his business needs. The plaintiff sued

the city for the resulting damage to his plants. The city claimed that it was immune, but we

disagreed, distinguishing between water supplied for fire protection and water supplied for

consumption:

               It is generally held that a municipal corporation, in enacting an
       ordinance for protection against fire and in the maintenance of a fire
       department and system of water works for that purpose, acts in a governmental
       capacity in the general interest of the community, and that the municipality is
       not liable to a property owner for damages caused by fire. Nor is a public
       utility company, owning and operating a system of water works for the
       furnishing of water to private consumers, and for the protection of the public
       from fire, under a franchise or contract with the municipality, liable to a
       property owner for loss of property by fire caused by insufficient water
       pressure. A city maintains waterworks for the twofold purpose of fire
       protection and for supplying water to its inhabitants for daily consumption. As
       to the city‘s liability for the default or negligence of its employees in
       maintaining such waterworks, there is a clear line of demarcation between its
       liability, depending on the purpose for which the water system is being used.

                                              18
               The first purpose, that of fire protection, is clearly a discretionary or
       governmental act. For the default or negligence of the city‘s employees in
       relation to fire protection the city is not liable. However, in supplying water to
       the inhabitants of the city for daily consumption, the well-established rule is
       that the city is liable on the same principle that a private corporation engaged
       in the same business is liable.

City of Huntingburg, 90 Ind. App. at 577-78, 162 N.E. at 257.

       O’Connell distinguished City of Huntingburg, stating:           ―[T]he malfunctioning

hydrants do not present an issue of private, commercial use of water. Rather, our facts are

the opposing comparison used by the City of Huntingburg court as an example of well-settled

immunity: supplying water to the public for fire protection.‖ 779 N.E.2d at 19. Therefore,

we held that the town had common law immunity. Id. at 21.

       In City of Peru v. Lewis, 950 N.E.2d 1 (Ind. Ct. App. 2011), trans. denied, we again

followed Gates. In that case, Tracy Lewis called 911 and reported that her house was on fire

and that she and her children were inside, but would attempt to get out of the house. When

the fire department arrived, it did not immediately search for people inside the burning house.

One child died in the fire, and Lewis and the rest of her children were injured. Lewis sued

the city, and the city moved for summary judgment on the grounds that it was immune from

suit. The trial court denied summary judgment, but we reversed. After discussing Gates and

Lamb, we stated:

       When examining the various circumstances that were presented in these cases,
       we acknowledge that there is virtually no limit to the types of claims that
       citizens might advance concerning municipal inadequacies in providing
       adequate fire protection, such as adequate staffing, inadequate training, etc.
       As discussed above, the Lewises contend that the fire department was
       negligent in supplying fire protection without making a search for fire victims

                                              19
       a priority; by favoring ventilation of the house instead of searching for victims;
       and by not communicating to firefighters that people might be in the house,
       which communication might have caused them to make potential rescue a
       more urgent priority once the first floor fire was under control. In our view,
       these allegations—however characterized—fall within the ambit of the failure
       to provide adequate fire protection and are subject to common law immunity in
       accordance with Lamb and Gates….

Id. at 6. Therefore, we held that the trial court should have granted the city‘s motion for

summary judgment. Id.

       The Insurers assert that their precise argument – that the lack of water was caused by

commercial activity – has not been addressed before. Although they appear to be technically

correct, Indiana decisions regarding firefighting immunity have long drawn a clear line based

on the purpose for which the water is being used – for firefighting or for other purposes. See,

e.g., City of Huntingburg, 90 Ind. App. at 578, 162 N.E. at 257 (―As to the city‘s liability for

the default or negligence of its employees in maintaining such waterworks, there is a clear

line of demarcation between its liability, depending upon the purpose for which the water

system is being used.‖); Gates, 725 N.E.2d at 119 (noting that ―Campbell is properly applied

by presuming that a governmental unit is bound by the same duty of care as a non-

governmental unit‖ unless the duty allegedly breached ―is so closely akin to one of the

limited exceptions (prevent crime, appoint competent officials, or make judicial decisions)

that it should be treated as one as well‖ and concluding that firefighting was such an

exception); Metal Working, 746 N.E.2d at 359 (―It is not the provision of water per se that

entitles IWC to immunity; it is the narrow function of providing water and equipment for fire

protection services that entitles IWC to the limited common law immunity granted by


                                              20
Campbell.‖); O’Connell, 779 N.E.2d at 19 (―Our case is distinguishable from City of

Huntingburg because the malfunctioning hydrants do not present an issue of private,

commercial use of water. Rather, our facts are the opposing comparison used by the City of

Huntingburg court as an example of well-settled immunity: supplying water to the public for

fire protection.‖); Lamb, 741 N.E.2d at 439 (rejecting plaintiffs‘ argument that ―many of the

counts in their complaint ‗pertained to matters set in place prior to the ―fire‖ in question and

are not, in and of themselves, pertaining to actions taken on the day of the fire‘‖). None of

these cases suggest that the underlying cause of the lack of water to fight a fire is pertinent to

the immunity analysis. We must agree with the City that the factual scenario in this case fits

squarely within the immunity that we have afforded to governmental entities for fire

protection services. Therefore, we reverse the trial court‘s ruling that the City is not entitled

to common law immunity.

                      B. Common Law Immunity for Private Entities

       Relying on Metal Working, Veolia contends that it is entitled to common law

immunity to the same extent as the City. In Metal Working, a fire started at Metal Working‘s

facility. A nearby shut-off valve had been closed, leaving an inadequate supply of water to

fight the fire. Metal Working sued the Indianapolis Water Company for negligent failure to

inspect and maintain the water mains servicing the hydrants in the vicinity of Metal

Working‘s property. The water company filed a motion for summary judgment on the

grounds that it had immunity, which the trial court granted, and Metal Working appealed.




                                               21
       The water company conceded that it was not a governmental entity as defined by the

ITCA. Metal Working, 746 N.E.2d at 358. However, we observed that when private entities

are ―endowed by the state with powers or functions governmental in nature, they become

agencies or instrumentalities of the state and are subject to the laws and statutes affecting

governmental agencies and corporations.‖ Id. at 356 (quoting Ayres v. Indian Heights

Volunteer Fire Dep’t, Inc., 493 N.E.2d 1229, 1235 (Ind. 1986)). We noted that firefighting

―is a service that is uniquely governmental. The need to control, prevent, and fight fires for

the common good of the community has been universally accepted as a governmental

function and duty in this state.…‖ Id. (quoting Ayres, 493 N.E.2d at 1235). We further

noted that ―the business decisions that private companies can usually make without outside

interference, such as expansion plans and rate-making, are subject to governmental controls

when it comes to [the water company].‖ Id. at 357. We concluded that the water company

was entitled to common law immunity because if the water company did not provide water to

the city and its citizens, then the city itself would; in other words, the water company was

acting in the government‘s stead:

       We note that considering [the water company] to be a governmental entity and
       giving [it] immunity in this circumstance causes no harm to the citizens,
       because if a private company did not provide the water services, then the
       government would, and pursuant to Gates, the government would
       unquestionably be immune under the same circumstances.

Id. at 359. See also Harrison, 929 N.E.2d at 252 (although holding that Veolia was not

entitled to statutory immunity, panel stated that it did ―not necessarily disagree with the

ultimate holding of the Metal Working case, namely that a water utility cannot be liable on a


                                             22
claim that it failed to provide adequate water for firefighting purposes‖); Larimore, 197 Ind.

at 459, 151 N.E. at 334 (at common law, a water company with a contractual duty to supply

water to a city is not liable for fire losses due to lack of sufficient water to fight the fire); New

Albany Waterworks, 193 Ind. at 375, 140 N.E. at 543 (a water company is not ―an insurer of

any individual citizen and tax-payer against loss by fire‖ because ―the consideration for

[supplying water] is totally inadequate upon which to presume that any such duty was

contemplated by the parties‖).

       The Insurers do not explicitly argue that Veolia is not entitled to common law

immunity even if the City is. Given the long-standing precedent that water companies have

immunity to the same extent as the municipality with which they have contracted, we must

agree with Veolia that it is also entitled to immunity.

       Although we feel bound by settled precedent to hold that both the City and Veolia are

entitled to immunity, we must acknowledge that the Insurers have presented several cogent

reasons for reconsidering this policy. Although Veolia was acting in the City‘s stead, Veolia

is a for-profit company and is not directly accountable to voters and taxpayers. Veolia

presumably earned some profit from operating the waterworks; otherwise, it would have no

reason to be in business. Compare Ayres, 493 N.E.2d at 1237 (holding that volunteer fire

department was an instrumentality of the state, and therefore entitled to immunity, in part

because the contract price was nominal), with Harrison, 929 N.E.2d at 253 (in declining to

find Veolia a governmental entity covered by ITCA, we noted that ―one of the main concerns

ITCA intended to address clearly was protection of the public treasury from a multitude of


                                                 23
tort lawsuits,‖ a concern not applicable to Veolia, which is a for-profit enterprise that is ―part

of a multi-national, multi-billion dollar conglomerate‖). A city operating its own waterworks

would not necessarily seek to earn any profit. In addition, if the City operated the

waterworks itself, dissatisfied citizens could attempt to redress problems through the political

process; however, citizens cannot ―vote out‖ Veolia or any of its employees. On the

contrary, the Management Agreement was for a term of twenty years, potentially long after

the officials who granted Veolia the contract would be out of office.

Veolia had a contractual obligation to maintain the City‘s waterworks and also had

responsibilities to consumers, for example, to maintain appropriate water pressure, as in City

of Huntingburg. Veolia already had a responsibility vis-à-vis the City and consumers to keep

the waterworks system in good repair, and it is not obvious on the record before us that

substantial additional maintenance work would have been required to keep that same system

in good repair for firefighting purposes. Nor is it obvious that Veolia would face staggering

liability if it lacked immunity. The Management Agreement required Veolia to carry

insurance to cover ―all claims arising from injuries to members of the public or damage to

property of others.‖ Management Agreement at 61. The cost of this insurance presumably

was taken into account when the contract price was negotiated and when the rates were set by

the Indiana Regulatory Commission. Moreover, the specter of liability would provide

incentive to keep hydrants in good repair.

       The commercial sale of water from hydrants is supposed to benefit consumers by

lowering rates. Veolia had a contractual obligation to monitor the use of and to maintain


                                               24
those hydrants. The primary function of the hydrants is to provide water for fire suppression.

Immunity is intended to insure that the government can continue to provide essential safety

services, because exposing government entities to liability for fire damages could discourage

them from providing fire protection services. Insulating Veolia from liability for its alleged

failure to monitor or maintain in this case may actually create a disincentive to maintain

hydrants.

        Our supreme court has not addressed immunity for firefighting in recent years.11 Since

then, public-private contracts have not only become more prevalent, but they are also much

more complex than contemplated by cases such as New Albany Waterworks. In this case, the

Management Agreement is a multi-million-dollar contract containing detailed provisions

spanning ninety-two pages, accompanied by a ninety-nine-page amendment and fifteen

exhibits. Although the common law rule is easy to apply, it takes the focus off whether the

government action is the type that ought to be immunized and instead places it on the type of

damage caused, i.e., damage from fire. Were we writing on a clean slate, we might adopt a

different rule; however, we are bound by supreme court precedent. See Jones v. State, 749

N.E.2d 575, 582 n.4 (Ind. Ct. App. 2001) (noting that ―we are not at liberty to ignore the

precedent of our Supreme Court‖), trans. denied. Therefore, we reverse the trial court‘s

ruling that Veolia is not entitled to common law immunity.


        11
             The most recent supreme court case to discuss immunity for firefighting is Ayres, which was
decided in 1986. In Ayres, the supreme court stated that it was ―in total accord with the Court of Appeals‖ on
the issue of statutory immunity and briefly discussed City of Hammond v. Cataldi, 449 N.E.2d 1184 (Ind. Ct.
App. 1983), a case which applied the now outdated discretionary/ministerial test; transfer was granted
primarily to address a different issue. Ayres, 493 N.E.2d at 1234. Prior to Ayres, the last supreme court to
address immunity for firefighting was Larimore, decided in 1926.

                                                     25
                                 III. Third-Party Beneficiary

         Veolia argues that the trial court erred by finding that the Insurers were third-party

beneficiaries to the Management Agreement and therefore could pursue a breach of contract

claim.

         Generally, only parties to a contract or those in privity with the parties have
         rights under the contract. However,

                One not a party to an agreement may nonetheless enforce it by
                demonstrating that the parties intended to protect him under the
                agreement by the imposition of a duty in his favor. To be
                enforceable, it must clearly appear that it was the purpose or a
                purpose of the contract to impose an obligation on one of the
                contracting parties in favor of the third party. It is not enough
                that performance of the contract would be of benefit to the third
                party. It must appear that it was the intention of one of the
                parties to require performance of some part of it in favor of such
                third party and for his benefit, and that the other party to the
                agreement intended to assume the obligation thus imposed.

         The intent of the contracting parties to bestow rights upon a third party ―must
         affirmatively appear from the language of the instrument when properly
         interpreted and construed.‖ However, it is not necessary that the intent to
         benefit a third party be demonstrated any more clearly than the parties‘ intent
         regarding any other terms of the contract.

OEC-Diasonics, Inc. v. Major, 674 N.E.2d 1312, 1314-15 (Ind. 1996) (citations omitted).

         When interpreting a contract, we read the contract as a whole and attempt to construe

the contractual language so as not to render any words, phrases, or terms ineffective or

meaningless. Trustcorp Mortg. Co. v. Metro Mortg. Co., 867 N.E.2d 203, 213 (Ind. Ct. App.

2007). ―Likewise, we must accept an interpretation of the contract that harmonizes its

provisions, rather than one that places the provisions in conflict.‖ Id. Unless the terms of a



                                               26
contract are ambiguous, they will be given their plain and ordinary meaning. Brockman v.

Brockman, 938 N.E.2d 831, 834 (Ind. Ct. App. 2010), trans. denied.

       Terms are not ambiguous merely because the parties disagree as to the proper
       interpretation of those terms. By contrast, contract terms may be ambiguous if
       they are susceptible to more than one reasonable interpretation. If a written
       instrument is ambiguous, we may consider all relevant evidence, including
       extrinsic evidence, to discern the contract‘s meaning.

Id. (citations omitted).

       Veolia argues that the third-party beneficiary issue is irrelevant because it has

immunity. In support, Veolia cites Giles v. Brown County, 868 N.E.2d 478 (Ind. 2007).

Annette Giles sued Brown County because her husband, Joey, died after the county failed to

dispatch an ambulance in response to his 911 call. The county had a contract with Columbus

Regional Hospital to provide emergency medical services to all Brown County residents.

However, when Joey called 911 and reported that he was experiencing chest pains and

shortness of breath, none of the ambulances reserved for Brown County were available.

Columbus Regional Hospital asked Bloomington Hospital to dispatch an ambulance. An

ambulance arrived from Bloomington about forty-five minutes later, and Joey died shortly

thereafter.

       Giles‘s theory was that she was a third-party beneficiary of the contract between

Brown County and Columbus Regional Hospital. Brown County sought immunity under the

ITCA on the ground that Joey‘s death resulted from the ―operation‖ or ―use‖ of an enhanced

emergency communications system. Ind. Code § 34-13-3-3(19). Our supreme court agreed,




                                            27
and further held that this immunity trumped Giles‘s claim that she was a third-party

beneficiary to the contract:

         Immunity assumes negligence but denies liability. Thus, the issues of duty,
         breach and causation are not before the court in deciding whether the
         government entity is immune. If the court finds the government is not
         immune, the case may yet be decided on the basis of failure of any element of
         negligence. This should not be confused with the threshold determination of
         immunity.

Giles, 868 N.E.2d at 480 (quoting Peavler, 528 N.E.2d at 46-47).

         The Insurers counter by arguing that Veolia waived its right to immunity in the

Management Agreement.12 In support, the Insurers point to Section 8 of the Management

Agreement, which requires Veolia to purchase certain types of insurance coverage, including

comprehensive general liability insurance with a provision for waiver of immunity:

         Section 8.01 Insurance Procurement; Duty to Maintain; Obligation to Provide
         Continuous Coverage.

                  (a) Procurement. Throughout the term of this Agreement the Company, on
                  its own behalf and on behalf of any one directly or indirectly employed by it
                  for whose acts or omissions it may be liable, shall secure, or cause to be
                  secured, and maintain, at its cost and expense, including premium payments,
                  the following insurance policies with the below specified policy limits. Cost
                  and expense, including premium payments, will be separately identified but
                  included in the Service Fee.

                  …




         12
            Veolia argues that the Insurers waived their argument that immunity was contractually waived by
not raising it in the trial court. ―Issues not raised at the trial court are waived on appeal. In order to properly
preserve an issue on appeal, a party must, at a minimum, show that it gave the trial court a bona fide
opportunity to pass upon the merits of the claim before seeking an opinion on appeal.‖ Cavens v. Zaberdac,
849 N.E.2d 526, 533 (Ind. Ct. App. 2006). Much of the Insurers‘ argument to the trial court on this issue was
not transcribed because the audio recording was unintelligible. Although it is unclear what the Insurers‘
precise argument was, it is clear that the trial court did consider the issue; therefore, we decline to find the issue
waived.

                                                         28
                        (3) Comprehensive General Liability. Commercial general liability
                        insurance to protect the Company against all claims arising from
                        injuries to members of the public or damage to property of others,
                        including loss of the use of tangible property damaged, arising out of
                        any act or omission of the Company or its agents, employees or
                        subcontractors.… Comprehensive general liability coverage shall
                        contain the following provisions:

                        …


                                (N) include waiver of government immunity;

Management Agreement at 55-57.13

        While we are somewhat puzzled as to the intended purpose of this language, we must

agree with Veolia that it does not require Veolia to waive its immunity. Even if immunity

were waived, Section 13.18 of the Management Agreement explicitly disavows any intent to

create third-party beneficiaries:

        Section 13.18 Third Party Beneficiary. This Agreement is intended to be solely
        for the benefit of Company and Department and their successors and permitted
        assigns and is not intended to and shall not infer any rights or benefits on any
        third party not a signature hereto, except as specifically set forth herein.

Id. at 87.

        In Indiana Gaming Co. v. Blevins, 724 N.E.2d 274 (Ind. Ct. App. 2000), trans. denied,

we held that a similar contractual provision trumped language that might otherwise be

construed to create third-party beneficiaries. In that case, the City of Lawrenceburg and

Indiana Gaming entered into a contract to develop and operate a riverboat gaming operation



        13
             The Management Agreement has been provided to us in PDF format on a disc. Because the first
few pages of the Management Agreement are numbered with romanettes, the numbers on the document do not
correspond with the page number that must be entered into the PDF reader to jump to the relevant text. We
will cite to the number needed to jump to the quoted text.

                                                   29
in Lawrenceburg. The contract stipulated that each laborer or mechanic shall be paid a wage

equal to the union contract wage in the Lawrenceburg area. Some archaeologists working on

the project and their union, United Archaeological Field Technicians International Union of

Operating Engineers, sued Indiana Gaming, contending that they were being paid less than

the contract required. They argued that they were third-party beneficiaries of the contract

between Indiana Gaming and the city.

       Indiana Gaming filed a motion to dismiss, relying on Section 15.21 of the contract,

which stated, ―No Third-Party Beneficiaries. Nothing in this Agreement shall be construed

as creating any rights or entitlement that inure to the benefit of any person or entity not a

party of this Agreement (except Guarantor).‖ Id. at 278. The trial court denied the motion to

dismiss, but we reversed, stating, ―This language clearly and unambiguously precludes the

Technicians from being third-party beneficiaries under the Agreement.‖ Id. We stated that

our interpretation of the contract did not render the wage provisions meaningless, but merely

limited the enforcement of those provisions to certain individuals. Id. at 279. On the other

hand, allowing the suit to go forward would render Section 15.21 meaningless. Id.

       In Plummer v. Consolidated City of Indianapolis, 1:03-CV-00567-DFH-WT, 2004

WL 2278740 (S.D. Ind. Aug. 17, 2004), the Southern District of Indiana interpreted the same

Management Agreement at issue here. In Plummer, several USFilter Employees brought

ERISA claims against the City. The court rejected the employees‘ claim that was based on a

third-party beneficiary theory:

       There is … no contradiction between having the City and USFilter agree on
       one hand that … employees should be treated in a particular way, and having

                                             30
       the contracting parties also agree that they do not intend to confer legally
       enforceable rights on those employees under the contract. Contracting parties
       often recognize that their agreement may affect the interests of others who are
       not parties to the contract. They may expressly acknowledge those effects in
       the contract. They may even extract promises from one another concerning
       those effects. But it is a very different thing for the contracting parties to
       bestow upon those third parties the right to sue the contracting parties to
       enforce those promises. That prospect of third-party enforcement is exactly
       why disclaimers like Section 13.18 are inserted into contracts like the
       Management Agreement, especially since courts might otherwise imply from
       the agreement an intent to confer third-party benefits. See, e.g., Barth Elect.
       Co. v. Traylor Bros., Inc., 553 N.E.2d 504, 506 (Ind. App. 1990) (reversing
       dismissal of construction prime contractor‘s claim to be third party beneficiary
       where contract lacked an explicit disclaimer of intent to confer such rights).

Id. at *17.

       The Insurers rely on two cases that have held that members of the general public were

third-party beneficiaries of a city contract: Freigy v. Gargaro Co., 223 Ind. 342, 60 N.E.2d

288 (1945) (holding that a contractor‘s contract with the City of Fort Wayne to construct a

sewer authorized a homeowner damaged by the construction work to pursue a cause of action

against the contractor), and City of Indianapolis v. Kahlo, 938 N.E.2d 734 (Ind. Ct. App.

2010) (holding that citizens of Indianapolis were third-party beneficiaries of contract that

required a portion of the Pan Am Plaza to remain open to the public), trans. denied.

However, neither of the contracts at issue in those cases contained a specific provision

disavowing any intent to create third-party beneficiaries. Indiana Gaming is more directly on

point, and although we are not bound by Plummer, we find its reasoning to be persuasive.

Therefore, we conclude that the trial court erred by finding that the Insurers were third-party

beneficiaries of the Management Agreement.



                                              31
                                         Conclusion

       Pursuant to long-standing precedent, common law immunity bars claims for fire

damages stemming from an inadequate supply of water or inoperable fire hydrants. This

immunity applies both to the City and to Veolia. We also conclude that Veolia did not waive

its immunity, and even if it had, the explicit terms of the contract indicate that the Insurers

are not third-party beneficiaries of the Management Agreement. We therefore reverse the

judgment of the trial court.

       Reversed.

VAIDIK, J., and BRADFORD, J., concur.




                                              32
