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Connolly v. Long Island Power Authority

New York Court of Appeals

February 20, 2018

Barbara Connolly, et al., Respondents,
v.
Long Island Power Authority, et al., Appellants, et al., Defendant., William Baumann, et al., Respondents,
v.
Long Island Power Authority, et al., Appellants, et al., Defendant. William Heeran, & c., et al., Respondents,
v.
Long Island Power Authority (LIPA), et al., Appellants, et al., Defendants.

          David Lazer, for appellants.

          Brian J. Shoot, for respondents.

          David Lazer, for appellants.

          Brian J. Shoot, for respondents.

          David Lazer, for appellants.

          Brian J. Isaac, for respondents.

          OPINION

          STEIN, J.

         The narrow issue before us on these appeals is whether defendants Long Island Power Authority (LIPA), Long Island Lighting Company (LILCO), and National Grid Electric Services, LLC (National Grid, and collectively with LIPA and LILCO, defendants) are entitled to dismissal of plaintiffs' amended complaints on the rationale that the actions challenged were governmental and discretionary as a matter of law, and, even assuming the actions were not discretionary, that plaintiffs' failure to allege a special duty is a fatal defect. Because defendants have not met their threshold burden of demonstrating that the action was governmental in the context of these pre-answer, pre-discovery CPLR 3211 (a) (7) motions, we cannot say that the complaints fail to state causes of action as a matter of law. We therefore affirm.

         I

         LIPA is a public authority that was created by the legislature in 1986 to provide a "safer, more efficient, reliable and economical supply of electric energy" in the service area of LILCO, which includes the Rockaway Peninsula in Queens County (see Public Authorities Law § 1020-a). Due to rising costs of electricity and a lack of confidence in the ability of LILCO - an "investor owned utility" at the time - the legislature determined that "[s]uch matters of state concern best can be dealt with by replacing [LILCO] with a publicly owned power authority" (id.). To effectuate these purposes, the legislature created LIPA as a "corporate municipal instrumentality of the state... which shall be a body corporate and politic and a political subdivision of the state, exercising essential governmental and public powers, " and authorized it to operate in LILCO's service area (Public Authorities Law § 1020-c [1], [2]).

         At the direction of the legislature, LIPA acquired LILCO including, among other things, its electric transmission and distribution facilities (T & D System) (see Public Authorities Law § 1020-h [1] [b]; Matter of Suffolk County v Long Is. Power Auth., 258 A.D.2d 226, 228 [2d Dept 1999], lv denied 94 N.Y.2d 759');">94 N.Y.2d 759 [2000]). The T & D System consists of the equipment necessary to bring power onto Long Island from high-load power lines, towers, and substations, and to deliver power to individual customers. As a result of the acquisition, LILCO became a wholly-owned subsidiary of LIPA, entitled by statute to "all the privileges [and] immunities... of [LIPA]" (Public Authorities Law § 1020-i [2]). Meanwhile, in preparation for the acquisition, LIPA entered into a Management Services Agreement (MSA) with LILCO, which was eventually assigned to the entity now known as National Grid. The MSA governed all aspects of the relationship between LIPA and National Grid at the relevant time, including National Grid's main function of operating and maintaining the T & D System.

         In each of the actions presently before us, plaintiffs allege that their real and personal property was destroyed by fire as a result of defendants' negligent failure to preemptively de-energize the Rockaway Peninsula prior to or after Hurricane Sandy made landfall in October 2012 [1]. As alleged in plaintiffs' complaints, the Governor declared a state of emergency in all counties across New York State in preparation for the potential impact of the storm, and the National Hurricane Center warned of a "life-threatening storm surge" that could cause "repeated and extended periods of coastal and bayside flooding." Further, the Mayor of the City of New York issued Executive Law No. 163 ordering the evacuation of Zone A, which included the Rockaway Peninsula. Nevertheless, LIPA did not shut down power to the area, even though Consolidated Edison - the utility supplying most of the electricity to the five boroughs of New York City - preemptively did so in its service area in order to avoid salt water from the surge coming into contact with its electrical systems. According to plaintiffs, when the Rockaway Peninsula flooded due to storm surges from Hurricane Sandy, flood water came into contact with components of the T & D System, causing short circuits, fires and, ultimately, the destruction of plaintiffs' property. Plaintiffs also alleged in their amended complaints that LIPA persisted in failing to shut down power despite having received actual notice of downed, live power lines.

         Defendants moved to dismiss the amended complaints pursuant to CPLR 3211 (a) (7) insofar as asserted against them on the ground that LIPA was immune from liability based on the doctrine of governmental function immunity, and that LILCO and National Grid were entitled to the same defense. Specifically, LIPA argued, among other things, that the actions challenged were taken in the exercise of its governmental capacity and were discretionary, and, even if they were not discretionary, plaintiffs' failure to allege a special duty in the complaints amounted to a failure to state viable claims. Plaintiffs opposed the motions on the ground that defendants' actions were proprietary, not governmental, and that special duty rules did not apply. Supreme Court denied the motions to dismiss in three substantially similar orders.

         On defendants' appeals, the Appellate Division, Second Department, with one Justice dissenting, affirmed each order denying defendants' motions to dismiss (141 A.D.3d 555');">141 A.D.3d 555 [2d Dept 2016]; 141 A.D.3d 554');">141 A.D.3d 554 [2d Dept 2016]; 141 A.D.3d 561');">141 A.D.3d 561');">141 A.D.3d 561');">141 A.D.3d 561 [2d Dept 2016]). The Court held that LIPA was not entitled to governmental immunity because the provision of electricity is properly categorized as a proprietary function and, in the Court's view, the functions of both providing electricity in the ordinary course and in responding to a hurricane are part of the proprietary core functions of electric utilities. The Court also rejected National Grid's claim of immunity on the basis that it presupposed that LIPA was entitled to governmental immunity. The dissenting Justice agreed that defendants were engaged in a generally proprietary activity as providers of electricity, but would have held that the specific acts or omissions alleged in the complaints were related, not to defendants' general operations but, instead, to the governmental function of preparing for, and responding to, a natural disaster (141 A.D.3d at 571-573 [Miller, J., dissenting]).

         The Appellate Division granted defendants leave to appeal to this Court, in each case, certifying the question of whether its order was properly made.

         II

         It is well settled that, "[d]espite the sovereign's own statutory surrender of common-law tort immunity for the misfeasance of its employees, governmental entities somewhat incongruously claim - and unquestionably continue to enjoy - a significant measure of immunity fashioned for their protection by the courts" (Haddock v City of New York, 75 N.Y.2d 478, 484 [1990]). The doctrine of governmental function immunity "reflects separation of powers principles and is intended to ensure that public servants are free to exercise their decision-making authority without interference from the courts" (Valdez v City of New York, 18 N.Y.3d 69, 76 [2011]). Additionally, "this immunity reflects a value judgment that - despite injury to a member of the public - the broader interest in having government officers and employees free to exercise judgment and ...


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