Lazer, for appellants.
J. Shoot, for respondents.
Lazer, for appellants.
J. Shoot, for respondents.
Lazer, for appellants.
J. Isaac, for respondents.
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.
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 , ).
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  [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 ).
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 ). 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.
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 . 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.
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
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]).
Appellate Division granted defendants leave to appeal to this
Court, in each case, certifying the question of whether its
order was properly made.
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 ). 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 ). 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 ...