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Municipalities Can Be Held Liable When They Act Like Private Companies

By: Vito A. Cannavo - New York Lawyer -  When a municipality undertakes an activity normally performed by a private company, it can be held liable for damage that it causes.  This rule can help plaintiffs overcome the requirement of a special relationship, which can be a barrier to recovering against a municipality.

Two recent decisions regarding damage caused by flooding illustrate the way in which a municipality can forfeit its ability to defend itself in a lawsuit with the special relationship rule.  In Allen v. City of New York, 49 A.D.3d 1126, 855 N.Y.S.2d 279 (3d Dep’t 2008),  the plaintiffs sued the City to recover for flood damage done to their properties after City reservoirs overflowed during a flood.  The plaintiffs alleged that the City had been negligent in not lowering the water levels in anticipation of the storm.  The Appellate Division, Third Department, dismissed the plaintiffs’ claims.  It held that the City maintained the reservoirs only to keep a supply of drinking water and that it had not entered into a special relationship to protect the plaintiffs’ properties from floods.

The same court, however, held the local government responsible for flood damage in D & D of Delhi, Inc. v. Village of Delhi, 47 A.D.3d 1117, 849 N.Y.S.2d 716 (3d Dep’t 2008).  There, the municipality had undertaken to maintain the water system and to provide water to individual paying customers.  The plaintiff’s property was damaged when a municipal engineer trying to repair a leaking water main turned a valve that redirected water directly into the plaintiff’s basement, causing substantial damage.  The Appellate Division, Third Department rejected the municipality’s argument that the plaintiff had to prove a special relationship in order to recover for the damage.  The court explained that providing water was a service traditionally done by private companies.  By deciding to perform that function itself, the municipality gave up the right to seek protection from liability under the special relationship rule.

A municipality that chooses to act like a private business can be sued like a private business.  In Allen, the City had not taken the place of a private business by maintaining a supply of drinking water.  Therefore, it was able to defend itself by arguing that it had not taken on the responsibility of protecting the plaintiffs’ properties from floods.  In D & D, however, the municipality had decided to take the place of a private company and to provide water directly to paying customers.  Because of that decision, it gave up an important defense to civil liability.

Contributor: Premises Liability Attorney - Vito A. Cannavo - New York Lawyer  

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