Proprietary Capacity and Substantial Prejudice in Municipal Liability Cases

Kenneth E. Pitcoff and Andrea M. Alonso, New York Law Journal

April 14, 2017

On Dec. 22, 2016, the Court of Appeals decided two significant cases in the area of Municipal Law. In Turturro v. City of New York, 28 N.Y.3d 469, 482 (2016), a divided court further defined when a municipality is acting in its "proprietary capacity." In the case of Newcomb v. Middle County Central School District, 28 N.Y.3d 455 (2016), the court clarified the burden of proof in determining "substantial prejudice" to a public corporation in a late notice of claim petition. Both cases will have an enormous impact in the litigation of cases involving public corporations.

'Turturro': Proprietary Capacity

Tragedy struck on Dec. 5, 2004 when 12-year-old Anthony Turturro was hit by a vehicle while riding his bicycle on Gerritsen Avenue in Brooklyn. Gerritsen Avenue was a four-lane road with two lanes of traffic going north and south divided by a double-yellow

line. The speed limit was 30 miles per hour. A police investigation found that defendant driver Louis Pascarella was traveling at a speed of 54 miles per hour when the accident occurred. Defendant Pascarella ultimately pled guilty to criminal reckless assault. See Penal Law §§15.05(3); 120.05(4).

At trial, plaintiffs presented evidence that numerous letters complaining of speeding on Gerritsen Avenue had been sent to the City before the accident. The roadway, it was claimed, was used as a "race track" for "drag racing." Some letters requested traffic signals, others traffic studies. The ICU (Intersection Control Unit) of the DOT (Department of Transportation) conducted four studies prior to the accident. They concluded many vehicles were speeding and notified the police of the problem after the studies were completed.

At trial, a City engineer testified that if police enforcement did not alleviate the speeding the DOT should have implemented "traffic calming" measures such as: speed bumps, narrowed lanes and rumble strips. The City's expert countered that referring the speeding problem to the police was an adequate response to the speeding complaints.

The jury returned a verdict as follows: 10 percent to the plaintiff, 40 percent to the City and 50 percent to defendant Pascarella. The issue on appeal was whether the City was acting in its governmental capacity and thus plaintiff needed to prove a special duty was owed him or, in the alternative, was the City acting in its governmental capacity but entitled to a qualified immunity.

The City's argument was simple: that the plaintiff's claim arose from the police's failure to enforce the speed limit on Gerritsen Avenue. Since police protection is a "quintessential governmental function," Applewhite v. Accuhealth, 21 N.Y.3d 420, 425 (2013), the plaintiff needed to prove a special duty was owed to the plaintiff. No such duty was proven; thus the City had available to it the governmental function immunity defense.

Plaintiff succinctly argued that highway planning design and maintenance are proprietary functions arising from the municipality's duty to "keep its roads and highways in a reasonably safe condition." Wittorf v. City of New York, 23 N.Y.3d 473, 480 (2014). Although the City could avail itself of a qualified immunity it was based on the principle that: "[o]nce [a municipality] is made aware of a dangerous traffic condition it must undertake reasonable study thereof with an eye toward alleviating the danger." Friedman v. State of New York, 67 N.Y.2d 271, 284 (1986). The study here, plaintiff

argued, was inadequate since traffic calming measures were not put in place once the police involvement failed to stop the speeding.

The Court of Appeals concluded that first: the City was acting in its proprietary function not its governmental function when it ordered the traffic study on Gerritsen Avenue. Second: The court found that no qualified immunity defense was applicable since the study performed was inadequate. The opinion by Judge Eugene Fahey noted cautiously that "under the particular circumstances of this case," Turturro, 28 N.Y.3d 469, 482 (2016), the failure to conduct a study of whether traffic calming measures were appropriate prevented the protection of the qualified immunity defense to be applied. The study was found to be "plainly inadequate." Id. at 487.

Judge Eugene Pigott's dissent was long and well reasoned. The judge warned that this decision exposed governmental entities to tort liability where they fail to prevent a crime. At issue here was Louis Pascarella's criminal reckless conduct on Gerritsen Avenue. The City's failure to respond to this conduct was "overwhelmingly governmental in nature." Id. at 494. Absent a special duty owed to the plaintiff, the City was entitled to a governmental immunity. The dissent laser focused on the criminal conduct of Pascarella and quoted plaintiff's own expert who opined "you're not going to stop a person who wants to speed." Id. at 496.

While highway design, planning and maintenance is a proprietary function, once a study is conducted it must be thorough and the suggested roadway reforms enacted without delay. Turturro has undoubtedly raised the bar, scrutinizing the adequacy of the study and reaction to that study that must be conducted once a municipality is made aware of a dangerous traffic condition.

'Newcomb': Substantial Prejudice

It is well established that a party suing a public corporation must serve a notice of claim "within 90 days after the claim arises." General Municipal Law §50e( i)(a). The court, in its discretion, may extend the time for petitioner to serve a notice of claim. General Municipal Law §50e(5). Among the factors to be considered by the courts is whether the public corporation would be "substantially prejudiced" in maintaining its defense on the merits. This factor was the foundation of the opinion by Chief Judge Janet DiFiore in the case of Newcomb v. Middle County Central School District.

On March 23, 2013, petitioner's 16-year-old son suffered "devastating injuries" while crossing an intersection within the Middle Country School District. Newcomb, 28 N.Y.3d at 461. He was struck by a hit-and-run driver. Petitioner immediately reported his son's accident to his high school within the district. A month later he requested the police file. As it was a hit-and-run accident, he could not obtain it until the investigation was closed. Petitioner served timely notices of claim on the State, Town and County. He did not serve the School District.

Six months after the accident the petitioner obtained the police accident file. It revealed photos of a sign at the intersection where the petitioner's son was struck. That sign was removed after the accident. After enlarging the police photos, eight months after the accident, petitioner discovered that the sign advertised the play at another high school within the Middle Country Central School District.

Five months after the 90-day period for filing the notice of claim had expired, petitioner moved by order to show cause for leave to file a late notice of claim. Petitioner argued that the District sign had obstructed the view of the corner and created the distraction for drivers, thus creating a dangerous and hazardous condition.

The petitioner argued that the District had actual knowledge of the accident, since it had immediately reported it in detail to them. Furthermore, the District's agent had removed the sign within the 90-day period. Petitioner had diligently attempted to obtain the hit and run investigation and legible photographs of the scene. Since the accident scene was unchanged, a transient condition was not a prejudicial factor to be considered. It had been difficult to obtain the police investigation since it was a hit and run investigation.

The District simply claimed in an affidavit of counsel, with no other evidence attached, that it did not have actual knowledge since the police report did not mention the sign. Most significantly the District claimed that the petitioner bore the burden of proof to establish lack of prejudice and had failed to do so. The Supreme Court squarely placed the burden of proof on petitioner to demonstrate that the School District was not substantially prejudiced by the delay in service. The Supreme Court, on its own, without any evidence, concluded that matriculation and graduation of students and personnel changes hindered the District from collecting information about the sign. The court inferred that the mere passage of time created prejudice. It resulted in witnesses' fading memories. The Appellate Division affirmed. Id. at 464.

Chief Judge DiFiore, in an incisive decision, clarifies that a court cannot infer or presume substantial prejudice from evidence that is not in the record. The court could not presume that personnel changes and graduation hindered the District's ability to investigate. The mere passage of time was not proof of prejudice because of failing memories of witnesses. Those inferences by the Supreme Court were found inappropriate by the Chief Judge. Simply put, substantial prejudice must be based on evidence in the record. Id. at 466.

The court acknowledged that there was a split in all four appellate departments that placed the burden on the petitioner to show lack of substantial prejudice. There was also a split as to whether the burden shifted to the public corporation after the petitioner made an initial showing of lack of prejudice. Chief Judge DiFiore set the record straight and endorsed the rule "requiring a petitioner to make an initial showing that the public corporation will not be substantially prejudiced and then requiring the public corporation to rebut that showing with particularized evidence." Id. at 467.

No longer will there be any lingering doubt as to whether the petitioner bears the burden of proving substantial prejudice in a late notice of claim against a public corporation. After making an initial showing by the petitioner that the public corporation will not be substantially prejudiced, the public corporation must rebut that showing with particular evidence. The burden of proof essentially shifts to the public corporation who is in a better position to prove its own prejudice. A fair balance has been struck.

Kenneth E. Pitcoff and Andrea M. Alonso are partners of Morris Duffy Alonso & Faley.

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