Opinion ID: 1793194
Heading Depth: 1
Heading Rank: 3

Heading: liability of city for negligence in performance of proprietary function of providing water

Text: The City argues that only the City street department knew that the manhole covering the stop boxes and shut-off valves had been paved over, and this knowledge cannot be imputed to the water division. Further, it argues that regardless of such knowledge, the water division had no duty to the College under the common law to keep the stop boxes or shut-off valves accessible, to warn about their location or to train its employees how to find privately-owned stop boxes and shut-off valves, nor did it assume such a duty by ordinance or contract. It argues that the City's negligence, if any, was in paving over the manhole cover, not in any water division functions, and that the paving over of the manhole cover constitutes a condition of public property. As the College never claimed that any exception to sovereign immunity applied to its paving under sections 537.600(2) and 537.610, RSMo 1994, [2] the City argues it has no liability at all. The College alleged that the trial court was correct in finding the City negligent because the City water division was acting in a proprietary capacity in selling water to its customers for profit; thus, sovereign immunity does not apply to it. Under the common law, only the State and its entities were entitled to complete sovereign immunity from all tort liability. Jungerman v. City of Raytown, 925 S.W.2d 202, 204 (Mo. banc 1996). Municipal corporations traditionally have had immunity, however, for those actions they undertake as a part of the municipality's governmental functions  actions benefiting the general public. Id. See also, State ex rel. St. Louis Hous. Auth. v. Gaertner, 695 S.W.2d 460, 462 (Mo. banc 1985). Municipal corporations do not enjoy sovereign immunity in tort while performing proprietary functions. Proprietary functions are those actions performed for the special benefit or profit of the municipality acting as a corporate entity. Jungerman, 925 S.W.2d at 204. See also, Dallas v. City of St. Louis, 338 S.W.2d 39, 44 (Mo.1960); State ex rel. City of Marston v. Mann, 921 S.W.2d 100, 102 (Mo.App. S.D.1996); Schulz Through Schulz v. City of Brentwood, 725 S.W.2d 157, 160 (Mo.App. E.D.1987). In 1978, when the legislature reinstated sovereign immunity in tort as it existed at common law, sec. 537.600, it created two exceptions to sovereign immunity in tort for: (1) Injuries directly resulting from the negligent acts or omissions of public employees arising out of the operation of motor vehicles ...; (2) Injuries caused by the condition of a public entity's property if the plaintiff establishes that the property was in a dangerous condition at the time of the injury, .... Sec. 537.600.1. In 1985, the legislature further clarified the application of this provision to municipalities by adding section 537.600.2, which states: The express waiver of sovereign immunity in the instances specified in subdivisions (1) and (2) of this section are absolute waivers of sovereign immunity in all cases within such situations whether or not the public entity was functioning in a governmental or proprietary capacity and whether or not the public entity is covered by a liability insurance for tort. Sec. 537.600.2. In Wollard v. City of Kansas City, 831 S.W.2d 200 (Mo. banc 1992), this Court held that if the conduct that forms the basis of the claim pertains to a dangerous condition of public property, and so comes within the terms of section 537.600, then the previous distinctions between proprietary and governmental functions are irrelevant. The statute provides for a complete waiver of sovereign immunity, regardless whether the conduct would previously have been considered proprietary or governmental, but recovery is limited to the amount prescribed by statute. See secs. 537.610; 537.615, RSMo 2000. The College does not attack Wollard or address its potential application to the repaving of Oakland Avenue; therefore, there is no reason for this Court to reach the question whether such repaving created a dangerous condition of public property or whether the statutory limitation on damages applies to any negligence in repaving. Rather, the College asserts that section 537.600 and any limitations on recovery for a dangerous condition of public property are irrelevant, for it is not suing for a dangerous condition of public property, nor has it alleged it is entitled to recover from the City for improperly paving over the stop box and shut-off valve. It instead asserts fault on the City's part in its functions and capacity as a supplier of water. The College argues that because the alleged negligence of the City as a supplier of water does not involve a condition of public property, section 537.600.2 is irrelevant, and the distinction between proprietary and governmental functions therefore applies to the City in its capacity as supplier of water. Therefore, the College argues, the City is liable if its supplying of water is a proprietary function and if the water division had and breached a duty either to: 1) maintain the accessibility of the fire line shut-off valve; 2) mark the location of the paved manhole cover or warn the College that it was paved over; or 3) properly train its water division employees so that they could locate the shut-off valve in a timely fashion. The College alleged that these duties on the part of the City arose under the common law, or alternatively, that the City assumed these duties in 1993 when it passed an ordinance requiring the City to uncover paved-over manhole covers in certain circumstances, and that the City breached one or more of these duties. [3] The College is correct that the limitations on liability set out in section 537.600.1 do not apply where the alleged tort does not involve a dangerous condition of public property or the operation of a motor vehicle, and that in such cases the distinction between whether a municipality is operating in a proprietary or governmental capacity is still important. Numerous cases have addressed whether a municipal water division is acting in a proprietary or governmental capacity in supplying water as a public utility. Where a city supplies water for use in putting out fires, it is performing a governmental function and is immune from liability. See Lober v. Kansas City, 74 S.W.2d 815, 822 (Mo.1934) (noting that in the extinguishment of fires, a municipality acts in its governmental capacity). See also, Theodoro v. City of Herculaneum, 879 S.W.2d 755, 761 (Mo.App. E.D.1994) (The creation of a municipal fire department is for the benefit of the general public, and therefore, any act or omission of the municipality associated with the performance of this service is a governmental function for which the municipality ordinarily may not be held liable.); O'Dell v. City of Breckenridge, 859 S.W.2d 166, 168 (Mo.App. W.D.1993) (accord). But, when a municipality is in the business of selling water to customers for profit or revenue, it is engaged in a proprietary function. Lober, 74 S.W.2d at 822. Here, it is stipulated that the City operates a Water Division which distributes and sells water to residential, commercial and industrial customers, including the College. The water that flooded was not being used by it to fight a fire or for another public purpose. The water was being purchased by the College to run through lines solely owned by the College and intended for use solely on its property. In supplying this water, the City was engaged in a proprietary function, and its alleged fault in regard to supplying water for use in this private line does not constitute a dangerous condition of public property, so that sovereign immunity principles do not apply.
As the College notes: Whenever a city in its proprietary capacity operates a waterworks system for the purpose of supplying water to individuals, as is admitted in the present case, it must assume the same responsibility for its negligence as any other private supplier of water for profit, and the question of its liability for negligence must be so determined. Adam Hat Stores, Inc. v. Kansas City, 316 S.W.2d 594, 597 (Mo. banc 1958). The College poses the question, If the City had been a private water company, would there be any question that it would be liable for the losses suffered by the College resulting from the City's bungling? In fact, if a private water company had acted as the City water division had done, the private water company would not be held liable to the College. The City is not either. While the College asserts otherwise, the cases it cites do not support its arguments. In each of these cases, the water company's own lines or other company property caused the injury. Here, however, the break did not occur in the City main, but in the College's own line, an event for which the College admits it, not the City, is responsible. Yet, the College also owns the fire line shut-off valve and stop box. None of the cited cases hold that a water company has a duty to repair, make, or keep accessible property owned by the customer, in the absence of a contract so requiring. Adam Hat Stores, 316 S.W.2d at 594, Koch Brothers Bag Co. v. Kansas City, 315 S.W.2d 743 (Mo.1958), and Lamar v. City of St. Louis, 746 S.W.2d 160 (Mo.App. E.D.1988), merely hold that a water company has a duty not to let the company's property cause injury to others, and, so, is responsible where a break in the water company's lines caused damage to surrounding property. In Byrd v. Brown, 641 S.W.2d 163, 169 (Mo.App. S.D.1982), a duty was found only because the city itself damaged a neighbor's water pipe, which ultimately resulted in the plaintiff's store being damaged by a fire. In an attempt to avoid this difficulty, the College argues that a common law duty on the part of the water division can also be found in principles set out in Lopez v. Three Rivers Electric Cooperative, Inc., 26 S.W.3d 151 (Mo. banc 2000), and Hoover's Dairy, Inc. v. Mid-America Dairymen, Inc./Special Products, Inc., 700 S.W.2d 426 (Mo. banc 1985). These cases, however, do not assist the College. In Lopez , the representatives of two decedents sued defendant after a helicopter carrying the decedents crashed into defendant's unmarked power lines. This Court found that defendant, which owned the power lines, should have foreseen a probability of injury if the lines went unmarked, and that it had a duty to tag them or make them visible in some way. Lopez, 26 S.W.3d at 156. In that case, the duty arose because defendant owned the power lines and had a continuing duty to warn of danger resulting from their obscured location. Here, as noted, the City does not own the water line, stop box, or shut-off valve; the College owns them. Nothing in Lopez suggests that this Court would have held the power company liable if the injured party owned the power lines. In Hoover's Dairy , plaintiff claimed that defendant was negligent in the installation of a milking system. During installation, defendant failed to conduct a complete system analysis. A stray voltage problem went undetected, ultimately infecting forty percent of plaintiff's herd. Hoover's Dairy, 700 S.W.2d at 428-30. This Court found that defendant had a duty to warn plaintiff of the stray voltage problem at the time of installation. Id. at 432. Here, however, it was the College that installed the valve and stop box, not the City. Hoover's Dairy is not on point. Moreover, here the College alleges a duty on the part of the City to warn of a danger that did not arise until years after the stop box and valve were installed; Hoover's Dairy did not hold that the installers' duty to warn continued as to defects arising after the installation was complete and ownership passed to the farmer. The College cites to no other case providing a basis for finding a common law duty on the part of the City water division to maintain open access to customer-owned shut-off valves and stop boxes or to warn customers if another division blocks access to the valve or stop box. This is separate from the issue whether the City was negligent in paving Oakland Avenue. The City acknowledges that, at some point, it paved over the manhole giving access to the shut-off valve and stop box, and it is implicit in the trial court's decision that it believed that the City was negligent in so doing. Certainly, a factual question for submission to the jury was raised by the evidence. And, the water division, as a division of the City, can be charged with knowledge of the fact that the City's street department paved over the College's stop box and shut-off valve. [4] But, the College specifically disclaims that it is seeking damages based on the paving over of the manhole, thereby allowing it to bypass the issues whether the repaving created a dangerous condition of public property and whether the $100,0000 limitation on recovery set out in section 537.610 therefore applies. In order to do so, it attempted to plead a duty and breach on the part of the City water division separate and apart from any negligence in paving over the manhole. It was, then, required to demonstrate that such a separate duty existed, rather than merely posit that it did. For these same reasons, the dissenting opinion is in error in suggesting that the water department somehow breached a duty to the College because of the paving over of the stop box, separate and apart from the duty of the City as a paver of the road. While the City may have had and breached a duty in paving the road, it was in its function as a paver of the road that it would have done so. If the College wishes to avoid the sovereign immunity issues thereby implicated, then it must identify a separate basis for an additional duty by the City in its capacity as a provider of water. The cases the College and the dissent cite simply do not provide the authority for finding such a separate duty on the part of the water division, separate and apart from any liability that may have arisen from paving over the manhole. The trial court erred in finding such a common law duty on the part of the water division.