Koch v. Consolidated Edison Co. of New York, Inc.

• Decision Date: 14 June 1984
• Citation: 62 N.Y.2d 548,468 N.E.2d 1,479 N.Y.S.2d 163
• Parties: , 468 N.E.2d 1 Edward I. KOCH, as Mayor of the City of New York, et al., Respondents- Appellants, v. CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., Appellant-Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 163

479 N.Y.S.2d 163

62 N.Y.2d 548, 468 N.E.2d 1

Edward I. KOCH, as Mayor of the City of New York, et al., Respondents- Appellants, v. CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., Appellant-Respondent.

Court of Appeals of New York.

June 14, 1984.

William E. Hegarty, Ernest J. Williams, Thomas J. Kavaler, Vincent E. Gentile and Lisa Schilit, New York City, for appellant-respondent

Frederick A.O. Schwarz, Jr., Corp. Counsel, New York City (Alfred Weinstein, Leonard Koerner and Daniel E. Katz, New York City, of counsel), for respondents-appellants.

OPINION OF THE COURT

JONES, Judge.

The determination made in a prior action that Con Edison was grossly negligent in connection with the 1977 blackout in the City of New York is binding and conclusive on Con Edison in this action. Although plaintiffs may recover damages for physical injury to persons and property directly resulting from the service interruption, including damages resulting from looting and vandalism by rioters, they may not recover damages for additional expenditures, occasioned by the blackout, made by plaintiffs in the performance of their governmental functions, nor may they recover for loss of revenues assertedly attributable to the blackout.

On July 13, 1977 at approximately 9:36 p.m. there was a complete failure of electrical service in the City of New York except for an area in the Borough of Queens which was supplied by the Long Island Lighting Company. The blackout lasted for approximately 25 hours with power not being completely restored until approximately 10:40 p.m. on July 14.

The present action was instituted on September 7, 1978 by the City of New York and 14 public benefit corporations to recover damages allegedly sustained as a result of Con Edison's gross negligence and reckless and willful conduct with respect to the blackout.

Plaintiffs moved for partial summary judgment with respect to Con Edison's liability for gross negligence "on the ground that, under the doctrine of collateral estoppel, a prior determination in another lawsuit (Food Pageant, Inc. v. Consolidated Edison Co., Inc., Supreme Court, Bronx County, Index No. 16971/77) ¹ that the July 13-14, 1977 electric power failure * * * resulted from the gross negligence of the defendant Consolidated Edison, is conclusive and binding on the defendant Consolidated Edison in this action". Con Edison thereupon made a cross motion for partial summary judgment, so far as pertinent for the purposes of the present appeal, (1) dismissing plaintiffs' claims based on Con Edison's contracts with the Power Authority of the State of New York (PASNY) because "plaintiffs are neither parties nor third-party beneficiaries of those contracts", (2) dismissing "plaintiffs' claims for damages attributable to criminal activity, civil disturbances, municipal employee absenteeism and lost productivity" because "superseding causes preclude imposition of liability upon Con Edison for such damages", and (3) dismissing "plaintiffs' claims for reimbursement of municipal expenditures incurred during July 13-14, 1977" because "plaintiffs cannot recover as damages the costs of governmental operations which they were created to perform".

Special Term granted plaintiffs' motion and denied Con Edison's motion as described above. The Appellate Division, 95 A.D.2d 988, 465 N.E.2d 99, affirmed, without opinion, and granted both plaintiffs and Con Edison leave to appeal to our court. We modify the determination at the Appellate Division.

We agree with both courts below that on the issue of Con Edison's liability for gross negligence in connection with the blackout, Con Edison is precluded by the adverse determination of the issue in Food Pageant v. Consolidated Edison Co., 54 N.Y.2d 167, 445 N.Y.S.2d 60, 429 N.E.2d 738. The applicable principle in this case is that of third-party issue preclusion. ²

It is plaintiffs who seek to invoke the principle of third-party issue preclusion to bar Con Edison from relitigating its liability for gross negligence. It is not disputed that this issue was actually litigated and determined by a valid and final judgment in Food Pageant and that the determination of that issue was essential to the judgment in that case. Plaintiffs contend, therefore, that the determination in Food Pageant is binding and conclusive in this case. Con Edison, having the burden ³ to demonstrate that the circumstances of the prior determination justify affording it an opportunity to relitigate the issue of liability, advances several arguments in support of its contention that the determination in Food Pageant is not to be given preclusive effect. ⁴ These arguments, taken singularly or in combination, do not warrant the result for which Con Edison contends, and Con Edison has not tendered sufficient proof in admissible form to require trial of any issue of fact or reversal of the exercise of judgment by the courts below.

It is first contended that third-party issue preclusion should not apply because there are other judicial determinations concluding that Con Edison was not guilty of gross negligence in connection with the blackout. ⁵ Whatever might be said of the effect properly to be given to inconsistent determinations of like judicial stature, in this instance it suffices to dismiss Con Edison's contention to observe that the inconsistent determinations on which it would rely are those in cases tried in the Small Claims Part of the Civil Court of New York City as to which informal and simplified procedures are applicable ⁶ and which by express statutory provision are not to be deemed an adjudication of any fact at issue (other than the amount involved) with respect to any other action. ⁷

Con Edison next argues that there is now available exculpatory evidence which in fairness requires that it be permitted to relitigate the issue of liability. Reference is made to investigative reports, in particular to the so-called Clapp Report. These reports were available and offered but rejected in the Food Pageant trial. Nothing suggests that the exclusion of this hearsay evidence was there error (and any contention that it was could have been subjected to appellate review on the appeal in that case), and no persuasive argument is now advanced to support admissibility in this case.

Con Edison next makes an oblique plea that we should reintroduce the former requirement of mutuality which we declared "a dead letter" in B.R. DeWitt, Inc. v. Hall, 19 N.Y.2d 141, 147, 278 N.Y.S.2d 596, 225 N.E.2d 195. To grant this plea would, of course, be entirely to eliminate third-party issue preclusion. It is understandable that Con Edison should express concern, in the light of the multiplicity of claims arising out of the blackout, that the issue of its gross negligence will have been established in each case. Nevertheless, no sufficient justification is advanced to turn the clock back with respect to so fundamental a legal development as the elimination of the requirement of mutuality. We have been committed since DeWitt, and indeed even before (Israel v. Wood Dolson Co., 1 N.Y.2d 116, 151 N.Y.S.2d 1, 134 N.E.2d 97), to the proposition that efficient utilization of the judicial system is served by preclusion of relitigation of issues as to which a litigant has had a full and fair opportunity for resolution, irrespective of the identity of his particular opponent. Nor does Con Edison advance any intermediate position warranting a different application of the principles of third-party issue preclusion with respect to a multiplicity of claims arising out of a community-wide disaster such as the blackout in this case.

It is then argued that the determination in Food Pageant should not be given preclusive effect because of indications that it was the result of compromise in the jury room. No tender has been made, however, of proof in admissible form sufficient to require trial of this factual issue. The arguments of Con Edison are grounded only in speculation, and it cannot be said as a matter of law that the Food Pageant verdict was the result of impermissible compromise.

The circumstance, to which Con Edison next points, that the claim in Food Pageant and the amount of the jury's verdict ($40,500) may be said to be "small in absolute terms and particularly so when compared to the aggregate of over $200 million in claims against Con Edison arising out of the 1977 blackout", provides no basis to deny application of third-party issue preclusion. In Food Pageant, Con Edison had a full and fair opportunity to litigate the issue of gross negligence, the forum and applicable procedures were the same, the burden of persuasion was the same, and Con Edison, explicitly then recognizing the potential preclusive effects of an adverse determination in that case, had every incentive to defend that action fully and vigorously.

Nor does the adoption of a rule of comparative negligence in New York (CPLR art. 14-A) foreclose application of third-party issue preclusion in the circumstances of this case. No contention whatsoever is put forth by Con Edison that any action or omission to act on the part of any of plaintiffs contributed to cause the blackout. There simply is no issue of comparative negligence involved in the question of Con Edison's responsibility for the blackout. It may be, however, that principles of mitigation will require consideration of certain action or inaction on the part of plaintiffs in the determination of damages.

Finally with respect to the preclusion issue, we reject as wholly without merit Con Edison's assertion that to apply third-party issue preclusion would be to deprive it of the due process to which it is constitutionally entitled. The characterization of this appeal as "presenting a question of fundamental fairness" neither concludes nor advances the argument. Con Edison cites no authority, and we know of none, which now regards the application of third-party issue preclusion as...