Milliken & Co. v. City of New York

• Decision Date: 09 December 1993
• Citation: 199 A.D.2d 75,605 N.Y.S.2d 682
• Court: New York Supreme Court — Appellate Division
• Parties: MILLIKEN & CO., et al., Plaintiffs-Appellants-Respondents, v. The CITY OF NEW YORK, et al., Defendants-Respondents-Appellants, and Consolidated Edison Company of New York, Defendant.

Page 682

605 N.Y.S.2d 682

199 A.D.2d 75

MILLIKEN & CO., et al., Plaintiffs-Appellants-Respondents, v. The CITY OF NEW YORK, et al., Defendants-Respondents-Appellants, and Consolidated Edison Company of New York, Defendant.

[And a Third-Party Action.]

GOLD MILLS, INC., Plaintiff-Appellant-Respondent, v. The CITY OF NEW YORK, et al., Defendants-Respondents-Appellants, and Consolidated Edison Company of New York, Defendant.

[And a Third-Party Action.]

I.S.K. MANHATTAN, INC., et al., Plaintiffs-Appellants, v. The CITY OF NEW YORK, et al., Defendants-Respondents.

[And a Third and Fourth-Party Action.]

Supreme Court, Appellate Division First Department.

Dec. 9, 1993.

Before CARRO, J.P., and ROSENBERGER, ELLERIN, WALLACH and RUBIN, JJ.

MEMORANDUM DECISION.

Orders, Supreme Court, New York County (Karla Moskowitz, J.), entered on or about March 6, 1991, as resettled in orders entered September 2, 1992, unanimously modified, on the law, to the extent of reinstating against defendant Con Edison the claims (including for loss of profits) of those plaintiffs which were dismissed for lack of privity with the utility, and dismissing the claims against the real estate defendants, and otherwise affirmed, without costs.

On August 10, 1983 an underground water main ruptured near the intersection of 38th Street and Seventh Avenue, flooding the subbasement of the Navarre Building, where Con Edison maintained a substation. As a consequence of the flood and a resultant fire, electrical power was lost to most of Manhattan's garment center (30th to 42nd Streets, between Avenue of the Americas and Seventh Avenue) for the next four days. Aside from the normal inconvenience and disruption caused by an extended power outage, this happened to be the fashion industry's semiannual Buyers Week in New York. Various allegations of negligence and contractual liability were asserted by numerous plaintiffs against Con Edison, the City of New York, various real estate entities connected with the Navarre Building, and Empire City Subway Company, which had excavated and installed certain underground conduits and communication lines in the area for defendant New York Telephone Company.

On March 6, 1991, in orders resettled eighteen months later, the IAS court ruled, as pertinent on these consolidated appeals, that Con Edison should be liable only to its direct subscribers (i.e., those metered for service by the utility) who can show that they sustained actual property damage. To the contrary, we hold that Con Edison's zone of duty encompasses those tenants who can prove a relationship with the utility by having assumed an obligation in their leases to reimburse the landlord for electrical power on an apportioned basis, despite a lack of direct metering.

The IAS court dismissed the claims by those plaintiffs who were tenants without a direct customer relationship with Con Edison, citing Strauss v. Belle Realty Co., 65 N.Y.2d 399, 492 N.Y.S.2d 555, 482 N.E.2d 34. In Strauss, the Court dismissed a complaint against Con Edison by an elderly tenant who had tripped and fallen in a darkened common area of his apartment building during the power blackout of 1977. While such an injury might very well have been foreseeable under the circumstances, the Court held, on public policy grounds, that the extension of Con Edison's liability to nonsubscribers (i.e., individuals having no contractual relationship with the utility) would unduly enlarge the zone of duty, notwithstanding Con Edison's established negligence in connection with the blackout. "Duty in negligence cases is defined neither by foreseeability of injury.... nor by privity of contract.... But while the absence of privity does not foreclose recognition of a duty, it is still the responsibility of courts, in fixing the orbit of duty, 'to limit the legal consequences of wrongs to a controllable degree' " (id. at 402, 492 N.Y.S.2d 555, 482 N.E.2d 34, citations omitted). Without employment of public policy, the court suggested that the zone of duty might very well be expanded beyond controllable limits to include such categories as the guests and invitees of a tenant or the walk-in customers or occupants...