Raspberry Junction Holding, LLC v. Se. Conn. Water Auth.

• Decision Date: 18 August 2021
• Docket Number: SC 20454
• Parties: RASPBERRY JUNCTION HOLDING, LLC v. SOUTHEASTERN CONNECTICUT WATER AUTHORITY
• Court: Connecticut Supreme Court

340 Conn. 200

263 A.3d 796

RASPBERRY JUNCTION HOLDING, LLC

v.SOUTHEASTERN CONNECTICUT WATER AUTHORITY

SC 20454

Supreme Court of Connecticut.

Argued January 15, 2021^*

Officially released August 18, 2021

Santa Mendoza, for the appellant (plaintiff).

Stephanie S. Berry, New London, with whom, on the brief, was Christopher C. Ring, for the appellee (defendant).

Robinson, C. J., and McDonald, D'Auria, Mullins, Kahn, Ecker and Keller, Js.

KELLER, J.

The plaintiff, Raspberry Junction Holding, LLC, the owner of a 164 room hotel in North Stonington, commenced this negligence action against the defendant, Southeastern Connecticut Water Authority, a municipal corporation that provides water to twenty-one towns and boroughs in southeastern Connecticut, seeking damages for economic losses it incurred when an explosion at the defendant's North Stonington pumping station caused an interruption in the hotel's water service. The defendant moved for summary judgment, contending that (1) it was immune from liability under rules it had adopted pursuant to the rule-making authority conferred on it by the legislature, and (2) the plaintiff's claim was barred by the economic loss doctrine, a common-law rule, which, "generally characterized, reflects the principle that a plaintiff cannot sue in tort for purely monetary loss unaccompanied by physical injury or property damage." Raspberry Junction Holding, LLC v. Southeastern Connecticut Water Authority , 331 Conn. 364, 368 n.3, 203 A.3d 1224 (2019). The trial court, Vacchelli , J. , agreed with the defendant's first contention and granted its motion for summary judgment. Id. at 368, 203 A.3d 1224. The plaintiff appealed, and this court reversed the trial court's judgment and remanded the case for consideration of the defendant's alternative ground for summary judgment. Id. at 378, 203 A.3d 1224. Presently before us is the plaintiff's appeal¹ from the judgment of the trial court, Calmar , J ., again granting the defendant's motion for summary judgment, this time on the theory that the defendant owed the plaintiff no legal duty of care. On appeal, the plaintiff claims that the trial court incorrectly determined that the defendant could not be held liable for the plaintiff's losses because public policy does not support the imposition of a duty on the defendant under the circumstances of this case. We disagree and, accordingly, affirm the judgment of that court.

The following undisputed facts and procedural history are relevant to our resolution of this appeal. "The defendant was created in 1967 by a special act of the General Assembly as a body politic and corporate of the state, designated to perform the ‘essential government function’ of planning, operating, and maintaining a water supply system for the benefit of the southeastern Connecticut planning region. 33 Spec. Acts 478, No. 381 (1967) (special act).² Section 14 of [the special] act sets forth the powers and duties conferred on the defendant, including ‘the power ... to make ... rules for the sale of water and the collection of rents and charges therefor ... [and] to do all things necessary or convenient to carry out the powers expressly given in [the] act ....’ 33 Spec. Acts 481, 483–84, No. 381, § 14 (1967)." (Footnote altered.) Raspberry Junction Holding, LLC v. Southeastern Connecticut Water Authority , supra, 331 Conn. at 366–67, 203 A.3d 1224.

"The [defendant] is a publicly owned agency of government, not a private company. Its function, simply stated, is to plan, operate and construct water supply systems in Southeastern Connecticut. The underlying consideration in the creation of the [defendant] by the legislature, in response to local initiatives, was that the long range public interest is best served by a collective and cooperative approach to the water supply requirements, present and future." Southeastern Connecticut Water Authority, Rules Governing Water Service, available at https://www.waterauthority.org/rules-governing-service (last visited August 9, 2021).

The defendant consists of seven members appointed by the representative advisory board (advisory board), which is comprised of two members from each of the twenty-one towns and boroughs served by the defendant. Id. Advisory board members are appointed by the board of selectmen or town council from each town or borough for a term of two years and serve without compensation. See 33 Spec. Acts 479, No. 381, §§ 4 and 5 (1967). "The [advisory board], in addition to appointing [the defendant's] members, annually audits the financial records of the [defendant]. It also holds public hearings on proposed changes in rates. Within the [advisory board], there are several standing committees, including [f]inance, [l]egislative, and [c]ustomer [a]ppeals. The [c]ustomer [a]ppeals [c]ommittee's purpose is to resolve misunderstandings between the [defendant] and its customers. [Each] town's [advisory board] members are [the] direct representatives [of the defendant's customers] ...." Southeastern Connecticut Water Authority , supra.

"In 2016, the plaintiff commenced the present action against the defendant, seeking damages [for] a loss of water service at [its hotel] .... In its one count complaint, the plaintiff alleged that the hotel lost water service for several days in June, 2015, due to the explosion of a hydropneumatic tank at a pumping station operated by the defendant as a result of the defendant's negligent construction, operation, inspection or maintenance of the tank and its valves. The plaintiff further alleged that the water outage caused the plaintiff to lose revenue due to its inability to rent rooms and the need to give refunds to hotel guests during the water outage.

"The defendant moved for summary judgment on two grounds. First, it contended that rule 5 [of the defendant's ‘Rules Governing Water Service’] immunized it from liability for the plaintiff's damages .... Second, it contended that, because the plaintiff was seeking damages for monetary loss only, the claim is barred by the common-law economic loss doctrine. The plaintiff opposed the motion, arguing that the defendant, as a municipal corporation engaged in a proprietary function, is not immune from suit and has no authority, express or implied, to promulgate rules that waive liability for negligence. The plaintiff also argued that the economic loss doctrine does not apply under the circumstances presented." (Citation omitted; footnote omitted.) Raspberry Junction Holding, LLC v. Southeastern Connecticut Water Authority , supra, 331 Conn. at 367–68, 203 A.3d 1224.

The trial court, Vacchelli , J. , agreed with the defendant's first contention and rendered summary judgment in the defendant's favor. Id. at 368, 203 A.3d 1224. On appeal, this court reversed the trial court's judgment on the basis of our determination that the legislature did not authorize the defendant to promulgate rules immunizing itself from liability. Id. at 370, 203 A.3d 1224. In light of that determination, we remanded the case to the trial court for consideration of the defendant's alternative ground for summary judgment, namely, that the plaintiff's claim was barred by the economic loss doctrine. Id. at 378, 203 A.3d 1224.

On remand, the parties filed additional briefs in support of their respective positions. Following oral argument, the trial court, Calmar , J ., issued a memorandum of decision in which it granted the defendant's motion for summary judgment. The trial court, citing Lawrence v. O & G Industries, Inc ., 319 Conn. 641, 664, 126 A.3d 569 (2015), explained that the economic loss doctrine is a common-law rule intended "to shield a defendant from unlimited liability for all of the economic consequences of a negligent act, particularly in a commercial or professional setting, and thus to keep the risk of liability reasonably calculable." (Internal quotation marks omitted.) The trial court further explained that this court previously has declined to apply the economic loss doctrine as a categorical bar to the recovery of purely economic losses in a tort action, opting instead to apply a traditional duty analysis to the question of whether a defendant's liability should extend to such losses. Applying this analysis, the trial court concluded that the defendant owed the plaintiff no legal duty of care.

In reaching its determination, the court, quoting Lawrence , explained that whether a duty exists turns on two considerations, the foreseeability of the harm and "a determination, on the basis of a public policy analysis, of whether the defendant's responsibility for its negligent conduct should extend to the particular consequences or particular plaintiff in the case." (Internal quotation marks omitted.), quoting Lawrence v. O & G Industries, Inc ., supra, 319 Conn. at 650, 126 A.3d 569. The court further explained that, in determining whether public policy supports the imposition of a duty, courts apply the well established test first articulated in Jaworski v. Kiernan , 241 Conn. 399, 407, 696 A.2d 332 (1997), which requires courts to consider the following four factors: "(1) the normal expectations of the participants in the activity under review; (2) the public policy of encouraging participation in the activity, while weighing the safety of the participants; (3) the avoidance of increased litigation; and (4) the decisions of other jurisdictions." (Internal quotation marks omitted.) Lawrence v. O & G Industries, Inc ., supra, at 650, 126 A.3d 569. Applying these well established principles, the court determined that, although the plaintiff's economic losses were reasonably foreseeable, imposing a duty on the defendant was inconsistent with public policy, as determined by the applicable four factor test.

Specifically, the trial court concluded that, although the first factor favored the plaintiff "slightly" insofar as water service customers generally expect an interruption in service to be "temporary," lasting hours...