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The Third Department Addresses Liability for Construction Related Flood Damage Resulting From the Diversion of Storm Water

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  • Posted on: Aug 20 2021

By Jonathan H. Freiberger 

On August 12, 2021, the Appellate Division, Third Department, decided WFE Ventures, Inc. v. GBD Lake Placid, LLC, a multi-faceted construction litigation.  Today’s article, however, will focus on flood damage resulting from the underlying construction project.

In WFE, the defendant owner (“Owner”) built a Marriot hotel in Lake Placid.  Owner hired an architectural firm (“Architect”) to obtain site plan (“Plan”) approval (“Approval”) from the applicable municipal review board (“JRB”) and an engineer (“Engineer”) to prepare a stormwater management plan (“Plan”).  The Plan included grading details that called for a retaining wall around the entire property.  The Plan was approved and, inter alia, contained a condition requiring prior written approval from the JRB before any engineering modifications or design changes could be made.  In this regard, Owner’s site work contractor (the “Site Contractor”) requested, and received, from JRB approval to change the materials from which the retaining wall would be built.

After encountering certain field conditions, however, the site work contractor “submitted preliminary sketches to the local inspector/code enforcement officer … to see whether … JRB would consider replacing the bulk of the [retaining] wall with earthen fill that would extend the slope of the land approximately 25 to 30 feet into the neighboring [property].”  No evidence was submitted that JRB approved the substitution of the retaining wall for the slope extension.   Nonetheless, the substitution did occur.  After the hotel was completed, a certificate of occupancy was issued.

The WFE plaintiff was a was a developer that acquired a nearby plot of land on which it intended to develop four buildings — each containing multiple townhouses (the “Development”).  Shortly after one of the buildings was completed, and over a two-year period thereafter, it experienced flooding which damaged all three townhouses therein.  After the first flood, plaintiff’s president complained to the JRB that the flooding was caused by Owner’s construction project — in particular, the removal of a retention pond on neighboring property as a result of slope extension efforts once the approved retaining walls were eliminated from the project.  Ultimately, plaintiff addressed the flooding by taking remedial actions itself after Owner ignored Plaintiff’s requests to address the problem directly.  Plaintiff’s actions were successful and the flooding stopped.

Thereafter, plaintiff commenced action against Owner “asserting causes of action sounding in negligence and nuisance and claiming that through the slope extension and related construction – undertaken without JRB approval – defendant wrongfully diverted surface water that resulted in flooding to [plaintiff’s development].”  In response, Owner, inter alia, brought third-party actions against the Site Contractor and Architect.  

Among other motions, Owner moved for summary judgment dismissing plaintiff’s complaint and plaintiff cross-moved for summary judgment against Owner on the issues of liability and proximate cause.  As relates to this article, supreme court denied plaintiff’s cross-motion finding issues of fact regarding, among other things, whether Owner’s actions diverted water onto plaintiff’s property by artificial means, thereby precluding summary judgment on this issue and plaintiff appealed.

In supreme court, plaintiff’s experts opined that Owner’s construction “particularly its decision to use fill as opposed to the JRB approved use of a [retaining] wall” caused the flooding.  Owner relied on the opinion of municipalities’ expert, who concluded that “not only did the hotel construction fail to cause the flooding, but the building of the hotel actually alleviated some surface water flow onto plaintiff’s property by redirecting some surface water that had previously flowed across the [Development] property.”  The Court agreed with supreme court that “[i]n light of the conflicting expert opinions and “recognizing that disagreement between experts generally presents a credibility determination to be resolved by the trier of fact and the cause of the flooding cannot be resolved on a motion for summary judgment.”  (Citations and internal quotation marks omitted.)

Among others, the Court rejected Owner’s, argument that, “regardless of whether the construction of the hotel was the root cause of the flooding of plaintiff’s property, defendant bears no responsibility in this regard [because] surface water was not diverted onto plaintiff’s land by artificial means….”  Indeed, the Court agreed with supreme court that issues of fact existed as to whether “artificial means” were used to divert water from Owner’s property.  Citing a litany of cases, the Court stated that a “landowner will not be liable for damages caused by the runoff of surface water onto a neighbor’s land as long as it was the result of an improvement to the landowner’s property undertaken in a good faith effort to enhance the usefulness of the property and, of more significance here, no artificial means, such as pipes and drains, are used to divert the water thereon. (Citations and internal quotation marks omitted.)  See also, Biaglow v. Elite Property Holdings, LLC, 140 A.D.3d 814, 815 (2nd Dep’t 2016).  The Court found that the first element was “clearly satisfied by the construction of a new hotel where vacant land and/or an abandoned building once stood.”  

The Court disagreed with Owner’s argument that the second element was satisfied because “there is no evidence that pipes or drains were used or installed” by Owner.  The Court noted its prior holdings that “the definition of artificial means should not be read so narrowly, as other, more esthetically pleasing means of water diversion – such as the construction of a swale or a berm – have been held to potentially constitute artificial means sufficient to form the basis for liability.”  (Citations omitted.)  Thus, the Court stated that “[t]he diversion of water by artificial means is not strictly limited to the use of pipes, drains and ditches and may otherwise be established where it is demonstrated that the net effect of the defendant’s improvements so changed, channeled or increased the flow of surface water onto the plaintiff’s land as to proximately cause damage to the property.”  (Citations, internal quotation marks, ellipses and brackets omitted.)

Considering the calculations of plaintiff’s expert that almost 60,000 cubic feet of fill was used by Owner to extend the slope of the property, a jury “might well conclude that the use of such a volume of fill to change the natural slope of the land could be deemed an artificial, as opposed to a natural, means of water diversion.”  Put another way, “as with the building of a swale or a berm, the issue of whether the extended slope so changed, channeled or increased the flow of surface water onto plaintiff’s land as to proximately cause damage to the property cannot be determined on a motion for summary judgment.”  (Citations and internal quotation marks omitted.)

Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.

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