                           State of New York
                    Supreme Court, Appellate Division
                       Third Judicial Department
Decided and Entered: March 31, 2016                     521423
________________________________

MICHAEL BILLERA,
                      Respondent-
                      Appellant,
     v

MERRITT CONSTRUCTION, INC.,
                    Respondent-
                    Appellant,
      and

VILLAGE OF CATSKILL,
                    Appellant-
                    Respondent,
                    et al.,
                    Defendant.

(Action No. 1.)

                                             OPINION AND ORDER

JOHN ANNESE et al.,
                      Respondents-
                      Appellants,
     v

COUNTY OF GREENE,
                      Defendant,
     and

VILLAGE OF CATSKILL,
                    Appellant-
                    Respondent,
      and

MERRITT CONSTRUCTION, INC.,
                    Respondent-
                    Appellant.

(Action No. 2.)
________________________________
                               -2-                  521423

Calendar Date:   February 19, 2016

Before:   Peters, P.J., Garry, Rose, Lynch and Clark, JJ.

                            __________


      Shantz & Belkin, Latham (M. Randolph Belkin of counsel),
for appellant-respondent.

      Ralph C. Lewis Jr., Catskill, for Michael Billera,
respondent-appellant.

      Napierski, VanDenburgh, Napierski & O'Connor, LLP, Albany
(Thomas J. O'Connor of counsel), for Merritt Construction, Inc.,
respondent-appellant.

      Basch & Keegan, LLP, Kingston (Derek J. Spada of counsel),
for John Annese and another, respondents-appellants.


                            __________


Garry, J.

      Appeal from an order of the    Supreme Court (Platkin, J.),
entered October 8, 2014 in Greene    County, which, among other
things, partially denied a motion    by defendant Village of
Catskill for, among other things,    summary judgment dismissing
the complaints against it.

      Defendant Merritt Construction, Inc. was retained by
defendant County of Greene to perform construction work on a
stretch of roadway within the County. Part of this project
required pile driving, that is, driving steel sheets into the
ground adjacent to the roadway by means of a crane with a hammer
attached. To allow the crane to access the site, it was
necessary to excavate and remove a portion of a nearby fire
hydrant connected to a water main owned by defendant Village of
Catskill. Village officials were therefore called in to consult
                              -3-                521423

on this part of the work. A nearby valve was closed in an
attempt to cut off the water flow to the hydrant. This valve did
not fully close; after the top portion of the hydrant was
removed, there was a "drip" of water leaking from the remaining
bottom portion of the hydrant. Following discussions between
Merritt's superintendent, the Village Water Department foreperson
and the County Engineer, it was decided that, despite this drip,
Merritt would backfill over the hydrant and water main and
proceed with the necessary pile driving work, leaving the leak to
be addressed at a later date.

      Approximately two weeks later, on a Friday evening, the
Village was notified that there was water coming out of the
ground in the area of this work site. Village officials arriving
on the scene observed water seeping out of the ground "like a
garden hose," and running down the shoulder of the roadway. The
Village officials decided to monitor the leak over the weekend
and meet with workers from Merritt the following Monday to then
ascertain the source of the leak. The leak thus persisted
through the weekend; the Village official tasked with monitoring
it described it as staying approximately the same size. An
employee of the County Highway Department who passed by the site
described it as a "substantial" amount of water "at least a foot
wide [and] an inch and a half deep." In the early morning hours
that following Monday, the Village was notified that the water
plant that processed the Village's water was experiencing a
significant increase in the flow of water through its system,
which was running "full bore." Workers arriving at the site
discovered that the water main attached to the hydrant had burst.
Flooding and a mudslide had damaged a nearby residence leased by
plaintiff Michael Billera, and owned by plaintiffs John Annese
and Jessica Montague.

      Billera and, separately, Annese and Montague commenced
actions against Merritt, the County and the Village, asserting
that defendants had been negligent in failing to take actions to
prevent the rupture of the water main, among other things.
Following joinder of issue, each of the defendants asserted cross
claims against the other seeking contribution and common-law
indemnification. The County also asserted a cross claim for
contractual indemnification against Merritt. Thereafter, the
                              -4-                521423

Village moved for leave to amend its answer to include the
affirmative defense of governmental immunity and add a cross
claim against Merritt for contractual indemnification, and also
seeking summary judgment dismissing the claims against it.
Merritt and the County jointly cross-moved for summary judgment
on their cross claims against the Village for common-law
indemnification and also sought dismissal of plaintiffs' claims
against them.1 Finally, Billera cross-moved for summary judgment
on his claims against the Village and Merritt.

      Supreme Court denied the motion by the Village except to
the extent of allowing amendment of the answer to include a cross
claim for contractual indemnification against Merritt. The court
granted summary judgment to both Merritt and the County
dismissing plaintiffs' complaints against them, and dismissed the
cross claims against them by the Village seeking contribution and
common-law indemnification. The court also denied Billera's
cross motion for summary judgment against the Village. Except
for the County, all of the parties now appeal.

      Initially, the Village asserts that Supreme Court erred by
refusing to allow them leave to serve an amended answer
presenting the affirmative defense of governmental immunity.
Specifically, the Village argues that it is entitled to immunity
for the discretionary decision of Village employees not to take
additional action regarding the leak based upon their concern for
maintaining an adequate supply of water for firefighting. A
threshold inquiry in determining if a municipality is entitled to
immunity in a negligence action is "whether the municipal entity
was engaged in a proprietary function or acted in a governmental
capacity at the time the claim arose" (Applewhite v Accuhealth,
Inc., 21 NY3d 420, 425 [2013]; accord Wittorf v City of New York,
23 NY3d 473, 478-479 [2014]). Where the alleged negligence arose
out of proprietary, rather than governmental acts, no immunity
will attach and a municipality will generally be liable to the
same extent as a private actor (see D & D of Delhi, Inc. v


    1
        Plaintiffs did not oppose the motion to the extent that
it sought summary judgment on their claims asserted against the
County.
                              -5-                521423

Village of Delhi, 47 AD3d 1117, 1118 [2008]; Lemery v Village of
Cambridge, 290 AD2d 765, 766 [2002]). The maintenance of a
municipal water system to provide water for the private use of
residents has been deemed to be a proprietary function (see
De Witt Props. v City of New York, 44 NY2d 417, 423-424 [1978];
D & D of Delhi, Inc. v Village of Delhi, 47 AD3d at 1118).
However, where the alleged negligence stems from municipal
efforts to protect the safety of the public by "aggregating and
supplying water for the extinguishment of fires," it is engaged
in a government function entitled to immunity (Canavan v City of
Mechanicville, 229 NY 473, 476 [1920]). These established rules
can present challenges as applied to modern municipal water
systems that are used to provide water to both homes and hydrants
(see County of Nassau v South Farmingdale Water Dist., 62 AD2d
380, 388 [1978], affd 46 NY2d 794 [1978]). In such cases, where
a municipality can be seen to be serving dual governmental and
proprietary roles, we must look to "the specific act or omission
out of which the injury is claimed to have arisen and the
capacity in which that act or failure to act occurred" (Weiner v
Metropolitan Transp. Auth., 55 NY2d 175, 182 [1982]).

      Here, the Village submitted the affidavit testimony of the
foreperson of the Village Water Department who participated in
the decision not to immediately attempt to repair the leak when
it was first observed. He stated that attempting immediate
repairs to the faulty valve would have required shutting down the
Village's water supply from the main, which would then deprive
all of the Village fire hydrants of a water supply and "shut down
the Village's ability to fight fires." Therefore, those on the
scene collectively "weighed the existence of a slight drip of
limited duration against a lack of water to the Village fire
hydrants and the collective decision was the leak was the better
alternative." Similar affidavit testimony was submitted from
another Village official who had responded to the work site
approximately two weeks later, on the Friday evening when water
was reported to be leaking above ground. This official stated
that the decision was made to monitor the leak over the weekend
rather than taking any immediate action to address it because the
risk of erosion was outweighed by the need to maintain the flow
of water to the Village hydrants for firefighting purposes. In
light of this evidence, we disagree with Supreme Court's finding
                              -6-                521423

that the proposed amendment was plainly without merit and, thus,
find that the court improvidently exercised its discretion in
refusing to allow the Village to assert the affirmative defense
(see CPLR 3025 [b]; State of New York v Ladd's Gas Sta., 198 AD2d
654, 654-655 [1993]; see also Greene v Hayes, 30 AD3d 808, 809
[2006]).

      Turning to the merits, however, we agree with Supreme Court
that many of plaintiffs' allegations of negligence involve
actions and omissions of a proprietary nature – such as the
Village's failure to adequately maintain the water main,
investigate the source of the leak, or supervise the work being
performed – that were unconnected to the Village's decision not
to shut off the water main. The Village argues that immediately
repairing the leak would necessarily have required that the water
flow to all hydrants in the Village be shut down. However, this
does not wholly resolve the claim, as it fails to address other
potential and reasonable actions that might have prevented or
mitigated the leak and its subsequent impact. Moreover, there
are factual issues relative to this claimed justification for
declining to shut off the water supply. For instance, there was
no evidence of similar concern as to maintaining firefighting
capability when the Village shut off the water supply during the
initial excavation and hydrant removal.2 Notably, an emergency
plan in place for the project also called for turning off the
water supply. Further, there was testimony from Merritt's
superintendent suggesting that the decision to not undergo
immediate repairs to the leak may have been based, at least in
some part, by the need to order additional supplies and budgetary
concerns. Accordingly, there are factual issues relative to the
application of the affirmative defense of governmental immunity
asserted by the Village, as well as the reasonableness of other
actions that were strictly proprietary in nature, barring an
award of summary judgment (see Luckey v City of New York, 120
AD3d 403, 404 [2014]; Gilberti v Town of Spafford, 117 AD3d 1547,


    2
        A Village official estimated that the main water supply
would have to be shut down for "a couple hours" to replace the
leaky valve after the remaining portion of the hydrant was first
observed to be dripping.
                              -7-                521423

1550 [2014]; Madden v Town of Greene, 64 AD3d 1117, 1120 [2009];
see generally Miller v State of New York, 62 NY2d 506, 513
[1984]).

      Next, we find that Supreme Court erred in granting summary
judgment dismissing plaintiffs' complaints against Merritt.
"[O]rdinarily, breach of a contractual obligation will not be
sufficient in and of itself to impose tort liability to
noncontracting third parties upon the promisor" (Church v
Callanan Indus., 99 NY2d 104, 111 [2002]; accord Moran v City of
Schenectady, 47 AD3d 1001, 1002 [2008]). There are three
specific recognized exceptions to this rule, however, and, as
relevant here, liability may attach "where the contracting party,
in failing to exercise reasonable care in the performance of his
[or her] duties, 'launche[s] a force or instrument of harm'"
(Espinal v Melville Snow Contrs., 98 NY2d 136, 140 [2002],
quoting Moch Co. v Rensselaer Water Co., 247 NY 160, 168 [1928];
see Durrans v Harrison & Burrowes Bridge Constructors, Inc., 128
AD3d 1136, 1137 [2015]). Merritt submitted the affidavit of a
licensed engineer in support of its motion, but this expert was
merely able to opine that it was impossible to determine what
caused the water main break, and that "[t]he fact that
construction was ongoing nearby at the time of the failure is
only one possible contributing factor among many." Considering
the record evidence as to the work that Merritt had performed at
the site immediately prior to the appearance of any leak, and
this expert's inability to rule out Merritt's actions as a cause
of the leak, we find that Merritt failed to meet its prima facie
burden of demonstrating an entitlement to summary judgment (see
Kelley v Schneck, 106 AD3d 1175, 1179-1180 [2013], lv dismissed
21 NY3d 1069 [2013]; Rubistello v Bartolini Landscaping, Inc., 87
AD3d 1003, 1005 [2011]; Grady v Hoffman, 63 AD3d 1266, 1267
[2009]). In addition, as Merritt may be found to have caused or
contributed to plaintiffs' damages, the court also erred in
dismissing the cross claims for common-law indemnification and
contribution asserted against Merritt by the Village.

      Further, in light of this determination, the Village was
properly granted leave to amend its answer to include a claim for
contractual indemnification against Merritt. The contract
between the County and Merritt includes a provision to this
                              -8-                  521423

effect, and, as it limits Merritt's indemnification obligation to
its own negligence, but does not extend to negligence
attributable to the Village, the provision is not rendered
invalid by General Obligations Law § 5-322.1 (see Brooks v Judlau
Contr., Inc., 11 NY3d 204, 210 [2008]; Miranda v Norstar Bldg.
Corp., 79 AD3d 42, 50 [2010]). As issues of fact remain as to
defendants' respective liability, Supreme Court properly denied
that part of the Village's motion seeking summary judgment upon
the claim for contractual indemnification.

     Peters, P.J., Rose, Lynch and Clark, JJ., concur.



      ORDERED that the order is modified, on the law, without
costs, by reversing so much thereof as (1) granted the cross
motion by defendant Merritt Construction, Inc. for summary
judgment dismissing the complaints against it, (2) denied that
part of the motion by defendant Village of Catskill seeking leave
to amend its answer to assert the affirmative defense of
governmental immunity, and (3) dismissed the Village's cross
claims for contribution and common-law indemnification against
Merritt; Merritt's cross motion denied to said extent, the
Village's motion granted to said extent and the Village's cross
claims against Meritt reinstated; and, as so modified, affirmed.




                             ENTER:




                             Robert D. Mayberger
                             Clerk of the Court
