Connolly v. Long Island Power Auth., 30 N.Y.3d 719

Background

LIPA is a public power authority created in 1986 to replace investor‑owned LILCO and operate its transmission & distribution (T&D) system; LILCO became LIPA’s subsidiary and LIPA contracted with National Grid to operate the T&D system under a Management Services Agreement.
Plaintiffs allege that during Hurricane Sandy (Oct. 2012) defendants negligently failed to preemptively de‑energize the Rockaway Peninsula, despite warnings of life‑threatening storm surge and actual notice of downed live lines, causing fires that destroyed plaintiffs’ property.
Governor and NYC officials declared emergencies and ordered evacuations; other utilities (e.g., Con Edison) preemptively de‑energized parts of their systems.
Defendants moved to dismiss under CPLR 3211(a)(7), asserting governmental‑function immunity (and that, if governmental, plaintiffs failed to allege a special duty).
Supreme Court denied dismissal; Appellate Division (2d Dept.) affirmed; defendants obtained leave to appeal to the Court of Appeals on whether the acts were governmental and thus immune.
On appeal the Court of Appeals held that, on the pre‑answer, pre‑discovery record, defendants had not shown as a matter of law that the challenged conduct was governmental rather than proprietary, so dismissal was not warranted.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether LIPA’s decision not to de‑energize was a governmental function (immunity applies)	LIPA performed proprietary utility functions; provision/management of electricity is traditionally private so immunity does not apply	LIPA’s failure to de‑energize was part of preparing for/responding to a natural disaster and thus an exercise of governmental police powers entitled to immunity	On the pleaded facts, defendants failed to show as a matter of law that the conduct was governmental; denial of dismissal affirmed
Whether special‑duty pleading is required	No — if LIPA acted in proprietary capacity, ordinary negligence rules apply	If conduct is governmental, plaintiffs must plead a special duty	Not resolved on merits because governmental status not decided; special‑duty issue depends on that threshold question
Whether LILCO and National Grid share LIPA’s asserted immunity	Plaintiffs: as proprietary actors or contractors, they are not entitled to immunity	Defendants: subsidiary/contractor immunity flows from LIPA’s governmental status	Because LIPA’s immunity not established, LILCO and National Grid likewise not entitled to dismissal
Whether the magnitude of the disaster alone converts proprietary acts into governmental ones	Plaintiffs: magnitude doesn’t automatically change the nature of the specific act (de‑energization decision remains proprietary)	Defendants: the scale of the emergency makes the decision governmental as a matter of law	Court: magnitude alone insufficient on a 3211(a)(7) record; factual development required in many cases

Key Cases Cited

Haddock v. City of New York, 75 N.Y.2d 478 (court recognizes governmental function immunity rationale)
Valdez v. City of New York, 18 N.Y.3d 69 (explains immunity protects discretionary governmental decisionmaking)
Turturro v. City of New York, 28 N.Y.3d 469 (distinguishes proprietary vs governmental functions; discretionary‑act framework)
Sebastian v. State of New York, 93 N.Y.2d 790 (proprietary functions substitute for traditionally private enterprises)
Miller v. State of New York, 62 N.Y.2d 506 (determine capacity by the specific act or omission alleged)
Matter of World Trade Ctr. Bombing Litig., 17 N.Y.3d 428 (police/security allocation was governmental; example of resolving status on summary judgment/trial)
Lauer v. City of New York, 95 N.Y.2d 95 (special duty requirement when government acts in governmental capacity)
Leon v. Martinez, 84 N.Y.2d 83 (standards for CPLR 3211(a)(7) motion to dismiss)
Riss v. City of New York, 22 N.Y.2d 579 (proprietary/governmental function dichotomy)
Balsam v. Delma Eng'g Corp., 90 N.Y.2d 966 (examples and limits of governmental function)