Opinion
Plaintiff Pacific Bell’s facility suffered substantial damage when a corroded cast-iron water pipe servicing a fire hydrant burst and the escaping water flooded the facility. The pipe was owned and maintained by defendant City of San Diego (City) and would not have burst had it not been corroded.
Pacific Bell sought inverse condemnation damages from City. Pacific Bell asserted that because City had no preventive maintenance plan to inspect or monitor the effect of corrosion on old cast iron pipes, burst pipes resulting in damage to adjoining private property was an inevitable consequence of City’s water delivery system as designed, constructed and maintained.
There are two principal issues. First, do the immunities under the Tort Claims Act (Gov. Code, § 810 et seq.), 1 including the so-called fire hydrant immunity (§ 850.4), 2 bar an inverse condemnation claimant from recovering damages caused by a burst pipe providing water service to a fire hydrant? Second, if the Tort Claims Act immunities do not apply, under inverse condemnation principles is City strictly liable for damages caused by its bursting pipe or must the claimant establish City’s unreasonable conduct?
City contends it is immune from liability for damage to Pacific Bell’s facility because the gravamen of Pacific Bell’s claim is City’s negligent maintenance program, which must be prosecuted under the Tort Claims Act, and the fire hydrant immunity bars any claim against City under the Tort Claims Act. Pacific Bell contends the Tort Claims Act and its immunities do not apply to its inverse condemnation claim. Pacific Bell further argues that
McMahan’s of Santa Monica v. City of Santa Monica
(1983)
I
Facts
A. The Deteriorating Pipes
The dispositive facts are undisputed. City’s water delivery system has approximately 2,700 miles of pipes, about 180 miles of which are made of cast iron. The burst cast-iron pipe that resulted in damage to Pacific Bell’s facility was installed in 1958.
Cast-iron pipes are subject to a corrosive process known as graphitization, in which the iron component of the pipe is leached into the soil, leaving a brittle shell of graphite. Graphitization makes the pipe less able to withstand water pressure fluctuations and more susceptible to breakage. Because of the high number of graphitization-caused breaks in older cast-iron pipes, 3 City has concluded that all cast-iron pipes in its system need to be replaced.
City has no program or method for testing or inspecting cast-iron pipes to identify those needing immediate replacement. Instead, City learns a cast-iron pipe needs replacement only when it breaks. City replaces an old cast-iron pipe if it breaks, or if there is a change of service, or in conjunction with replacing the water main to which it is attached.
In the 10-year period before 1997, the city council denied 28 requests for a water rate increase to fund City’s water pipe repair and rehabilitation efforts, including replacing cast-iron pipes. Under City’s current schedule, it will take between 10 and 15 years to replace all of the cast-iron pipes.
B. The April 1997 Break
City installed, owned and maintained a fire hydrant near the corner of Sixth and Robinson. Water to the hydrant was provided by a six-inch cast-iron pipe installed by City in 1958. Prior to April 1997 the hydrant had been knocked over six times and City installed bumper posts around the hydrant to protect against future knockovers. City also fitted the hydrant with a breakaway check valve, known as a flapper valve, which is designed to automatically snap shut in the event the hydrant is knocked over, thereby minimizing the loss of water.
On April 11, 1997, an automobile struck the Sixth and Robinson hydrant and knocked it over. The flapper valve snapped shut as intended. However, the resulting spike in water pressure caused the cast-iron pipe to burst or disintegrate near its junction with the main water line. The pipe burst only because it was corroded; the pipe would have withstood the pressure change but for its severely corroded condition.
It took between one and two hours to completely shut off water flowing from the broken pipe into the basement of Pacific Bell’s facility. Pacific Bell suffered damages and cleanup costs of more than $170,000.
C. The Lawsuit
Pacific Bell filed a multicount complaint against City to recover the damages to its facility. City’s answer asserted numerous defenses, including
the fire hydrant immunity (§ 850.4). At trial Pacific Bell dismissed all counts except its count alleging inverse condemnation. The court informed the parties of its intention to enter judgment for City, and Pacific Bell timely requested a statement of decision. The court concluded that: (1) under
Customer Co. v. City of Sacramento
(1995)
II
Analysis
A. General Principles
The determinative facts in this case are undisputed and we address only issues of law. Accordingly, we review de novo the trial court’s legal conclusions.
(San Diego Metropolitan Transit Development Bd. v. Handlery Hotel, Inc.
(1999)
An inverse condemnation action, in contrast to a condemnation action initiated by the condemning public agency, is an eminent domain action initiated by one whose property was taken or damaged for public use.
The principles of eminent domain law apply to inverse condemnation proceedings.
(Belmont County Water Dist.
v.
State of California
(1976)
A successful inverse condemnation claimant must prove that a public entity has taken or damaged its property for a public use.
(San Diego Gas & Electric Co. v. Superior Court
(1996)
B. The Immunity for Fire Facilities Does Not Preclude Pacific Bell from Pursuing an Inverse Condemnation Claim
The burst water pipe causing damage to Pacific Bell’s facility was part of City’s firefighting equipment. The courts have concluded that section 850.4 provides the government absolute immunity against claims under the Tort Claims Act for injury to persons or property caused by firefighting equipment. (See, e.g.,
Cochran v. Herzog Engraving Co.
(1984)
However, the immunities provided by the Tort Claims Act do not insulate a public entity from liability for inverse condemnation; the constitutional
provisions requiring compensation for property taken or damaged by a public use overrides the Tort Claims Act and its statutory immunities.
(Baldwin v. State of California
(1972)
City argues, and the trial court found, that under
Customer, supra,
“The holding in [Miller v. City of Palo Alto (1929)208 Cal. 74 [280 P. 108 ]]—that damage caused by the negligent conduct of public employees or a public entity does not fall within the aegis of section 19—has been followed repeatedly and uniformly in the more than 60 years that have elapsed since that decision was rendered. [Citations.] In House v. L. A. County Flood Control Dist.[, supra,]25 Cal.2d 384 . . . , which held that damage caused by the design of a public project gave rise to an inverse condemnation action, then Justice Traynor was careful to explain that ‘[t]he destruction or damaging of property is sufficiently connected with “public use” as required by the Constitution, if the injury is a result of dangers inherent in the construction of the public improvement as distinguished from dangers arising from the negligent operation of the improvement.’ (25 Cal.2d at p. 396 (conc. opn. of Traynor, J.), italics added [by Customer].)
“Similarly, in Bauer v. County of Ventura (1955)45 Cal.2d 276 , 286 [289 P.2d 1 ], this court, after concluding that property owners could recover for the damage caused by floodwaters diverted onto their property by a public watercourse and drainage system, took pains to explain that application of the predecessor of section 19 did not ‘subject the state to general tort liability under the theory of eminent domain. The defendants contend that the imposition of a duty to compensate for improper maintenance of a public improvement would impose liability for the act of negligently forgetting to close a sluice gate or other negligent acts committed during the routine day to day operation of the public improvement. But the raising of a ditch bank appears on its face to be a deliberate act carrying with it the purpose of fulfilling one or another of the public objects of the project as a whole. . . . The damage to property in this instance resulted not from immediate carelessness but from a failure to appreciate the probability that, functioning as deliberately conceived, the public improvement as altered and maintained would result in some damage to private property.Damage resulting from negligence in the routine operation having no relation to the function of the project as conceived is not within the scope of the rule applied in the present case. [Citations.]’ ” (Customer, supra, 10 Cal.4th at pp. 381-382, italics added by Customer.)
Customer
held that because the injury was not caused by a public improvement operating as deliberately planned and constructed, the plaintiff’s claim was not an inverse condemnation claim but a claim subject to the Tort Claims Act and its attendant immunities. The court stated: “In the present case, of course, the property damage for which Customer seeks to recover bears no relation to a ‘public improvement’ or ‘public work’ of any kind. Instead, the damage was caused by actions of public employees having ‘no relation to the function’ of a public improvement whatsoever. As the foregoing cases demonstrate, property damage caused in such a manner never has been understood to give rise to an action for inverse condemnation in California, but rather has been treated as subject to the general tort principles applicable to governmental entities.” (Customer,
supra,
Customer
did not hold, as City urges, that the existence of an applicable immunity under the Tort Claims Act precludes an inverse condemnation claim.
Customer
held that damages occurring in the exercise of police powers are not compensable through an inverse condemnation action. The court in
Barham v. Southern Cal. Edison Co., supra, 74
Cal.App.4th 744, rejecting a construction of
Customer
similar to that urged by City here, recognized that: “A clear distinction has been recognized between inverse condemnation which arises out of damage to property caused by the construction or maintenance of public works and that which arises out of an exercise of police powers. [Citation.] In the instant case, the damage arose out of the functioning of the public improvement as deliberately conceived, altered and maintained. Therefore, even under the principles outlined in
Customer,
the Barhams are entitled to recover in inverse condemnation in the instant case. [Citing Customer.] [¶] [Defendant] urges
Customer
stands for the proposition that conduct which amounts to negligence cannot support inverse condemnation liability. We do not agree. In fact, several courts have held inverse condemnation principles apply in cases very similar to that at bar. (See, e.g.,
Marshall
v.
Department of Water & Power, supra,
We agree with
Barham
and interpret
Customer
as holding that a claim for an injury caused by police powers activities, or by negligence in the routine
operation of the improvement that is not related to the function of the project as conceived, is subject to the rules and immunities of the Tort Claims Act, which are not obviated by recasting the claim as an inverse condemnation claim. (Accord,
Paterno
v.
State of California
(1999)
Here, we conclude Pacific Bell’s claim is not based on City’s exercise of the police power and is not a negligence claim recast as an inverse condemnation claim. Customer is therefore inapplicable to the instant case.
C. The Water Delivery System as Deliberately Designed and Maintained Was a Substantial Cause of the Damage
One basis for the court’s rejection of Pacific Bell’s inverse condemnation claim was its conclusion Pacific Bell did not prove the injury was caused by a “deliberate act undertaken in fulfillment of a public object.” A claim for inverse condemnation requires proof of injury to property caused by the public improvement “as deliberately designed and constructed . . . whether foreseeable or not.”
(Albers v. County of Los Angeles, supra,
62 Cal.2d at pp. 263-264.) However, the deliberateness requirement is satisfied by a public improvement that as designed and constructed presents inherent risks of damage to private property, and the inherent risks materialize and cause damage.
(House
v.
L.A. County Flood Control Dist., supra,
The evidence here showed City’s water delivery system was deliberately designed, constructed and maintained without any method or program for monitoring the inevitable deterioration of cast-iron pipes other than waiting for a pipe to break. Additionally, City received the cost savings from its “replace it when it breaks” method of maintenance, turning down numerous rate increases necessary to fund a different, more proactive approach to replacing these deteriorating pipes. In
Holtz v. Superior Court
(1970)
To support its conclusion that, under inverse condemnation principles, a governmental entity’s choice to obtain cost savings on a project carries with it the corollary obligation to pay for the damages caused when the risks attending these cost-saving measures materialize, the
Holtz
court quoted with approval the reasoning of the Iowa Supreme Court in
Lubin v. Iowa City
(1964)
City’s decisions to install a system without monitoring capabilities and to use a “wait until it breaks” method for detecting deterioration may well have been reasonable because the costs of a prophylactic approach may have outweighed its benefits. However, the rationale of Holtz, as well as its approval of the factually analogous case of Lubin, convinces us that “since the undertaking of the [project] at this lower cost created some risk, however slight, of damage to plaintiffs’ property, it is proper to require the public entity to bear the loss when damage does occur.” (Holtz v. Superior Court, supra, 3 Cal.3d at pp. 310-311.) The burdens attending City’s cost-saving approach should be spread to the community benefiting from lower water rates rather than imposing the entire cost on those property owners placed in harm’s way by City’s program.
In
McMahan’s, supra,
“[W]hether the City’s program of water main installation and replacement is characterized as ‘construction’ or ‘maintenance,’ the fact remains that it was inadequate and contributed to the break due to corrosion of the [water main]. The City’s knowledge of the limited life of such mains and failure to adequately guard against such breaks caused by corrosion is as much a ‘deliberate’ act as existed in Albers [v. County of Los Angeles], supra,62 Cal.2d 250 . [¶]. . .[¶]
“. . . ‘The governmental decision to proceed with the project without incorporating the essential precautionary modifications in the plan thus represents more than a mere determination that effective damage prevention is not expedient. It is also a deliberate policy decision to shift the risk of future loss to private property owners rather than to absorb such risk as a part of the cost of the improvement paid for by the community at large. In effect, that decision treats private damage costs, anticipated or anticipatable, but uncertain in timing or amount or both, as a deferred risk of the project. If and when they materialize, however, the present analysis suggests that those costs should be recognized as planned costs inflicted in the interest of fulfilling the public purpose of the project[,] and thus subject to a duty to pay just compensation.’ [Quoting Van Alstyne, Inverse Condemnation: Unintended Physical Damage (1969) 20 Hastings L.J. 431, 491-492.]
“In the instant appeal, the City was taking a calculated risk by adopting a plan of pipe replacement and maintenance that it knew was inadequate. The City’s plan of replacement of the water mains reflected the deferred risks of the project both foreseeable and unforeseeable, and it is proper to require the City to bear the loss when the damage occurs.” (McMahan’s, supra, 146 Cal.App.3d at pp. 696-698.)
The
McMahan’s
court also relied on
Holtz’s
rationale that the underlying purpose of inverse condemnation is to distribute throughout the community the loss inflicted by the public improvements, as well as on
Holtz’s
approval of
Lubin
v.
Iowa City, supra,
We conclude that McMahan’s correctly applied inverse condemnation principles. Moreover, we conclude McMahan’s is controlling on the facts of this case and permits Pacific Bell to recover on its claim for inverse condemnation unless, as contended by City, subsequent Supreme Court authority has substantially modified McMahan’s. We therefore examine this last issue.
D. Pacific Bell Was Not Required to Show Unreasonableness as an Element of Its Inverse Condemnation Claim
The ordinary rule applied in
McMahan’s
is that a public entity is strictly liable for inverse condemnation damages.
(Marshall v. Department of Water & Power, supra,
1. The Supreme Court Cases
In
Belair, supra,
The plaintiffs argued they were entitled to recover without any showing of negligence by the public entity. The Supreme Court noted that the rule articulated by
Albers
ordinarily imposed inverse condemnation liability without fault for damages caused by public improvements, but that
Albers
had exempted from its strict liability rule those types of cases in which the state had at common law a “right to inflict damage” (the so-called
Archer
line of cases).
(Albers
v.
County of Los Angeles, supra,
“Although, as noted, we expressly excepted the Archer [Archer v. City of Los Angeles (1941)19 Cal.2d 19 [119 P.2d 1 ]] line of decisions from Albers’s rule of liability without fault, we also cautioned against the ‘facile’ assumption that an activity which is ‘privileged’ when performed by a private party is equally privileged when undertaken by a public entity. (Holtz v. Superior Court, supra, 3 Cal.3d at pp. 307-308, fn. 13.) Different policy considerations, we noted, inform the public and the private spheres. . . .
“Thus, while we recognized in Albers that strict inverse condemnation liability may not be appropriate in the case of flood control improvements, we emphasized in Holtz that such improvements should not be cloaked with the same immunity as private flood control measures. The question, therefore, is what standard applies in such cases. We draw the answer from prior case law, public policy and common sense.
“On the one hand, a public agency that undertakes to construct or operate a flood control project clearly must not be made the absolute insurer of those lands provided protection. On the other hand, the damage potential of a defective public flood control project is clearly enormous. Therefore, as we observed in Holtz, the courts have consistently held that ‘even when a public agency is engaged in such “privileged activity” as the construction of barriers to protect against floodwaters, it must [at least] act reasonably and non-negligently. [Citations.]’ (Holtz v. Superior Court, supra,3 Cal.3d at p. 307, fn. 12 , italics added; . . . .) Contrary to plaintiffs’ position, the fact that a dam bursts or a levee fails is not sufficient, standing alone, to impose liability. However, where the public agency’s design, construction or maintenance of a flood control project is shown to have posed an unreasonable risk of harm to the plaintiffs, and such unreasonable design, construction or maintenance constituted a substantial cause of the damages, plaintiffs may recover regardless of the fact that the project’s purpose is to contain the ‘common enemy’ of floodwaters. [Citations.]” (Belair, supra, 47 Cal.3d at pp. 564-565.)
Thus, Belair concluded that when a public flood control improvement does not function as intended and proximately causes damage to properties historically subject to flooding, the public entity does not have absolute immunity as did private parties at common law. However, the property owners may not recover in inverse condemnation from the public entity absent proof that the failure was attributable to some unreasonable conduct on the part of the public entity.
Six years after
Belair,
the court in
Locklin
v.
City of Lafayette
(1994)
Finally, in
Bunch, supra,
2. Analysis
City argues the strict liability approach set forth in
McMahan’s
has been supplanted by the reasonableness test articulated in
Belair, Locklin
and
Bunch,
and is applicable to Pacific Bell’s claim. City notes that both
Bunch
and
Belair
referred to numerous cases, including
McMahan’s,
as setting forth a rule that applies strict inverse condemnation liability to public improvements that divert water from its natural drainage channel and cause damage.
(Belair, supra,
Although Belair, Locklin and Bunch replaced the strict liability approach with a reasonableness requirement for flood control improvements, we do not perceive those cases to have overruled McMahan’s. McMahan’s did not involve a failure of a flood control improvement causing damage to a property that was historically subject to flooding. Furthermore, the ratio decidendi of Belair, Locklin and Bunch does not support extension of the reasonableness standard here. The Belair, Locklin and Bunch approach was decided in the narrow and unique context of water law, and holds that neither the common law absolute immunity rule formerly applicable to damages caused by private flood protection measures, nor the strict liability rule applicable to damages caused by public improvements, appropriately balanced the competing interests.
In the present context, damages caused by failure of a private water pipe system would not have enjoyed absolute immunity at common law. More importantly, the concerns that animated the rejection of the strict liability rule in the context of public flood control projects has no counterpart here. Belair, Locklin and Bunch reasoned that strict liability for failure of a public flood control improvement would make the public entity an insurer against floods; the potentially enormous exposure could deter the public entity from building flood control projects and thereby deprive the public as a whole, including the damaged landowner, of protection against flooding. Because the landowner would suffer some flood damage in the absence of the flood control project or if the constructed project failed, the principle requiring compensation if the damaged landowner bore a disproportionate cost of the public benefit did not require a strict liability approach; instead, compensation was required only if the project exposed him to an unreasonable risk of harm. (Bunch, supra, 15 Cal.4th at pp. 450-451.)
Unlike flood control improvements, the purpose of a water delivery • system is not to protect against the very injury that its failure caused. Unlike flood control improvements, failure of the pipe here subjected Pacific Bell’s facility to injury from flooding that was not a risk it was exposed to in the absence of the pipe. 10 Thus, the private landowner damaged by failure of the pipe, if left uncompensated, is forced to contribute a disproportionate share of the public undertaking. Because damages caused by failure of a water delivery system do not resemble damages caused by failure of a flood control system, we conclude the Belair, Locklin and. Bunch reasonableness test should not be extended to the facts of this case, and the ordinary rules of inverse condemnation strict liability for damages caused by public improvements are applicable.
Disposition
The judgment is reversed. Respondent shall bear the costs of appeal.
Huffman, Acting P. J., and Haller, J., concurred.
Notes
All further statutory references are to the Government Code unless otherwise noted.
Section 850.4 provides in part that “[n]either a public entity, nor a public employee acting in the scope of his [or her] employment, is liable for any injury resulting from the condition of fire protection or firefighting equipment or facilities or . . . for any injury caused in fighting fires.”
Although cast-iron pipes account for less than 10 percent of the total pipes in the system, these pipes have at times accounted for 80 percent of the breaks in the system.
The court also found that corrosion in the pipe contributed to the pipe failure but that it was not a substantial cause of Pacific Bell’s damage. The trial court’s conclusion is inconsistent with the controlling principles on causation. A public entity can be liable for inverse condemnation if the public improvement is a substantial cause of the injury, even if it is only one of several concurrent causes.
(Marshall v. Department of Water & Power
(1990)
For that reason, many of the cases relied on by City are inapposite. For example, the plaintiff in
Razeto
made no claim for inverse condemnation, and therefore the
Razeto
court did not consider whether the immunities provided under the Tort Claims Act would insulate a governmental entity from liability for inverse condemnation. Similarly, although the court in
Valley Title Co. v. San Jose Water Co.
(1997)
The so-called police power or emergency exception to the inverse condemnation compensation requirement has a venerable history in both state and federal courts. It is a specific application of the general rule that damage to, or even destruction of, property pursuant to a valid exercise of the police power often requires no compensation under the just compensation clause. Thus, “[i]njury to property can and often does result from the demolition of buildings to prevent the spread of conflagration, from the abandonment of an existing highway, from the enforced necessity of improving property in particular ways to conform to police regulations and requirements. . . . And equally well settled and understood is the law that in the exercise of this same power property may in some, and indeed in many, instances be utterly destroyed. The destruction of buildings, of diseased animals, of rotten fruit, of infected trees, are cases that at once come to mind as applicable to both personalty and realty. Always the question in each case is whether the particular act complained of is without the legitimate purview and scope of the police power. If it be, then the complainant is entitled to injunctive relief or to compensation. If it be not, then it matters not what may be his loss, it is
damnum absque injuria
[damage without injury].”
(Gray v. Reclamation District No. 1500
(1917)
For this reason, the cases relied on by City are inapplicable. For example, in
Lainer Investments v. Department of Water & Power
(1985)
One rationale underlying the decisions in the trial court and the Court of Appeal was that there was no evidence the levee was the proximate cause of plaintiffs’ damages. The Supreme Court rejected the conclusion on causation because the evidence supported plaintiffs’ contention the levee did not function within its design capacity and thus constituted a substantial concurrent cause of their property damages. (Belair, supra, 47 Cal.3d at pp. 558-562.)
At common law, the natural watercourse rule had two aspects. It first permitted the riparian landowner to gather surface waters and discharge them into the watercourse at a location other than that at which natural drainage would occur. It also permitted the owner to make improvements in the bed of the stream to improve drainage and to protect the land from erosion by constructing dikes or embankments. Both types of activity were privileged even though the result would be to increase the volume and velocity that might damage the property of lower riparian owners. (Locklin v. City of Lafayette, supra, 7 Cal.4th at pp. 349-351.)
The court in
Akins v. State of California
(1998)