Liability Update: Lessons Learned at the California Joint Powers Insurance Authority Risk Management Educational Forum

Each year at the California Joint Powers Insurance Authority (California JPIA) Annual Risk Management Educational Forum, one of the most well attended sessions is the Liability Update. The session captures lessons learned from Authority litigation and takes a look at some of the prior year’s appellate cases that affect public entities. This year, there were two particularly important appellate cases highlighted for California JPIA members.

The first case is Huckey v. Temecula. In this case, a real estate agent was walking on a city sidewalk while carrying a for sale sign at 4:00 p.m. on December 12, 2015 when he tripped and fell over a displacement of two sidewalk panels. The displacement ranged from 9/16” to 1-1/4”. Generally, the courts have recognized that anything under 3/4” is considered trivial as a matter of law, barring some other aggravating circumstances. Despite this, defense counsel moved for Summary Judgment, claiming that the defect was open, obvious, trivial and there were no aggravating factors involved. The Court granted the Motion for Summary Judgment, concurring with the defense contentions and clarifying that there were no factors such as shadows, leaves or debris or jagged edges involved, hence the defect did not constitute a dangerous condition. The plaintiff filed an appeal and the appellate court upheld the favorable ruling on the Motion for Summary Judgment. This represents a sizeable departure from the aforementioned 3/4” threshold for trivial defect and is sure to be an important holding going forward.

The second case is City of Oroville v. Superior Court. In this case, the plaintiffs, a dental group, suffered a sewer backup at their business location, causing property damage and business loss. A lawsuit was filed against the city under an inverse condemnation theory of liability. Heretofore, the application of inverse condemnation law against a public entity has been very close to strict liability, with only the need to establish that the public improvement was a substantial contributing factor to the causation of the plaintiff’s loss in order to impose liability. Substantial was defined as anything other than trivial. In Oroville, roots did block the city’s main sewer line and there was a backup, however pursuant to a City of Oroville code, the plaintiffs were required to have a backwater prevention valve and they did not.

Both the trial court and the appellate court found the city liable under inverse condemnation. Defense counsel, with the support of several other public entity pools, filed a Petition for Review. The Supreme Court accepted the case and reversed, finding that the Court of Appeal had erred by “failing to analyze inverse condemnation with sufficient focus on substantial causation by inherent risks associated with the public improvement, and presuming that the city must disprove any causal connection to the harm.” Instead, the Supreme Court found no inverse condemnation liability, holding that “public entities are not strictly or otherwise automatically liable for any conceivable damage bearing some kind of connection, however remote, to a public improvement.” Rather, a plaintiff must additionally show that “the damage to private property was substantially caused by inherent risks associated with the design, construction, or maintenance of a public improvement.” Here, there was not a deficient design or construction and the city’s maintenance plan was reasonable. This is a significant victory for sewer service providers throughout the State of California as to date, the defense of the lack of a backwater valve has fallen on deaf ears.

The Liability Update session handouts are available here through the Risk Management Educational Forum website.

Providing innovative risk management solutions for its public agency partners for more than 40 years, the California Joint Powers Insurance Authority (California JPIA) is one of the largest municipal self-insurance pools in the state, with more than 100 member cities and other governmental agencies.  Members actively participate in shaping the organization to provide important coverage for their operations. The California JPIA provides innovative risk management solutions through a comprehensive portfolio of programs and services, including liability, workers’ compensation, pollution, property, and earthquake coverage, as well as extensive risk management training and loss control services.