Property owners often must make improvements to their properties in order to develop them, such as paving, leveling and changing the grade of their land. This process can change how surface waters flow across the property, and may unintentionally cause flooding as water may flow onto surrounding properties. This has historically been the subject of significant property damage litigation, which has uniformly held that property owners are not usually liable for damages in these situations. However, a recent appellate court decision calls into question the continuing viability of existing case authority and the potential risk if liability should be on the minds of developers and those seeking to develop a property.
Longstanding caselaw in New York limits a developer’s liability in cases where all the owner did was pave, grade, level and/or add fill to the property, which happened to change the slope of the land and cause flooding. An owner is generally only liable for flooding if they:
- Used artificial means of diverting water, including but not limited to a pipe running onto the other property, a berm or a ditch; or
- Made changes to the property in bad faith, meaning the changes were done for the purpose of causing damage rather than in furtherance of improving the property in good faith.
Prior decisions in these cases clearly implied that paving, adding fill, etc., did not constitute “artificial means.” This seems to be grounded in the fact that the primary purpose of paving or grading, etc., is generally not to divert water flow, but rather to level the land and/or provide a proper foundation for the construction.
Yet a recent New York appellate case in the Third Department calls this rationale into question and may require more caution for property owners developing their land. In the case of 517 Union St. Assoc. LLC v. Town Homes of Union Sq. LLC, 156 A.D.3d 1187 (2017), a developer made certain improvements to its property that altered the grade and slope of a parking lot on the property, which caused surface water on the property to now flow onto another property owner’s lot and cause flooding. The developer constructed town houses which had gutters and downspouts that pooled water onto the rear portion of the developer’s lot which then, because of the grade change, flowed to the other property owner’s lot. There were no traditional “artificial means” which carried water off the developer’s land and onto another land. The water flowed to the other property simply because of the changed slope.
Yet, the Third Department seemed to broaden the traditional meaning of “artificial means,” finding that the combined effect of improvements could be enough to impose liability on a developer. The decision held that:
“The diversion of water by artificial means, however, 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 defendants’ improvements ‘so changed, channeled or increased the flow of surface water onto [the] plaintiff[s]’ land as to proximately cause damage[ ] to the property.’”
Although this decision is contrary to prior case law, including the law of the Court of Appeals (the highest court in New York), its holding has not been appealed and remains valid and applicable law. As a result, developers and property owners considering improving their land should consult with an attorney regarding the potential impact to adjacent owners. Similarly, property owners who have suffered damage from water flowing from a neighbor’s property should speak with an attorney to evaluate their options for obtaining recourse.