The Gold Standard

A lawsuit filed by a group of tenants in two adjoining Financial District apartment buildings, arising from harm they suffered in the wake of 2012’s Hurricane Sandy, has been dismissed by the Appellate Division of the New York State Supreme Court.

The rental buildings, at Two Gold Street and 201 Pearl Street, share a common basement, lobby and third floor. The lower levels of both structures were flooded on October 29, 2012, when Hurricane Sandy sent an eight-foot wall of water smashing through the South Street Seaport neighborhood, and parts of the Financial District.

Within the buildings, both of which front Maiden Lane (between Pearl and Gold Streets), the basement levels were submerged beneath 26 feet of water, which caused a 20,000-gallon diesel fuel tank to detach from the footings, break apart, and disgorge its contents.

Residents of both buildings were prevented from returning to their homes until February, 2013. At that point, they alleged, the building was still choked with the overpowering stench of diesel, which had been absorbed by porous belongings, such as furniture and clothing. They further charged that pollution (in the form of diesel fumes and airborne bacteria) created an ongoing health hazard. Multiple residents also claimed that their homes were left unlocked, and that some personal property was missing. For all of these harms, a group of renters, sought compensatory damages.

The renters argued that the landlord had been negligent in failing to prepare the buildings adequately for the flood. To press this point, they hired Joseph Sage, an architect specializing in waterproofing systems, who inspected the buildings in 2016. He testified that the flood-proofing measures installed by the developer who built both towers were, “inadequate as there exist holes and penetration joints which are not sealed,” and that “any reasonable standard of care would correct these deficiencies immediately, which was not done.” The residents further argued that, even if permanent flood-protection features designed into the building were not strong enough to protect against a storm of Hurricane Sandy’s magnitude, the landlord still could have supplemented this protection with improvised measures, such as sand bags.

The landlord countered that, “the standard of care for flood prevention in Zone A structures located in Manhattan, such as the buildings, was to equip such structures with flood protection equipment, such as floodgates and flood panels, sufficient to protect against a 100-year flood,” and that this was a level surpassed by Hurricane Sandy.

In 2017, the State Supreme Court, during the case’s initial trial, ruled that, “while a landlord has a duty to secure a building and make it reasonably safe, that duty is not unlimited. The existence and scope of the duty is, first, a legal question for determination by the courts. In making that determination … the focus is on the foreseeability of the risk or hazard.” Based on this reasoning, the Supreme Court dismissed the renters’ suit.

The renters then took their case to the Appellate Division, seeking to overturn trial court’s verdict. In March, a five-judge panel affirmed the lower court’s ruling in favor of the landlord, finding that, “they submitted evidence showing that plaintiffs’ damages, if any, were caused by an act of God. Further, that a storm of the magnitude of Sandy would strike lower Manhattan, and that compliance with the Department of Buildings’ mandated provisions for flood protection would be inadequate, was not foreseeable.”