Valley Title Co. v. San Jose Water Co.

A fire service pipeline outside the building of Valley Title Company (Valley) ruptured in 1992, flooding the building. Valley and others sued San Jose Water Company (SJWC) and others for the property damage, alleging that SJWC had failed to inspect, repair, replace, and stabilize the line adequately. A jury found SJWC liable for negligence and trespass, awarding Valley approximately $3 million. SJWC appeals from the ensuing judgment. Because we conclude that SJWC is immune from Valley’s claims pursuant to section 774 of the Public Utilities Code, we reverse the judgment.

I. Factual and Procedural Background

A. The Parties

SJWC is an investor-owned utility governed by the Public Utilities Commission. SJWC has a service area of approximately 134 square miles, including portions of the City of San Jose and surrounding communities, and owns approximately 2,300 miles of water lines. Of these, over 500 miles are cast iron water lines. SJWC’s system includes distribution mains located under city streets, and lateral pipes (also called mains or service pipes) which run from the distribution mains to connect with customers’ pipes.

Valley is a title insurance company with its…