## Facts

- Grace & Co. (Pacific Coast) stored about 1,960 bags of coffee in a City-operated transit shed at Berth 59, Pier 1, Los Angeles Harbor.
- The City maintained underground cast-iron water lines under Signal Street, including an 8-inch Harbor Department main and laterals used only for fire fighting and fire prevention (not domestic or general business water service).
- The pipes were installed around 1914 using cast iron considered the best available at the time; Grace did not claim negligent installation.
- The City later learned the harbor soil was highly corrosive to cast iron.
- The City followed a deferred maintenance policy for buried cast-iron lines: repair or replace only after a leak became visible at the surface.
- On March 12, 1955, a lateral from the 8-inch harbor main into the Berth 59 shed burst, flooding the shed and damaging Grace’s coffee.
- Grace claimed the City negligently failed to inspect, maintain, or replace the aging fire-service pipe despite knowledge of corrosion risk.

## Issues

1. Whether the City breached a duty of reasonable care by not proactively inspecting or replacing the fire-protection lateral and main in known corrosive soil.
2. Whether operation of a fire-only municipal water system supports liability absent proof of negligence (i.e., a theory resembling liability without fault).
3. Whether the district court’s findings that the City was not negligent were clearly erroneous on appellate review.

## Decision

- The district court, after a bench trial, entered judgment for the City, finding Grace failed to prove negligence.
- The Ninth Circuit affirmed.
- The court held the case sounded in negligence, not liability without fault, and the record supported the trial court’s finding that the City’s conduct was not shown to be unreasonable.
- The appellate court declined to disturb factual findings supported by substantial evidence and not clearly erroneous.

## Legal Principles

- A municipality’s liability for damage from failure of its underground water lines generally requires proof of negligence; the municipality is not an insurer.
- Knowledge that soil conditions can corrode cast-iron pipe does not, by itself, establish a duty to excavate and conduct periodic subsurface inspections absent proof that reasonable care required such measures under the circumstances.
- The mere occurrence of a pipe burst and resulting damage does not establish negligence.
- On appeal from a bench trial, findings of fact are upheld unless clearly erroneous; supported findings control the negligence determination.

## Conclusion

The Ninth Circuit affirmed judgment for the City because Grace did not prove that the City’s maintenance approach for fire-protection water lines in corrosive harbor soil fell below reasonable care, and the courts rejected imposing liability without fault for the pipe failure.


Grace & Co. (Pac. Coast) v. City of Los Angeles, 278 F.2d 771 (9th Cir. 1960)