| Dormitory Auth. of the State of N.Y. v Samson Constr.Co. |
| 2016 NY Slip Op 01546 [137 AD3d 433] |
| March 3, 2016 |
| Appellate Division, First Department |
[*1]
| Dormitory Authority of the State of New York et al.,Appellants-Respondents, v Samson Construction Co., Also Known as SamsonConstruction Co., Inc., Doing Business as Samson Construction Company and Others,Defendant, and Perkins Eastman Architects, P.C., Respondent-Appellant. (And OtherActions.) |
Zachary W. Carter, Corporation Counsel, New York (Marta Ross of counsel), forappellants-respondents.
Wasserman Grubin & Rogers, LLP, New York (Michael T. Rogers of counsel),for respondent-appellant.
Order, Supreme Court, New York County (Eileen Bransten, J.), entered March 1,2013, which, to the extent appealed from as limited by the briefs, granted the part ofdefendant Perkins Eastman Architects, P.C.'s (Perkins) motion for summary judgmentseeking dismissal of the fifth cause of action, for breach of contract, and denied the partof the motion seeking dismissal of the sixth cause of action, for negligence, modified, onthe law, to deny the motion as to the fifth cause of action, and otherwise affirmed,without costs.
In or about 2000, plaintiff City decided to build a state-of-the-art forensic biologylaboratory for the Office of the Chief Medical Examiner. The project was designed to bea 15-story structure with a two-level basement, and was to be located on a parcel ofcity-owned land at the intersection of First Avenue and East 26th Street in Manhattan.The project site was part of the Bellevue Hospital Campus.
The City turned over the project to plaintiff Dormitory Authority of the State of NewYork (DASNY), a public authority that provides professional services and expertise forthe financing and construction of public projects. The City and DASNY then entered intoan agreement pursuant to which DASNY was to manage and finance the planning,design, and construction of the project. DASNY was authorized to contract withconsultants, contractors, and a construction manager. It retained Perkins as the architect.Defendant Samson Construction Co. (not a party to this appeal) was hired as thefoundation contractor. Samson was responsible for site excavation and the foundation'sconstruction.
In or about May 2002, when Samson began driving piles as part of the foundationwork, the adjacent Bellevue building, known as the C&D building, began to settle.The settling of the building continued while the foundation work continued. By March2004, the C&D Building had settled eight inches in some areas, leading to a delay ofthe project by more than 18 months. Other structures adjacent to the project site,including sidewalks, roadbeds, sewers, and water systems, also sustained damage due tothe settlement during the foundation work. The cost of fixing the damage to the projectsite and the adjacent properties was approximately $37 million. Perkins ultimatelycompleted its work on the project in February 2007.
The motion court erred in dismissing the breach of contract claim against Perkins.Although Perkins made a prima facie showing that the City is not a third-partybeneficiary of the contract because it is not named in the contract, the City raised an issueof fact whether it is an [*2]intended third-partybeneficiary of the contract (see MK W. St. Co. v Meridien Hotels, 184 AD2d 312[1st Dept 1992]). The contract expressly states that a city agency will operate the DNAlaboratory, and the City retained control over various aspects of the project, includingparticipation in and approval of the design of the building, the budget for the project, theselection of contractors, including Perkins, and the construction of the building.
The motion court, however, correctly determined that DASNY may proceed with itsnegligence claim. Perkins, as architect, may be subject to tort liability based on a failureto exercise due care in the performance of its duties. In making this determination, thecourt is to look at the nature of the injury and whether the plaintiff is merely seeking thebenefit of its agreement. Where the plaintiff is merely seeking the benefit of itsagreement, it is limited to a contract claim (Sommer v Federal Signal Corp., 79NY2d 540, 551-552 [1992]).
Where, however, "[t]he particular project . . . is so affected with thepublic interest that the failure to perform competently can have catastrophicconsequences," a professional may be subject to tort liability as well (Trustees ofColumbia Univ. in City of N.Y. v Gwathmey Siegel & Assoc. Architects, 192AD2d 151, 154 [1st Dept 1993]). Indeed, "[t]his is one of the most significant elementsin determining whether the nature of the type of services rendered gives rise to a duty ofreasonable care independent of the contract itself" (id., citing Sommer vFederal Signal Corp., 79 NY2d 540, 553 [1992]). As the Court explained inSommer, "[I]t is policy, not the parties' contract, that gives rise to a duty of. . . care" (79 NY2d at 552). The "nature of the injury, the manner in whichthe injury occurred and the resulting harm" are also considered (id., citingBellevue S. Assoc. v HRH Constr. Corp., 78 NY2d 282, 293-295 [1991] [Courtrejected plaintiff's attempt to ground in tort a claim that defendants supplied defectivefloor tiles, noting that the injury (delamination of tiles) was not personal injury orproperty damage, there was no abrupt, cataclysmic occurrence, and the injury was simplyreplacement cost of the product]).
Here, there is a factual question whether Perkins assumed an independent legal dutyas an architect to perform its work in a manner consistent with the generally acceptedstandard of professional care in its industry. DASNY alleges that Perkins's failure toadhere to professional standards of care by not conducting an adequate site investigationand/or providing an adequate foundation design appropriate to the existing siteconditions violated the relevant standard of professional care, resulting in increased costsfor the project and additional costs of $37 million to remediate the damage caused by thefailure to comply with those professional standards. The damage included damage to thesidewalks, roadbeds, sewers, and water systems located near a major medical center inManhattan. There are issues of fact whether the project was so affected with the publicinterest that Perkins's failure to comply with the relevant professional standards couldresult in catastrophic consequences (Trustees of Columbia Univ., 192 AD2d at154).
The dissent opposes this position on the basis that the damages were not"catastrophic" since the "settling of the building took place gradually over a couple ofyears and never posed a serious threat to the public's safety." However, the suddenness ofthe injury is only one factor for the court to consider, and, in any event, a catastrophedoes not necessarily have to be a sudden event (see Oxford Online Dictionaries,catastrophe ["(A)n event causing great and often sudden damage or suffering; adisaster" (emphasis added)]).[FN*] The destruction of road beds,sidewalks, sewers and water pipes in a crowded city is a catastrophe and has the potentialto lead to catastrophic consequences (see Sommer, 79 NY2d at 552; see also Duane Reade v SL GreenOperating Partnership, LP, 30 AD3d 189, 189-190 [1st Dept 2006] [tort claimproperly made out where it was alleged that "defendant reduced the heat in the buildingand . . . freezing temperatures caused a sprinkler pipe to burst, resulting in$500,000 in damages to plaintiff's property"]).
Perkins's reliance on the "economic loss" rule is also unavailing. The "economicloss" doctrine does not apply to negligence claims arising out of a violation of aprofessional duty (AssuredGuar. [UK] Ltd. v J.P. Morgan Inv. Mgt. Inc., 80 AD3d 293, 306 [1st Dept2010], affd 18 NY3d 341 [2011]).
[*3] We have considered Perkins's remaining contentions and find them unavailing.Concur—Acosta, Richter and Kapnick, JJ.
Tom, J.P., who dissents in part in a memorandum as follows: While I agree with themajority that the motion court erred in dismissing the breach of contract claim againstdefendant Perkins Eastman Architects, P.C. (Perkins), I would find that, becauseplaintiffs are "essentially seeking enforcement of the bargain," the action should proceedunder a contract theory (Sommer v Federal Signal Corp., 79 NY2d 540, 552[1992]), and the cause of action for negligence should be dismissed as duplicative of thecause of action for breach of contract.
This action arises from the construction of a new DNA testing laboratory adjacent tothe City's Bellevue Hospital complex in Manhattan. Plaintiff City contracted withplaintiff Dormitory Authority of the State of New York (DASNY) to serve as the projectmanager. DASNY, in turn, contracted with defendant Perkins to serve as the project'sarchitect.
The contract between DASNY and Perkins required Perkins's designs to be"sufficiently detailed to ensure . . . installation compatibility" and toconform to applicable laws, codes and industry standards. Perkins was also obligated toinvestigate the site conditions and to supervise and monitor the work of thesubcontractors and subconsultants.
Notably, the contract between DASNY and Perkins provides in pertinent part that"[e]xtra costs to [DASNY] resultant from design errors or omissions shall be recoverablefrom [Perkins] and/or its Professional Liability Insurance carrier."
During the foundation work on the project, and as a result of that work, one of theadjacent Bellevue buildings began to settle into the ground. The adjacent sidewalks,roadbeds, sewers, and water systems sustained damage. Plaintiffs assert claims againstPerkins for breach of contract and negligence.
Both causes of action allege identical wrongdoing and additional expenses to theproject based on the alleged failures. The only distinction between the two causes ofaction is that the cause of action for negligence alleges that Perkins "failed to complywith professional standards of care."
Of course, DASNY's allegations of a mere breach of duty of care do not transform itsbreach of contract claim into a tort claim (see Clark-Fitzpatrick, Inc. v Long Is. R.R.Co., 70 NY2d 382, 390 [1987]). Moreover, in disentangling tort and contract claims,courts consider "the nature of the injury, the manner in which the injury occurred and theresulting harm" (Sommer, 79 NY2d at 552). This Court has described the natureof the harm, particularly whether it is "catastrophic," as "one of the most significantelements in determining whether the nature of the type of services rendered gives rise toa duty of reasonable care independent of the contract itself" (Trustees of ColumbiaUniv. in City of N.Y. v Gwathmey Siegel & Assoc. Architects, 192 AD2d 151,154 [1st Dept 1993]).
In Trustees of Columbia, we found that the professional defendants could besubject to tort liability because the project was "so affected with the public interest"(id.). We noted that due to failures of the architect, a large chunk of the facade ofa building fell into the complex's courtyard presenting a great danger to an area regularlyused by students and pedestrians and requiring emergency safety measures andemergency repairs. We also stated that "[t]he sudden precipitous manner in which theharm in this case occurred adds further support to a finding that a claim lies in tort"(id. at 155).
In contrast to the nature of the harm presented in Trustees of Columbia, no"catastrophic" harm is or could be alleged in this case. The settling of the building tookplace gradually over a couple of years and never posed a serious threat to the public'ssafety. Nor were emergency safety measures or repairs required. Contrary to themajority's assertion, there is no factual issue whether "Perkins's failure to comply withthe relevant professional standards could result in catastrophic consequences." Thealleged breach of contract by Perkins resulted only in the delay of the project andadditional costs expended for repairs to the sidewalks, roadbeds, sewers and watersystems as a result of the settling of the foundation of the adjoining building. Thisdamage [*4]can hardly be described as "catastrophic."That the project took place near a hospital does not change these crucial facts. Thus,there are no issues of fact presented whether the project was so affected with the publicinterest that any alleged failure by Perkins resulted in catastrophic consequences (see e.g. Verizon N.Y., Inc. vOptical Communications Group, Inc., 91 AD3d 176 [1st Dept 2011]).
The majority's position is not aided by reference to the dictionary definition of"catastrophe." While the Oxford Dictionaries' definition does not preclude non-suddenevents within the meaning of "catastrophe," the majority can point to no cases sustaininga tort claim where the damage did not occur suddenly. Further, while the suddenness ofthe injury is only one factor in the analysis, the cases sustaining tort claims involveactual, not hypothetical, threats to the public safety, such as the fire in Sommer orthe falling chunks of facade in Trustees of Columbia. In this regard, it is notablethat Duane Reade v SL GreenOperating Partnership, LP (30 AD3d 189 [1st Dept 2006]), upon which themajority relies, sustained the tort claim because of the "abrupt nature of the injury"(id. at 191) and because the landlord's failure to protect the water supply pipesfrom freezing temperatures as part of a comprehensive scheme of regulations designed topromote fire safety presented a risk to public safety akin to the failure to maintain firealarms in Sommer. We do not have such circumstances in this case.Accordingly, DASNY cannot claim a legal duty on the part of Perkins independentof Perkins's contractual obligations, and the cause of action for negligence is duplicativeand should be dismissed (see Dormitory Auth. of State of N.Y. v Caudill RowlettScott, 160 AD2d 179 [1st Dept 1990], lv denied 76 NY2d 706 [1990]).
Footnote *:Oxford OnlineDictionaries, catastrophe(http://www.oxforddictionaries.com/us/definition/american_english/catastrophe)