| Archstone v Tocci Bldg. Corp. of N.J., Inc. |
| 2012 NY Slip Op 09015 [101 AD3d 1059] |
| December 26, 2012 |
| Appellate Division, Second Department |
| Archstone et al., Respondents-Appellants, v Tocci BuildingCorporation of New Jersey, Inc., et al., Defendants, Perkins Eastman Architects, Inc.,Respondent, and Eldorado Stone, LLC, Appellant-Respondent. (And Third-PartyActions.) |
—[*1] Certilman Balin Adler & Hyman, LLP, East Meadow, N.Y. (Robert L. Crewdson, pro hacvice, of counsel), for respondents-appellants. Wasserman Grubin & Rogers, LLP, New York, N.Y. (Michael T. Rogers, Douglas J. Lutz,and Susan Arden of counsel), for respondent.
In an action, inter alia, to recover damages for breach of contract, and related third-partyactions, the defendant Eldorado Stone, LLC, appeals from so much of an order of the SupremeCourt, Nassau County (Warshawsky, J.), entered January 24, 2011, as denied that branch of itsmotion which was for summary judgment dismissing the cause of action alleging negligenceasserted against it, and the plaintiffs cross-appeal, as limited by their notice of appeal and brief,from so much of the same order as granted those branches of the motion of the defendantEldorado Stone, LLC, which were for summary judgment dismissing the causes of actionalleging breach of express and implied warranty asserted against it.
Ordered that the order is reversed insofar as appealed from, on the law, and that branch of themotion of the defendant Eldorado Stone, LLC, which was for summary judgment dismissing thecause of action alleging negligence asserted against it is granted; and it is further,
Ordered that the order is affirmed insofar as cross-appealed from; and it is further,
Ordered that one bill of costs is awarded to the defendant Eldorado Stone, LLC, payable bythe plaintiffs and Perkins Eastman Architects, Inc.
This appeal and cross-appeal are amongst several involving water intrusion and damage at anewly constructed apartment complex (see Archstone v Tocci Bldg. Corp. of N.J., Inc.,101 AD3d 1057 [2012]; Archstone v Tocci Bldg. Corp. of N.J., Inc., 101 AD3d 1062[2012[*2]] [both decided herewith]). The plaintiffs, the owners ofthe apartment complex, contracted with the defendant Tocci Building Corporation of NewJersey, Inc. (hereinafter Tocci), to act as the general contractor on the project. The plaintiffscommenced this action against Tocci, and others, including the appellant Eldorado Stone, LLC(hereinafter Eldorado), alleging that severe water intrusion required them to reconstruct thebuildings, terminate certain leases, and defend against personal injury and property claimsbrought by the apartment complex's tenants. Eldorado manufactured an artificial stone veneerused to clad the exterior of the buildings. The plaintiffs asserted causes of action againstEldorado sounding in, inter alia, negligence and breach of express and implied warranties.
Eldorado moved for summary judgment dismissing the negligence and breach of express andimplied warranty causes of action asserted against it. The Supreme Court granted those branchesof the motion which were for summary judgment dismissing the breach of express and impliedwarranty causes of action, and otherwise denied the motion. Eldorado appeals from so much ofthe order as denied that branch of its motion which was for summary judgment dismissing thenegligence cause of action asserted against it, and the plaintiffs cross-appeal from so much of theorder as granted that branch of Eldorando's motion which was for summary judgment dismissingthe breach of express and implied warranty causes of action asserted against it.
"The economic loss rule provides that tort recovery in strict products liability and negligenceagainst a manufacturer is not available to a downstream purchaser where the claimed losses flowfrom damage to the property that is the subject of the contract and personal injury is not allegedor at issue" (Atlas Air, Inc. v GeneralElec. Co., 16 AD3d 444, 445 [2005]; see Bocre Leasing Corp. v General MotorsCorp. [Allison Gas Turbine Div.], 84 NY2d 685, 694 [1995]; New York Methodist Hosp. v CarrierCorp., 68 AD3d 830 [2009]; Weiss v Polymer Plastics Corp., 21 AD3d 1095 [2005]; AminRealty v K & R Constr. Corp., 306 AD2d 230 [2003]). The rule is applicable to economiclosses to the product itself, as well as consequential damages resulting from the defect (seeBocre Leasing Corp. v General Motors Corp. [Allison Gas Turbine Div.], 84 NY2d at 693;Weiss v Polymer Plastics Corp., 21 AD3d at 1096).
Here, the plaintiffs claimed economic losses with respect to the reconstruction of thebuildings allegedly resulting from the failure of the stone cladding system to perform properly inpreventing water intrusion. Contrary to the plaintiffs' contention, their alleged losses constitutedconsequential damages resulting from the alleged design defect and flowing from damage toproperty which was the subject of the plaintiffs' contract with Tocci (see Weiss v PolymerPlastics Corp., 21 AD3d at 1096; Amin Realty v K & R Constr. Corp., 306 AD2d at231; Hemming v Certainteed Corp., 97 AD2d 976 [1983]). Those alleged damages arethus not "outside the scope of the contractually based economic losses, attendant to the particularcommercial transaction and subject matter" (Bocre Leasing Corp. v General Motors Corp.[Allison Gas Turbine Div.], 84 NY2d at 691). Moreover, the personal injury and propertydamage allegedly suffered by the tenants did not create a direct tort cause of action againstEldorado on behalf of the plaintiffs, where the losses they claimed were purely economic innature (see 7 World Trade Co. v Westinghouse Elec. Corp., 256 AD2d 263, 264 [1998]).Accordingly, the economic loss rule barred the plaintiffs' negligence cause of action againstEldorado, and the Supreme Court should have granted that branch of the motion which was forsummary judgment dismissing that cause of action insofar as asserted against Eldorado.
The Supreme Court properly granted that branch of the motion which was for summaryjudgment dismissing the breach of implied warranty causes of action, as the plaintiffs wereneither in privity with Eldorado (see Arthur Jaffee Assoc. v Bilsco Auto Serv., 58 NY2d993, 995 [1983]; Catalano v Heraeus Kulzer, Inc., 305 AD2d 356, 358 [2003]), nor werethey third-party beneficiaries of Eldorado's contract with the distributor (see UCC 2-318;Amin Realty v K & R Constr. Corp., 306 AD2d at 231-232; Ralston Purina Co. vMcKee & Co., 158 AD2d 969, 970 [1990]).
The Supreme Court properly granted that branch of the motion which was for summaryjudgment dismissing the breach of express warranty cause of action. Eldorado established itsentitlement to judgment as a matter of law by demonstrating that the alleged express warrantywas made subject to conditions which were not fulfilled. In opposition, the plaintiffs failed toraise a [*3]triable issue of fact (see Zuckerman v City of NewYork, 49 NY2d 557, 562 [1980]). In light of this determination, Eldorado's remainingcontention has been rendered academic. Angiolillo, J.P., Dickerson, Leventhal and Chambers,JJ., concur. [Prior Case History: 2010 NY Slip Op 33576(U).]