861 F. Supp. 2d 120
W.D.N.Y.
2012
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Background

  • Keywell engages in scrap metal recycling and contracted Pavilion to design, manufacture, and install a lightweight structure at Frewsberg facility.
  • Zehn Burhan Uzman, an NY licensed engineer, was retained as engineer of record by Pavilion; Barrett and Barrett Crane were engineers sub-contractors.
  • Master Agreement signed Sept 27, 2007; First Amendment (June 10, 2008) and Second Amendment (Oct 28, 2008) amended the contract; amendments reference the Master Agreement.
  • Structure completed Nov 2008 but allegedly under-designed for snow and wind loads; defects included welds, truss bracing, and fabric-to-frame stress issues.
  • Plaintiff alleges breach of contract against Pavilion/Uzman/Barrett subsidiaries and professional negligence claims; Uzman moves for partial judgment on the pleadings to dismiss the contract claim against him.
  • Court analyzes privity and the Master Agreement’s scope, noting Uzman was not a signatory but considering a ‘functional equivalent of privity’ and the pleadings’ allegations.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether Uzman is bound by the Master Agreement as a subcontractor Master includes subcontractors; Uzman assented via conduct. No privity; Uzman did not sign or assent to Master Agreement. Denied; privity issue unresolved; pleadings show plausible claim via functional privity.
Whether privity is required to state a breach of contract claim against Uzman Functional equivalence of privity exists; owner-subcontractor dealings suffice. Privity required; no signed/assented contract with Uzman. Denied; factual questions remain; discovery may clarify privity or its functional equivalent.
Whether the motion should be converted to summary judgment based on outside pleadings Outside material supports consideration; conversion appropriate. No conversion; outside responses excluded; keep as 12(c). Denied; no conversion necessary; outside interrogatory responses excluded.
Whether consideration defeats contractual liability against Uzman Consideration to Pavilion can support privity with owner. No independent consideration with Uzman; cannot bind Uzman. Denied; issues of consideration for privity remain for discovery.

Key Cases Cited

  • LaFaro v. N.Y. Cardiothoracic Group, PLLC, 570 F.3d 471 (2d Cir. 2009) (court considers pleadings and inferences in plaintiff's favor on 12(b)/(c) motions)
  • Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleadings must plead plausible claims)
  • Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for surviving dismissal)
  • Scheuer v. Rhodes, 416 U.S. 232 (U.S. 1974) (standard for liberal construction of complaints)
  • Goldstein v. Pataki, 516 F.3d 50 (2d Cir. 2008) (liberal construction and pleading standards)
  • Sira v. Morton, 380 F.3d 57 (2d Cir. 2004) (outside materials can convert 12(b)(6) to summary judgment)
  • Hernandez v. Coffey, 582 F.3d 303 (2d Cir. 2009) (outside pleadings may trigger Rule 56 conversion)
  • Nabisco Brands, Inc. v. General Restoration Co., Inc., 679 F. Supp. 264 (W.D.N.Y. 1988) (consideration and privity questions in subcontractor context)
  • LaBarte v. Seneca Resources Corp., 285 A.D.2d 974 (4th Dept. 2001) (privity essential for contract claims against non-signatories)
  • Logan-Baldwin v. L.S.M. General Contractors, Inc., 31 Misc.3d 174 (N.Y. Sup. Ct., Monroe Cnty. 2011) (direct dealings can create privity-like rights)
  • Seaver v. Ransom, 224 N.E. 639 (N.Y. 1918) (historical privity concepts in contracts)
  • Leonard v. Gateway II, LLC, 890 N.Y.S.2d 33 (1st Dept. 2009) (contract claims vs. non-signatories under specific circumstances)
  • CDJ Builders Corp. v. Hudson Group Constr. Corp., 889 N.Y.S.2d 64 (2d Dept. 2009) (non-signatories and privity considerations in NY)
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