Lead Opinion
The two questions on this appeal are whether plaintiff City of New York is an
This action arose out of a construction project to build a forensic biology laboratory at 26 th Street and First Avenue in Manhattan, adjacent to Bellevue Hospital, for use by the Office of the Chief Medical Examiner (OCME). The City (on behalf of OCME) and DASNY entered into a project management agreement, which provided that DASNY would finance and manage the design and construction of the laboratory (the project). DASNY was authorized to enter into contracts with the necessary contractors and consultants including, as relevant here, the architect, Perkins.
Pursuant to the contract between DASNY and Perkins (the Perkins contract), Perkins was to provide design, architectural, and engineering services for the project and supervise its construction. Perkins was also responsible for providing a site plan for the location of the laboratory in relation to the hospital. The contract further provides that Perkins would "indemnify and hold harmless" DASNY and the "Client" (that
Pursuant to a separate contract, DASNY retained Samson Construction Co., which is not a party to this appeal, as the contractor to provide excavation and foundation work for the Project. Significantly, the contract executed between DASNY and Samson provides that the client-i.e., the City-"is an intended third party beneficiary of the Contract for the purposes of recovering any damages caused by [Samson]." Although there are passing references to the client in the Perkins contract, no analogous language providing that the City is an intended third-party beneficiary appears there.
Work began on the foundation in May 2002, but the failure to properly install an excavation support system led to substantial damage and delays. In particular, this failure caused the adjacent C & D building on the Bellevue campus to "settle" by as much as eight inches, damaged other adjacent structures (including sidewalks, sewers and water mains), and required emergency repairs. These issues caused the project to be delayed by more than 18 months at an additional cost of $37 million.
Plaintiffs commenced this action against Samson in August 2006. Perkins was added as a defendant in February 2007 through the filing of a supplemental summons and complaint, which contained two causes of action against Perkins-one alleging breach of contract and the other alleging negligence. The breach of contract claim alleges that Perkins breached the contract by:
"failing to provide adequate designs for the Project, by failing to properly supervise the subcontractors and subconsultants that it retained with regard to the Project, by failing to monitor the progress of the Work to ensure that it was being completed properly and in substantial compliance with the design recommendations, specifications and their intent, by failing to ascertain the actual field conditions, including the subsurfaceconditions at the Site and the foundations beneath [the C &]D Building and by failing to advise DASNY of the risks to the [C &]D Building posed by the installation of the [excavation support system] and taking precautions against such risks."
The allegations set forth in the negligence cause of action are virtually identical in every respect, but with an introductory phrase that references Perkins' failure "to comply with professional standards of care" instead of breach of contract. The damages for both claims are described as the "significant additional expenses" necessary to complete the project. Although the complaint's ad damnum clause states a figure for Perkins' negligence that is $4 million higher than for its breach of contract, there is no basis given for the additional amount. During early discovery, plaintiffs produced a binder and provided testimony showing that the total cost of fixing the damage was approximately $37 million, including repairs to the project site and the adjacent structures, with no distinction drawn between the two claims.
Perkins moved for summary judgment to dismiss the City's breach of contract and negligence claims and to dismiss DASNY's negligence claim as duplicative of its breach of contract claim. Supreme Court granted the motion in part, dismissing the City's breach of contract and negligence claims (
The Appellate Division modified by denying Perkins' motion for summary judgment on the City's breach of contract claim and, as so modified, affirmed (
One Justice dissented in part, and would have dismissed DASNY's negligence claim as duplicative. The Appellate Division granted Perkins' motion for leave to appeal to this Court,
Intended Third-Party Beneficiary
"[A] third party may sue as a beneficiary on a contract made for [its] benefit. However, an intent to benefit the third party must be shown, and, absent such intent, the third party is merely an incidental beneficiary with no right to enforce the particular contracts" ( Port Chester Elec. Constr. Corp. v. Atlas,
Here, the parties were aware that the laboratory was being built for OCME's use. However, neither ground set out in Fourth Ocean exists for finding the City an intended third-party beneficiary (see
Duplicative Negligence Claim
"It is a well-established principle that a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated" ( Clark-Fitzpatrick, Inc. v. Long Is. R.R. Co.,
We have also recognized that "[a] legal duty independent of contractual obligations may be imposed by law as an incident to the parties' relationship" and that several types of defendants-including professionals-can be held liable in tort "for failure to exercise reasonable care, irrespective of their contractual duties" ( Sommer v. Federal Signal Corp.,
Here, the negligence allegations in the complaint are, as we held in Clark-Fitzpatrick, "merely a restatement, albeit in slightly different language, of the 'implied' contractual obligations asserted in the cause of action for breach of contract" (
The cases relied upon by the dissent- Santulli v. Englert, Reilly & McHugh,
There is nothing in Sears to suggest that a completely duplicative professional malpractice claim (identical in nearly every respect to the owner's contract claim) should be permitted to proceed against an architect simply because the defendant is an architect. Brushton-Moira Cent. School Dist. v. Thomas Assoc.,
Accordingly, the order of the Appellate Division should be reversed, with costs, and defendant Perkins' motion insofar as it sought summary judgment dismissing the fifth cause of action for breach of contract and dismissing the sixth cause of action for negligence should be granted, and the certified question should be answered in the negative.
WILSON, J. (dissenting in part):
I agree with the majority that the City of New York may not sue Perkins Eastman Architects, P.C. for breach of the Dormitory Authority of the State of New York (DASNY)-Perkins contract on the theory that the City is an intended third-party beneficiary of that contract, to which it is not a party.
New York recognizes a distinct claim for professional malpractice and allows parties to pursue simultaneously a professional malpractice claim and a breach of contract claim (see
In Santulli, we reversed the Appellate Division's grant of summary judgment on plaintiff's breach-of-contract claim, allowing him to proceed at trial on both a legal malpractice and a breach-of-contract claim arising from the same alleged misfeasance, rejecting defendant's argument that a breach-of-
Contrary to the majority's contention, Brushton-Moira Cent. School Dist. v. Thomas Assoc.,
The majority also misapplies Sommer by confusing the test that applies when a plaintiff seeks to maintain a claim for
Notes
Here, the City and DASNY are highly sophisticated parties. As described in its brief, DASNY's raison d'etre is "to help finance and construct public projects for New York's higher education, health care, and public institutions." In the contract between DASNY and the general contractor, Samson, DASNY and the City specifically provided that the City could sue for breach, but in the DASNY contract with Perkins, DASNY and the City omitted any such right. Those facts weigh very heavily here; I do not take our decision to suggest that, absent the sophistication of the parties or the clear difference in the City's right to sue under contracts concerning a single project, dismissal would nevertheless have been proper.
Clark-Fitzpatrick, Inc. v. Long Is. R.R. Co.,
Dissenting Opinion
Defendant Perkins Eastman Architects P.C. is not entitled to summary judgment. Material issues of fact, which should go to the jury, exist as to whether plaintiff City of New York (City) is a third-party beneficiary of defendant's contract with plaintiff Dormitory Authority of the State of New York (DASNY), and with respect to DASNY's tort claim for professional malpractice. The Appellate Division thus correctly determined that summary judgment was unwarranted, and we should answer the certified question in the affirmative.
With respect to the City's claim, the majority's standard is perilously close to requiring that a contract expressly name a nonparty as a third-party beneficiary. Yet this is not the law. A nonparty that "is not a stranger to the contract," and whose relationship with the defendant is the "functional equivalent of privity," may assert a breach (see Town of Oyster Bay v. Lizza Industries, Inc.,
With respect to DASNY's professional malpractice claim, the majority misreads our case law. In Sommer v. Federal Signal Corp., this Court stated that professionals "may be subject to tort liability for failure to exercise reasonable care, irrespective of their contractual duties" (
Order reversed, with costs, and defendant Perkins Eastman Architects, P.C.'s motion, insofar as it sought summary judgment dismissing the fifth cause of action for breach of contract and dismissing the sixth cause of action for negligence, granted and certified question answered in the negative.
Judges Stein, Fahey, Garcia and Feinman concur.
Judge Wilson dissents in part in an opinion, in which Judge Rivera concurs in part in a separate dissenting opinion.
