OPINION & ORDER
This complex litigation arises out of the construction of a 785,000 square-foot vertical campus for Baruch College (“Baruch”), part of the City University of New York (“CUNY”), between about 1998 and about 2002 (the “Project”).
1
Plaintiff Travelers
BACKGROUND
The instant litigation has already been the subject of numerous Opinions by this Court. 2 Familiarity with all prior proceedings is assumed, and only the facts relevant to the pending motions are set forth herein. These facts, taken from the parties’ evidentiary submissions on summary judgment, are undisputed or construed in the light most favorable to the nonmoving party, Travelers.
A. The Construction Project
On or about September 14, 1995, defendant Dormitory Authority — State of New York (“DASNY”), 3 acting on CUNY’s behalf as “owner” of the Project, finalized a contract (the “KPF-DASNY Contract”) whereby KPF was engaged “to Provide Programming, Architectural, Engineering and Construction Phase Services for the Construction of [the Project]” as enumerated in the contract’s “scope-of-services” appendix. KPF thereby became the Project’s chief designer and architect of record.
The scope-of-services appendix to the KPF-DASNY Contract includes a detailed catalogue of responsibilities to be undertaken by KPF during various phases of the Project. With respect to the “Construction Documents Phase” of the Project, the scope-of-services appendix provided,
inter alia,
that KPF would prepare “contract drawings and specifications” in a manner “fully coordinated for bidding by the various Contractors.” With respect to the “Bidding and Award of Prime Construction Contracts Phase” of the Project, the scope-of-services appendix provided that KPF would “prepare and supply the necessary sets of Contract Documents ... for bidding and eventual award of contracts between [DASNY] and the Contractors”; “keep account of and distribute drawings to prospective bidders”; and “investigate questions posed by bidders relative to bid documents or any other questions, and issue written replies to all bidders in the form of supplemental bulletins, addenda, or bid instructions.” With
DASNY also entered into three phased contracts with TDX (collectively, the “TDX-DASNY Contracts”) for the purpose of engaging TDX as construction manager. First, in October 1996, TDX contracted with DASNY to provide construction management services in connection with the Project’s “Design and Pre Construction Phase.” Second, in May 1997, TDX contracted with DASNY to provide construction management services pertaining to the Project’s “Construction Phase.” Finally, in January 1998, TDX contracted with DASNY to provide construction management services in connection with the Project’s “General Conditions Work Phase.”
As with the KPF-DASNY Contract, the TDX-DASNY Contracts included detailed scope-of-services appendices enumerating dozens of specific responsibilities and tasks to be undertaken by TDX. In the scope-of-services appendix to the “Construction Phase” contract, for example, TDX was directed, inter alia, to “[sjerve as [DASNY’s] chief representative in the field”; “[rjeceive, investigate, and reply to all Prime Contractors’ correspondence pertaining to the Construction Work”; “[cjonduct all job progress meetings and job coordination meetings”; “[ijnspect all work daily for quality and conformance to the Contract Documents”; “[ajdvise Prime Contractor(s) of necessary corrective work”; and “[rjeview all shop drawings for coordination of field conditions among the Prime Contractors” and “[rjeturn shop drawings, as necessary, for corrections.”
Finally, DASNY entered into thirteen prime contracts, spread among eleven separate contractors, for carrying out the substance of the Project’s construction work.
5
Trataros was ultimately awarded two of
The Bidding Documents for Contract 15 were made available on February 2, 1998, with the issuance of a “Notice to Bidders.” The scope of work under Contract 15 included, inter alia, construction of the exterior walls and windows (known as the “curtainwall”), elevators, and rough carpentry. On or about March 19, 1998, Trataros submitted a bid for Contract 15 in the amount of $50,222,000. DASNY and Trataros then entered into a written contract on or about April 27, 1998, by which Trataros agreed to perform the scope of work within Contract 15 for the fixed sum of $50,222,000. On or about April 27, 1998, Trataros obtained two surety bonds from Reliance Insurance Company (“Reliance”) 6 — a “performance bond” and a “labor and materials payment bond” — each carrying a penal sum of $50,222,000. 7 Both bonds named Trataros as principal and DASNY as obligee.
Sometime in early- or mid-1998, the Bidding Documents for Contract 16 were also released to potential bidders. The scope of work under Contract 16 included, inter alia, the interior fit-out, miscellaneous metal work, roofing installation, and flooring installation and finishing. As with Contract 15, TDX maintained a list of “plan holders” and ensured that both the Bidding Documents and addenda prepared by KPF were sent to those holders.
On or about June 10, 1998, Trataros submitted a bid in the amount of $24,140,000 for Contract 16. DASNY and Trataros then entered into a written contract on or about September 1,1998, under which Trataros agreed to perform the scope of work within Contract 16 for the fixed sum of $24,140,000. On or about the same date, Trataros obtained additional performance and payment bonds from Reliance, each in the amount of $24,140,000, and each naming Trataros as principal and DASNY as obligee.
The Project did not proceed on schedule. As a result of various delays, problems,
B. Procedural History
On August 1, 2007, Travelers commenced this action asserting claims of negligence against KPF and TDX as well as breach-of-contract and subcontractor pass-through claims against DASNY (the “Complaint”). 8 Travelers alleges that both KPF and TDX “did not properly perform [their] contractual and/or professional responsibilities” during the Project and that “[t]he actions and/or failures to act [by both KPF and TDX] constituted negligence and/or professional negligence” which, in turn, “contributed to the impacts that plagued the Project.” Travelers asserts that KPF and TDX each owed a “duty of care to Trataros and/or Trataros’ subcontractors/suppliers” based either on those contractors’ “status as third-party beneficiaries” of the KPF-DASNY Contract and the TDX-DASNY Contracts, or alternatively, “as a result of the functional equivalent of privity existing” among the parties. The Complaint seeks not only compensatory and consequential damages from KPF and TDX, but also attorney’s fees incurred by Travelers in litigation with third parties. 9
On October 1, 2007, KPF moved to dismiss the Complaint. Following briefing by the parties, the motion was denied by Order of January 24, 2008 (the “January 2008 Order”). The January 2008 Order indicated that KPF’s motion was denied for “substantially the reasons stated” set forth in Judge Baer’s previous opinion in
Travelers Cas. & Ins. Co. v. Dormitory Auth. of the State of N.Y.,
No. 04 Civ. 5101(HB),
The parties then proceeded to discovery. Travelers produced at least two expert reports relating, at least in part, to KPF’s and TDX’s performance during the Project.
10
First, R.V. Buric Construction Management Consultants, Inc. (“Buric”) concluded, with respect to KPF, that “[t]he
Travelers’ experts also opined that TDX was negligent in various ways. Buric concluded that “TDX failed to comply with industry standards and its contractual obligations related to the development of Project CPM [critical path method] schedules, coordination of the work, and its review of the design.” Likewise, CSF concluded that TDX had “negligently performed” its work during the “preconstruction” phase in a number of ways, including by “recommending] the fast track construction of a project not suited for such a project delivery methodology”; “failing] to properly develop and coordinate bid packages”; and “failing] to develop schedules that were properly planned and prepared based on flawed or missing logic [sic].” With respect to the Project’s later phases, CSF concluded that TDX “failed to review and coordinate all shop drawings among the Prime Contractors”; “failed to expedite and coordinate the Work of all Prime Contractors”; “permitted non-conforming and defective work to be installed on the project”; “failed to expedite and coordinate the progress of the Architect”; “failed to be cognizant of potential delays”; “failed to determine the cause and responsibility for any delays and to take remedial action”; “refused to evaluate requests for extensions of time, claims and/or cost adjustments”; “failed to provide contractors on site with an accurate schedule based on logical, sequential relationships”; and “failed to prepare periodic Exception Reports.” CSF also concluded that TDX was “grossly negligent” insofar as it “substituted its judgment for that of the Architect on site in matters as they relate to building design.”
On February 19, 2010, KPF and TDX each moved for summary judgment. 11 Travelers filed opposition papers for each motion on March 19, and the motions became fully submitted on April 2.
DISCUSSION
Summary judgment may not be granted unless all of the submissions taken together “show that there is no genuine issue as to any material fact and that the movant is
Once the moving party has asserted facts showing that the non-movant’s claims cannot be sustained, the opposing party must “set out specific facts showing a genuine issue for trial,” and cannot “rely merely on allegations or denials” contained in the pleadings. Fed.R.Civ.P. 56(e);
see also Wright v. Goord,
I. KPF’s Motion
KPF moves for summary judgment to dismiss Travelers’ claims in three different respects. First, KPF argues that Travelers cannot recover for breach of contract because Trataros was neither in privity of contract with KPF, nor was it a third-party beneficiary of the KPF-DASNY Contract. Second, KPF argues that Travelers cannot recover in tort because Travelers cannot demonstrate that KPF made any negligent misrepresentations to Trataros nor that KPF and Trataros were in a privity-like relationship. Third, KPF asserts that Travelers cannot recover its “bond losses” from KPF because the Shindler exception to the “American Rule” on attorney’s fees does not apply. Each of these arguments is addressed in turn.
A. Breach of Contract: Third-Party Beneficiary
Travelers argues that Trataros and the other prime contractors were intended beneficiaries of the KPF-DASNY Contract and thereby entitled to enforce its terms by recovering damages directly from KPF. Travelers asserts that its third-party beneficiary status is made “even more compelling! ]” by the fact that some 30 amendments to the KPF-DASNY Contract were executed primarily during the time that Trataros actively participated in the Project.
Ordinarily, “[a] non-party to a contract governed by New York law lacks standing to enforce the agreement.”
12
Premium Mortg. Corp. v. Equifax, Inc.,
Travelers’ third-party-beneficiary theory cannot succeed. Travelers has not raised any material question of fact concerning whether KPF and DASNY intended to benefit Trataros by concluding the KPFDASNY Contract or by executing the several dozen amendments thereto. While the KPF-DASNY Contract contemplates that KPF would be required to coordinate and produce the Bidding Documents, which may have ultimately been relied upon by Trataros in tendering its bids for Contracts 15 and 16, the KPF-DASNY Contract in no way suggests that the purpose of those contractual provisions was to confer a benefit upon Trataros, as opposed to giving Trataros that which was “necessary to assist [it] in [its own] performance.”
13
Id. Indeed, “ ‘the ordinary construction contract — i.e., one which does not expressly state that the intention of the contracting parties is to benefit a third party — -does not give third parties who contract with the promisee [i.e., owner] the right to enforce the latter’s contract with another.’”
Perron v. Hendrickson/Scalamandre/Posillico (TV),
Travelers also seeks to recover Trataros’ economic losses from KPF on a “negligence and/or professional negligence” theory. KPF has responded by seeking summary judgment on this aspect of Travelers’ claim based on two related arguments. First, KPF argues that New York’s “economic loss doctrine” prevents recovery of pecuniary damages by Trataros in the absence of contractual privity or proof of a special duty of care owed to it by KPF. Second, KPF asserts that the sole exception to the economic loss doctrine — a claim for negligent misrepresentation under a “functional equivalent of privity” theory— is not applicable in these circumstances.
1. Legal Standards
KPF is correct that the economic loss doctrine applies as a general matter to bar Travelers’ recovery against KPF. New York’s economic loss doctrine is a jurisprudential principle that a plaintiff cannot recover in tort for purely economic losses caused by the defendant’s negligence.
See, e.g., 532 Madison Ave. Gourmet Foods, Inc. v. Finlandia Ctr., Inc.,
This principle is justified on several grounds. First, to the extent that a plaintiff claiming economic damages is seeking to recover the loss of an expectancy interest created by contract in the first instance, the doctrine channels the dispute into a breach-of-contract action, in keeping with the nature of the interest that the plaintiff claims has been damaged. “[Cjourts have applied the economic loss rule to prevent the recovery of damages that are inappropriate because they actually lie in the nature of breach of contract as opposed to tort.”
Hydro Investors,
Second, to the extent that “economic loss” is difficult to quantify, but also a highly foreseeable outcome of negligence in the commercial context, the economic loss doctrine reflects a policy interest in protecting defendants from disproportionate, and potentially limitless, liability. “[R]elying solely on foreseeability to define the extent of liability in cases involving economic loss, while generally effective, could result in some instances in liability so great that, as a matter of policy, courts would be reluctant to impose it.”
Hydro Investors,
A limited exception to New York’s barrier against recovery of economic loss exists, however, for claims of negligent misrepresentation.
18
Nevertheless, “before a party
Insofar as Travelers alleges in the Complaint that “the functional equivalent of privity exist[ed] between [Trataros] and KPF,” Travelers has indicated that its “negligence and/or professional negligence” claim is one for negligent misrepresentation. To demonstrate the existence of the “functional equivalent of privity” sufficient to maintain a negligent misrepresentation claim, Travelers must satisfy a “tripartite standard.”
Id.
First, it must show “an awareness by the maker of the statement [i.e., KPF] that it is to be used for a particular purpose.”
Id.
at 484,
As it is a limited exception to the general rule against recovery of economic loss, the tripartite standard is applied strictly by New York courts, and a plaintiff pursuing a negligent misrepresentation claim
Indeed, although other jurisdictions have adopted the “lower threshold” established by the Restatement (2d) of Torts for proving a claim of negligent misrepresentation,
Williams & Sons,
This strictness finds particular application with respect to the test’s second prong: whether the plaintiff is “known” to the defendant. “To qualify as [a] ‘known part[y]’ under New York law,” a plaintiff must belong to “ ‘a known group possessed of vested rights, marked by a definable limit and made up of certain components.’ ”
SIPC,
2. Application
Travelers has failed to adduce sufficient proof showing that the functional equivalent of privity existed between Trataros and KPF such as would enable Travelers to have a triable claim for negligent misrepresentation. Several considerations compel this result.
First, Travelers has not identified a single specific misrepresentation made by KPF and upon which Trataros reasonably relied to its detriment. In particular, as KPF observes, Travelers has not offered any evidence,even colorably suggestive of misrepresentations made by KPF after the date on which Trataros joined the Project. 20 Rather, Travelers relies only on its experts’ opinions that KPF “failed to exercise its professional standard of care” in various respects, as summarized in the factual background above. An omission, however, does not constitute a negligent misrepresentation, and New York courts have not extended the “functional equivalent of privity” exception to cover passive acts of negligence. 21 Travelers may not rest on its allegation that KPF and Trataros were in a near-privity relationship during a period of time that KPF exhibited “poor performance,” because a tort claim under the tripartite standard requires evidence of specific misrepresentations, not a generalized showing of negligence.
Second, assuming
arguendo
that a material question of fact existed as to whether the KPF-DASNY Contract or the Bidding Documents contained affirmative, actionable misrepresentations on which Trataros reasonably relied to its detriment, Travelers has failed to adduce any evidence demonstrating that Trataros was “known” to KPF at those times. With respect to the Bidding Documents, Travelers has not unearthed any evidence during discovery to show that Trataros was anything to KPF other than one of multiple potential bidders for Contracts 15 and 16. In other words, Trataros was merely “part of an ‘indeterminate class of persons who, presently or in the future, might act in reliance’ ” on KPF’s plans.
Marcellus,
Other courts considering similar factual circumstances — namely, claims by construction contractors against design professionals for negligent misrepresentation — regularly conclude that a contractor’s reliance on design professionals’ planning documents in the course of making a bid does not constitute the functional equivalent of privity under New York law. Judge Mukasey’s discussion of this fact pattern is instructive:
The [tripartite] test was applied in [Os sining ] to permit a school district to sue the consulting engineers hired by the architects the school district retained to evaluate its school buildings. One building was closed on the recommendation of those engineers, which allegedly resulted from a negligent evaluation. The lawsuit was allowed, however, only because it was alleged that the engineers “undertook their work in the knowledge that it was for the school district alone,” had direct contact with the school district and billed the school district directly, and allegedly rendered their reports with the objective of thereby shaping this plaintiff’s conduct.
By contrast, however, when architectural professionals create designs and specifications used as the basis for a bid and later performance by a contractor, are retained by the property owner at a time when they do not know who the successful bidder will be, and render their services to the property owner — all of which factors were present here — the contractor who then claims that those designs and specifications were prepared negligently cannot sue those architectural professionals.
Mergentime/AWhite v. Metcalf & Eddy of N.Y., Inc.,
No. 89 Civ. 7188(MBM),
Travelers makes several arguments in opposition. First, Travelers relies on this Court’s previous denial of KPF’s motion to dismiss the Complaint in the January 2008 Order. That Order in turn relied on the 2005 Opinion denying KPF’s motion to dismiss in the first round of this litigation before Judge Baer. While acknowledging the different standards of review governing Rule 12(b)(6) and Rule 56 motions, Travelers argues that “Judge Baer’s ruling ... was based in large part upon the
These arguments are flawed. The fact that a party has successfully stated a claim in the first instance does not mean that that claim merits trial, even if the court construed and relied upon contractual language in denying the defendant’s motion to dismiss. Summary judgment is warranted where — whatever the abstract sufficiency of the complaint under Rule 12(b)(6) standards^ — the party opposing summary judgment cannot demonstrate that “a genuine issue for trial” exists even after all reasonable factual inferences and ambiguities are resolved in its favor. Fed.R.Civ.P. 56(e);
see Dickerson v. Napolitano,
Second, Travelers argues that this Court, in applying the tripartite standard, should consider the relationship between Trataros and KPF throughout the life of the Project. Travelers argues that KPF’s motion for summary judgment “intentionally avoids numerous critical facts and attempts to limit this Court’s consideration of KPF’s full involvement with this Project.” In particular, Travelers observes that “KPF and -DASNY entered into 30 amendments to the KPF Contract, most of which increase KPF’s scope of work and were executed after Trataros was selected as prime contractor”; that “KPF was still performing design work while construction activities were proceeding”; that KPF “responded to many of the requests for information from the contractors and/or subcontractors,” of which there more than 3,500 throughout the Project; that “KPF reviewed numerous shop drawings that were submitted by the prime contractors”; and that, as part of the fast-track design process, “there were very extensive communication and interaction between KPF on the one hand and Trataros and its subcontractors on the other,” including KPF’s attendance at “dozens of meetings” with TDX and various prime contractors, including Trataros.
These arguments are without merit. Even if the “very extensive communication” between KPF and Trataros during the active phase of construction constituted “linking conduct” under the third prong of the tripartite standard, or amounted to evidence that Trataros was a “known party” under the second prong, Trataros has not identified any contemporaneous misstatements on which it relied to its detriment. While Travelers criticizes KPF for “limiting] focus to its original contract and/or its original design,” Travelers supplies no evidence in support of taking a broader view. Accordingly, Travelers’ tort claims against KPF must be dismissed. 25
C. Travelers’ “Bond Loss” Claim
Finally, KPF moves for summary judgment with respect to Travelers’ claim that KPF is liable for certain “bond losses” sustained by Travelers, principally the attorneys’ fees that Travelers incurred in
Travelers cannot recover its attorney’s fees or other bond losses from KPF. Because Trataros was not a third-party beneficiary of the KPF-DASNY Contract, and because KPF is not liable in tort to Trataros for the latter’s economic losses, KPF has not committed any “wrongful conduct” that would support the application of the Shindler exception. In opposing KPF’s motion, Travelers has identified no other predicate legal claim that could support the invocation of Shindler. As such, this final aspect of Travelers’ claim must also be dismissed. 26
II. TDX’s Motion
Travelers asserts an identical claim against TDX, and TDX in turn seeks summary judgment on principally the same three grounds as KPF. Namely, TDX argues that Trataros was not a third-party beneficiary of the TDX-DASNY Contracts; that Trataros was not in a relationship functionally equivalent to privity with DASNY; and that Travelers cannot recover its attorney’s fees under the Shindler exception. For the same reasons set forth above in discussing KPF’s motion, Travelers’ claims against TDX must also fail.
A. Breach of Contract: Third-Party Beneficiary
Travelers cannot show that TDX and DASNY intended that Trataros be a third-party beneficiary of their agreement. The passages cited by Travelers from the TDX-DASNY Contracts in opposing TDX’s motion only amount to “[e]ontract language referring to third parties as necessary to assist th[ose] parties in their performance.”
Subaru,
B. Tort: Negligent Misrepresentation
Travelers also cannot recover its economic losses in tort from TDX. First, to the extent that Travelers asserts that the scope-of-services appendices contained within the TDX-DASNY Contracts included negligent misrepresentations, Travelers cannot demonstrate that the functional equivalent of privity existed between Trataros and TDX at that time, because Trataros was not then a “known party” to TDX within the meaning of the tripartite standard.
See Parrott II,
In opposition, Travelers argues that New York law “recognize[s] a non-contracting party’s right to sue a professional in tort for economic damages” and that the economic loss doctrine does not prohibit such claims. Travelers further observes that “TDX holds itself out to the public as a professional entity” and argues that TDX therefore constitutes a “professional” subject to liability for malpractice. 28
Insofar as Travelers contends that a malpractice cause of action would relieve it from having to demonstrate either privity with TDX or a near-privity relationship coupled with a negligent misrepresentation, Travelers’ reliance is misplaced. “Under New York law, professional malpractice is a species of negligence.”
Hydro Investors,
The legal authorities that Travelers cites in support of its position are inapplicable. For example, Travelers cites
Hydro Investors
for the proposition that New York law permits a non-contracting party to bring a professional malpractice suit for recovery of economic damages. What
Hydro Investors
says, however, is that economic loss should be “recover[able] in the limited class of cases involving liability for the
violation of a professional duty.”
C. Travelers’ “Bond Loss” Claim
Finally, because Travelers’ other claims against TDX cannot succeed as a matter of law, and because Travelers has identified no other “wrongful act” committed by TDX against Travelers,
see Shindler,
CONCLUSION
TDX’s and KPF’s February 19, 2010 motions for summary judgment are granted.
SO ORDERED.
Notes
. The completed building, known as the William and Anita Newman Vertical Campus, occupies approximately three-quarters of the city block bounded by East 24th and East 25th Streets and Lexington and Third Avenues in Manhattan. The building consists of
.
See, e.g., Travelers Cas. & Sur. Co. v. Dormitory Auth.,
No. 07 Civ. 6915(DLC),
. In its motion papers, Travelers variously supplies DASNY's full name as “Dormitory Authority — State of New York” and as “Dormitory Authority of the State of New York.”
. The KPF-DASNY Contract also contemplates that KPF could "propose and engage Consultants ... to perform portions of the Services required under this Agreement.” Pursuant to that provision, KPF hired a number of subconsultants, including Weidlinger Associates Consulting Engineers, P.C.; Castro-Blanco Piscioneri & Associates, Architects, P.C.; Arquitectónica New York, P.C.; Cosentini Associates, Inc.; and Cermak Peterka Petersen, Inc. KPF brought a third-party complaint against these subcontractors (among others) on February 1, 2008, but all claims associated with that third-party complaint have since been dismissed by stipulation.
. The Project fell within the terms of the New York Wicks Law, which requires, inter alia, that all public construction projects costing more than a certain monetary threshold must provide for "separate and independent bidding” for three types of work: plumbing and gas fitting; heating, ventilating, and air conditioning; and electric writing and fixtures. N.Y. State Fin. Law § 135; N.Y. Gen. Mun. Law § 101. The monetary threshold was $50,000 until 2008, when the threshold was increased to $3 million for projects occurring in New York County. The Project’s thirteen prime contracts included the three Wicks Law work categories; the two "general trades” contracts awarded to Trataros; and specialized contracts for site excavation and foundation, structural steel, structural concrete, masonry, ductwork, sprinkler system/standpiping, fire alarm system, and temperature control.
. Reliance subsequently entered into an agreement with Travelers whereby Reliance granted Travelers a power of attorney to act as administrator for Reliance and reinsurer with respect to Contracts 15 and 16.
. A labor and materials payment bond ("payment bond”) is an undertaking by which a surety agrees to compensate subcontractors and suppliers who have furnished labor or supplies to the surety's "principal” (often a general contractor), but who have not been paid by that principal even after payment was duly demanded. The surety’s aggregate financial liability on the payment bond is limited to the bond's "penal sum.” Payment bonds are required by statute for "public improvement” projects. See N.Y. State Fin. Law § 137 (requiring "a bond guaranteeing prompt payment of moneys due to all persons furnishing labor or materials to the contractor or any subcontractors in the prosecution of the work provided for in such contract”).
A performance bond, by contrast, is an undertaking by which a surety agrees to be financially responsible to the owner of a construction project if that surety's principal fails to fulfill its contractual obligations to the owner. If the owner declares a contractor in default and makes a claim upon that contractor's performance bond, the surety usually has the option of either completing the project itself (by retaining another contractor) or paying the owner its damages, up to the penal sum of the bond. Unlike with insurance contracts, the surety may recover in indemnity against its principal for any sums paid out under either type of surety bond.
. This litigation is in its second round in federal court. Travelers previously filed suit in June 2004 against DASNY, TDX, and KPF. See Travelers Cas. & Ins. Co. v. Dormitory Auth. of the State of N.Y., No. 04 Civ. 5101(HB). After about a year of pretrial proceedings and motion practice before the Honorable Harold Baer, the case was voluntarily dismissed without prejudice in October 2005 to enable the parties to pursue mediation. When the mediation failed, Travelers re-filed this litigation, and the case was assigned to this Court.
. In its claims against KPF and TDX, which are identical in all materia! respects, Travelers asserts that it "has standing to assert claims as against KPF [and TDX] either as a result of the assignment from Trataros; equitable subrogation with respect to the rights of claimants, the obligees, and/or the principal; third-party beneficiary rights in connection with [the KPF-DASNY Contract and the TDX-DASNY Contracts], and/or as a party whose connection to KPF [and TDX) is so close as to approach privity.” Travelers does not enumerate separate causes of action against KPF and TDX based on the various legal theories under which it sues, but instead asserts a single claim against each.
. The expert reports’ findings are disputed by the parties. Nevertheless, these expert reports are considered in determining whether Travelers has proffered evidence showing that there remains a genuine issue of material fact requiring trial.
. KPF and TDX also asserted cross-claims against one another in this litigation. These causes of action were dismissed with prejudice by stipulation of the parties on May 13, 2010.
. The parties do not dispute that New York law governs the KPF-DASNY Contract or the TDX-DASNY Contracts.
. Indeed, the Project's contract documents, prepared by DASNY, reflect that the parties knew how to create a third-party-beneficiary relationship if they so intended. Certain "General Conditions” incorporated by reference into Contracts 15 and 16 provide that "[i]t is understood that the Client is an intended third party beneficiary of the Contract for the purposes of recovering any damages caused by the Contractor.” The term "Client” is defined under the General Conditions as the entity for whom DASNY is "performing services,” i.e., CUNY. By contrast, although "Contractors” are also referenced throughout the contract documents, there is no similar indication that Contractors are intended beneficiaries of the contracts.
. The cases cited by Travelers do not support its position. Travelers relies upon
Marcellus Constr. Co., Inc. v. Village of Broadalbin,
. New York courts appear to disagree whether the term "economic loss rule” should apply outside the context in which it first emerged, namely, product-liability suits against manufacturers.
See N.Y. Methodist Hosp. v. Carrier Corp.,
. Indeed, Travelers has asserted multiple breach-of-contract claims against DASNY in this litigation.
. These principles do not necessarily absolve an architect, engineer, or construction manager (collectively, "design professionals”) of all liability in tort where their poor performance causes damage to construction contractors. If a contractor brings a breach-of-contract claim against the owner, the owner can in turn seek indemnification or contribution from the design professional to the extent that the latter caused the losses for which the contractor has sued. Indeed, DASNY asserted cross-claims for indemnification and contribution against KPF and TDX in this litigation, but those claims were dismissed at the request of the parties.
. The elements of negligent misrepresentation under New York law are:
(1) the defendant had a duty, as a result of a special relationship, to give correct information; (2) the defendant made a false representation that he or she should have known was incorrect; (3) the information supplied in the representation was known by the defendant to be desired by the plaintiff for a serious purpose; (4) the plaintiff intended to rely and act upon it; and (5) the plaintiff reasonably relied on it to his or her detriment.
Hydro Investors,
. The tripartite standard was originally developed and applied with respect to negligent misrepresentation claims against accountants.
See Credit Alliance Corp. v. Arthur Andersen & Co.,
. Neither the Complaint nor Travelers' opposition to KPF’s motion for summary judgment identifies any specific misrepresentations made by KPF. KPF appears to concede, however, that Travelers would have a claim sufficient for trial if the "functional equivalent of privity” existed between Trataros and KPF at two times: (1) when the KPF-DASNY Contract was concluded or (2) when the Bidding Documents were issued.
. New York courts have also refused to allow a third party to recover for breach-of-contract under a "functional equivalent of privity” theory.
See, e.g., Hamlet at Willow Creek Dev’t Co., LLC v. Ne. Land Dev’t Corp.,
. Because Travelers fails on the second prong of the tripartite standard, the Court need not decide whether the first or third prongs were satisfied.
See Parrott I,
. Cases finding no functional equivalent of privity include, in reverse chronological order:
Sykes,
. Cases finding that a "functional equivalent of privity” theory was sufficiently pled at the motion-to-dismiss stage include, in reverse chronological order:
Samuels v. Fradkoff,
. KPF’s challenges to Travelers’ apportionment of damages need not be considered, as none of Travelers’ legal theories survive summary judgment.
. It need not be decided whether Travelers’ Shindler claim is deficient in any other re-spec! identified by KPF's motion.
. Although Travelers cites
dicta
from
Glanzer v. Shepard,
. Travelers cites various cases and other authorities for the uncontroversial proposition that a construction manager is a professional subject to liability in malpractice, including
CH2M Hill, Inc. v. Herman,
. Travelers asserts that TDX’s position is "the height of absurdity” because it would give construction managers "carte blanche to perform professional malpractice without any need to answer for repercussions of its tortious conduct.” Travelers ignores the fact that a professional who commits malpractice may indeed be held liable, in tort, to any party to whom the professional owes a duty of care. Travelers has simply failed to demonstrate that Trataros was owed any such duty by TDX.
. These cases are
Sommer,