New York: Professional Malpractice—Claim Against Engineering Client Dismissed in Kings County

04/04/19

A judge recently granted our motion seeking a dismissal of all claims in favor of Rawle & Henderson LLP's client, the defendant engineer, in a case venued in Supreme Court, Kings County (Brooklyn).

Plaintiffs, purchasers of real property, claimed that the property they had purchased had numerous design and construction defects resulting in water infiltration, cracked walls, and swaying of the building.  Plaintiffs alleged that the work performed by the engineer defendant was defective and asserted seven causes of action for breach of contract, professional malpractice, unjust enrichment, fraud, negligent misrepresentation, deceptive acts or practices and for a declaratory judgment imposing alter ego liability on defendants.

By agreement with the developer, the defendant engineer performed engineering services during the construction of the two-family duplex.  Plaintiffs were not a party to this contract. Rawle & Henderson LLP demonstrated how defendant engineer did not have any contact with plaintiffs, had no knowledge of the plaintiffs until after the purchase of the property, and did not intend plaintiffs to be third-party beneficiaries of the contract.

We filed a motion on behalf of the defendant engineer to dismiss plaintiffs’ complaint for failure to state a cause of action under CPLR §3211.  We argued in favor of dismissal based on, among other things, a lack of privity between the plaintiffs and the defendant engineer as well as plaintiffs’ failure to allege facts evidencing that plaintiffs were intended beneficiaries of the engineer’s contract with the developer.

We successfully argued that plaintiffs’ first and second causes of action for breach of contract and professional malpractice be dismissed due to lack of privity as well as plaintiffs’ failure to demonstrate that they were intended beneficiaries of the contract.

To establish an intended beneficiary relationship, there must be a showing that (1) the professional was aware that their work would be used for a particular purpose, (2) upon which a known party was intended to rely, and (3) that there was some conduct on the part of the professional linking them to the plaintiff.  See Caprer v. Nussbaum, 36 A.D.3d 176 (2d Dept. 2006).  A viable cause of action alleging professional negligence or malpractice requires that the underlying relationship between the parties be one of privity of contract or that the bond between them be so close as to be the functional equivalent of privity.  See Perfetto v. CEA Engrs., P.C., 114 A.D.3d 835 (2d Dept. 2014), and Tambrands, Inc. v. Lockwood Greene Engrs., 178 A.D.2d 406 (2d Dept. 1991).  The Court found that no such relationship existed between the parties.

We also successfully argued that plaintiffs’ third cause of action for unjust enrichment be dismissed.  An unjust enrichment claim is that the defendant had obtained a benefit which in “equity and good conscience” should be paid to the plaintiff.  See Corsello v. Verizon, N.Y., Inc., 18 N.Y.3d 777 (2012); Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173 (2011), Paramount Film Distrib. Corp. v. State of New York, 30 N.Y.2d 415 (1972).  However, an unjust enrichment claim is not available where it simply duplicates, or replaces a conventional contract or tort claim.  See Clark-Fitzpatrick, Inc. v. Long Is. R.R. Co., 70 N.Y.2d 382 (1987), Samiento v. World Yacht Inc., 10 N.Y.3d 70 (2008), and Town of Wallkill v. Rosenstein, 40 A.D.3d 972 (2d Dept. 2007).

Similarly, we successfully argued that the fourth cause of action alleging fraud could not be permitted where the only fraud claim relates to a breach of contract.  See Tiffany at Westbury Condominium v. Marelli Dev. Corp., 40 A.D.3d 1073 (2d Dept. 2007).

With regard to plaintiffs’ fifth and sixth causes of action alleging negligent misrepresentation and deceptive acts or practices, the Court dismissed both claims as inapplicable.  Finally, the Court also dismissed Plaintiffs’ final cause of action for alter ego liability based on the above findings.