IFD Construction Corp. v. Dietz

253 A.D.2d 89, 685 N.Y.S.2d 670, 1999 N.Y. App. Div. LEXIS 1859
CourtAppellate Division of the Supreme Court of the State of New York
DecidedFebruary 23, 1999
StatusPublished
Cited by20 cases

This text of 253 A.D.2d 89 (IFD Construction Corp. v. Dietz) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
IFD Construction Corp. v. Dietz, 253 A.D.2d 89, 685 N.Y.S.2d 670, 1999 N.Y. App. Div. LEXIS 1859 (N.Y. Ct. App. 1999).

Opinion

OPINION OF THE COURT

Sullivan, J. P.

Defendant engineers Corddry Carpenter Dietz and Zack (CCDZ) and Seelye Stevenson Value and Knecht (SSVK) appeal from the denial of their motions to dismiss the complaint alleging, as against them, negligent misrepresentation, for failure to state a cause of action and as barred by the Statute of Limitations. In addition, CCDZ moved, alternatively, for summary judgment.

Plaintiff IFD Construction Corporation was the labor and materials contractor under an April 21, 1993 contract with the [91]*91City of New York for the construction of the College Point Bus Facility in Queens. Defendants were the engineering firms that the City had previously retained to prepare the contract drawings and plans and specifications for the project. In its complaint, IFD alleges that its work was delayed and additional work necessitated because the contract documents prepared by the engineers were deficient in that they falsely represented that contaminated/hazardous soil would not be encountered in the course of the work and that bitumen-coated piles could be driven in cold weather.

Although the engineers contracted with the City only, IFD alleges that they were aware that IFD, as well as other bidders, would rely on their contract drawings and specifications in preparing a bid for the construction project. Thus, IFD argues, the defendant engineers had a duty to it that required them to prepare the bid documents in conformity with a professional standard of care, which, because of their negligent misrepresentations, has not been met. Distilled to its essence, IFD’s claim is that its construction costs exceeded its agreed-to price. IFD seeks $6,000,000 in increased costs and delay damages.

The defendant engineers moved for dismissal of the claim for negligent misrepresentation on three distinct grounds. They argued that IFD’s claim, which accrued when IFD agreed to perform the work at a price calculated in alleged reliance on the misrepresentation, was barred by the three-year Statute of Limitations applicable to a contractor’s negligence claims against an engineer not retained by it. They also argued that IFD could not demonstrate reasonable and justifiable reliance on the alleged misrepresentations and, finally, that the claim for negligent misrepresentation is deficient as there is neither contractual privity nor the functional equivalent of privity between IFD and the engineers to support such a claim. As noted, CCDZ also moved for summary judgment.

The IAS Court denied the motion, finding that the parties were in a relationship approaching privity. It rejected the Statute of Limitations argument, holding that the engineers’ performance continued throughout the course of the project so that the parties’ professional relationship continued until February 27, 1996, the last date that IFD worked on the project. The court failed to address the engineers’ argument that IFD’s reliance on the alleged misrepresented conditions contained in the contract documents was not justifiable. We reverse.

It is not disputed that the three-year limitation of CPLR 214 (6) controls in a negligence action against a professional, [92]*92such as an architect or engineer. (Ackerman v Price Waterhouse, 84 NY2d 535.) The issue here is over the accrual date. In ruling that a contractor’s claim of negligence against the project engineer accrues on the completion of the project, the IAS Court failed to recognize the differing rights of the owner who retained the engineer and a party outside of that relationship who is allegedly injured as a result of the engineer’s negligence.

In that regard, an owner’s claim against a construction contractor for defective workmanship accrues upon completion of the construction (City School Dist. v Stubbins & Assocs., 85 NY2d 535, 538; Rotterdam Sq. v Sear-Brown Assocs., 246 AD2d 871, 872). An owner’s claim against an architect or engineer accrues when the professional relationship ends, usually upon issuance of the final payment certificate under the contract. (See, Matter of Kohn Pederson Fox Assocs. [FDIC], 189 AD2d 557; Methodist Hosp. v Perkins & Will Partnership, 203 AD2d 435.) On the other hand, in the context of a personal injury action against a design professional by a party who did not retain the design professional, the cause of action accrues on the date of injury (Cubito v Kreisberg, 69 AD2d 738, affd 51 NY2d 900), the date when, as the Court of Appeals has noted, the claim becomes enforceable, i.e., when all elements of the tort can be truthfully alleged in a complaint (Snyder v Town Insulation, 81 NY2d 429, 432-433).

In a negligence action based upon reliance on a design professional’s allegedly defective work product, such as contract documents upon which a contractor’s bid decisions are based, the cause of action cannot accrue until the date that the work product is received, since that is the earliest date on which the injured party, who did not retain the professional, could have relied upon it. (See, Credit Alliance Corp. v Andersen & Co., 101 AD2d 231, 236-237, revd on other grounds 65 NY2d 536; Ackerman v Price Waterhouse, supra, 84 NY2d, at 538, 541.)

Here, the gravamen of the wrong complained of is that IFD calculated its bid price on the basis of documents and specifications prepared by the defendant engineers, who negligently misrepresented the soil conditions at the project site. Thus, IFD was injured when the forces alleged to have produced that injury were put in motion, that is, at least by the time IFD agreed to its formulated bid price by entering into a construction contract with the City on April 21, 1993, more than three years before the June 25, 1996 commencement of this action. It did so with full knowledge of, and reliance on, the terms, condi[93]*93tions and content of the contract documents. Having allegedly relied on the engineers’ negligent misrepresentations in the contract documents in formulating its supposed unrealistically low bid, IFD was, for purposes of the Statute of Limitations, injured at that time. In that regard, the aggrieved party need not be aware of the wrong or injury for the cause of action to accrue. (Supra, at 541.)

In any event, and separate and apart from the Statute of Limitations defense, IFD’s negligent misrepresentation claim should be dismissed for failure to show reasonable and justifiable reliance on the alleged misrepresentations. (See, General Elec. Capital Corp. v United States Trust Co., 238 AD2d 144.) The defendant engineers’ design of the project, as approved by the City, was part of the final bid package for all interested construction bidders. Among other things, it provided for the installation of bitumen-coated piles. The design also set forth the manner in which the construction contractor was to excavate, remove and otherwise deal with contaminated soil at the site. The City retained a construction management firm to oversee the construction. Thereafter, the project was let out for bids. Those contractors desiring to bid obtained a copy of the bid documents, which included the defendant engineers’ design drawings and technical specifications, the contract’s general and supplementary conditions and the Specifications.

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Bluebook (online)
253 A.D.2d 89, 685 N.Y.S.2d 670, 1999 N.Y. App. Div. LEXIS 1859, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ifd-construction-corp-v-dietz-nyappdiv-1999.