A big construction of a supermarket is marred when the floor settles in an unsettling manner.  The architect is sued, and motion practice ensues.  It appears that there is a limitation of liability agreement which would severely undermine the case against the architect…or is there?  This case highlights the necessity of using more words, rather than fewer words in contracts.  It’s all about Schedule A.

Maines Paper & Food Serv., Inc. v Keystone Assoc., Architects, Engrs., & Surveyors, LLC   2015 NY Slip Op 09346 [134 AD3d 1340]  December 17, 2015  Appellate Division, Third Department  reaches the conclusion that more is needed to dismiss the case.

“In 2009, plaintiff retained defendant to perform architectural consulting services related to the construction of a new supermarket. Following the completion of construction, plaintiff’s employees discovered that the supermarket floor had begun to settle in an irregular manner. Thereafter, plaintiff commenced this action sounding in breach of contract and professional malpractice, alleging that the floor defect stemmed from construction methods that were inappropriate for the conditions at the site. Following joinder of issue, defendant moved for partial summary judgment on the issue of damages, arguing that, in the event that it was found liable, the prospective damages should be capped by application of a limitation of liability clause. This clause was contained within a schedule purportedly attached or incorporated into the parties’ contract (hereinafter Schedule A). Supreme Court denied defendant’s motion, finding that triable issues of fact existed as to whether Schedule A—and the limitation of liability clause contained therein—was included in the parties’ contract. Defendant appeals.

Defendant submits that Supreme Court erred in that the evidence established as a matter of law that plaintiff received Schedule A, or, in the alternative, that Schedule A was incorporated [*2]into the contract by reference. The proponent of a motion for summary judgment bears the initial burden of showing the absence of material issues of fact; once made, the burden shifts to the opposing party “to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact” (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; see Phoenix Signal & Elec. Corp. v New York State Thruway Auth., 90 AD3d 1394, 1396 [2011]). In support of its motion, defendant submitted the parties’ contract with an attached Schedule A containing a limitation of liability clause. The contract states that “[t]his Proposal, along with the attached Standard Terms and Conditions, Schedule A, Schedule B, and the Billing Rate Schedule represents the entire understanding between the Client and Architect.” Defendant also submitted an affidavit from its managing member in which he asserts that Schedule A “[was] attached to, and a part of, [defendant’s] agreement with [plaintiff].” He further stated that it is defendant’s normal business practice for it to send an accompanying copy of Schedule A to all prospective clients whenever a proposed contract is sent. These submissions met defendant’s prima facie burden, and thus required plaintiff to demonstrate triable issues of fact.”

“The doctrine of incorporation by reference “is grounded on the premise that the material to be incorporated is so well known to the contracting parties that a mere reference to it is sufficient” (Chiacchia v National Westminster Bank, 124 AD2d 626, 628 [1986]). The document is required to also be described in the contract such that it is identifiable “ ’beyond all reasonable doubt’ ” (Kenner v Avis Rent A Car Sys., 254 AD2d 704, 704 [1998], quoting Matter of Board of Commrs. of Washington Park of City of Albany, 52 NY 131, 134 [1873]; accord Unclaimed Prop. Recovery Serv., Inc. v UBS PaineWebber Inc., 58 AD3d 526, 526 [2009]). Here, defendant failed to submit any evidence to show that the Schedule A referenced in the contract was understood by the parties to be coextensive with the Schedule A attached to the prior unexecuted contracts. Instead, as set forth above, the evidence submitted undermines this assertion. Thus, viewing the evidence in the light most favorable to plaintiff (see e.g. William J. Jenack Estate Appraisers & Auctioneers, Inc. v Rabizadeh, 22 NY3d 470, 475 [2013]), we find that defendant failed to conclusively establish as a matter of law that Schedule A was sufficiently identified in the executed contract so as to be incorporated by reference (see County of Orange v Carrier Corp., 57 AD3d 601, 602 [2008]; Kenner v Avis Rent A Car Sys., 254 AD2d at 704-705; Chiacchia v National Westminster Bank, 124 AD2d at 628).”