A new luxury condo is built on the Bowery and on a cold night, pipes freeze.  80,000 gallons of water pour through the building, and when workers start to fix the problem, more and more problems are found.  Who is responsible?  The Sponsor ? The contractors?

Board of Mgrs. of 250 Bowery Condominium v 250  VE LLC,  2018 NY Slip Op 31168(U)
June 5, 2018 Supreme Court, New York County Docket Number: 656608/2016 Judge: O. Peter Sherwood discusses privity, professional negligence and the interplay of tort and contract.

“This ·litigation arises from alleged construction defects in the building, which were discovered in 2016 after the water in a fire sprinkler pipe froze, causing the pipe to burst, and water to flood the building (Morris notice of motion, Schreckinger affirmation, exhibit B [Complaint], ¶66). The building is an eight-story structure containing 24 residential units and 2 commercial units
(id.,¶38). While damage from the flooding was being repaired, plaintiff allegedly discovered
defects in the building (id, ¶¶ 70-82). These conditions were purportedly inconsistent with the
representations made by Sponsor Defendants, who marketed the building as a high-end luxury
condominium (id, ¶¶ 26, 29, 49-58). ”

“Morris, ICOR, and Foundations (Builder Defendants) each separately move to dismiss the
negligence and gross negligence claims as against them (motion sequences 001, 002, and 004).
Builder Defendants each argue that the negligence and gross negligence claims are barred by th~
statute of limitations pursuant to CPLR 214, which states that the statute of limitations is three
years for “an action to recover for damages of malpractice, other than medical, dental or podiatric
malpractice, regardless of whether the underlying theory is based on contract or tort” (CPLR 214.
[6]). These defendants contend that the accrual date for a design professional in a professional
malpractice negligence claim is the date of completion of services and, as their services were
completed over three years ago, plaintiffs negligence claims are barred by the statute of
limitations. Plaintiff counters that its negligence claims are not barred because these claims are not
malpractice claims from a direct contract or professional relationship between plaintiff and these
defendants, and, thus, the accrual date is the date that the damage occurred, not the date of
completion of services. ”

“Assuming the truth of the allegations in plaintiffs pleading and “resolv[ing] all inferences
which reasonably flow therefrom in favor of the [plaintiff],” the court agrees with plaintiff that the
negligence claims are not professional malpractice negligence claims (Sanders, 57 NY2d at 394).
There was no direct or other professional relationship between plaintiff and Morris, ICOR, or
Foundations, and plaintiff asserts claims for property damages that it has incurred as a result of the
alleged negligence. Plaintiff discovered the property damage on or after February 15, 2016, when
the fire sprinkler pipe burst. Plaintiff commenced this action on December 19, 2016, thus it is
timely.
Morris, ICOR, and Foundations also contend that the negligence and gross negligence
claims should be dismissed as plaintiff lacks privity, or the functional equivalent thereof, with all
three defendants. Plaintiff concedes an absence of privity (Plaintiff Opp. at 9-10, 16). However,
this is not fatal to a negligence claim as, even in the absence of privity, New York law allows the
assertion of a cause of action for negligence resulting in property damage (see 905 5th Assocs.,
Inc. v Weintraub, 85 AD3d 667, 668 [1st Dept 2011] [finding that “the lack of privity does not
affect plaintiffs’ ability to bring a general negligence claim against the [defendant] architect for
property damage sustained by them” where there are “issues of fact as to whether the [defendant]
directed or controlled the work which is alleged to have created the injury”]; Topcuoglu v Hotel
124, LLC, 2013 NY Slip Op 31232(U), *4 [Sup Ct, NY County 2013] [finding that “[a] party who
enters into a contract to perform construction-related services may be liable to third parties for
personal injuries or property damage, despite the lack of privity … “]). Plaintiff asserts that its negligence-based cause of action is largely based on property damage and alleges that the Builder
Defendants had responsibilities related to the construction that could be considered as controlling
the work that caused the injury (Plaintiff Opp. at 19; Complaint ifif 24-32, 110-113). City School
Dist. of City of Newburgh v Hugh Stubbins & Associates, Inc. (85 NY2d 535 1995) can be
distinguished because that plaintiff reviewed and approved specifications and had control during
construction, giving it the functional equivalent of privity. Here, plaintiff alleges that it lacks
privity with Morris, ICOR, and Foundations, but it is not clear whether these defendants reviewed
and approved specifications and had control during construction of the building. ”