On Lam v Arnold Montag Architect  2019 NY Slip Op 30712(U)  March 13, 2019 Supreme Court, Kings County Docket Number: 522413/2017 Judge: Pamela L. Fisher discusses the relationship between plaintiffs and sub-contractors of their architects and other professionals, and the requirement of privity in a breach of contract case.

“On March 4, 2013, BTE entered into a contract with nonparty JNE Development (JNE) to provide architectural and engineering services for the construction of a two-family duplex located at 1582A Pacific Street in Brooklyn (property). Subsequently, on May 7, 2014, Montag Architects entered into a written agreement with nonparties Yaniv Zohar and GHIB, LLC (collectively, developers) to perform services in connection with the Preparation of Architectural Plans & Expediting to Supercede Previous Applicant” for the property (see Montag Architects moving papers, exhibit C, affidavit of Arnold Montag [Montag affidavit] at ¶ 2 and exhibit C-1, Montag Architects contract with the nonparty developers at 1).

In November 2014, plaintiffs purchased the real property. Plaintiffs contend that the purchased property has numerous design and construction defects. Plaintiffs further contend that the work performed by defendants BTE and later Montag Architects was defective, and, as a result of BTE’s and Montag Architects’ negligence and malpractice, plaintiffs have incurred $2,000,000 damages.”

“Based on the contracts submitted, Montag Architects and BTE have established that the plaintiffs were not in privity of contract with either defendant. However, plaintiffs do not even allege that they were in contract with either Montag Architects or BTE. Instead, plaintiffs allege that they are intended beneficiaries under the agreement between Montag Architects and the developers. To establish that they were intended third-party beneficiaries, plaintiffs must establish

“(1) the existence of a valid and binding contract between other
parties, (2) that the contract was intended for his/her benefit and
(3) that the benefit to him/her is sufficiently immediate, rather
than incidental, to indicate the assumption by the contracting
parties of a duty to compensate him if the benefit is
lost” (State of California Public Employees’ Retirement System v Sherman
& Sterling, 95 NY2d 427, 435 [2000] ; Burns Jackson Miller
Summit & Spitzer v Lindner, 59 NY2d 314, 336 [1983];Cahill
v Lazarski,.226 AD2d 572, 573 [2d Dept 1996]).

“Under this analysis, a professional may be held liable for negligence or malpractice even when they are not retained by plaintiff if a relationship exists between the parties that is so close as to approach privity (see Ossining Union Free School Dist. v Anderson LaRocca Anderson, 73 NY2d 417, 425 [I989]). To establish such a 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 AD3d 176, 196 [2d Dept, 2006])”

“Although plaintiffs allege that they are intended beneficiaries, they fail to allege facts sufficient to establish a relationship approaching privity. Plaintiffs were neither parties to, nor express third-party beneficiaries of, either contract at issue. In fact, the contract between Montag Architects and the nonparty developers specifically excludes the creation of a contractual relationship with third parties (see Dormitory Auth. of the State of N.Y. v Samson Constr. Co., 30 NY3d 704, 710 [2018]; Fourth Ocean Putnam Corp. v Interstate Wrecking Co., 66 NY2d 38, 44 [1985]). Plaintiffs rely on a telephone call conducted with defendant Montag; however this conversation alone is insufficient to establish a relationship approaching privity”