We sometimes stray into professional liability other than that of legal malpractice, and today we look at Dormitory Auth. of the State of N.Y. v Samson Constr. Co.  2016 NY Slip Op 01546
Decided on March 3, 2016  Appellate Division, First Department.  The City of New York decided to build a state-of-the-art forensic lab for the Medical Examiner.  It decided to use the Dormitory Authority of the State of New York to manage the construction.  From there things went really bad. What liability might the architect face?  In this case, potential tort liability, which is rare.

“In or about May 2002, when Samson began driving piles as part of the foundation work, the adjacent Bellevue building, known as the C & D building, began to settle. The settling of the building continued while the foundation work continued. By March 2004, the C & D Building had settled eight inches in some areas, leading to a delay of the project by more than 18 months. Other structures adjacent to the project site, including sidewalks, roadbeds, sewers, and water systems, also sustained damage due to the settlement during the foundation work. The cost of fixing the damage to the project site and the adjacent properties was approximately $37 million. Perkins ultimately completed its work on the project in February 2007.

The motion court erred in dismissing the breach of contract claim against Perkins. Although Perkins made a prima facie showing that the City is not a third-party beneficiary of the contract because it is not named in the contract, the City raised an issue of fact whether it is an [*2]intended third-party beneficiary of the contract (see MK W. St. Co. v Meridien Hotels, 184 AD2d 312 [1st Dept 1992]). The contract expressly states that a City agency will operate the DNA laboratory, and the City retained control over various aspects of the project, including participation in and approval of the design of the building, the budget for the project, the selection of contractors, including Perkins, and the construction of the building.

The motion court, however, correctly determined that DASNY may proceed with its negligence claim. Perkins, as architect, may be subject to tort liability based on a failure to exercise due care in the performance of its duties. In making this determination, the court is to look at the nature of the injury and whether the plaintiff is merely seeking the benefit of its agreement. Where the plaintiff is merely seeking the benefit of its agreement, it is limited to a contract claim (Sommer v Federal Signal Corp., 79 NY2d 540, 551-552 [1992]).

Where, however, “the particular project . . . is so affected with the public interest that the failure to perform competently can have catastrophic consequences,” a professional may be subject to tort liability as well (Trustees of Columbia Univ. in City of N.Y. v Gwathmey Siegel & Assoc. Architects, 192 AD2d 151, 154 [1st Dept 1993]). Indeed, “[t]his is one of the most significant elements in determining whether the nature of the type of services rendered gives rise to a duty of reasonable care independent of the contract itself” (id., citing Sommer v Federal Signal Corp., 79 NY2d 540, 553 [1992]). As the Court explained in Sommer, “[I]t is policy, not the parties’ contract, that gives rise to a duty of care” (79 NY2d at 552). The “nature of the injury, the manner in which the injury occurred and the resulting harm” are also considered (id., citing Bellevue S. Assoc. v HRH Constr. Corp., 78 NY2d 282, 293—295 [1991] [Court rejected plaintiff’s attempt to ground in tort a claim that defendants supplied defective floor tiles, noting that the injury (delamination of tiles) was not personal injury or property damage, there was no abrupt, cataclysmic occurrence, and the injury was simply replacement cost of the product]).

Here, there is a factual question whether Perkins assumed an independent legal duty as an architect to perform its work in a manner consistent with the generally accepted standard of professional care in its industry. DASNY alleges that Perkins’s failure to adhere to professional standards of care by not conducting an adequate site investigation and/or providing an adequate foundation design appropriate to the existing site conditions violated the relevant standard of professional care, resulting in increased costs for the project and additional costs of $37 million to remediate the damage caused by the failure to comply with those professional standards. The damage included damage to the sidewalks, roadbeds, sewers, and water systems located near a major medical center in Manhattan. There are issues of fact whether the project was so affected with the public interest that Perkins’s failure to comply with the relevant professional standards could result in catastrophic consequences (Trustees of Columbia Univ., 192 AD2d at 154).”