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Kent Holland
ConstructionRisk, LLC

In a decision that this author finds confusing, an appellate court in New York held that where there was expert testimony demonstrating that an A/E failed to meet the professional standard of care in designing sheer walls for the seismic retrofit of a hospital, relief would be awarded to the hospital based on a professional malpractice claim, but would not be based on a breach of contract count of the complaint. In another interesting twist, the court held that because the contract did not specifically state that the A/E was to comply with the 2000 International Building Code, the code would not be relevant to judging the efficacy of the A/E’s design. Mary Imogene Bassett Hospital v. Cannon Design, Inc., 127 A.D.3d 1377 (2015).

The trial court agreed with the hospital’s contention that the A/E breached the contract by failing to meet the code requirements. But the appellate court states: “While defendant and several of its witnesses conceded that everyone involved considered the 2000 IBC to be the agreed-upon design criteria, the IBC is not mentioned in the contract itself and the contract prohibits any oral modifications…. Thus we cannot read compliance with the 2000 IBC into the contract, and defendant did not breach the unambiguous contract by failing to comply with the standards in that code.”

Failed to Meet Standard of Care for Structural Engineering

Instead, the court affirmative judgment against the A/E was based on the generally described standard of care in the contract which stated, “services shall be performed as expeditiously as is consistent with the professional skill and care and the orderly progress of the work [and] shall be provided in a manner consistent with the standards of care and skill exhibited in its professional for projects of this nature, type and degree of difficulty.” As explained by the court, “These provisions simply incorporated into the contract the common-law standard of care for a professional. Making such ordinary obligations express terms of an agreement does not remove the issue [of a violation thereof] from the realm of negligence…, nor can it convert a malpractice car action into a breach of contract action…. Inasmuch as a breach of contract cause of action based on the violation of these particular contract provisions would be duplicative of a professional malpractice cause of action, the trial court should have dismissed plaintiff’s breach of contract cause of action.”

Ultimately, the court determined that the plaintiff submitted sufficient expert evidence to establish that the A/E failed to meet the proper standard of practice for structural engineering.

Comment

This rather short decision leaves me wondering why the 2000 IBC that everyone seemed to agree was applicable was found to be irrelevant by the court because it was not expressly referenced in the contract.   More perplexing, however, is the notion that only a negligence action could be brought against the A/E by its client, and not a breach of contract action. I typically argue exactly the opposite. The client can only sue the A/E for breach of contract and not negligence. It may be true that the contract was breached due to failure to meet the requisite standard of care. But that does not mean that the cause of action becomes one for tort (negligence) instead of breach of contract. In fact, we often argue that the “economic loss” doctrine bars claims for negligence where only economic losses such as those here are being claimed and there was not bodily injury or property damage. This decision just seems strange to me. Perhaps one of my New York colleagues might like to explain this decision in a future issue of this newsletter.

 

About the author: Article written by J. Kent Holland, Jr.,  a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 17, No. 5 (August 2015).

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