An owner developing a project under a design-build contract filed suit against a design professional that was a subcontractor to the owner’s design-build contractor. The suit was based on negligence and also breach of contract and named the engineering firm and two engineers individually. Summary judgment was granted for the engineers and this was affirmed on appeal, with the court explaining that under New York law, a breach of contract claim requires direct contractual privity (being parties to a contract), but an exception to privity can occur if the plaintiff’s and defendant’s relationship “is the functional equivalent to privity.” The court held that the owner failed to meet the requirement of a critical element for establishing “the functional equivalent of privity,” which is to show evidence of “linking conduct” by the design professional—words or actions that link the professional to the non-client. Stapleton v. Barrett Crane Design & Engineering. United States Court of Appeals, Second Circuit (2018).
There was no direct contact between the two engineers and the owner. The owner argued that by the engineer stamping his name on the design drawings he had established a link to the owner. The court found this unpersuasive, noting that the engineer didn’t convey the drawings to owner, or make any related contact or communication.
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. 20, No. 12 (Mar 2019).
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