A recent decision by a judge in a Brooklyn, New York court, highlights the inability of a condominium to sue the sponsor’s architect for design and construction defects arising from the construction of a new luxury condominium. The condominium sued the sponsor and the architect claiming that it began receiving complaints from unit owners subsequent to the closing on the first unit, including leaks, HVAC problems, improper roofing, missing pavers, improper drainage and other defects. The Court in Board of Managers of NV 101 N 5th Street Condo. v. Morton, et al. (2013 NY Slip Op 50575[U] [ Sup Court Kings County 2013]) dismissed all of the claims against the architect.
Under its agreement with the sponsor, the architect inspected the building and issued a report. It also issued an “Attorney General’s Report” which was intended to be part of the Offering Plan presented to potential purchasers, which contained certain statutorily required language. The condominium brought three claims against the architect based on those reports: (i) breach of contract based on its being a beneficiary of the contract between the sponsor and the architect; (ii) negligent misrepresentation and (iii) professional malpractice.
The Court found that the condominium’s breach of contract claim was predicated on an allegation that the architect’s reports omitted facts and that certain representations made were untrue. However, the Court found that those statements were all required disclosures by law, and any claims based on those statements were preempted by the law in New York. The Court also found that the unit owners were not intended third-party beneficiaries of the sponsor’s contract with the architect, and not in privity (having a direct contract) with the architect, necessary elements for a breach of contract claim. The Court further found that the breach of contract claim was merely a restatement and duplicative of the professional malpractice claim, providing an additional reason for its dismissal.
As to the negligent misrepresentation claim, the Court found that it too was a restatement of the professional malpractice claim. The Court also held that the negligent misrepresentation claim failed because the condominium could not show privity, or a relationship so close to approach that of privity, necessary for a negligent misrepresentation claim.
Last, the Court dismissed the professional malpractice claim because the condominium failed to allege that the architect performed any actions or inactions that caused the defects. Rather, the condominium’s entire claim was based on the architect’s alleged misstatements in his reports which the Court found cannot be used to create a private right of action.
In sum, it is very difficult for a condominium to bring claims against the sponsor’s architect. These claims may be dismissed because the statements made are required by New York law and the law bars a lawsuit against the architect, and because the condominium lacks a direct contract with the architect.