AMERICON CONSTRUCTION INC v. CIROCCO OZZIMO INC (2022)

Order, Supreme Court, New York County (Barry R. Ostrager, J.), entered April 1, 2021, which, insofar as appealed from as limited by the briefs, denied third-party defendant Thornton Tomasetti, Inc.’s (Thornton) motion to dismiss defendant The Laquila Group Inc.’s amended third-party complaint as against it and granted plaintiff Americon Construction, Inc.’s motion to amend the complaint to add negligence, contractual and common-law indemnification, and contribution claims against Laquila, unanimously reversed, on the law, with costs, the motion to dismiss granted and the motion to amend denied.

The motion court should have dismissed Laquila's contribution claim against Thornton, because the underlying claim by Americon against Laquila was for purely economic loss resulting from a breach of contract (see generally CPLR 1401;  Children's Corner Learning Ctr. v. A. Miranda Contr. Corp., 64 A.D.3d 318, 323–324, 879 N.Y.S.2d 418 [1st Dept. 2009]).  Although the complaint also alluded to property damage, the only damages that Americon sought to recover from Laquila was the cost of repairs and delays resulting from Laquila's contractually noncompliant work – classic breach of contract damages (see Board of Educ. of Hudson City School Dist. v. Sargent, Webster, Crenshaw & Folley, 71 N.Y.2d 21, 24, 28–29, 523 N.Y.S.2d 475, 517 N.E.2d 1360 [1987];  Trump Vil. Section 3, Inc. v. N.Y. State Hous. Fin. Agency, 307 A.D.2d 891, 897, 764 N.Y.S.2d 17 [1st Dept. 2003], lv denied 1 N.Y.3d 504, 775 N.Y.S.2d 780, 807 N.E.2d 893 [2003]).

The motion court should also have dismissed Laquila's negligence claim against Thornton.  There can be no recovery for purely economic losses arising out of negligent construction in the absence of contractual privity (see Ossining Union Free School Dist. v. Anderson LaRocca Anderson, 73 N.Y.2d 417, 421–424, 541 N.Y.S.2d 335, 539 N.E.2d 91 [1989];  Residential Bd. of Mgrs. of Zeckendorf Towers v. Union Sq.–14th St. Assoc., 190 A.D.2d 636, 637, 594 N.Y.S.2d 161 [1st Dept. 1993]).  It is undisputed that Laquila (a subcontractor retained by the construction manager to perform excavation work) and Thornton (a structural engineering consultant retained by the architect) did not have any contractual relationship with each other, and Laquila did not allege that they have the “functional equivalent of contractual privity” (Ossining Union, 73 N.Y.2d at 419, 425, 541 N.Y.S.2d 335, 539 N.E.2d 91;  see also Sykes v. RFD Third Ave. 1 Assoc., LLC, 67 A.D.3d 162, 163, 166–168, 884 N.Y.S.2d 745 [1st Dept. 2009], affd 15 N.Y.3d 370, 912 N.Y.S.2d 172, 938 N.E.2d 325 [2010];  Prudential–Bache Sec., Inc. v. Resnick Water St. Dev. Co., 161 A.D.2d 456, 457, 555 N.Y.S.2d 367 [1st Dept. 1990]).

The motion court should have denied Americon leave to amend its complaint to add a negligence claim against Laquila, because such a claim would be time-barred.  The original complaint was not filed until over three years after the subject incident took place and the alleged property damage was apparent (see generally CPLR 214[4];  Russell v. Dunbar, 40 A.D.3d 952, 953, 838 N.Y.S.2d 97 [2d Dept. 2007]).

The motion court should also have denied Americon leave to amend its complaint to add contractual and common-law indemnification and contribution claims against Laquila, because these claims have not yet accrued.  “[C]laims for indemnification and/or contribution do not accrue for purposes of the Statute of Limitations until the party seeking indemnification and/or contribution has made payment to the injured person” (F.W. Woolworth Co. v. Southbridge Towers, Inc., 101 A.D.2d 434, 440, 476 N.Y.S.2d 299 [1st Dept. 1984]).  Americon has made no such allegations of payment here.  Although indemnification or contribution claims may be asserted by way of a third-party action, even if technically premature (see CPLR 1007;  Di Perna v. Am. Broadcasting Cos., 200 A.D.2d 267, 270, 612 N.Y.S.2d 564 [1st Dept. 1994]), this exception does not apply where, as here, the plaintiff seeks to assert such claims directly in the main action and not by impleader in a third-party action (see Schmutz v. Fleet Bank, 278 A.D.2d 19, 20, 716 N.Y.S.2d 668 [1st Dept. 2000];  Mars Assoc., Inc. v. New York City Educ. Constr. Fund, 126 A.D.2d 178, 191–192, 513 N.Y.S.2d 125 [1st Dept. 1987], lv dismissed 70 N.Y.2d 747, 519 N.Y.S.2d 1033, 514 N.E.2d 391 [1987]).