New York Commercial and Construction Lawyer Blog
The First Department has reversed a trial court ruling dismissing a third-party action where an architect claimed that a contractual indemnification clause in its agreement with the sponsor of a condominium development was of no consequence.
In Board of Managers of Hester Gardens v. Well-Come Holdings, LLC, 128 A.D.3d 601, 10 N.Y.S.3d 72 (1st Dep’t 2015), the First Department considered a lower court dismissal of a third-party complaint brought by the sponsor of a condominium development (the “Sponsor”) against, among others, the architect retained by the Sponsor to design the development and inspect the on-going construction (the “Architect”). The Sponsor had already been sued by the Board of Managers of the development (the “Board”) for numerous alleged defects in the design and construction of the development. As is typically the case, many of the claims of the Board sounded in negligence and fraud due to the alleged failure of the development to conform to the statements and plans published in the offering documents and other advertising materials. The Architect was also sued by the Board, but successfully obtained dismissal of the claims against it because there was no contract between itself and the Board (or any of the individual unit owners).
After the Architect was dismissed from the main action for lack of privity, the Sponsor brought a third-party action against the Architect (and others) alleging that, under the relevant contract, the Architect was liable to indemnify the Sponsor for the Architect’s own “intentional acts, errors and omissions” and breaches of the contract. The Architect moved, pre-answer, to dismiss the third-party complaint, alleging, among other things that, due to the nature of the primary claims against the Sponsor, i.e, negligence and fraud, the third-party action actually sought indemnification from the Architect for the Sponsor’s own bad acts.