Board of Educ. of Hudson City School Dist. v. Sargent, Webster, Crenshaw & Folley

• Decision Date: 06 April 1989
• Citation: Board of Educ. of Hudson City School Dist. v. Sargent, Webster, Crenshaw & Folley, 539 N.Y.S.2d 814, 146 A.D.2d 190 (N.Y. App. Div. 1989)
• Court: New York Supreme Court — Appellate Division
• Parties: , 52 Ed. Law Rep. 1204 BOARD OF EDUCATION OF the HUDSON CITY SCHOOL DISTRICT, Appellant-Respondent, v. SARGENT, WEBSTER, CRENSHAW & FOLLEY, Defendant and Third-Party Plaintiff-Respondent-Appellant; Thompson Construction Corporation, Third-Party Defendant-Respondent.

Page 814

539 N.Y.S.2d 814

146 A.D.2d 190, 52 Ed. Law Rep. 1204

BOARD OF EDUCATION OF the HUDSON CITY SCHOOL DISTRICT Appellant-Respondent, v. SARGENT, WEBSTER, CRENSHAW & FOLLEY, Defendant and Third-Party Plaintiff-Respondent-Appellant Thompson Construction Corporation, Third-Party Defendant-Respondent.

Supreme Court, Appellate Division Third Department.

April 6, 1989.

Rapport, Meyers, Griffen & Whitbeck (Victor M. Meyers, of counsel), Hudson, for appellant-respondent.

Donohue, Sabo, Varley & Armstrong (Kenneth G. Varley, of counsel), Albany, for defendant and third-party plaintiff-respondent-appellant.

Couch, White, Brenner, Howard & Feigenbaum (Sharon Couch De Bonis, of counsel), Albany, for third-party defendant-respondent.

Before WEISS, J.P., and MIKOLL, YESAWICH, LEVINE and HARVEY, JJ.

LEVINE, Justice.

In 1966, plaintiff, the Board of Education of the Hudson City School District (hereinafter the School District), entered into an agreement with defendant, Sargent, Webster, Crenshaw & Folley (hereinafter the Architect), on a standard form of agreement of the American Institute of Architects (hereinafter AIA) for the provision of plans and specifications and superviso architectural services in connection with the construction of a new high school building. Under paragraph 7(b) of the agreement, the Architect was obligated to make periodic visits to the work site "to determine in general if the work is proceeding in accordance with the Contract Documents". The Architect was also required to "keep [the School District] informed of the progress of the work, will endeavor to guard [it] against defects and deficiencies * * * and * * * may condemn work as failing to conform to the Contract Documents". The Architect was also to issue certificates of payment, thereby representing that the work was properly performed and authorizing progress and final payments by the School District to the general contractor. Paragraph 7(b) provided, however, that the Architect was not required to make "exhaustive or continuous on-site inspections to check the quality or quantity of the work and * * * will not be responsible for the Contractors' failure to carry out the construction work in accordance with the Contract Documents". The agreement also required the Architect to assemble any written guarantees required of contractors and to make three annual inspections of the building following completion of construction and to advise the School District of any maintenance and remedial measures required.

Third-party defendant, Thompson Construction Corporation (hereinafter Thompson), was engaged as general contractor and construction commenced in the spring of 1969. Thompson contracted with Skyway Roofing Company, Inc. (hereinafter Skyway) to install the roof on the building. The specifications called for a four-ply, built-up, gravel-surfaced roof consisting of four layers of felt and coal tar pitch to assure bonding and waterproofing, with the gravel embedded in the top level of pitch. These layers were to be applied on top of a poured gypsum roof deck. The School District submitted evidence that, for a roof of this type, the layers as applied must be protected from exposure to precipitation during construction, since moisture trapped within the layers has a tendency to vaporize and expand, creating blisters in the plies of felt which may crack and cause leakages. Therefore, the specifications expressly required completion of the application of the plies of roofing in one day or, failing that, the application of a glaze coating of hot bitumen to protect the felts until application of the gravel.

The School District also proved that Skyway failed to comply with the foregoing specifications in that application of the layers was done in phases, leaving the felt plies exposed to rain and snow without protective glazing. In fact, Thompson's daily construction reports indicated that Skyway personnel shoveled snow off the partially completed roof and that this was observed by one of the Architect's representatives on the site. The Architect then engaged an outside roofing expert to inspect Skyway's installation. He concluded that the roof system was seriously out of conformity with the specifications, alluding to the phased construction but, more importantly, to another defect, i.e., the fact that the vapor barrier was not attached to the poured gypsum deck. Based upon that report, the Architect directed Thompson to remove and replace the defective roofing. Thompson refused, insisting that the roof was properly applied. Following various conferences and exchanges of correspondence the Architect agreed to several less severe remedial measures and, once these were completed, issued certificates of payment for the roofing.

The construction of the high school was completed and a final certificate of payment was issued by the Architect in September 1972. It was much later discovered, however, that the Architect had failed to obtain the two roofing guarantees required by the specifications, i.e., a two-year guarantee from Thompson and Skyway and a manufacturer's 20-year roofing bond. Leaks in the roof developed as early as November or December 1972. Upon initially consulting the Architect about the leaks, the School District's building and grounds superintendent was told by the Architect's representative that the cause of the problem was ice buildup. Each succeeding year, the blistering and the leaks became worse and, by 1979, the School District contemplated replacement of the roof. At this point, it was informed by the Architect that the cause of the problem was the phased installation in violation of the specifications and that the guarantees required by the contract inadvertently had not been obtained.

The School District then brought the instant suit against the Architect and Thompson. Its complaint set forth five causes of action against the Architect, the first two of which were for breach of contract, alleging in the first the Architect's failure to obtain the roofing guarantees and, in the second, the Architect's failure to have informed the School District of the deviation from the specifications in the roof installation and failure to have guarded the School District against the general contractor's defective performance and to have condemned the work as failing to conform to the contra documents. The Architect cross-claimed against Thompson for contribution and indemnity. Subsequently, the School District's action against Thompson was dismissed on Statute of Limitations grounds and Supreme Court also dismissed the Architect's cross claim against Thompson, without prejudice to the commencement of a third-party action. These rulings were affirmed by this court (Board of Educ. of Hudson City School Dist. v. Thompson Constr. Corp., 111 A.D.2d 497, 488 N.Y.S.2d 880). On another appeal, the Architect's causes of action against Thompson for contribution and indemnification were dismissed with leave to replead the claim for indemnification (Board of Educ. of Hudson City School Dist. v. Sargent, Webster, Crenshaw & Folley, 125 A.D.2d 27, 511 N.Y.S.2d 961, affd. 71 N.Y.2d 21, 523 N.Y.S.2d 475, 517 N.E.2d 1360). The Architect served such an amended pleading.

In the foregoing procedural posture, the case proceeded to trial. At the conclusion of all of the evidence, Supreme Court granted the Architect's motion for a directed verdict dismissing all but the first of the School District's causes of action. The court directed a verdict in favor of the School District on its first cause of action (the failure to obtain the roofing guarantees) and assessed damages against the Architect for $6,000, the penal sum of the roofing bond called for by the contract. Finally, the court dismissed the Architect's third-party complaint against Thompson, ruling that the evidence did not establish the Architect's claim for indemnification. These cross appeals ensued.

In our view, the School District's proof regarding its second cause of action was sufficient to withstand the motion for a directed verdict. Hence, the portion of the judgment dismissing the second cause of action should be reversed, that claim reinstated and remitted for retrial. Supreme Court's contrary ruling was based upon the provision of paragraph 7(b) of the agreement under which the Architect was absolved from responsibility "for the Contractors' failure to carry out the construction work in accordance with the Contract Documents", reading that provision as totally exonerating the Architect from liability for construction defects. While this very clause in the standard AIA architect/owner contract has been given exculpatory effect in this State and other jurisdictions (see, Jewish Bd. of Guardians v. Grumman Allied Inds., 96 A.D.2d 465, 467, 464 N.Y.S.2d 778, affd. 62 N.Y.2d 684, 476 N.Y.S.2d 535, 465 N.E.2d 42; Shepard v. City of Palatka, 414 So.2d 1077 [Fla.]; Moundsview Ind. School Dist. No. 621 v. Buetow & Assoc., 253 N.W.2d 836 [Minn.] ), none of the cases involved defects known by the architect during the course of construction, which he failed to apprise the owner of under the contractual duty to "keep the [School District] informed of the progress of the work". We decline to extend the application of the clause in question to an instance such as this, where the trier of facts could find that the architect was aware of the defect and failed to notify the owner of it.

First, in general, exculpatory provisions are disfavored and are narrowly construed (see, Gross v. Sweet, 49 N.Y.2d 102, 106-107, 424 N.Y.S.2d 365, 400 N.E.2d 306). Second, the underlying rationale for exonerating an architect under the exculpatory clause does not apply to defects known by the architect. The cases reason that an owner who has not contracted and paid for an architect to closely supervise construction should not be able to hold the architect liable for those defects in the contractor's...