Morse/Diesel, Inc. v. Trinity Industries, Inc.
| Decision Date | 26 June 1987 |
| Docket Number | No. 84 Civ. 5791 (SWK),84 Civ. 6103 (SWK).,84 Civ. 5791 (SWK) |
| Parties | MORSE/DIESEL, INC., Plaintiff, v. TRINITY INDUSTRIES, INC. and Mosher Steel Co., Defendants. HELENA ERECTORS, INC., Plaintiff, v. TRINITY INDUSTRIES, INC. and Aetna Insurance Co., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Friedman, Wang, and Bleiberg, New York City by William C. House, for Morse/Diesel and John Portman Associates.
Fisher and Fisher, Brooklyn, N.Y. by Andrew S. Fisher, for Trinity Industries, Inc.
Hart and Hume, New York City by Cecil Holland, for Helena Erectors, Inc.
McGuire and Tiernan, New York City by Harold F. McGuire, for St. Lawrence Cement Co. Peckor and Abramson, New York City by Kevin D. Slakas, for A.J. McNulty and Co., Inc. and Blakeslee Prestress, Inc.
Shea and Gould, New York City by James E. Frankel, for Weidlinger Associates, Inc.
This case is presently before the Court on the third-party defendants' motion for reargument of this Court's decision of March 9, 1987 ("Morse/Diesel I") 655 F.Supp. 346, or, in the alternative, for modification of the decision to allow for interlocutory appeal and for a stay pending appeal. The basic facts of this case are recited in Morse/Diesel I, and will be repeated only when necessary.
Weidlinger Associates, Inc. ("Weidlinger"), the structural engineer, argues that in the absence of privity it cannot be held liable to third parties. Defendant John Portman Associates, Inc., the architect, joins Weidlinger's motion. Weidlinger argues that the Court improperly relied upon White v. Guarente, 43 N.Y.2d 356, 401 N.Y.S.2d 474, 372 N.E.2d 315 (1977) and Credit Alliance Corporation v. Andersen, 65 N.Y.2d 536, 493 N.Y.S.2d 435, 483 N.E.2d 110 (1985) in abrogating the privity requirement in construction cases. Weidlinger argues that not only do White and Credit Alliance not abrogate the privity requirement, but even if they did, they do not apply to architects or structural engineers in construction cases. Weidlinger relies to a large degree on a recent Second Circuit opinion, Widett v. United States Fidelity and Guaranty Company, 815 F.2d 885 (2d Cir.1987).
A.J. McNulty and Co., Inc., the concrete panel installer, and Blakeslee Prestress, Inc., the prestressed concrete manufacturer, also move to reargue. St. Lawrence Cement Co., which fabricated precast concrete panels and designed accompanying steel connector clips, joins in this motion. They assert that the Court improperly ruled that they could be liable for economic damages in tort, and that the Court should have applied the ruling in Suffolk County v. Long Island Lighting Company, 728 F.2d 52 (2d Cir.1984) and improperly relied upon Consolidated Edison v. Westinghouse Electric Corp., 567 F.Supp. 358 (S.D. N.Y.1983). Blakeslee and McNulty also argue that the Court incorrectly relied upon James McKinney & Son, Inc. v. Lake Placid 1980 Olympic Games, Inc., 92 A.D.2d 991, 461 N.Y.S.2d 483 (3d Dept. 1983), modified, 61 N.Y.2d 836, 473 N.Y. S.2d 960, 462 N.E.2d 137 (1984), in holding that they could be liable to other subcontractors in the absence of privity or a clear contractual duty to supervise the work of Trinity or Helena.
In Morse/Diesel I, the Court held that Trinity Industries, Inc., the structural steel contractor, and Helena Erectors, Inc., the structural steel erector, stated claims for negligence and negligent misrepresentation against Portman and Weidlinger even though there was no privity of contract. If privity is required, then all causes of action brought against Portman and Weidlinger, including negligence, negligent misrepresentation, contribution, and indemnification must be dismissed.
In Widett, supra, plaintiff, a subcontractor, sued the defendant, a landscape architect, for negligently preparing site plans on which the subcontractor relied to its detriment. The architect was hired by a county government, and its contract required it to conduct casual inspections of the construction site to ensure compliance with the plans. The county government retained primary responsibility for supervision of the work. The county also entered into a separate general construction contract with a construction company which in turn hired the plaintiff subcontractor.
Finding that there was no contractual relationship between the architect and the subcontractor, the Second Circuit citing Ultramares Corp. v. Touche, 255 N.Y. 170, 174 N.E. 441 (1931), stated: "it is well settled in New York, however, that professionals are not liable either in tort or contract absent privity." At 886.
The Second Circuit rejected the subcontractor's argument that the Ultramares privity requirement was relaxed to a sufficient degree in White v. Guarente, 43 N.Y.2d 356, 401 N.Y.S.2d 474, 372 N.E.2d 315 (1977) to allow plaintiff's suit to stand. The Circuit stated that although New York has followed White with respect to accountant liability, see Credit Alliance v. Arthur Andersen & Co., 65 N.Y.2d 536, 493 N.Y.S.2d 435, 483 N.E.2d 110 (1985), "we do not believe that the Court of Appeals is prepared to extend these rulings to the architectural profession." At 887. The Second Circuit's support for this was the New York Court of Appeals' affirmance of the dismissal of claims by two subcontractors against architects with whom they were not in privity. See Alvord and Swift v. Stewart M. Muller Construction Co., N.Y.L.J. Sept. 15, 1976 at 7, Col. 4 (Sup.Ct.N.Y.Co., Sept. 9, 1976), aff'd, 56 A.D.2d 760, 391 N.Y.S.2d 1000 (1st Dept. 1977), aff'd, 46 N.Y.2d 276, 413 N.Y.S.2d 309, 385 N.E.2d 1238 (1978); Underhill Construction Co. v. New York Telephone Co., N.Y.L.J. Sept. 15, 1976, aff'd as modified, 56 A.D.2d 760, 391 N.Y.S.2d 1000 (1st Dept.1977), aff'd without opinion, 44 N.Y.2d 666, 405 N.Y.S.2d 40, 376 N.E.2d 201 (1978). The Second Circuit also cited James McKinney & Son, Inc. v. Lake Placid 1980 Olympic Games, Inc., 92 A.D.2d 991, 461 N.Y.S.2d 483 (3d Dept. 1983), modified on other grounds, 61 N.Y.2d 836, 473 N.Y.S.2d 960, 462 N.E.2d 137 (1984), in which the court dismissed a subcontractor's negligence claim against an architect, and Crow-Crimmins-Wolff & Munier v. County of Westchester, 90 A.D.2d 785, 455 N.Y.S.2d 390 (2d Dept. 1982), in which the Second Department stated in dictum that without privity of contract, there is no duty running from a subcontractor to an architect.
The Second Circuit said that the facts of Widett presented no more compelling a case for the extension of White than those found in Alvord and Swift or Underhill. "The record discloses no direct communication between the architect and the subcontractor regarding problems on the job site ... and no other special circumstances to justify the application of White to this case." At 887. The Court continued: "Given the Court of Appeals' apparent unwillingness to expand the modified privity requirement in White to architects on the basis of facts similar to those presented in this case, we conclude that a New York court would not adopt the rule the subcontractor argues for here." Id. at 887.
This last statement of the Second Circuit seems to lend itself to the interpretation that other circumstances might justify the relaxation of the privity requirement. However, the Second Circuit went on to say, "the New York Court of Appeals has not relaxed the privity requirement for negligence actions against architects and appears unlikely to do so." Id. at 887. Thus, relaxation of the privity requirement in lawsuits for negligence against architects would require extraordinary circumstances.
This Court's understanding of White and Credit Alliance, as expressed in Morse/Diesel I, was that something less than, but very close to, privity was required before an accountant could be held liable to a third-party for negligence. The Second Circuit agreed in Widett that the privity requirement as to accountants had been modified in these cases. In Morse/Diesel I, this Court also presumed that the New York Court of Appeals was ready to apply the modified privity requirement to other professions. This Court also considered Alvord and Swift, Underhill, James McKinney and Son, and Crow-Crimmins-Wolff and Munier, and recognized that in each case a subcontractor's claim against an architect had been dismissed for lack of privity. The Court did not read these cases to mean that privity was required in negligence actions against architects, but felt that in those cases, the subcontractors did not state claims under the modified privity requirement because they failed to allege a sufficiently close relationship. The Court felt that in this case, a sufficiently close relationship had been alleged so that the modified privity requirement would allow a claim for negligence. The Second Circuit clearly disagreed with this in Widett, stating both that privity is required to hold professionals liable, at 887, and, based on a number of New York cases, that the court was not ready to extend a modified form of privity to architects. The Court must now apply the Second Circuit's ruling in Widett to this case.
The relevant portion of Trinity's claim against Portman alleges:
33. Portman and Weidlinger, as architect and structural engineer, respectively, of the Times Square Hotel, prepared the plans, drawings and specifications which were utilized by Trinity in connection with its bid for the structural steel subcontract.... These plans, drawings and specifications were also part of the Structural Steel Subcontract and were utilized by Trinity to perform its obligations under the Structural Steel Subcontract.
The relevant sections of Helena's claim against Portman allege:
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