MARCO & SITARAS, PLLC, WINS SUMMARY JUDGMENT AGAINST ARCHITECT FOR $1.47 MILLION PLUS ATTORNEYS FEES
Marco & Sitaras, PLLC, wins summary judgment for $1.47 million plus attorney’s fees against an architect for breach of contract. The decision awarding summary judgment was the culmination of a complex litigation arising out of the renovation and conversion of privately-owned warehouse in Long Island City, Queens, into a public school known as the Baccalaureate High School for Global Education. Marco & Sitaras, PLLC, represented the property owner, which had leased the property to the New York City Department of Education (the “DOE”) in 2001. Under the lease the Owner agreed to build-out the school for a price of approximately $5.4 million in accordance with specifications provided by the DOE and the New York City School Construction Authority (the “SCA”), which oversaw the construction work for the DOE. Under the lease, the Owner hired an architect that had worked on similar school conversion projects, and who was approved by the SCA, to prepare the construction plans and provide construction administration services under an AIA form agreement (B151-199). The AIA agreement was modified by a rider which included an indemnification provision requiring the architect to indemnify the owner for damages (including attorney’s fees) arising out of the architect’s breach of contract or negligence.
During construction the architect certified each of the contractor’s payment applications and ultimately issued a certificate of substantial completion, which coincided with the issuance of a temporary certificate of occupancy for the building. Even though the DOE had taken occupancy of the building and had used it as a school for approximately 18 months, the DOE failed to pay the Owner approximately $1.1 million of the $5.4 million for the project, forcing the Owner to file a lawsuit against the DOE to collect the contract balance, retainage and change orders. (See, 34-12 36th Avenue LLC v. Department of Education of the City of New York (NY County, Index 604339/2006). The DOE asserted counterclaims against the Owner seeking to collect approximately $3.5 million for alleged defective work, which the architect had previously certified as completed pursuant to the plans. Thus, the Owner asserted third-party claims against the architect for breach of contract, negligence/professional malpractice and contractual indemnification based upon the architect’s certification of payment applications and his issuance of a certificate of substantial completion for the project. (See, 34-12 36th Avenue LLC v. Stephen Lepp et al (NY County Index # 600840/2009).
During discovery, and through depositions, the architect conceded that, despite issuing these certifications, he failed to actually observe or inspect the critical items of work, including drop ceiling installations, fire ratings, and various other items that the DOE claimed were defective. Based on the architect’s admissions and documentary evidence, the court granted the Owner’s motion for summary judgment against the architect on the issue of liability for breach of contract, and found that the architect was required to indemnify the Owner for damages to be determined at trial. The Owner and the DOE subsequently settled their respective claims under an agreement that involved a new lease that gave the DOE a credit against the rent for approximately $1.47 Million over 15 years. After the settlement between the Owner and the DOE was finalized and the Owner’s damages were fixed at $1.47 Million, the Owner moved for summary judgment against the Architect.
In a victory for the Owner, the court awarded summary judgment against the architect and in favor of the Owner in the amount of $1.47 Million plus interest and attorney’s fees, and set the matter for a hearing to determine the present value of $1.47 Million since that amount was paid or credited to the DOE over a 15 year period under the new lease. The parties ultimately resolved the case.
Marco & Sitaras, PLLC, is a full-service construction law firm. We represent owners, contractors, trade contractors, and construction professionals in all aspects of construction law, whether it be contract drafting and negotiation, dispute resolution, litigation, appeals or judgment enforcement. Feel free to contact one of our experienced attorneys if you need assistance with your construction project.Marco & Sitaras PLLC 33 Whitehall Street, 16th Floor, New York, NY 10004 phone: 212-430-6410 (ex 190)