Archive:2007

Ossining Union Free Sch. Dist. v. Anderson LaRocca Anderson, 73 N.Y.2d 417 (1989)

In Ossining, the Court of Appeals expanded on the holding in Credit Alliance and ruled that a school district, which contracted with an architect, could sue engineers hired by the architect for damages suffered as a result of the engineers’ negligence and malpractice.  The issue addressed by the court was whether privity of contract is required in a negligent misrepresentation case that produces only economic injury.  The court held that a cause of action for negligent misrepresentation which produces only economic injury requires that the underlying relationship between the parties be one of contract or the bond between them so close as to be the “functional equivalent of contractual privity.”  The court laid out a three-prong test following the guidance of Credit Alliance:  (i) that the design professional be aware that its reports are to be used for a particular purpose; (ii) that a known person rely on the reports in furtherance of that purpose; and (iii) that there be some conduct by the design professional linking it to the reliant person and evidencing its understanding of the reliance.

Corinno Civetta Constr. Corp. v. City of New York, 67 N.Y.2d 297 (1986)

In Corinno Civetta, the Court of Appeals reaffirmed that generally, “no damage for delay” clauses, which bar a contractor from recovering damages for delay in the performance of a contract, are valid and enforceable.  However, even with such a clause, damages may be recovered for:  (i) delays caused by the contractee’s bad faith or willful, malicious, or grossly negligent conduct; (ii) uncontemplated delays; (iii) delays so unreasonable that they constitute an intentional abandonment of the contract by the contractee; and (iv) delays resulting from the contractee’s breach of a fundamental obligation of the contract.

Credit Alliance Corp. v. Arthur Andersen & Co., 65 N.Y.2d 536 (1985)

In Credit Alliance, the Court of Appeals held that accountants could be liable to noncontractual parties if the relationship of the parties approached that of privity.  Specifically, the court held that an accountant could be liable, absent privity of contract, to a party who relies to his detriment on a negligently prepared financial report if (i) the accountant was aware that the financial reports were to be used for a particular purpose, (ii) in the furtherance of which a known party was intended to rely, and (iii) there must have been some conduct on the part of the accountant linking him to that party which evinces his understanding of that parties’ reliance.

Kalisch-Jarcho, Inc. v. City of New York, 58 N.Y.2d 377 (1983)

In Kalisch-Jarcho, the city entered into a contract with a contractor for the construction of a ventilation system in police headquarters.  The contract contained an exculpatory clause, by which the contractor agreed to make no claims for delay damages occasioned by any act or omission by the city.  After trial on the scope and validity of the delay damages clause, the Court of Appeals ruled that clauses barring a contractor from recovering damages for delay in the performance of a contract are valid, but they will not prevent the recovery of damages resulting from the contractee’s grossly negligent or willful conduct which “smacks of intentional wrongdoing.”