Question. Can a general contractor assert claims against an engineer hired by a sub-subcontractor under theories of negligence or that he was an intended beneficiary of the sub-sub-subcontract for engineering services?
General Contractor, a, entered into a contract to produce a hotel. General Contractor hired subcontractor, Sub FP Inst., to design and install a fire protection system for the hotel. Sub FP Inst. hired sub-subcontractor, Sub FP Design., to design the system, and Sub FP Design. hired an engineer, FP Eng., to provide engineering services in conjunction with the design. FP Eng., a licensed engineer in New York, affixed his seal and stamp to the designs produced by Sub FP Design., which neither complied with relevant codes nor adequately accounted for General Contractor's specifications. The faulty design caused property damage to the hotel, resulting in injury to General Contractor.
The elements of a cause of action alleging common-law negligence are a duty owed by the FP Eng. to the General Contractor, a breach of that duty, and a showing that the breach of that duty proximately caused injury to the General Contractor. In general, a tort claim for negligence does not arise when the duty that FP Eng. owes to a General Contractor arises solely out of a contractual relationship. In order to state a claim for negligence in a case of economic loss, there must generally be some non-contractual duty of FP Eng., contracting with Sub FP Inst., to the General Contractor. However, in suits against professionals, including engineers, for negligent misrepresentations, the standard is somewhat different. In Ossining Union Free Sch. Dist. v. Anderson LaRocca Anderson, the New York Court of Appeals allowed suits for negligent misrepresentation to proceed against two engineers who knew that the plans that they produced would be used by the general contractor for a particular purpose. Here, FP Eng. knew the plans that he approved would be used by General Contractor to install a fire protection system.
Third-Party Beneficiary Liability for Breach of Contract
A professional engineer or architect that provides services to produce construction plans is liable to the owner that undertakes such construction under a third-party beneficiary theory. Third-party beneficiary status is granted more broadly to a party in contractual privity with a contractor when that contractor hires a subcontractor, here Sub FP Inst., to do work necessary to the completion of the contract between the party and the contractor.
Thus, General Contractor has a colorable claim as a third-party beneficiary.
This is not to say that either of these claims will ultimately successful. There are multiple questions of fact that need to be resolved by a judge or jury. It does however, mean that the engineer will have to defend the lawsuit.