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Court Holds That Condo Sponsor’s Mechanical Engineer Cannot Avoid Trial Concerning Negligent Misrepresentations the Engineer Provided for Use in the Sponsor’s Offering Plan

A homeowners association consisting of purchasers of newly constructed condominium units found their new homes to be rife with several dangerous structural defects, including an unstable elevated deck structure addition to the building, a leaky roof, the lack of proper fire stopping between floors, the failure to install fire sprinklers in compliance with the New York City Building Code, the lack of exterior wall insulation resulting in substantial loss of heat and air-conditioning, an inadequate HVAC system, insufficient and/or non-existent soundproofing between apartments and floors, the installation of a roof not meeting the warranty requirements promised in the offering plan, and a myriad of insufficiencies in the building’s domestic water systems, for the correction of all of which it was estimated that $18 million dollars would be required.

The association hired Adam Leitman Bailey, P.C. to obtain needed corrective action and compensation from the sponsor. The construction defects in this building were so outrageous that Adam Leitman Bailey, P.C. skipped any attempt at a pre-litigation settlement and moved immediately to bring suit against the sponsor, the sponsor’s wholly controlled board that had closed its eyes and ears to the unit owners’ complaints, and the sponsor’s architect.

The complaint drafted by Adam Leitman Bailey, P.C. alleged that the architect had improperly and negligently prepared the plans and specifications for the building in breach of the architectural/engineering services agreement that existed between himself and the sponsor.

The complaint further alleged that the architect had prepared an Engineer’s Certification contained in the offering plan in which the architect certified that he had prepared the building plans and specifications, had visually inspected the building, had prepared an architect’s report, had read the entire report and had investigated the facts set forth in the report and the facts underlying it with due diligence in order to form a basis for the certification.

The architect further certified that the architect’s report did not contain any untrue statement of material fact, that it set forth a description of the entire property as it would exist upon completion of renovation and construction, and that it afforded potential purchasers an adequate basis upon which to found their judgments. Finally, the architect certified that the certification was made “for the benefit of all persons of [sic] whom this offer is made.”

The architect moved to dismiss the action against him on the ground that the plaintiffs were not in privity with him and, therefore, they were without standing to sue him for breach of his contract with the sponsor. The court held, however, that it is “settled that a third party may sue as beneficiary of a contract made for his benefit.”

The court noted that “there can be no doubt that in purchasing their apartments, plaintiffs were entitled to rely upon defendant [architect’s] competent performance of his professional obligations which were certified to meet specified standards as described in their Purchase Agreements incorporating the Offering Plan.” In conclusion, the court noted that, “[i]n the case at bar, plaintiffs have adequately pled a breach of contract cause of action against [architect] as third party beneficiaries of that contract.”

With decisions such as these, Adam Leitman Bailey, P.C. is helping to reshape the law to protect the rights of “new home” condo and co-op buyers to ensure that they are properly compensated by all those responsible for construction defects that cause buyers to suffer sub-habitable living conditions.

John M. Desiderio and Adam Leitman Bailey represented the client in this matter.

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