DENISE COTE, District Judge:
This complex litigation arises out of the construction of a 785,000 square-foot vertical campus for Baruch College ("Baruch"), part of the City University of New York ("CUNY"), between about 1998 and about 2002 (the "Project").
The instant litigation has already been the subject of numerous Opinions by this Court.
On or about September 14, 1995, defendant Dormitory Authority—State of New York ("DASNY"),
The scope-of-services appendix to the KPF-DASNY Contract includes a detailed catalogue of responsibilities to be undertaken by KPF during various phases of the Project. With respect to the "Construction Documents Phase" of the Project, the scope-of-services appendix provided, inter alia, that KPF would prepare "contract drawings and specifications" in a manner "fully coordinated for bidding by the various Contractors." With respect to the "Bidding and Award of Prime Construction Contracts Phase" of the Project, the scope-of-services appendix provided that KPF would "prepare and supply the necessary sets of Contract Documents . . . for bidding and eventual award of contracts between [DASNY] and the Contractors"; "keep account of and distribute drawings to prospective bidders"; and "investigate questions posed by bidders relative to bid documents or any other questions, and issue written replies to all bidders in the form of supplemental bulletins, addenda, or bid instructions." With
DASNY also entered into three phased contracts with TDX (collectively, the "TDX-DASNY Contracts") for the purpose of engaging TDX as construction manager. First, in October 1996, TDX contracted with DASNY to provide construction management services in connection with the Project's "Design and Pre Construction Phase." Second, in May 1997, TDX contracted with DASNY to provide construction management services pertaining to the Project's "Construction Phase." Finally, in January 1998, TDX contracted with DASNY to provide construction management services in connection with the Project's "General Conditions Work Phase."
As with the KPF-DASNY Contract, the TDX-DASNY Contracts included detailed scope-of-services appendices enumerating dozens of specific responsibilities and tasks to be undertaken by TDX. In the scope-of-services appendix to the "Construction Phase" contract, for example, TDX was directed, inter alia, to "[s]erve as [DASNY's] chief representative in the field"; "[r]eceive, investigate, and reply to all Prime Contractors' correspondence pertaining to the Construction Work"; "[c]onduct all job progress meetings and job coordination meetings"; "[i]nspect all work daily for quality and conformance to the Contract Documents"; "[a]dvise Prime Contractor(s) of necessary corrective work"; and "[r]eview all shop drawings for coordination of field conditions among the Prime Contractors" and "[r]eturn shop drawings, as necessary, for corrections."
Finally, DASNY entered into thirteen prime contracts, spread among eleven separate contractors, for carrying out the substance of the Project's construction work.
The Bidding Documents for Contract 15 were made available on February 2, 1998, with the issuance of a "Notice to Bidders." The scope of work under Contract 15 included, inter alia, construction of the exterior walls and windows (known as the "curtainwall"), elevators, and rough carpentry. On or about March 19, 1998, Trataros submitted a bid for Contract 15 in the amount of $50,222,000. DASNY and Trataros then entered into a written contract on or about April 27, 1998, by which Trataros agreed to perform the scope of work within Contract 15 for the fixed sum of $50,222,000. On or about April 27, 1998, Trataros obtained two surety bonds from Reliance Insurance Company ("Reliance")
Sometime in early- or mid-1998, the Bidding Documents for Contract 16 were also released to potential bidders. The scope of work under Contract 16 included, inter alia, the interior fit-out, miscellaneous metal work, roofing installation, and flooring installation and finishing. As with Contract 15, TDX maintained a list of "plan holders" and ensured that both the Bidding Documents and addenda prepared by KPF were sent to those holders.
On or about June 10, 1998, Trataros submitted a bid in the amount of $24,140,000 for Contract 16. DASNY and Trataros then entered into a written contract on or about September 1, 1998, under which Trataros agreed to perform the scope of work within Contract 16 for the fixed sum of $24,140,000. On or about the same date, Trataros obtained additional performance and payment bonds from Reliance, each in the amount of $24,140,000, and each naming Trataros as principal and DASNY as obligee.
The Project did not proceed on schedule. As a result of various delays, problems,
On August 1, 2007, Travelers commenced this action asserting claims of negligence against KPF and TDX as well as breach-of-contract and subcontractor pass-through claims against DASNY (the "Complaint").
On October 1, 2007, KPF moved to dismiss the Complaint. Following briefing by the parties, the motion was denied by Order of January 24, 2008 (the "January 2008 Order"). The January 2008 Order indicated that KPF's motion was denied for "substantially the reasons stated" set forth in Judge Baer's previous opinion in Travelers Cas. & Ins. Co. v. Dormitory Auth. of the State of N.Y., No. 04 Civ. 5101(HB), 2005 WL 1177715 (S.D.N.Y. May 19, 2005) (the "2005 Opinion"), which had also denied a motion to dismiss filed by KPF.
The parties then proceeded to discovery. Travelers produced at least two expert reports relating, at least in part, to KPF's and TDX's performance during the Project.
Travelers' experts also opined that TDX was negligent in various ways. Buric concluded that "TDX failed to comply with industry standards and its contractual obligations related to the development of Project CPM [critical path method] schedules, coordination of the work, and its review of the design." Likewise, CSF concluded that TDX had "negligently performed" its work during the "preconstruction" phase in a number of ways, including by "recommend[ing] the fast track construction of a project not suited for such a project delivery methodology"; "fail[ing] to properly develop and coordinate bid packages"; and "fail[ing] to develop schedules that were properly planned and prepared based on flawed or missing logic [sic]." With respect to the Project's later phases, CSF concluded that TDX "failed to review and coordinate all shop drawings among the Prime Contractors"; "failed to expedite and coordinate the Work of all Prime Contractors"; "permitted non-conforming and defective work to be installed on the project"; "failed to expedite and coordinate the progress of the Architect"; "failed to be cognizant of potential delays"; "failed to determine the cause and responsibility for any delays and to take remedial action"; "refused to evaluate requests for extensions of time, claims and/or cost adjustments"; "failed to provide contractors on site with an accurate schedule based on logical, sequential relationships"; and "failed to prepare periodic Exception Reports." CSF also concluded that TDX was "grossly negligent" insofar as it "substituted its judgment for that of the Architect on site in matters as they relate to building design."
On February 19, 2010, KPF and TDX each moved for summary judgment.
Summary judgment may not be granted unless all of the submissions taken together "show that there is no genuine issue as to any material fact and that the movant is
Once the moving party has asserted facts showing that the non-movant's claims cannot be sustained, the opposing party must "set out specific facts showing a genuine issue for trial," and cannot "rely merely on allegations or denials" contained in the pleadings. Fed.R.Civ.P. 56(e); see also Wright v. Goord, 554 F.3d 255, 266 (2d Cir.2009). "A party may not rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment," as "[m]ere conclusory allegations or denials cannot by themselves create a genuine issue of material fact where none would otherwise exist." Hicks v. Baines, 593 F.3d 159, 166 (2d Cir.2010) (citation omitted). Only disputes over material facts—"facts that might affect the outcome of the suit under the governing law"—will properly preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); see also Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (stating that the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts").
KPF moves for summary judgment to dismiss Travelers' claims in three different respects. First, KPF argues that Travelers cannot recover for breach of contract because Trataros was neither in privity of contract with KPF, nor was it a third-party beneficiary of the KPF-DASNY Contract. Second, KPF argues that Travelers cannot recover in tort because Travelers cannot demonstrate that KPF made any negligent misrepresentations to Trataros nor that KPF and Trataros were in a privity-like relationship. Third, KPF asserts that Travelers cannot recover its "bond losses" from KPF because the Shindler exception to the "American Rule" on attorney's fees does not apply. Each of these arguments is addressed in turn.
Travelers argues that Trataros and the other prime contractors were intended beneficiaries of the KPF-DASNY Contract and thereby entitled to enforce its terms by recovering damages directly from KPF. Travelers asserts that its third-party beneficiary status is made "even more compelling[]" by the fact that some 30 amendments to the KPF-DASNY Contract were executed primarily during the time that Trataros actively participated in the Project.
Ordinarily, "[a] non-party to a contract governed by New York law lacks standing to enforce the agreement."
Travelers' third-party-beneficiary theory cannot succeed. Travelers has not raised any material question of fact concerning whether KPF and DASNY intended to benefit Trataros by concluding the KPF-DASNY Contract or by executing the several dozen amendments thereto. While the KPF-DASNY Contract contemplates that KPF would be required to coordinate and produce the Bidding Documents, which may have ultimately been relied upon by Trataros in tendering its bids for Contracts 15 and 16, the KPF-DASNY Contract in no way suggests that the purpose of those contractual provisions was to confer a benefit upon Trataros, as opposed to giving Trataros that which was "necessary to assist [it] in [its own] performance."
Travelers also seeks to recover Trataros' economic losses from KPF on a "negligence and/or professional negligence" theory. KPF has responded by seeking summary judgment on this aspect of Travelers' claim based on two related arguments. First, KPF argues that New York's "economic loss doctrine" prevents recovery of pecuniary damages by Trataros in the absence of contractual privity or proof of a special duty of care owed to it by KPF. Second, KPF asserts that the sole exception to the economic loss doctrine—a claim for negligent misrepresentation under a "functional equivalent of privity" theory— is not applicable in these circumstances.
KPF is correct that the economic loss doctrine applies as a general matter to bar Travelers' recovery against KPF. New York's economic loss doctrine is a jurisprudential principle that a plaintiff cannot recover in tort for purely economic losses caused by the defendant's negligence. See, e.g., 532 Madison Ave. Gourmet Foods, Inc. v. Finlandia Ctr., Inc., 271 A.D.2d 49, 711 N.Y.S.2d 391, 393 (App. Div. 1st Dep't 2000) ("Finlandia I"), rev'd, 96 N.Y.2d 280, 289, 727 N.Y.S.2d 49, 750 N.E.2d 1097 (2001) ("Finlandia II"). Under this principle, the defendant is not liable to a plaintiff for the latter's economic loss unless there exists "a special relationship that requires the defendant to protect against the risk of harm to plaintiff."
This principle is justified on several grounds. First, to the extent that a plaintiff claiming economic damages is seeking to recover the loss of an expectancy interest created by contract in the first instance, the doctrine channels the dispute into a breach-of-contract action, in keeping with the nature of the interest that the plaintiff claims has been damaged. "[C]ourts have applied the economic loss rule to prevent the recovery of damages that are inappropriate because they actually lie in the nature of breach of contract as opposed to tort." Hydro Investors, 227 F.3d at 16; see also Finlandia I, 711
Second, to the extent that "economic loss" is difficult to quantify, but also a highly foreseeable outcome of negligence in the commercial context, the economic loss doctrine reflects a policy interest in protecting defendants from disproportionate, and potentially limitless, liability. "[R]elying solely on foreseeability to define the extent of liability in cases involving economic loss, while generally effective, could result in some instances in liability so great that, as a matter of policy, courts would be reluctant to impose it." Hydro Investors, 227 F.3d at 16 (citation omitted). As a result, to avoid "crushing exposure" to suits by countless parties who have suffered economic loss, New York courts have concluded that "[a]bsent a duty running directly to the injured person there can be no liability in damages, however careless the conduct or foreseeable the harm." Finlandia II, 96 N.Y.2d at 289, 727 N.Y.S.2d 49, 750 N.E.2d 1097.
A limited exception to New York's barrier against recovery of economic loss exists, however, for claims of negligent misrepresentation.
Insofar as Travelers alleges in the Complaint that "the functional equivalent of privity exist[ed] between [Trataros] and KPF," Travelers has indicated that its "negligence and/or professional negligence" claim is one for negligent misrepresentation. To demonstrate the existence of the "functional equivalent of privity" sufficient to maintain a negligent misrepresentation claim, Travelers must satisfy a "tripartite standard." Id. First, it must show "an awareness by the maker of the statement [i.e., KPF] that it is to be used for a particular purpose." Id. at 484, 718 N.Y.S.2d 709, 741 N.E.2d 506 (citation omitted). Second, it must demonstrate "reliance by a known party on the statement in furtherance of that purpose." Id. (citation omitted); see also Sec. Investor Prot. Corp. v. BDO Seidman, LLP, 222 F.3d 63, 79 (2d Cir.2000) ("SIPC") (describing this prong as "requir[ing] fulfillment of two distinct factors": that a plaintiff is "one of a specific, identifiable class of persons" and that the defendant "knew [the plaintiff] would rely" on its statement). Third, Travelers must adduce "some conduct by the maker of the statement linking it to the relying party and evincing its understanding of that reliance." Parrott II, 95 N.Y.2d at 484, 718 N.Y.S.2d 709, 741 N.E.2d 506 (citation omitted). These three criteria, taken jointly, require Travelers to demonstrate "a clearly defined set of circumstances which bespeak a close relationship premised on knowing reliance." Id.; see also MS P'ship v. Wal-Mart Stores, Inc., 294 A.D.2d 853, 741 N.Y.S.2d 793, 794 (App. Div. 4th Dep't 2002) ("For defendant to be liable, reliance by plaintiff upon the representation must be `the end and aim of the transaction', rather than an `indirect or collateral' consequence of it." (citation omitted)).
As it is a limited exception to the general rule against recovery of economic loss, the tripartite standard is applied strictly by New York courts, and a plaintiff pursuing a negligent misrepresentation claim
Indeed, although other jurisdictions have adopted the "lower threshold" established by the Restatement (2d) of Torts for proving a claim of negligent misrepresentation, Williams & Sons, 983 F.2d at 1181, New York continues to "narrowly define[]" the "ambit of duty created by privity and relationships so close as to approach that of privity." Id. at 1182; see also SPBCI, 79 N.Y.2d at 708, 719, 586 N.Y.S.2d 87, 597 N.E.2d 1080 (Hancock, J., dissenting) (describing New York's privity rule as "the country's most exacting, followed by only a few jurisdictions"); Ossining, 73 N.Y.2d at 424, 541 N.Y.S.2d 335, 539 N.E.2d 91 ("We have defined this duty narrowly, more narrowly than other jurisdictions."); Sykes, 884 N.Y.S.2d at 751. Not only does New York not permit recovery of economic loss on the basis that a plaintiff was "foreseeable," but the New York Court of Appeals has repeatedly "`rejected even a somewhat narrower rule that would permit recovery where the reliant party or class of parties was actually known or foreseen' but the individual defendant's conduct did not link it to that third party." Parrott II, 95 N.Y.2d at 485, 718 N.Y.S.2d 709, 741 N.E.2d 506 (quoting Ossining, 73 N.Y.2d at 425, 541 N.Y.S.2d 335, 539 N.E.2d 91). "In negligent misrepresentation cases especially, what is objective foreseeable injury may be vast and unbounded, wholly disproportionate to a defendant's undertaking or wrongdoing.... It is our belief that imposition of such broad liability is unwise as a matter of policy or, at the very least, a matter for legislative rather than judicial reform." Ossining, 73 N.Y.2d at 421, 425, 541 N.Y.S.2d 335, 539 N.E.2d 91 (citation omitted); see also SIPC, 222 F.3d at 74 ("This strict limitation on the class of potential plaintiffs represents a policy determination by the New York courts that [professionals] will not, merely by contracting with a particular client, expose themselves `to a liability in an indeterminate amount for an indeterminate time to an indeterminate class.'") (quoting Ultramares Corp. v. Touche, 255 N.Y. 170, 179, 174 N.E. 441 (1931)); Parrott II, 95 N.Y.2d at 483, 718 N.Y.S.2d 709, 741 N.E.2d 506.
This strictness finds particular application with respect to the test's second prong: whether the plaintiff is "known" to the defendant. "To qualify as [a] `known part[y]' under New York law," a plaintiff must belong to "`a known group possessed of vested rights, marked by a definable limit and made up of certain components.'" SIPC, 222 F.3d at 74 (quoting White, 43 N.Y.2d at 361, 401 N.Y.S.2d 474,
Travelers has failed to adduce sufficient proof showing that the functional equivalent of privity existed between Trataros and KPF such as would enable Travelers to have a triable claim for negligent misrepresentation. Several considerations compel this result.
First, Travelers has not identified a single specific misrepresentation made by KPF and upon which Trataros reasonably relied to its detriment. In particular, as KPF observes, Travelers has not offered any evidence even colorably suggestive of misrepresentations made by KPF after the date on which Trataros joined the Project.
Second, assuming arguendo that a material question of fact existed as to whether the KPF-DASNY Contract or the Bidding Documents contained affirmative, actionable misrepresentations on which Trataros reasonably relied to its detriment, Travelers has failed to adduce any evidence demonstrating that Trataros was "known" to KPF at those times. With respect to the Bidding Documents, Travelers has not unearthed any evidence during discovery to show that Trataros was anything to KPF other than one of multiple potential bidders for Contracts 15 and 16. In other words, Trataros was merely "part of an `indeterminate class of persons who, presently or in the future, might act in reliance'" on KPF's plans. Marcellus, 755 N.Y.S.2d at 476 (quoting IT Corp. v. Ecology & Envtl. Eng'g, P.C., 275 A.D.2d 958, 713 N.Y.S.2d 633, 636 (App. Div. 4th Dep't 2000) ("IT Corp.")); see also Sykes, 884 N.Y.S.2d at 749 (no functional equivalent of privity where defendant "would only have been aware in the most general way that some buyer would rely on [defendant's] information"); IT Corp., 713
Other courts considering similar factual circumstances—namely, claims by construction contractors against design professionals for negligent misrepresentation—regularly conclude that a contractor's reliance on design professionals' planning documents in the course of making a bid does not constitute the functional equivalent of privity under New York law. Judge Mukasey's discussion of this fact pattern is instructive:
Mergentime/White v. Metcalf & Eddy of N.Y., Inc., No. 89 Civ. 7188(MBM), 1993 WL 72902, at *4-*5 (S.D.N.Y. Mar. 11, 1993) ("Mergentime") (citation omitted). In reaching this conclusion, Mergentime relied on the Second Circuit's then-recent decision in Williams & Sons, which also concerned a contractor's allegation that an architect made negligent misstatements in its bidding documents. The court held that the dissemination of the bidding documents to the contractor, even when coupled with the parties' attendance at a "pre-bid meeting at which [the architect] answered prospective bidders' questions about the plan documents," did not suggest that the functional equivalent of privity existed. Williams & Sons, 983 F.2d at 1183; cf. Mergentime, 1993 WL 72902, at *5 (observing that "there were no statements made by [defendant] to plaintiff that were not made to potential bidders at large"). Many other cases involving this general fact pattern have reached the same result.
Travelers makes several arguments in opposition. First, Travelers relies on this Court's previous denial of KPF's motion to dismiss the Complaint in the January 2008 Order. That Order in turn relied on the 2005 Opinion denying KPF's motion to dismiss in the first round of this litigation before Judge Baer. While acknowledging the different standards of review governing Rule 12(b)(6) and Rule 56 motions, Travelers argues that "Judge Baer's ruling... was based in large part upon the
These arguments are flawed. The fact that a party has successfully stated a claim in the first instance does not mean that that claim merits trial, even if the court construed and relied upon contractual language in denying the defendant's motion to dismiss. Summary judgment is warranted where—whatever the abstract sufficiency of the complaint under Rule 12(b)(6) standards—the party opposing summary judgment cannot demonstrate that "a genuine issue for trial" exists even after all reasonable factual inferences and ambiguities are resolved in its favor. Fed.R.Civ.P. 56(e); see Dickerson v. Napolitano, 604 F.3d at 740. Here, notwithstanding the fact that Travelers plausibly alleged that KPF made negligent misrepresentations to Trataros in the context of a near-privity relationship, Travelers has not tendered evidence that any specific misrepresentations were actually made during any phase of the Project in which the relationship between Trataros and KPF approached that of privity.
Second, Travelers argues that this Court, in applying the tripartite standard, should consider the relationship between Trataros and KPF throughout the life of the Project. Travelers argues that KPF's motion for summary judgment "intentionally avoids numerous critical facts and attempts to limit this Court's consideration of KPF's full involvement with this Project." In particular, Travelers observes that "KPF and DASNY entered into 30 amendments to the KPF Contract, most of which increase KPF's scope of work and were executed after Trataros was selected as prime contractor"; that "KPF was still performing design work while construction activities were proceeding"; that KPF "responded to many of the requests for information from the contractors and/or subcontractors," of which there more than 3,500 throughout the Project; that "KPF reviewed numerous shop drawings that were submitted by the prime contractors"; and that, as part of the fast-track design process, "there were very extensive communication and interaction between KPF on the one hand and Trataros and its subcontractors on the other," including KPF's attendance at "dozens of meetings" with TDX and various prime contractors, including Trataros.
These arguments are without merit. Even if the "very extensive communication" between KPF and Trataros during the active phase of construction constituted "linking conduct" under the third prong of the tripartite standard, or amounted to evidence that Trataros was a "known party" under the second prong, Trataros has not identified any contemporaneous misstatements on which it relied to its detriment. While Travelers criticizes KPF for "limit[ing] focus to its original contract and/or its original design," Travelers supplies no evidence in support of taking a broader view. Accordingly, Travelers' tort claims against KPF must be dismissed.
Finally, KPF moves for summary judgment with respect to Travelers' claim that KPF is liable for certain "bond losses" sustained by Travelers, principally the attorneys' fees that Travelers incurred in
Travelers cannot recover its attorney's fees or other bond losses from KPF. Because Trataros was not a third-party beneficiary of the KPF-DASNY Contract, and because KPF is not liable in tort to Trataros for the latter's economic losses, KPF has not committed any "wrongful conduct" that would support the application of the Shindler exception. In opposing KPF's motion, Travelers has identified no other predicate legal claim that could support the invocation of Shindler. As such, this final aspect of Travelers' claim must also be dismissed.
Travelers asserts an identical claim against TDX, and TDX in turn seeks summary judgment on principally the same three grounds as KPF. Namely, TDX argues that Trataros was not a third-party beneficiary of the TDX-DASNY Contracts; that Trataros was not in a relationship functionally equivalent to privity with DASNY; and that Travelers cannot recover its attorney's fees under the Shindler exception. For the same reasons set forth above in discussing KPF's motion, Travelers' claims against TDX must also fail.
Travelers cannot show that TDX and DASNY intended that Trataros be a third-party beneficiary of their agreement. The passages cited by Travelers from the TDX-DASNY Contracts in opposing TDX's motion only amount to "[c]ontract language referring to third parties as necessary to assist th[ose] parties in their performance." Subaru, 425 F.3d at 126; see also Port Chester, 40 N.Y.2d at 655, 389 N.Y.S.2d 327, 357 N.E.2d 983 ("[T]he
Travelers also cannot recover its economic losses in tort from TDX. First, to the extent that Travelers asserts that the scope-of-services appendices contained within the TDX-DASNY Contracts included negligent misrepresentations, Travelers cannot demonstrate that the functional equivalent of privity existed between Trataros and TDX at that time, because Trataros was not then a "known party" to TDX within the meaning of the tripartite standard. See Parrott II, 95 N.Y.2d at 484, 718 N.Y.S.2d 709, 741 N.E.2d 506 (requiring that the plaintiff demonstrate "reliance by a known party on the statement in furtherance of that purpose." (citation omitted)). Second, assuming arguendo that a material question of fact exists concerning whether TDX and Trataros were in a near-privity relationship during the active construction phase of the Project, Travelers has not identified any misstatements made by TDX to Trataros during that time and upon which Trataros reasonably relied to its detriment. To the extent that Travelers instead relies upon expert evidence that TDX negligently performed its work under the TDX-DASNY Contracts during the active construction phase, Travelers cannot recover because the law does not permit a stranger to a contract to sue a contracting party for negligent contract performance.
In opposition, Travelers argues that New York law "recognize[s] a non-contracting party's right to sue a professional in tort for economic damages" and that the economic loss doctrine does not prohibit such claims. Travelers further observes that "TDX holds itself out to the public as a professional entity" and argues that TDX therefore constitutes a "professional" subject to liability for malpractice.
Insofar as Travelers contends that a malpractice cause of action would relieve it from having to demonstrate either privity with TDX or a near-privity relationship coupled with a negligent misrepresentation, Travelers' reliance is misplaced. "Under New York law, professional malpractice is a species of negligence." Hydro Investors, 227 F.3d at 15 (citation
The legal authorities that Travelers cites in support of its position are inapplicable. For example, Travelers cites Hydro Investors for the proposition that New York law permits a non-contracting party to bring a professional malpractice suit for recovery of economic damages. What Hydro Investors says, however, is that economic loss should be "recover[able] in the limited class of cases involving liability for the violation of a professional duty." 227 F.3d at 18 (emphasis added). Travelers has not demonstrated that any such duty to Trataros was violated. Likewise, Travelers cites a variety of other cases for the proposition that "[p]rofessionals ... may be subject to tort liability for failure to exercise reasonable care, irrespective of their contractual duties." Sommer v. Fed. Signal Corp., 79 N.Y.2d 540, 551, 583 N.Y.S.2d 957, 593 N.E.2d 1365 (1992). Those cases, however, all involved circumstances in which a party in privity of contract with the professional sought to bring lawsuits asserting tort and breach-of-contract claims simultaneously.
Finally, because Travelers' other claims against TDX cannot succeed as a matter of law, and because Travelers has identified no other "wrongful act" committed by TDX against Travelers, see Shindler, 211 N.Y.S.2d at 765, Travelers may not recover under the Shindler exception. Accordingly, this claim against TDX must also be dismissed, and TDX's remaining arguments concerning the inapplicability of the Shindler exception need not be considered.
TDX's and KPF's February 19, 2010 motions for summary judgment are granted.
SO ORDERED.
A performance bond, by contrast, is an undertaking by which a surety agrees to be financially responsible to the owner of a construction project if that surety's principal fails to fulfill its contractual obligations to the owner. If the owner declares a contractor in default and makes a claim upon that contractor's performance bond, the surety usually has the option of either completing the project itself (by retaining another contractor) or paying the owner its damages, up to the penal sum of the bond. Unlike with insurance contracts, the surety may recover in indemnity against its principal for any sums paid out under either type of surety bond.
Hydro Investors, 227 F.3d at 20; see also Dallas Aerospace, Inc. v. CIS Air Corp., 352 F.3d 775, 788 (2d Cir.2003); J.A.O. Acquisition Corp. v. Stavitsky, 8 N.Y.3d 144, 148, 831 N.Y.S.2d 364, 863 N.E.2d 585 (2007). Alternatively stated, a defendant is liable "where there is carelessness in imparting words upon which others were expected to rely and upon which they did act or failed to act to their damage," provided that "such information" was "expressed directly, with knowledge or notice that it will be acted upon, to one to whom the author is bound by some relation of duty, arising out of contract or otherwise, to act with care if he acts at all." AUSA Life Ins. Co. v. Ernst & Young, 206 F.3d 202, 208 (2d Cir.2000) (quoting White v. Guarente, 43 N.Y.2d 356, 363-64, 401 N.Y.S.2d 474, 372 N.E.2d 315 (1977)). To be actionable, the "alleged misrepresentation must be factual in nature and not promissory or relating to future events that might never come to fruition." Hydro Investors, 227 F.3d at 20-21.
