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CONDOMINIUM UNIT OWNERS COULD SUE ENGINEER WHERE REPRESENTATIONS WERE MADE FOR BENEFIT OF FUTURE OWNERS A Ganfer & Shore, LLP Client Advisory March 2008

Alleged construction defects in condominium or cooperative buildings often lead to litigation against the architects or engineers who certified the drawings or prepared the inspection reports contained in the Offering Plan.Claims on behalf of the Unit Owners against an engineer were allowed to proceed in Bridge Street Homeowners Ass/n v. Brick Condominium Developers, LLC, 18 Misc. 3d 1128(a), 2008 WL 344136, 2008 N.Y. Slip Op. 5022 (Sup. Ct. Kings Co. Feb. 7, 2008).

In this case, the Unit Owners alleged that after they moved in, they discovered design and construction defects causing them to occur remediation expenses of more than $18 million.Plaintiffs sued the engineering firm that had prepared the building plans and specifications and inspected the work.The court allowed a breach of contract claim against the engineer to proceed even though the engineers contractual relationship was with the Sponsor, not with the future Unit Owners directly.It reasoned that the future Unit Owners were express third-party beneficiaries of the agreement between the Sponsor and the engineer, because the certification report stated that [t]his certification is made for the benefit of all persons [to] whom this offer is made.

The court also upheld the pleading of a professional malpractice claim against the engineer.Finally, the court allowed a claim for fraud and misrepresentation to proceed, because the alleged misrepresentations were incorporated by reference in each Unit Owners Purchase Agreement and all the elements of common-law fraud were pleaded.

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