The opinion of the court was delivered by: HAROLD BAER, JR., District Judge[fn*] [fn*] Mychii Snape, a spring 2005 intern in my Chambers, and currently a second-year law student at Columbia University School of Law, provided substantial assistance in the research and drafting of this Opinion.
On June 28, 2004, Plaintiffs, Travelers Casualty & Surety
Company ("Travelers"), as administrator for Reliance Insurance
Company ("Reliance"), filed the instant action which alleged,
inter alia, negligent misrepresentation against Defendant,
Kohn, Pederson Fox & Associates, P.C. ("KPF") in connection with
the Site B campus construction project at Baruch College. (See
Tr. 2:11-17.) Pursuant to Fed.R.Civ.P. 12(b)(6), KPF moves to
dismiss the Complaint for lack of privity of contract, or its
"functional equivalent," between Travelers and KPF. The Court
heard oral arguments on the motion on May 4, 2005. For the
foregoing reasons, Defendant's motion to dismiss is DENIED. I. BACKGROUND
A. Pre-Building Relationship
The Dormitory Authority of the State of New York ("DASNY")
contracted with KPF to perform "programming, design, and certain
construction phase services for the construction of Baruch
College Site "B", consisting of a building of approximately
700,000 gross square feet, near the existing school site, to
house classrooms, a theater, lecture halls, and other educational
facilities." (Peter Catalano, Att'y for Def. KPF ("Catalano"),
Aff. at ¶ 3) ("the Project"). The terms of the contract define
the nature of the relationship between DASNY and KPF as an
The relationship created by this Agreement between
the OWNER and ARCHITECT is one of independent
ARCHITECT and it is in no way to be construed as
creating any agency relationship between the OWNER
and the ARCHITECT nor is it to be construed as, in
any way or under the circumstances, creating or
appointing the ARCHITECT as an agent of the OWNER for
any purpose whatsoever.
(Catalano Aff. Ex. A, KPF/DASNY Contract Agreement (herein, "Ex.
A"), at App. D ¶ 13.) KPF, or "Architect," was obligated to
"prepare and supply the necessary set of Contract Documents for
bidding, and eventual award of contracts, between the owner and
the Contractors for approximately ten separate contract?
packages." (Catalano Aff. Ex. A at ¶ G.1.) KPF was contractually
obligated to "investigate questions posed by bidders or any other
questions, and issue written replies to all bidders in the form
of supplemental bulletins, addenda, or bid instructions."
(Catalano Aff. Ex. A at ¶ G.2.) The contract between KPF and
DASNY included language to the effect that KPF:
[S]hall assist the owner in reviewing and analyzing
bids, including any investigation that may be
required of qualifications and capabilities of low
bidders [and] [i]nspect on a bi-weekly basis, or as
required by the OWNER, the Work in progress to
determine compliance with the requirements of the
contract drawings and specifications or approved shop
(Catalano Aff. Ex. A at ¶ G.4.) As such, KPF was required to both
review approved submissions from contractors and monitor the
construction of the Project.
Throughout the bidding process, bidders were instructed that
all communication regarding Project questions and concerns should
be directed to KPF as a final decision-maker. Specifically, the
document entitled "Information for Bidders" stated that before
bidding, the prospective bidder "shall make written requests to the Architect,
with a copy forwarded to the owner, for an interpretation or
correction of any ambiguity, inconsistency or error [in the
bidding materials]." (David Dreifuss, Att'y for Pl. ("Dreifuss"),
Aff. Ex. C, DASNY Notice to Bidders, at § 1A.) Furthermore, "only
interpretations, corrections or additional Contract provisions
made in writing by the Architect as addenda shall be binding."
(Dreifuss Aff. Ex. C at § 1J.)
Trataros Construction, Inc. ("Trataros") successfully bid on
construction Contract No. 15 and Contract No. 16. (John
Scarpellino, Att'y for Pl. ("Scarpellino"), Aff. at ¶ 3 a-b.) In
accordance with the terms of the construction contracts,
Trataros' obtained four separate surety bonds from
Reliance.*fn1 Each performance surety bond named Trataros as
the principal and DASNY as the obligee or beneficiary. (Compl. at
¶ 12.) Similarly, each labor surety bond named Trataros as the
principal and their subcontractors as the obligee. (Scarpellino
Aff. Ex. 2, ¶ 1.) The surety bond for Contract No. 15 was valued
at $50,222,000. (Scarpellino Aff. ¶ 3a.) The surety bond for
Contract No. 16 was valued at $24,140,000. (Scarpellino Aff. ¶
3b.) Subsequently, Travelers became surety for the bonds and, in
this role, Travelers retained the right to act with power of
attorney for Reliance on any matter relating to these bonds.
(Compl. at ¶ 14.)
The Project commenced in 1998, but never stayed on schedule.
Nonetheless, the entire Project has since been completed. (Compl.
at ¶ 17.) Travelers and DASNY, as a counterclaim defendant, both
allege that KPF made considerable design errors which led to
significant delays and increased costs during the course of
construction. (Compl. at ¶¶ 52-56; see also DASNY Ans. ¶¶
110-116.) As a result, and according to DASNY's pleading,
Travelers will incur substantial expense. In particular, DASNY
KPF failed to exercise the required standard of care,
competence and skill in the completion of its duties
as architect of record for the Project. Among other
things, KPF improperly and negligently (1) failed to
complete and coordinate the Design Documents, (2)
failed to properly oversee and perform the
professional services that were required to complete
the Designed Documents, (3) failed to supervise and
coordinate the work of its subcontractors and consultants and integrate their work into the Design
Documents, (4) refused to acknowledge its Design
Defects and/or implement the necessary remedial
corrections in a timely or professionally competent
fashion, and (5) failed to satisfy other elements of
the required standard of care.
(Scarpellino Aff. ¶ 10, citing to DASNY Counterclaims.)
According to Travelers, KPF may be responsible for some or all
When ruling on a motion to dismiss pursuant to Fed.R.Civ.P.
12(b)(6), the Court must construe all factual allegations in the
complaint in favor of the non-moving party. See Krimstock v.
Kelly, 306 F.3d 40, 47-48 (2d Cir. 2002). The Court's
consideration is limited to facts stated on the face of the
complaint and in documents appended to the complaint or
incorporated in the complaint by reference, as well as to matters
of which judicial notice may be taken. See Allen v.
WestPoint-Pepperell, Inc., 945 F.2d 40, 44 (2d Cir. 1991).
Dismissal of a claim is proper only where "it appears beyond
doubt that the plaintiff can prove no set of facts in support of
his claim which would entitle him to relief." Shakur v. Selsky,
391 F.3d 106, 112 (2d Cir. 2004) (quoting Conley v. Gibson,
355 U.S. 41, 45-46 (1957)).
When a district court's jurisdiction is based upon diversity of
citizenship, as it is here, the court applies the choice-of-law
rules of the forum state. Md. Cas. Co. v. Cont'l Cas. Co.,
332 F.3d 145, 151 (2d Cir. 2003) (citing to Klaxon Co. v.
Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). Thus,
pursuant to New York choice of law rules, I will apply a "`center
of gravity' or `grouping of contacts'" analysis to resolve
conflicts of law. Id. Application of the center of gravity test
in contract cases requires that the court consider the locus of
contract negotiation, formation, performance and subject matter,
as well as "the domicile or place of business of the contracting
parties." Id. (internal citation omitted.)
Here, it is undisputed that the bidding process, contract
award, and construction of the Project, occurred in New York.
(Compl. at ¶¶ 9-13; ¶¶ 51-55.) In addition, the defendant is
domiciled in New York. (Compl. at ¶ 5.) While Travelers and
Reliance are out-of-state entities, their domicile cannot
override the significant relationship of New York State to this
dispute because alone it "is simply insufficient to outweigh the
contacts to New York." Gerling Am. Ins. Co v. Steadfast Ins.
Co., No. 00 Civ. 7907, 2001 WL 936288, at *2 n. 5 (S.D.N.Y. Aug.
17, 2001) (Baer, ...