Court Dismisses Contribution Claim Where Damages Sought on Underlying Claim Purely Economic in Nature

On January 29, 2024, Justice Andrea Masley of the New York County Commercial Division, issued a decision in One PPW Owner, LLC v IBI Group, 2024 NY Slip Op 30330(U), Index No. 653862/2020, granting third-party defendants’ motion for reargument of the Court’s prior decision denying their motion to dismiss a claim for contribution against them, and upon rearugment, dismissing the contribution claim against them. The Court accepted the third-party defendants’ argument that First Department case law required that the contribution claim against them be dismissed because the damages sought on the underlying claim for malpractice were purely economic in nature. The Court explained:

Reargument is warranted. In Children's Corner Learning Center, the Appellate Division, First Department held that the common-law contribution claim against third party defendants should have been dismissed because although the underlying complaint alleged breach of contract and professional malpractice, the damages sought were purely economic. (See id. at 323-24.) The court also reaffirmed that "the touchstone for purposes of whether one can seek contribution is not the nature of the claim in the underlying complaint but the measure of damages sought therein." (Id. At 324 [citations omitted].) Children's Corner Learning Center rejected third-party plaintiff's reliance on Tower Building Restoration because:

"Although the decision in Tower Bldg. Restoration did not specify the nature of the damages sought against the fourth-party plaintiff architect, a review of the briefs does. They reveal that the third-party plaintiff there, a cooperative apartment corporation, sought traditional tort damages from the architect in connection with the architect's alleged damaging of the floor and roof of one of the apartments in the building. In this case, plaintiff does not claim any damages that seek traditional tort remediation."

(Id.)

Based on the foregoing, the pendency of the professional malpractice claim in the main action is an insufficient predicate for IBl's contribution claim. (Id.; see also 34 Prince Equities LLC v Marvel Architects PLLC, 2023 NY Misc LEXIS 818, *17 [Sup Ct, NY County, Jan. 13, 2023, No. 650382/2021] ["Where ... the underlying claim seeks purely economic damages, common-law contribution is not available regardless of whether the third-party plaintiff is being sued for malpractice"].) The pivotal question is whether the damages sought in the main action are for injury to property or rather for purely economic loss. (Id.; CPLR 1401.)

Upon reargument, the contribution claim against moving third-party defendants is dismissed. The underlying complaint contains no allegations indicating that plaintiff's property was injured and does not seek damages for any such injury. ( See generally NYSCEF 1, Complaint.) Instead, plaintiff seeks to recover purely economic loss flowing from IBl's breach of an agreement for architectural services, breach of the standard of care in performing such architectural services, and unjust enrichment. (Id. ,m 28-47.)

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning motions for reargument, motions to dismiss, or claims for contribution.