News & Insights

New York Appellate Court Rules Negligence Claims Against Architect And Engineer Accrue When The Contract Terminates Rather Than When Damages Are Incurred

In WSA Group, PE.,PC v. DKI Engineering & Consulting USA PC, 2019 WL 7173322 (N.Y. App. Dec. 26, 2019), a New York appellate court held that the statute of limitations governing malpractice claims against architects and engineers in New York begins to accrue when the contract is complete and the professional relationship ends, rather than when the plaintiff incurs damages.

In March 2012, WSA Group, PE., PC (“WSA”) subcontracted with DKI Engineering & Consulting USA PC (“DKI”) for DKI to inspect state bridges pursuant to WSA’s prime contract with the Department of Transportation (“DOT”). The subcontract applied to services from January 1, 2012 through May 31, 2014 and required DKI to indemnify WSA for damages arising from DKI’s negligence.

In March 2017, DKI’s employee, Akram Ahmad, was convicted of falsifying a 2013 inspection report a bridge.  WSA incurred costs related to the investigation and proceedings and was required to reimburse DOT for the cost of Ahmad’s work. DKI refused to indemnify WSA for these damages.

In May 2018, WSA sued DKI for negligent supervision and breach of contract.  DKI argued the claims were barred by a three-year statute of limitations.  The trial court dismissed the negligent supervision claims on that basis, but allowed the breach of contract claim to remain.  WSA and DKI filed cross-appeals and the appellate court upheld the trial court’s ruling on both claims.

In New York, a three-year statute of limitations governs “action[s] to recover damages for malpractice, other than medical . . . regardless of whether the underlying theory is based in contract or tort.” CPLR 214[6].  A six-year statute of limitations governs breach of contract claims. 

DKI argued the three-year statute of limitations applied to both the breach of contract for failure to indemnify and the negligent supervision claim.  WSA argued the three-year statute of limitations did not bar either claim because the claims did not accrue until 2017, when WSA incurred damages.

The appellate court ruled that the three-year statute of limitations barred the negligent supervision claim, finding that a malpractice claim against an architect or engineer accrues when the contract is completed and the professional relationship ends, even if the extent of damages is unknown.  The subcontract specified a completion date in May 2014 and did not contemplate any continuing professional responsibilities beyond that date.  Therefore, WSA’s malpractice claim initiated in 2017 was beyond the three-year statute of limitations.

The appellate court also ruled that the six-year statute of limitations applied to the contractual indemnification provision, not the three-year statute.  The Court noted that indemnification was not an “ordinary professional obligation” and therefore could not be construed as professional negligence.  The Court further noted that the fact the indemnity obligation was triggered by the engineer’s negligence was still not sufficient to apply the malpractice statute of limitations.  

Statutes of limitations vary widely by jurisdiction, so the Court’s reasoning in this case may not apply outside New York.  This ruling is still important, however, because it highlights the fact that multiple theories of recovery could be involved in a single case. A case involving both negligence based claims and contractual indemnity claims, though they may be based on the same underlying facts, may be governed by different statutes of limitations. Architects and engineers should be careful to consider the multiple statutes of limitations that may affect a claim when deciding how best to defend the case.