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.
