It is well settled that an action against an architect or engineer arising out of his or her malpractice must be brought within a three-year statute of limitations.

But running from when? Certainly, if you are a passerby struck by a brick falling from a defectively-designed building, you would not expect the statute of limitations to expire before you were even injured. How about the owner of the building who hired the architect or engineer to design that building in the first place?
 

It is clear that the three-year period of limitations for malpractice actions runs from when the “claim accrues.” But that can mean different things to different people.
 

In a recent case arising out of a project upstate, the building owner hired an engineering firm to provide engineering services for a building project. The engineering firm, in turn, hired an architect to design the building. The building was completed in 2002, but the damage was discovered in 2017. The owner, which did not have a direct contract with the architect, sued the architect nevertheless, in 2018.

 

The building owner contended that its cause of action against the architect did not accrue until the damage was discovered in 2017, rendering its 2018 action timely. But the architect argued that an action for malpractice “accrues” at the latest upon the completion of performance—regardless of when the damage first appeared.
 

The upstate appellate court spelled out the rules applicable here. First, they noted that from the perspective of one of the contracting parties, “no matter how a claim is characterized in the complaint” all liability for defective construction has its genesis in the contractual relationship of the parties. Thus, the three-year statute of limitations applies and runs from the completion of performance.

 

But what about a passerby—a stranger to the contract? Can the statute of limitations expire three years from the completion of a contract it knew nothing about? No. A true stranger to the contract is not limited by the three-year statute—partly because it is not truly suing for malpractice, but rather suing in tort for personal injury or property damage outside of any contractual obligation.

 

But herein lies the final twist: the building owner argued that it did not have a contract with the architect; its contract was only with the engineer who then subcontracted the design to the architect. Shouldn’t that make the owner a “stranger to the contract,” unbound by the three-year limitation? No. The court held that the owner, despite its lack of “privity” with the architect, was “not a stranger to the contract.” It was a third-party beneficiary of the contract since the contract between the engineer and the architect was intended for the owner’s benefit. The architect’s contract mentioned the owner in it and expressly incorporated the owner’s contract with the engineer.

 

Since the owner was not a “stranger to the contract,” its professional malpractice claim accrued upon completion of the work (in 2002) and its complaint (in 2018) was time-barred and dismissed.
 

While one might think it unfair to permit the statute of limitations to expire long before any defects become visible, this is simply a risk allocating statute. The legislature has determined that the owner possesses the means to determine if the design was sound and constructed properly at the time of the completion of the work. If anything rears its head more than three years after that, it is a risk more properly borne by the owner. But not by a stranger to the contract.