Construction Group Wins Major Appeal to Save Client Millions in Catastrophic Flood Claim

Plaintiff-the owner of a large hi-rise building in NYC entered into a construction management agreement with the Firm’s general contractor client for a condominium conversion. The Owner claimed at least $24M in total damages comprised of $12M in property damage and $12 million in consequential damages from floods that occurred at the building during construction.

During the course of construction, the float switch of a temporary water tank failed resulting in the unoccupied structure being flooded. As a result of these events, the plaintiff initially brought claims for breach of contract against the Firm’s general contractor client before later amending its complaint to add claims for negligence and gross negligence and two of the subcontractors involved with the installation of the temporary water system. Notably, the plaintiff recovered approximately $3 million in an insurance claim with its own carrier and an additional $9.5 million in a settlement with the subcontractors and its carriers, but sought an additional $12 million from the Firm’s client under negligence and gross negligence claims. The trial court denied the parties’ summary judgment motions on all claims and permitted plaintiff’s tort claims to proceed.

Following our retention on appeal, the Construction Litigation Group argued that the negligence and gross negligence claims were not proper, mirrored the breach of contract claims for which consequential damages were contractually barred and, further, that the circumstances did not warrant the exceptional exercise of an imposition of a duty as a matter of law. Rather,  we argued that the case presented a commercial dispute between sophisticated business entities that negotiated the risk of this very loss in the construction contract and that agreement should not be renegotiated by the Courts.

Construction Group Chair John Sparling argued the appeal before the Appellate Division, First Department on April 22 and the First Department came down with the decision on May  13, 2025  unanimously modifying the decision below and granting the Firm General Contractor Client’s motion in all respects. Credit is also due to Senior Associate Michael Joseph who co-authored the submissions with Mr. Sparling.

A copy of the Decision can be found here: Click Here 

The oral argument can be viewed here: Click Here