Judges

Attorneys and Parties

Brief Summary

Background

Plaintiff owns a nine-story building at 1992 Third Avenue in Manhattan. Defendant Third Ave NY Realty LLC owns the adjacent property and began excavation and foundation work in March 2023 for a new development project. Plaintiff sued, alleging that pile driving and dewatering caused groundwater intrusion, soil loss, settlement, and leaning of plaintiff's building, and asserted claims including strict liability under New York City Building Code § BC 3309.4 [strict liability provision requiring the person performing soil or foundation work to preserve and protect adjoining structures at its own expense], negligence, trespass, nuisance, and breach of contract. After plaintiff sued, the Department of Buildings (DOB) issued a stop work order referencing movement and settlement of plaintiff's building and directing the developer to stabilize the adjoining building. The developer then asserted a negligence counterclaim, alleging plaintiff's building was structurally deficient, not code-compliant, and poorly maintained, and that those conditions caused the DOB partial stop work order and more than $16 million in construction delay damages.

Lower Court Decision

Supreme Court, New York County, denied dismissal of the negligence counterclaim under CPLR 3211 [rule allowing dismissal for failure to state a cause of action]. It reasoned that plaintiff owed a duty as an adjacent landowner because a landowner engaging in activities that may injure persons on adjoining premises must take reasonable precautions. The court also found the developer had sufficiently alleged that plaintiff's negligent design and construction made the building unstable and that the claimed economic harm from the project's inability to continue was enough at the pleading stage.

Appellate Division Reversal

The Appellate Division reversed and dismissed the negligence counterclaim. It held that when the stop work order was issued, the relevant activity was the developer's excavation and foundation work, not any activity by plaintiff. The court emphasized that New York City Building Code § BC 3309.4 places the duty to preserve and protect adjoining structures on the party doing the excavation, regardless of the adjoining building's condition. Because the developer controlled the construction means, protective measures, and remedial stabilization work, it was in the best position to prevent the harm. The court further held that even if some common-law duty existed, the developer's claimed losses were purely economic construction-delay damages, unsupported by any allegation of bodily injury or property damage, and therefore outside the scope of recoverable negligence damages.

Legal Significance

This decision clarifies that an adjacent landowner does not owe a common-law duty to preemptively design, construct, or maintain its building so as to protect a neighbor's future excavation project from delay-related losses. It reinforces that under New York City Building Code § BC 3309.4, the burden of protecting adjoining structures rests on the excavator. It also confirms that, absent a contractual relationship or accompanying personal injury or property damage, a developer cannot use negligence law to recover purely economic losses caused by a stop work order tied to adjacent-building instability.