Charlebois v. J. M. Weller Associates, Inc.

OPINION OF THE COURT Casey, J. At issue on this appeal is whether a construction contract between the owner and the contractor, whereby the contractor agrees not only to perform the construction of the project but also to be responsible for furnishing the design, is void as against public policy since the contractor is neither a licensed architect nor a licensed engineer. On the facts of this case, Supreme Court correctly declared that the contract is valid and enforceable. In January 1986 the parties entered into an agreement, called a "design-build” contract, for the construction by defendant of an addition to an existing building and the construction of a new warehouse to be used by plaintiffs in their beer distribution business. A dispute arose during the performance of the contract, with plaintiffs refusing to make further payments until certain alleged design and construction defects were corrected. Defendant demanded arbitration pursuant to the terms of the contract and plaintiffs thereafter instituted this action, seeking a declaratory judgment declaring the parties’ contract void as against public policy. The contract defines the "Construction Team” as the "Contractor” (defendant), the "Owner” (plaintiffs), and the "Architect/Engineer”, and it provides that "the 'Construction Team’ shall work from the beginning of design through construction completion”. The contract contains the following provision: "The services of [left blank], as the Architect/Engineer, will be furnished by the Contractor pursuant to an agreement between the Contractor and the Architect/Engineer.” Another clause in the contract provides that "all Architectural & Structural Engineering services are provided by James M. Weller, P.E. and are included in the 'Contractor’s Fee’ ”. Under the heading "Contractor’s Services”, the contract provides that "[t]he Contractor shall be responsible for furnishing [216] the Design and for the construction of the Project”, and in the opening article of the agreement, the "Contractor” "agrees to furnish the architectural, engineering and construction services set forth herein”. Based upon these latter provisions, plaintiffs claim that the contract is void as against public policy since only a person licensed under the Education Law shall practice engineering or architecture (Education Law §§ 7202, 7302). Since the contract clearly and unambiguously requires that all architectural and engineering services be provided by a named licensed professional engineer, plaintiffs’ claim must be rejected. Specifically, the contract provides that "schematic Design Studies”, "Design Development Documents” and "Drawings and Specifications setting forth in detail the requirements for the construction of the Project” shall be prepared by the "Architect/Engineer”. Under no reasonable interpretation of its language as a whole can the contract be construed as requiring or authorizing defendant to engage in the practice of engineering or architecture.* The case of American Store Equip. & Constr. Corp. v Dempsey’s Punch Bowl (174 Misc 436, affd 258 App Div 794, affd 283 NY 601), relied upon by plaintiffs, is distinguishable, for in that case a general contractor agreed to perform architectural services in connection with the construction of a building and since the contractor was not a licensed architect, the contract was held to be void (cf, Turner Constr. Co. v 1600 E. Ave., 30 Mise 2d 811, affd 15 AD2d 631). Defendant herein did not agree to perform architectural or engineering services; rather, plaintiffs and defendant agreed that a licensed third party would perform those services. Plaintiffs point out that where an unlicensed person agrees to perform services for which a license is required, the illegality is not cured merely because the unlicensed person hires a licensed person to do the work (see, e.g., Vitanza v City of New York, 48 AD2d 41, affd 40 NY2d 872). In contrast, the Court of Appeals explained in Bronold v Engler (194 NY 323, 325): "A builder might contract to erect and complete a house or other structure including the plumbing work for a gross sum and for that purpose he would have the right to employ a licensed master plumber to do the plumbing work. He would in such [217] case in no fair sense be conducting the 'trade, business or calling* of a master plumber. It would be the mere incident of a larger work.” (See, Vereinigte Osterreichische Eisen und Stahlwerke, A.G. v Modular Bldg. & Dev. Corp., 64 Misc 2d 1050, mod 37 AD2d 525.) Here, too, in no fair sense is defendant engaging in the practice of architecture or engineering. More importantly, defendant did not merely hire or sublet to a licensed engineer. The parties agreed in the contract that a named licensed professional engineer would perform all services for which a license was required. Had this same relationship been created by direct contract between plaintiffs and the named professional engineer there could be no claim of illegality. A finding of illegality on the basis of the absence of a direct contractual relationship between plaintiffs and the licensed engineer would exalt form over substance. There can be little doubt that plaintiffs are third-party beneficiaries of the contract between defendant and the licensed professional engineer (see, Bonwell v Stone, 128 AD2d 1013). In addition, the duty of care owed by the engineer to plaintiffs is not defined by privity of contract (supra, at 1014). In the circumstances of this case, neither the letter of the law requiring the practice of architecture and engineering by licensed professionals, nor the spirit of the public policy behind that law, has been violated. Supreme Court’s order declaring the contract enforceable should, therefore, be affirmed. Footnotes [*] It should be noted that certain activities undertaken by defendant as "Contractor”, such as construction supervision and management, are specifically exempt from the licensing requirements (Education Law § 7208 [h], [p]; § 7306 [c], [gl).