On January 12, 2022, the Second Department issued a decision in KTG Hospitality, LLC v. Cobra Kitchen Ventilation, Inc., 2022 NY Slip Op. 00171, rejecting a breach of contract claim based on a third-party beneficiary theory because the plaintiff was neither named in the contract nor entitled to enforce it, explaining:
Cobra demonstrated its prima facie entitlement to judgment as a matter of law dismissing the breach of contract cause of action by submitting evidence demonstrating that there was no contractual relationship between Cobra and KTG. Liability for breach of contract does not lie absent proof of a contractual relationship or privity between the parties. Generally, a subcontractor is in privity with the general contractor on a construction project and is not in privity with the owner, even if the owner benefitted from the subcontractor’s work.
In opposition, KTG failed to raise a triable issue of fact. Contrary to KTG’s contention, the evidence failed to demonstrate the existence of a triable issue of fact as to whether KTG was an intended third-party beneficiary of the subcontract between Cobra and World Class. A third party may enforce a contract as a third-party beneficiary in one of two circumstances: (1) when the third party is the only one who could recover for the breach of contract, or (2) when it is otherwise clear from the language of the contract that there was an intent to permit enforcement by the third party. Here, the subcontract between Cobra and World Class does not expressly name KTG as an intended third-party beneficiary nor authorize KTG to enforce any obligations thereunder. Contrary to KTG’s contention, the indemnification and insurance clauses of the subcontract, which state that Cobra will indemnify and hold harmless both the contractor and the Owner of the property, i.e., KTG, from liability arising out of or resulting from Cobra’s work under the subcontract, do not reflect a clear intention to confer upon KTG a right to enforce the terms of the subcontract. Accordingly, the Supreme Court should have granted that branch of Cobra’s motion which was for summary judgment dismissing the cause of action to recover damages for breach of contract.
(Internal quotations and citations omitted).