Clark-Fitzpatrick, Inc. v. Long Island R. Co., CLARK-FITZPATRIC

Decision Date03 November 1986
Citation124 A.D.2d 534,507 N.Y.S.2d 679
Parties, Appellant, v. The LONG ISLAND RAILROAD COMPANY, Respondent, et al., Defendant.
CourtNew York Supreme Court — Appellate Division

Paul, Hastings, Janofsky & Walker, New York City (Ronald P. Mysliwiec and Edward B. Fitzpatrick, III, of counsel), for appellant.

Kronish, Lieb, Weiner & Hellman, New York City and Thomas M. Taranto, Jamaica (Justin N. Feldman and Kennard M. Goodman, of counsel), for respondent (one brief filed).



In an action to recover damages, inter alia, for breach of contract, quasi contract, gross negligence and negligence, the plaintiff appeals from an order of the Supreme Court, Nassau County (Roncallo, J.), entered December 19, 1985, which dismissed those causes of action of the amended complaint sounding in quasi contract, gross negligence and negligence and which dismissed that portion of the complaint seeking punitive damages.

ORDERED that the order is affirmed, with costs.

This action arises out of a $9,500,000 track-improvement project undertaken by the defendant Long Island Rail Road Company (hereinafter LIRR). Involved in said project is the improvement of the Port Jefferson line by the addition of a second railroad track between Amott and Huntington. A construction plan involving numerous technical drawings and specifications was prepared by the LIRR, and submitted for public bid. On July 19, 1983, the plaintiff Clark-Fitzpatrick was awarded the contract which provided for a September 26, 1985, completion date. The plaintiff commenced this action in November 1984 and served an amended complaint in August 1985 pleading causes of action sounding in breach of contract, quasi contract, fraud, misrepresentation and deceit, gross negligence and reckless disregard of a duty of care, and negligence. The plaintiff seeks $3,000,000 compensatory damages and $2,000,000 punitive damages. It alleged that, after work was begun, it discovered that the LIRR was unprepared to proceed with the construction because, among other things, it had provided faulty engineering plans and failed to acquire certain properties abutting the construction sites. The plaintiff further alleged that the LIRR entered into the contract fully aware of such deficiencies.

The LIRR moved, pursuant to CPLR 3211(a)(7), to dismiss the causes of action sounding in quasi contract, gross negligence and reckless disregard of a duty of care, negligence, and the demand for punitive damages. The motion was granted in its entirety by order entered December 19, 1985, and this appeal ensued.

The plaintiff's cause of action sounding in quasi contract was properly dismissed. Where an express contract exists between the parties, recovery under a quantum meruit theory is precluded (Farm Automation Corp. v. Senter, 84 A.D.2d 757, 443 N.Y.S.2d 765; Levi v. Power Conversion, 47 A.D.2d 543, 363 N.Y.S.2d 103). The plaintiff's work and services, performed pursuant to change orders issued by the LIRR, were specifically covered under the contract and, therefore, the plaintiff must sue to recover damages for the breach of the contract itself (see, Cannon v. First Nat. Bank of East Islip, 98 A.D.2d 704, 469 N.Y.S.2d 101, affd. 62 N.Y.2d 1003, 479 N.Y.S.2d 517, 468 N.E.2d 699).

The plaintiff's causes of action sounding in negligence were also properly dismissed. In the absence of an independent tort duty, the plaintiff is limited to its contractual remedies (see, Luxonomy Cars v. Citibank, N.A., 65 A.D.2d 549, 550, 408 N.Y.S.2d 951). The plaintiff claims that the LIRR's failure to perform its own duty under the contract in a reasonable manner resulted in increased costs, thereby damaging the plaintiff. The contract between the parties provided that the LIRR had the right to issue change orders and a method of compensation for any changes. Thus, the duty of the LIRR to adequately compensate the plaintiff for its losses arose from the contract.

Additionally, we conclude that punitive damages arising out of an action on a contract may not be imposed against the LIRR. The Court of Appeals held in Sharapata v. Town of Islip, 56 N.Y.2d 332, 452 N.Y.S.2d 347, 437 N.E.2d 1104, that the waiver of sovereign immunity effected by Court of Claims Act § 8 does not permit the assessment of punitive damages against the State or its political subdivisions (Sharapata v. Town of Islip, supra, at p. 334, 452 N.Y.S.2d 347, 437 N.E.2d 1104). The court initially noted the important distinctions between compensatory damages, which are based upon the fundamental purpose of having "the wrongdoer make the victim whole" and punitive or exemplary damages which are intended "to punish the tort-feasor for his conduct and to deter him and others like him from similar action in the future" (Sharapata v. Town of Islip, supra, at p. 335, 452 N.Y.S.2d 347, 437 N.E.2d 1104). These distinctions became important with respect to the State when it waived its general immunity from liability by the adoption of Court of Claims Act § 8 which further provided for the State's assumption of liability and consent to have such " 'determined in accordance with the same rules of law as applied to actions in the supreme court against individuals or corporations' " (Sharapata v. Town of Islip, supra, at p. 336, 452 N.Y.S.2d 347, 437 N.E.2d 1104). In addition to the requirement that that section must be strictly construed, it being in derogation of the State's sovereignty, public policy considerations were found to operate against the imposition of punitive damages on municipal corporations as opposed to private corporations. In citing Costich v. City of Rochester, 68 App.Div. 623, 631, 73 N.Y.S. 835, the Court of Appeals indicated a basis for such a distinction.

" 'the latter [private entities] are largely created and administered for purposes of profit or for some other personal object. Those who become members of them do so voluntarily, and in the majority of instances in the hope of gain * * * the municipal corporation is different. It is not organized for any purpose of gain or profit, but it is a legal creation engaged in carrying on government and administering its details for the general good and as a matter of public necessity' " (Sharapata v. Town of Islip, supra, 56 N.Y.2d at p. 337, 452 N.Y.S.2d 347, 437 N.E.2d 1104).

The policy that public funds are not to be either directly or indirectly available for payment of damages beyond those actually suffered, that is, compensatory purposes only, has been consistently reaffirmed in legislative enactments (Sharapata v. Town of Islip, supra, at p. 338, 452 N.Y.S.2d 347, 437 N.E.2d 1104). Since the justifications for punitive damages--punishment and deterrence--would not be advanced if applied to a governmental unit, it was found that such damages may not be assessed against the State or its political subdivisions (Sharapata v. Town of Islip, supra, at p. 334, 452 N.Y.S.2d 347, 437 N.E.2d 1104).

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