Mackay Const. Corp. v. Brooklyn Union Gas Co.

• Decision Date: 18 May 1972
• Citation: 332 N.Y.S.2d 486,39 A.D.2d 687
• Parties: , 1972 Trade Cases P 74,155 MACKAY CONSTRUCTION CORP., Plaintiff-Respondent, v. BROOKLYN UNION GAS COMPANY, Defendant-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 486

332 N.Y.S.2d 486

39 A.D.2d 687, 1972 Trade Cases P 74,155

MACKAY CONSTRUCTION CORP., Plaintiff-Respondent, v. BROOKLYN UNION GAS COMPANY, Defendant-Appellant.

Supreme Court, Appellate Division, First Department.

May 18, 1972.

W. T. Griffin, New York City, for plaintiff-respondent.

S. H. Gillespie, New York City, for defendant-appellant.

Before STEVENS, P.J., and McGIVERN, MARKEWICK, KUPFERMAN and McNALLY, JJ.

PER CURIAM.

Order, Supreme Court, New York County, entered on September 1, 1971, affirmed on the opinion of Mangan, J., at Special Term. Respondent shall recover of appellant $30 costs and disbursements of this appeal.

All concur except KUPFERMAN, J., who dissents in the following memorandum:

This matter involves concurrent actions in the Supreme Court, New York County, and the United States District Court for the Eastern District of New York, and the question of whether the Federal court action should have priority or they should both proceed apace with the consequent usual procedural tactics maintained at full vigor in order more easily to stifle the real issues.

Defendant-appellant Brooklyn Union Gas Company, as a plaintiff, commenced an action in the Federal court against plaintiff-respondent Mackay and its President Henry Fried ^* on March 12, 1971. The complaint sought treble damages under the Sherman Act for alleged price fixing arising out of Mackay's construction activities, including work performed for Brooklyn Union. There was a second cause of action under § 340 of the New York General Business Law (New York anti-trust law, cf. Columbia Gas v. N.Y. Elec. & Gas, 28 N.Y.2d 117, 320 N.Y.S.2d 57, 268 N.E.2d 70). Mackay counterclaimed for treble damages under the Sherman Act for Brooklyn Union's alleged monopoly of the gas distribution business, but asserted no counterclaim for money due. However, together with the service of its answer in that Federal court action, Mackay served its verified complaint in this action in the New York State Supreme Court seeking a recovery of over $307,000 for materials furnished to Brooklyn Union since November of 1967. Those materials and labor were of the same nature as the business alleged by Brooklyn Union as plaintiff in its Federal case to have been the subject of the anti-trust violations. Mackay had a second cause of action for Brooklyn Union's allegedly deliberate refusal to pay balances due, making it impossible for Mackay to continue in the construction business, and sought $3,000,000 on that cause. Brooklyn Union in this New York State Supreme Court action raised as affirmative defenses the anti-trust violations asserted in the federal complaint and counterclaimed for Mackay's alleged violation of General Business Law § 340. There was no counterclaim interposed for the federal anti-trust violations, because only the federal court could grant positive relief thereon. Fried is not a party to the State Court action.

Brooklyn Union moved for a stay of the State Court action pursuant to CPLR § 2201 and the second clause of § 3211(a) 4, pending determination of the federal case, on the ground of comity, expertise of the Federal Court, avoidability of duplication of litigation, and the disposition of all issues between the parties in the Federal Court which is not possible in the State Court.

The judge at Special Term refused the stay on the ground that in neither action would there be a total determination of the issues in the other and, that there was no legal ground why both actions could not proceed simultaneously. Obviously, under Federal Rules of Civil Procedure 13(a), the Federal court action having been the first commenced, Mackay should have pleaded as a compulsory counterclaim the demand for payment of monies due. Further, there would be Res judicata, whether pleaded or not. See 1B, Moore's Federal Practice § 0.410(1) at page 1152. This was substantially recognized, although not ruled upon by the full court, in the New York Court of Appeals in Cummings v. Dresher, 18 N.Y.2d 105 (concurring opinion by Fuld, J. at 108, 271 N.Y.S.2d 976, at 977, 218 N.E.2d 688, at 689, 1966). However, a State court determination might not have the same effect. De Witt Motor Company v. Chrysler Motors Corporation, 391 F.2d 912 (2d Cir. 1968); Cream Top Creamery v. Dean Milk Co., Inc., 383 F.2d 358 (6th Cir. 1967) (See A.B.A. Antitrust Law Journal, Vol. 37, Issue 3, p. 625 on 'Federal Pre-Emption'); Movielab, Inc. v. Berkey Photo, Inc., 321 F.Supp. 806 (S.D.N.Y.1970, Mansfield, J.).

This Court would affirm on the basis that the matter was discretionary with the Court at Special Term. See, e.g., Phoenix Assurance Company v. Stark Mobile Homes, Inc., 39 A.D.2d 514, 330 N.Y.S.2d 548, 1972. While this approach is more honored in the breach, e.g., Katz v. Travelers Indemnity Company, 39 A.D.2d 516, 330 N.Y.S.2d 458, 1972, it cannot be followed where what is involved is the important question of anti-trust policy. ^** Further, if one...