Newsday, Inc. v. C. L. Peck Contractor, Inc.

• Decision Date: 17 June 1982
• Parties: NEWSDAY, INC., Plaintiff-Appellant-Respondent, v. C. L. PECK CONTRACTOR, INC., C. L. Peck Contractor and Morse/Diesel, Inc., Defendants-Respondents-Appellants. C. L. PECK CONTRACTOR, INC., C. L. Peck Contractor and Morse/Diesel, Inc., Third-Party Plaintiffs, v. CHAS. T. MAIN, INC. and Chas. T. Main of New York, Inc., Third-Party Defendants.
• Court: New York Supreme Court — Appellate Division

Page 415

451 N.Y.S.2d 415

87 A.D.2d 326

NEWSDAY, INC., Plaintiff-Appellant-Respondent, v. C. L. PECK CONTRACTOR, INC., C. L. Peck Contractor and Morse/Diesel, Inc., Defendants-Respondents-Appellants.

C. L. PECK CONTRACTOR, INC., C. L. Peck Contractor and Morse/Diesel, Inc., Third-Party Plaintiffs, v. CHAS. T. MAIN, INC. and Chas. T. Main of New York, Inc.,

Third-Party Defendants.

Supreme Court, Appellate Division,

First Department.

June 17, 1982.

Richard A. Rosen, New York City, of counsel (Allan Blumstein and Edward A. Purcell, Jr., New York City, with him on the brief, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, attorneys), for plaintiff-appellant-respondent.

Robert Damast, New York City, of counsel (Robert Machleder, New York City, with him on the brief, Wien, Lane & Malkin, New York City, attorneys), for defendants-respondents-appellants.

Before KUPFERMAN, J. P., and SULLIVAN, MARKEWICH, FEIN and ASCH, JJ.

KUPFERMAN, Justice Presiding.

The main action, for breach of contract, seeks damages in excess of $7,000,000 resulting from an alleged failure of the defendants to complete construction of a new publishing plant on the time schedule agreed to and in the workmanlike manner for which contracted. Newsday commenced this action in April, 1980, and the defendants served their original answer in May, 1980. Defendants' answer alleged that Newsday employees had slandered the defendants and sought a total of $8,000,000 in compensatory damages and a total of $12,000,000 in punitive damages.

The defendants contend that during the time period between December, 1979 and March, 1980 three statements were made, attributed to unidentified Newsday employees, which defamed the defendants. It was during this period that Newsday was withholding progress payments and, when various subcontractors approached Newsday to inquire why they had not been paid, it is alleged that statements were made that the defendant-contractor was withholding payments from them. The defendants claim that the statements were slanderous per se in that they implied the contractor was diverting the payments intended for the subcontractors, a larcenous act in violation of Art. 3-A of the Lien Law, § 70, § 71.

The mere assertion that the defendants are withholding monies was not facially defamatory. It is clear that they could not be slanderous per se in that a reference to extrinsic facts is needed even to understand the nature of the allegations. ¹ See Frawley Chemical Corp. v. Larsen Co., 274 A.D. 643, 86 N.Y.S.2d 710 (1st Dept. 1949). In any event, without proof of actual injury, there can be no recovery absent a showing of malice. Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789.

In Gertz, the Supreme Court made it clear that statements that are claimed to be defamatory must be more than objectively false, otherwise any recovery must be limited to actual damages. Without actual damage, malice must be shown in that the statement was made with knowledge of the falsity or with a reckless disregard of the truth. Gertz, supra, at 349, 94 S.Ct. at 3011.

The parties here are involved in a dispute with related actions involving almost thirty subcontractors and millions of dollars. There has been no showing of any intention on the part of the plaintiff to inflict harm through falsehood. See Silbowitz v. Lepper, 32 A.D.2d 520, 521, 299 N.Y.S.2d 564 (1st Dept. 1969). Without such a showing, compensation is limited to actual injury. Salomone v. MacMillan Pub. Co., 77 A.D.2d 501, 502, 429 N.Y.S.2d 441 (1st Dept. 1980); see Moran v. Hearst Corp., 40 N.Y.2d 1071, 1073, 392 N.Y.S.2d 253, 360 N.E.2d 932; Maule v. N.Y.M. Corp., 76 A.D.2d 58, 63, 429 N.Y.S.2d 891 (1st Dept. 1980).

Defendants have pleaded no special damages. The arbitrary figure of $8,000,000 in compensatory damages is not related to any specific injury. See Drug Research Corp. v. Curtis Publishing Co., 7 N.Y.2d 435, 199 N.Y.S.2d 33, 166 N.E.2d 319; Lincoln First Bank v. Siegel, 60 A.D.2d 270, 280, 400 N.Y.S.2d 627 (4th Dept. 1977).

The argument that actual damages cannot be ascertained at the pleading stage is...