Prote Contracting Co., Inc. v. Board of Education of the City of New York

• Decision Date: 12 October 2000
• Citation: 276 A.D.2d 309,714 N.Y.S.2d 36
• Court: New York Supreme Court — Appellate Division
• Parties: PROTE CONTRACTING CO., INC., Appellant,<BR>v.<BR>BOARD OF EDUCATION OF THE CITY OF NEW YORK, Respondent.

276 A.D.2d 309

714 N.Y.S.2d 36

PROTE CONTRACTING CO., INC., Appellant,

v.BOARD OF EDUCATION OF THE CITY OF NEW YORK, Respondent.

Decided October 12, 2000.

Concur — Sullivan, P.J., Rosenberger, Lerner, Andrias and Friedman, JJ.

This is an action to recover payments allegedly due under window installation contracts at various Queens schools. The Board of Education counterclaimed for breach of contract, alleging substantial premature deterioration of the windows and seeking damages therefor. At the first trial, a key issue was whether the contracts required plaintiff to use "back puttying" in the installation of the windows. This is a process that provides a seal between the wood and glass to prevent water penetration. On appeal from, inter alia, a $360,877.40 judgment in plaintiff's favor, we reversed and remanded for a new trial, holding that the verdict may not stand in view of posttrial evidence, not previously available, that plaintiff's principal had bribed a Board official to interpret the contract so as not to require "back puttying." (Prote Contr. Co. v Board of Educ., 230 AD2d 32.)

Thereafter, the Board served a second amended answer with counterclaims. Included was a separate claim for punitive damages, alleging that plaintiff "having improperly and unlawfully conveyed a benefit upon an employee of defendant to secure payment for work it was required to, but did not perform, acted with gross, wanton or willful fraud or other morally culpable conduct for which punitive damages should be awarded." At trial, at the close of the evidence, the court dismissed, as time-barred, all of the counterclaims; defense counsel requested leave to seek the damages as a setoff of plaintiff's claims. The court instructed the jury that if it found that plaintiff had paid a bribe or other improper payments, it must find against plaintiff for all claims. In addition, the court charged that "you may, but you are not required to, award defendant punitive damages if you find that the acts of the plaintiff in committing the alleged bribe and other improper payments were wanton, reckless, malicious." As to the setoffs, the court held that setoffs could be applied even though the Statute of Limitations had run (see, CPLR 203 [d]; see also, Headley v Noto, 22 NY2d 1, 4; Katz v Bach Realty, 192 AD2d 307, 308) and charged the jury as to several items of setoff demanded by defendant.

By a vote of 5 to 1, the jury found that plaintiff's principal unlawfully influenced a Board of Education official in the performance of his official duties to obtain a benefit for himself or plaintiff and that the Board was entitled to punitive damages in the amount of $532,865. Plaintiff subsequently moved to set aside the punitive damages award on the ground that punitive damages could not stand as a separate cause of action after the counterclaims were dismissed. The court denied the motion, noting that "there were counterclaims which would be used in the form of a setoff and that's how it was presented to the jury" and, further, that no objection was...