DiPizio Constr. Co., Inc. v New York State Urban Dev. Corp.
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DiPizio Constr. Co., Inc. v New York State Urban Dev. Corp. 2014 NY Slip Op 33914(U) February 6, 2014 Supreme Court, Erie County Docket Number: 2013-801815 Judge: Timothy J. Walker Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [*FILED: ERIE COUNTY CLERK 02/06/2014 1] INDEX NO. 801815/2013 NYSCEF DOC. NO. 59 RECEIVED NYSCEF: 02/06/2014 STATE OF NEW YORK SUPREME COURT : COUNTY OF ERIE DiPIZIO CONSTRUCTION COMPANY, INC.,' Plaintiff, CQMMERCIAL DIVISION DECISION AND ORDER .' Index No.: 2013-801815 vs. NEW YORK STATE URBAN DEVELOPMENT CORPORATION d/b/a EMPIRE STATE DEVELOPMENT, ERIE CANAL HARBOR DEVELOPMENT CORPORATION, SAM HOYT, ·.' THOMAS DEE, and. .MARKE. SMITH, .· Defendants. 'I BEFORE: APPEARANCES: HON. TIMOTHY J. WAL~R, Presiding Justice LIPSITZ GREEN SCIME CAMBRIA LLP Joseph J. Manna, Esq., OfCounsei Andrew 0. Miller, Esq., Of Collilsel .. Kathryn G. D' Angelo, Esq.·. Attorneys for Plaintiff DAMON MOREY LLP Michael E. Appelbaum~ Esq., Of Counsel Attorneys for Defendants WALKER,J. This action arises out of a public improvement project to redevelop the site of the former Memorial Auditorium sports ar~na in the City ofBl.lffalo, New York,.known as the Inner Harbor Development I?ha~e 3A - Canal Side Public Canal Enviro°:111erits Project (the "Project"). -1- [* 2] / On or about April 25, 2012, Plaintiff, DiPizio Construction Compat?-y, Inc. ("DiPizio"), and Defendant, Erie Canal Harbor :qevelopment Corporation ("ECHDC"), ent~red into the Inner Harbor Development Phase 3A - C::anal Side Owner/Contractor Agreement pursuant to which DiPizio was to act as general contractor to complete the Project (the "Owner/Contractor Agreement"). On May 8,2013, Defendant, New York State Urban Development Corporation d/b/a Empire State Development ("Empire"), issued to DiPizfo a written notice of intention to , - terminate the Owner/Contractor Agreement (the "Termination Letter"). Thereafter, on or about . ~ May 13, 2013, DiPizio commenced an action in this Court against ECHDC, en!itled, DiPizio Construction Company, Inc. v. Erie Canal Harbor Devel~pment Corporation, Index No. 2013602666 (the "Relate.d Action"). In the Related Action, DiPizio claims, inter alia, that ECHDC breached the Owner/Contractor Agreement. On or about September 13, 2013, DiPizio commenced the Instant Action, which includes causes of action for defamation, injurious falsehood, tortiousinterference with contract and punitive damages .. Defendants have made an application, pursuant to CPLR §3211,_to dismiss DiPizio's Complaint, dated September 13; 2013. STANDARD OF REVIEW . ' - ' , . It is well settled that, in considering a motion to dismiss pursuant to CPLR §3211, the complaint shall be liberally construed [see CPLR §3026], and the«.~ourt shall accept the facts, as ., - alleged in the complaint, as true, and afford the plaintiff the benefit of every favorable inference - (Leon v. Martinez, 84 NY2d 83 [1994]). ) Mor~over, the court shall.avoid assessing the merits of the complaint or any of its fach:1al aHegat~ons _and instead determine only whether_ the facts as alleged fit within any cognizable legal theory (Id.). '!tis equally well settled that allegations -2- [* 3] lacking factual support need not be accepted as true (Dominski v. Fran,k Williams and Son, LLC, 46 AD3d 1443 [41h Dept. 20Q7]). ;DISCUSSION Defamation This cause of action is grounded in the statements Defendants made in the Terinination Letter, because excerpts of same were published in the Buffalo News as a result of Defendants having provided it to the newspaper for publication. Whether particular words are defamatory presents a question of law to be determined by the court (Aronson v. Wiersman, 65 NY2d 592 [1985]). The court is charged with construing the words "in the context of the entire statement or publication as a whole~ tested against the understanding of the average reader" (Id., at 594). If such words are "not reasonably susceptible of a defamatory meaning, they are not actionable and cannot be made so by a strained or artificial construction" (Id.). If, on the other hand, the contested statements are reasonably.susceptible to a defamatory meaning, then "it becom~s the jury's function to say whether that was the Sense in which the words were likely to be understood by the ordinary and average reader" Gannett Co., 4~ (Jame~ v. NY2d 415, 419 [1976], quoting Mencher v. Chelsey, 297 NY 94, 100 [1947]). Generally, a written statement may be defamatory "if it tends to expose a person to hatred, contempt or aversion, or to induce an evil or unsavory opinion of him in the minds of a substantial number of the community" (Golub v. Enquier/Star Group, Inc., 89 NY2d 1074, 1076 [1997], quoting Mencher, 297 NY at 100). On a professional level, "derogatory statements that would cause apprehension about a person's abilitY to conduct business'' may be defamatory (Golub, at 1076). Moreover, defamation -3- [* 4] per se exists where the statement "imputes to plaintiff incompetence, incapacity or unfitness in the performance of his trade, occupation or profession" (Elibol v. Berkshire-Hathaway, Inc., 298 AD2d 944, 945 [4th Dept 2002], q.uoting Van Lengen v. Parr, 136 AD2d 964, 964 [4th Dypt 1988n. Where defamation per se exists, injury is presumed and the plaintiff is not required to plead special damages (Ruder & Finn Inc., v. SeaboardSurety Co., 52 NY2d 663, 670 [1981] ["Where a statement i~pugns the basicintegrity or creditworthiness of a business,_ an action for defamation lies and injury is conclusively presumed"]). Turning to the Instant Action, the Termination Letter identifies several reasons for terminating the Owner/Contractor Agreement, and also comments on DiPizio' s work performance. The Complaint alleges that Defendants provided a copy of the Termination Letter to the press for publication to the general public (Complaint, ifif64, 66, 67). Jndeed, an article · appeared in the Buffalo News on ~.fay 25, 2013 (C.omplaint, Exhibit Q), which describes the Project as "the $20 million project," and attributes Projeet delays_ to DiPizio by quoting the following language from the Termination Letter: ECHDC and its consultants have repeatedly advised your firm [i.e., DiPizio] of its deficient work and taken all reasonable steps to ensure the work can be completed in a timely and efficient manner. ... Despite these· efforts, DiPizio has failed to demonstrate any significant improvement in its performance, necessitating the actions taken here. The artide proceeds to refer to the Termination Letter's comment that DiPizio had failed to improve its performance over time; despite assistance from Defendant ECHDC's consultant engineer: In his letter to DiPizio [i.e., the Termination Letter], [Defendant Thomas] Dee cited a Jan. 24 report compiled by Liro Engineering -4- [* 5] that reviewed DiPizio's work and offered ways to reduce delays and make improvements. The recoinrneridations, he wrote; still failed to 'demonstrate any significant improvement in its performance.' ! i. I, The Court finds, as a matter oflaw and as limited to a consideration ofDiPizio's Complaint for purposes of evaluating the instant motion to dismiss, that the Complaint sufficiently alleg~s defamation per se. DiPizio has alleged that Defendants intentionally provided the Termination Letter to the Buffalo News for public dissemination. The Buffalo News then published excerpts of same pertaining to DiPizio's inability to complete the Project in ) a timely and effi.cient maimer, and lack of improvement in it~ performance, despite the receipt of assistance from ECHDC and its consultants, including recommendations made by'Liro Engineering. These statements "impute[] to plaintiff incompetence, incapacity or unfitness in the • • '..J_ : perfonrtance of [its] trade, occupation or profession," potentially constituting defamation per se (Elibol, 298 AD2d at 945). The Court rejects Defendants' contention that the Termination Letter may not be actionable as a defamatory statement, because it merely riotified DiPizio of the manner in which it breached the Owner/Contractor Agreement. However, this cause of action is not limited to the Termination Letter. Rather, DiPizio claims that, by providing the Termination Letter to the · Buffalo News "for public consumption," Defendants' disparaging remarks were needlessly but injuriously disseminated to the public at large (Complaint, ~64). While Defendants cannot be held accountable for commentary made by the Buffalo News' reporters over DiPizio's termination (see Hoffman.v. Landers, 146 AD2d 744 [2d Dept 1989]), Defendants are responsible for the p~blication of the above-quoted portions of the Termination Letter, because -5- [* 6] they provided the Termination Letter to the Buffalo News with the intent that it be published. 1 These facts are distinguishe9 from a scenario whereby the Buffalo News obtained a copy of the. - '· ' . .• . Termination Letter without Defendants' assistance, such a.Sa request made.pursuant to the Freedom of Information Law. Defendants rely ol1 Clark-Fitzpatr_ick, Inc. v. Long k R.R. Co. (70.NY2d 382 [1987]), for the COQtention that the defamation claini must be dismissed because it does not constitute an intentional tort that is independent of Defendants' purported breach of the Owner/Contractor Agreement. Clark-Fitzpatrick stands fohhe proposition that a simple breach of contract may not a be considered a tort unless the der~ndant breaches legal duty ind~pendent-of,the contra.ct itself. Such legal duty must spring from circumstances extraneous to, and not constituting . elements of, th~ contract, although it may be connected with and dependent upon the contract (Id., at 389). 1 - ·similarly, Defendants contend that the defamation claim is merely an amplification ofDiPizio'.s claims for breach of contract made in the Related Action. Defendants' reliance on Clark-Fitzpatrick, Inc., which does not address a defamation claim, is misplaced. _This Court has already determined that Defendants' conduct, taken as a whole (which includes providing the Tennination Letter to the Buffalo News), may constitute . . defamation per se. Regardless, providing the Termination Letter to The Buffalo News I constitutes a "circumstance[] extraneous to ... the [Owner/Contractor Agreement]" (Id.). Fim1lly, while statements made by Defendants Hoyt, I>ee, and Smith (the "Individual 1 DiPizio will be required to prove these facts at trial.. The Court accepts them as true in this Decision and Order solely for the purpose of considering the pending application to dismiss .. -()- I •I [* 7] . t ·Defendants") in the co'urse of discharging their ~fficial duties are entitled to a qualified immunity (Toker v. Pollack, 44 NY2d 211, 219 [1978]), the privilege may be lost where the speaker acted with malice (Terry v. County of Orleans: 72 AD2d 925 [4th Dept 1979]). DiPizio sufficiently pleads malice at parag~aphs 32 and 39 of the Complaint. On the instant motion to.dismiss, the· Court shall not determine the truth such allegations, and DiPizio is under "no obligation to show .. . ... ·· ' evidentiary facts" (Id., at 927). Accordingly, Defendants'. motion to dismiss the defamation cause of action is denied. Injurious Falsehood Defendants' sole basis for challenging this clai!ri is that DiPizio allegedly failed to plead special damages. Ple?ding special damages with particularity is an essential element of a claim for injurious falseho9d (Emergency Enclosures, Inc. v. National Fire_Adj: Co., Inc., 68 AD3d . 1658 [4th Dept 2009]). Moreover, [i]n pleading special damages, actual losses must be identified and causally related to the alleged tortious act [and] general allegations . of lost sales from unidentified lost customers are insufficient (Id., at 1660). Equally relevant, a "round figure" of alleged pecuniary loss_, such as $1 millioll:, is insufficient to satisfy this pleading mandate (Talbot v. Johnson Newspaper Corp.,· 124 AD2d 284 [3rd Dept . . 1986]). DiPizio contends that it sufficiently pied special damages in support of its injurious . falsehood claim at paragraphs21, 55 and 81 of its Complaint, which state as follows: , ', Complaint. ,21 Prior to the events pleaded herein, Plaintiff enjoyed a repu1ation as a Responsible Bidder and for quality, timely, and on-budget work, 'and had excellent relationspips with its .vendors, unions, and with -7- [* 8] owners, architects, and engineers with whom it has worked alongside on many state-funded projects. Complaint. iJ:55 Defendants' actions, to date, have cost Plaintiff millions of dollars as well as loss of bond capacity, ability to bid, and consequential lost profits. Complaint, iJ:81 As a direct result of the foregoing, Plaintiff was damaged in its reputation as a "responsible Bidder," lost bond and bidding capacity, and potentially exposed Plaintiff to financial obligations under its bonds. . Paragraph 21 o~the Complaint describes DiPizio's reputation and relationships with vendors preceding the events that form the bases for the Instant Action, but fail to state how such events damaged its reputation and _relationships. At best, such damages are implied, but the pleading falls far short of alleging "actual losses" (Emergency Enc_losur~s, 68 AD3d at 1658). The reference in paragraph 55 of the Complaint to a loss of "milli<;ms of dollars" is precisely the type of general allegation the Emergency Enclosures court found to be insufficient. Similarly, while DiPizio also pleads a "loss of bond capacity, ability to bid, and consequential lost profits," DiPizio fails to ·identify, inter alia, the extent of sucli lost capacity, the projects for which it was unable to bid, and the amount of such1ost profits, by project. The,allegations in paragraph 81 of the Complaint are insufficient for the same reasons. DiPizio f~ils to .id~ntify the projects over which it was unable to bid and the projects for which it may be exposed under its bonds. Moreover, DiPizio fails to state the amount of such damages with respect to each such project. Accordingly, Defendants' motion to dismiss the injurious falsehood cause of action is granted. -8- [* 9] r Tortious Interference with Contract The elements of a claim for tortious interference with contract are: (1) the existence of a .contract between the plaintiff and a third party; (2) defendant's knowledge of the contract; (3) defendant's intentional inducement of the third party to breach the contract; and (4) damages to the plaintiff (Kronos, Inc. v. AVXCorp., 81NY2d90, 94 [1993]). This claim: is limited to the Individual Defendants. The Complaint sufficiently all~ges each element of the claim (see Complaint, ifif7, 83-87). The Individual Defendants contend that this claim must be dismissed, because it may only survive ifan underlying breach of contract cause of action succeeds in the first instance (NBT Ba~corp v. Fleet!NorstarFin. Group, 87 NY2d 614 [1996]). However, the facts in NBT Bancorp are distinguishable from the Instant Matter. In NBT Bancorp, the Court.of Appeals upheld the dismissal of a claim for tortious interference with prospective business relations, because the parties had not actually entered into a binding contract. Here, the parties entered into \ . . .) - I a binding contract, consisting of the Owner/Contractor Agreement. Although Defendants' _ breach of contract claim is not part of the Instant Action, it is before this· Court as the subject of the Related Action. The Individual Defendants also contend that the tortious interference with contract claim should be dismissed, because it is merely an amplification of the claims DiPizio makes in the Related Action. This contention is incorrect. ECHDC is the sole Defendant in the Related ' Action. The Individual Defendants iil the Instant Action are not parties to the Related Action. Accordingly, the Individual Defendants' motion to dismiss the tortious interference with contract cause of action is denied. -9- [* 10] Punitive Damages The law is well settled that punitive damages may not be awarded against the State and its political subdivisions (Sharapata v. Town ofIslip, 56 NY2d 332 [1982]). In so holding, the Court of Appeals has recognized that the goalS of punishment and deterrence are not served when punitive damages are imposed against the State, because it is the innocent taxpayer who is ultimately punished (Id., at 338). For purposes of an award of punitive damages, a municipal~ty is distinguished from a private profit-making corporation, because [i]t 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 (Id., at 337). The same rationale applies to a public benefit corporation of the State ofN~wYork ((:larkFitzpatrick, 70 NY2d at 386). Defendant New York State Urban Development Corporation d/b/a·Empi_re State Development ("Empire") is a "corporate governmental agency of the state, constituting a political subdivision and public .benefit corporation" (Chapter 174 of the Laws of 1968 of the State of ~New York, §4). ECHDC is a subsidiary of Empire. The Individual Defendants are officers and/or employees of sa.id public agencies, and the allegations asserted against them in the Complaint involve actions they took while in the course of their. employment. · Accordingly, there is no basis in law for DiPizio's claim for punitive damages, and it is hereby dismissed. 'For the forgoing reasons, it is hereby ,ORDERED, that the Complaint's second cause of action (injuries falsehood) and fourth -10- I [* 11] cause of action (punitive damages) are dismissed. This constitutes the Decision and Order of this Court. Submission of an order by the Parties is not necessary. The mailing of a copy of this Decision and Order by this Court shall not constitute notice of entry. Dated: February 6, 2014 Buffalo, New York GRANTED -11-
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