S D Maintenance Co.
v.
City of New York

Appellate Division of the Supreme Court of New York, First DepartmentJan 8, 1991
169 A.D.2d 417 (N.Y. App. Div. 1991)
169 A.D.2d 417564 N.Y.S.2d 143

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January 8, 1991

Appeal from the Supreme Court, New York County (Shirley Fingerhood, J.).


Defendant city withheld payment due under a 1986 contract for the maintenance of parking meters, claiming that plaintiff was negligent in failing to effect timely repair of meters under a 1984 contract for the same service. In its counterclaim, the city alleges that, as a result, it sustained over $3.5 million in damages. It further alleges that investigation of possible corruption in the award of the 1984 contract is still "ongoing".

Plaintiff charges that the city fraudulently induced it to enter into the 1986 contract. It contends that knowledge of a city audit and a criminal investigation by the United States Attorney's office into the award of the 1984 contract caused the city to enter into the subsequent contract with no intention of making any payment thereunder. The city concedes that its defenses to plaintiff's action relate only to the 1984 contract, but alleges that plaintiff is in a precarious financial condition. It therefore urges that judgment on plaintiff's 1986 contract claims be stayed as security for payment of any judgment the city might obtain under the 1984 contract. The results of the audit of the city's payments under the 1984 contract are disputed by plaintiff, which blames any financial difficulties it may have experienced on the city's breach of the 1986 contract.

In the opinion of this court, the investigation into the award of the 1984 contract and plaintiff's performance thereunder should be brought to an expeditious conclusion. The city's claim for damages is based only upon its extrapolation of a three-month "test" of plaintiff's compliance with prescribed inspection and repair procedures, from which it derives an "estimated loss" of revenue. While a stay of enforcement is presently warranted to avoid prejudice to the city (Pease Elliman v 926 Park Ave. Corp., 23 A.D.2d 361, affd 17 N.Y.2d 890; cf., Stigwood Org. v Devon Co., 44 N.Y.2d 922; Trans World Maintenance Servs. v Luna Park Hous. Corp., 157 A.D.2d 586), its duration is appropriately limited to avoid hardship to plaintiff (Dalminter, Inc. v Dalmine, S.p.A., 29 A.D.2d 852, affd 23 N.Y.2d 653).

As to plaintiff's cross appeal, we agree that plaintiff's fraud claim was properly dismissed because it arises out of the identical facts and circumstances as its action for breach of contract (Spellman v Columbia Manicure Mfg. Co., 111 A.D.2d 320, 322-324; Wegman v Dairylea Coop., 50 A.D.2d 108, 113; Briefstein v Rotondo Constr. Co., 8 A.D.2d 349, 351).

Concur — Sullivan, J.P., Carro, Ellerin, Wallach and Rubin, JJ.