TAG MECHANICAL SYSTEMS INC v. STRUCTURES INC (2009)

Plaintiff commenced this action seeking damages for, inter alia, defendant's alleged breach of contract, based upon a series of contracts pursuant to which plaintiff was to perform certain construction services for defendant.   The complaint concerns four contracts, relating to projects in Tahlequah, Oklahoma;  Hazard, Kentucky;  Skaneateles, New York;  and Syracuse, New York. Plaintiff moved for summary judgment on the complaint, seeking damages in the total amount owed pursuant to the four contracts, and plaintiff sought dismissal of defendant's affirmative defenses and counterclaims.   Defendant cross-moved for leave to serve an amended answer to include additional affirmative defenses and counterclaims based on fraud and commercial bribery with respect to the Tahlequah, Hazard and Skaneateles contracts, as well as with respect to an alleged fifth contract between the parties concerning construction services rendered by plaintiff at a project in Gas City, Indiana.   We conclude that Supreme Court erred in granting plaintiff's motion and in denying that part of defendant's cross motion for leave to serve an amended answer to include the proposed affirmative defenses and counterclaims based on commercial bribery with respect to the Tahlequah, Hazard and Skaneateles projects.   We therefore modify the order and judgment accordingly.

 Addressing first defendant's cross motion, we note the well established principle that, “ ‘[g]enerally, leave to amend a pleading should be freely granted in the absence of prejudice to the nonmoving party where the amendment is not patently lacking in merit ․, and the decision whether to grant leave to amend a [pleading] is committed to the sound discretion of the court’ ” (Carro v. Lyons Falls Pulp & Paper, Inc., 56 A.D.3d 1276, 1277, 867 N.Y.S.2d 646;  see CPLR 3025[b];  Edenwald Contr. Co. v. City of New York, 60 N.Y.2d 957, 959, 471 N.Y.S.2d 55, 459 N.E.2d 164).   In our view, the court properly denied that part of the cross motion seeking leave to serve an amended answer to include an affirmative defense and counterclaim based on fraud.   The proposed amended answer contains no allegation of reasonable reliance upon a representation of plaintiff.   Such an allegation is a necessary element of fraud (see Hoffend & Sons, Inc. v. Rose & Kiernan, Inc., 19 A.D.3d 1056, 1058, 796 N.Y.S.2d 790, affd. 7 N.Y.3d 152, 818 N.Y.S.2d 798, 851 N.E.2d 1149), and thus the failure to plead reliance renders defendant's proposed affirmative defense and counterclaim patently without merit (see e.g. Gelmac Quality Feeds, Inc. v. Ronning, 23 A.D.3d 1019, 804 N.Y.S.2d 174;  Dos v. Scelsa & Villacara, 200 A.D.2d 705, 707, 607 N.Y.S.2d 68, lv. denied 84 N.Y.2d 840, 617 N.Y.S.2d 129, 641 N.E.2d 149;  cf. CPLR 3016[b];  Pludeman v. Northern Leasing Sys., Inc., 10 N.Y.3d 486, 492, 860 N.Y.S.2d 422, 890 N.E.2d 184).   We further conclude, however, that the court erred in denying that part of defendant's cross motion seeking leave to serve an amended answer to include affirmative defenses and counterclaims based on commercial bribery.   Here, defendant “sufficiently pleaded all the elements of [commercial bribery], i.e., that [plaintiff] conferred a benefit upon [defendant's] employee, without [defendant's] consent and with the intent to influence the employee's conduct” (Niagara Mohawk Power Corp. v. Freed, 265 A.D.2d 938, 939, 696 N.Y.S.2d 600).

 The court properly denied that part of defendant's cross motion seeking leave to serve an amended answer to include a counterclaim based on commercial bribery with respect to the Gas City contract.   That contract was not at issue in the complaint, and the proposed counterclaim seeks affirmative relief unrelated to any matters addressed during the course of discovery (see generally United States Fid. & Guar. Co. v. Delmar Dev. Partners, LLC, 22 A.D.3d 1017, 1019-1020, 803 N.Y.S.2d 254).   Indeed, to permit that amendment well after the close of discovery would result in obvious prejudice to plaintiff (see generally CPLR 3025[b];  Edenwald Contr. Co., 60 N.Y.2d at 959, 471 N.Y.S.2d 55, 459 N.E.2d 164).

 Turning next to plaintiff's motion, we conclude that the court erred in granting those parts of the motion with respect to the Tahlequah, Hazard and Skaneateles contracts.   Even assuming, arguendo, that plaintiff met its initial burden with respect to those parts of the motion (see generally Carltun on Bay Kosher Caterers v. Makani, 295 A.D.2d 464, 744 N.Y.S.2d 674;  Furia v. Furia, 116 A.D.2d 694, 695, 498 N.Y.S.2d 12), we conclude on the record before us that there is an issue of fact whether plaintiff used bribery to induce an employee of defendant to enter into those contracts on defendant's behalf (see generally Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718).   The bribery, if proven, would prevent plaintiff from obtaining any recovery with respect to those three contracts (cf. United States Fid. & Guar. Co., 22 A.D.3d at 1019-1020, 803 N.Y.S.2d 254).

 Finally, we conclude that the court erred in granting that part of plaintiff's motion with respect to the Syracuse contract.   Plaintiff failed to submit that contract in support of its motion and, even assuming, arguendo, that plaintiff met its initial burden with respect to the Syracuse contract, we conclude that defendant raised a triable issue of fact by submitting evidence that it was not a party to the Syracuse contract (see generally Zuckerman, 49 N.Y.2d at 562, 427 N.Y.S.2d 595, 404 N.E.2d 718).

It is hereby ORDERED that the order and judgment so appealed from is unanimously modified on the law by denying the motion and by granting that part of the cross motion for leave to serve an amended answer to include the proposed affirmative defenses and counterclaims based on commercial bribery with respect to the contracts for projects in Tahlequah, Oklahoma;  Hazard, Kentucky;  and Skaneateles, New York upon condition that defendant shall serve an amended answer within 30 days of service of the order of this Court with notice of entry and as modified the order and judgment is affirmed without costs.

MEMORANDUM: