terminate the transaction, the fact remains that the Consent Judgment existed at all times and legally prevented Loews from being "able" to participate in this joint venture.
Because the undisputed facts establish that Parke-Hayden failed to procure ready, willing and able partners for the Danbury joint venture, Loews's motion for summary judgment dismissing the Third and Fourth Claims is granted.
B. Motion to Dismiss Parke-Hayden's Claim for Punitive Damages
Loews also has moved for summary judgment dismissing Parke-Hayden's claim for punitive damages on the First and Third Claims.
As a preliminary matter, it bears noting that, even assuming Loews's bad faith, these claims sound in contract, not tort. Pittston Warehouse Corp. v. American Motorists Ins. Co., 715 F. Supp. 1221, 1227 (S.D.N.Y. 1989) ("tort of bad faith breach of contract" except in the insurance context), aff'd 954 F.2d 62 (2d Cir. 1992). Under New York law, punitive damages generally are not available in for a simple breach of contract. Smith v. Lightning Bolt Prods., Inc., 861 F.2d 363, 371 (2d Cir. 1988) (citing New York cases). New York courts, the Second Circuit and courts within this district are virtually unanimous that punitive damages may not be awarded in breach of contract cases, unless the wrong Is aimed at the public generally. Durham Indus., Inc. v. North River Ins. Co., 673 F.2d 37, 41 (2d Cir.), cert. denied, 459 U.S. 827, 74 L. Ed. 2d 64, 103 S. Ct. 61 (1982); Airlines Reporting Corp. v. Aero Voyagers, Inc., 721 F. Supp. 579, 585 (S.D.N.Y. 1989) (punitive damages available in breach of contract actions where "fraud 'aimed at the public generally,' evincing a 'high degree of moral turpitude,' and demonstrating 'such wanton dishonesty as to imply a criminal indifference to civil obligations.'" (citation omitted; emphasis added)); Morse/Diesel, Inc. v. Fidelity & Deposit Co., 715 F. Supp. 578 (S.D.N.Y. 1989) (punitive damages based on a contractual action cannot be sought absent some allegation of wrong against public generally); Purdy v. Consumers Distrib. Co., 648 F. Supp. 980, 983 (S.D.N.Y. 1986) ("Punitive damages are not available unless the plaintiff can show that the conduct complained of was not an isolated private wrong, but rather a morally culpable course of conduct aimed at injuring the public generally." (emphasis added)); Jacobson v. New York Prop. Ins. Underwriting Assoc., 120 A.D.2d 433, 501 N.Y.S.2d 882 (1st Dep't 1986) (to state cause of action for punitive damages, pleader must assert "'not an isolated transaction incident to an otherwise legitimate business, but a gross and wanton fraud upon the public.'" (emphasis added; quoting Walker v. Sheldon, 10 N.Y.2d 401, 406, 223 N.Y.S.2d 488, 179 N.E.2d 497 (1961)); Samovar of Russia Jewelry Antique Corp. v. Generali, 102 A.D.2d 279, 281, 476 N.Y.S.2d 869, 871 (1st Dep't 1984) (must be "morally reprehensible conduct directed at the general public" (emphasis added)).
Citing a handful of cases, Parke-Hayden argues that a wrong against the general public is not a required element of a claim for punitive damages in breach of contract actions in New York. However, the two cases that are arguably on point, Williamson, Picket, Gross, Inc. v. Hirschfeld, 92 A.D.2d 289, 460 N.Y.S.2d 36 (1st Dep't 1983) and AML Int'l Ltd. v. Orion Pictures Corp., No. 89 Civ. 2048 (KMW), 1991 U.S. Dist. Lexis 842 (S.D.N.Y. June 21, 1991), run decidedly against the grain of prevailing New York law.
In Williamson, Picket, an action for breach of a brokerage agreement, the First Department held that punitive damages may be awarded where the defendant's conduct involves "that degree of bad faith evincing a 'disingenuous or dishonest failure to carry out a contract.'" 92 A.D.2d at 295, 460 N.Y.S.2d at 41 (quoting Gordon v. Nationwide Mut. Ins. Co., 30 N.Y.2d 427, 437, 334 N.Y.S.2d 601, 285 N.E.2d 849 (1972)). However, the First Department appears to have abandoned the holding of Williamson, Picket. In Jacobson, 120 A.D.2d 433, 501 N.Y.S.2d 882, the same court explicitly held three years later that punitive damages are available in breach of contract actions only if the allegations support a conclusion that a fraud "upon the public" is involved. Id. at 435, 501 N.Y.S.2d at 884. And, after engaging in a detailed analysis of New York law on this topic, a court within this district rejected the rule in Williamson, Picket as an "aberration" in the otherwise uniform law of New York. Purdy, 648 F. Supp. at 982-83; cf. Morse/Diesel, 715 F. Supp. at 588 (breach of contract action; rejecting application of Greenspan v. Commercial Ins. Co., 57 A.D.2d 387, 395 N.Y.S.2d 519 (1977), which held that Walker is no longer valid in New York). Indeed, the Williamson, Picket court itself acknowledged the prevailing New York rule that "'punitive damages are not available for mere breach of contract, for in such a case only a private wrong, and not a public right, is involved.'" 92 A.D.2d at 294, 460 N.Y.S.2d at 40 (quoting Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354, 358, 386 N.Y.S.2d 831, 833, 353 N.E.2d 793 (1976)).
In the second case, AML International, Judge Wood recently denied a motion for summary judgment to strike plaintiff's demand for punitive damages in a breach of contract action. The court stated that "under New York law, punitive damages will be available only where defendant's conduct constitutes 'gross, wanton, or willful fraud or other morally culpable conduct.'" 1991 U.S. Dist. Lexis at 11 (quoting Smith, 861 F.2d at 371-72: Borkowski v. Borkowski, 39 N.Y.2d 982, 387 N.Y.S.2d 233, 355 N.E.2d 287 (1976)). Nevertheless, this definition of New York law must be read before the backdrop of Judge Wood's prior opinion in the same case in which she wrote:
According to the law of New York, . . . "'punitive damages are not available for mere breach of contract' . . . even if the breach results from a deliberate breach of good faith." To award punitive damages, "there must be fraud 'aimed at the public generally,' evincing a 'high degree of moral turpitude,' and demonstrating 'such wanton dishonesty as to imply a criminal indifference to civil obligations.'"
AML Int'l Ltd. v. Orion Pictures Corp., 1991 U.S. Dist. LEXIS 842, No. 89 Civ. 2048 (KMW), slip op. at 2 (emphasis added). AML is further distinguishable in that it involved an allegation of a pattern of breached contracts against various parties.
Following prevailing New York law, therefore, Parke-Hayden may not claim punitive damages for Loews's alleged breach of contract in the 72nd Street and Danbury Transactions. Loews's motion for summary judgment dismissing such claims is granted.
For the foregoing reasons, Parke-Hayden's motion for an order granting summary judgment in its favor on the First Claim is denied. Loews's motion for summary judgment dismissing the Third and Fourth Claims, as well as Parke-Hayden's claim for punitive damages on the First and Third Claims is granted.
It is so ordered.
New York, N. Y.
April 20, 1992
ROBERT W. SWEET