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Perini Corp v. City of New York

Sup Ct, New York County

August 12, 2013

PERINI CORPORATION, Plaintiff,
v.
CITY OF NEW YORK (Honeywell Street And Queens Boulevard Bridges) Defendant. Index No. 601720/03

Unpublished Opinion

KATHRYN E. FREED J.S .C

DECISION/ORDER

PRESENT KATHRYN E. FREED J.S .C

HON. KATHRYN E. FREED: RECITATION, AS REQUIRED BY CPLR§2219 (a), OF THE PAPERS CONSIDERED IN THE REVIEW OF THIS MOTION.

PAPERS

NUMBERED

NOTICE OF MOTION AND AFFIDAVITS ANNEXED...................

......1-3 (exs.4-40)

ORDER TO SHOW CAUSE AND AFFIDAVITS ANNEXED............

......................

ANSWERING AFFIDAVITS...............................................................

........4 (exs.A-L)

REPLYING AFFIDAVITS....................................................................

........5............

OTHER.................... (Memos of Law)....................................................

.......6-7..........

UPON THE FOREGOING CITED PAPERS, THIS DECISION/ORDER ON THE MOTION IS AS FOLLOWS:

In this contract dispute, plaintiff Perini Corporation (Perini) moves, pursuant to CPLR§ 3211 (a) (7) and §3212 (a) and (e), for an order dismissing defendant City of New York's (defendant or NYC) seventeenth and eighteenth affirmative defenses and first and second counterclaims.

After a review of the papers presented, all relevant statutes and caselaw, the Court grants the motion.

Factual and procedural background:

In 1999, Perini and the City entered into a contract for the reconstruction of the Honeywell Street and Queens Boulevard Bridges which run over the Amtrak and Long Island Railroad train yard in Queens (the Project). The United States Department of Transportation (US DOT) provided the majority of funding for the project and, pursuant to U.S. DOT guidelines, which have been adopted by New York State and NYC, companies that receive federal grants for a construction project must establish a program that is designed to award a percentage of the work on that project to Disadvantaged Business Enterprise (DBE) contractors. Plaintiff submitted a DBE plan for the Project and defendant accepted plaintiffs proposal for the Project conditioned on plaintiffs satisfaction of the DBE program requirements (Smollens aff, exhibit A).

In 2003, Perini commenced this breach of contract action against defendant demanding over $16 million in damages on the grounds that defendant failed to pay it an equitable adjustment for damages caused by certain work conditions and defendant's failure to apprise it of conditions that would affect or delay the work. In December 2008, a federal grand jury indicted two of plaintiff s former officers on charges of conspiracy, mail fraud, wire fraud, and money laundering in connection with federally funded contracts entered into by plaintiff between 1998 and 2000. The indictment, which was unsealed in March 2009, charges the officers with conspiring with other contractors to falsely represent, in proposals and other documents, that DBE subcontractors would perform work in satisfaction of the DBE requirements when, instead, Perini used non-DBE subcontractors or its own forces to perform the work.

Following the unsealing of the indictment, defendant moved to amend the answer to add the affirmative defenses of fraud in the inducement and fraud/illegality in the performance of the contract. It also sought to assert two counterclaims based on Perini's allegedly fraudulent conduct.

The 17th affirmative defense and first counterclaim, alleging fraud in the inducement, state that in order to induce the award of the contract, Perini circumvented the DBE requirements by entering into a conspiracy with several "DBE subcontractors" to falsely represent that the DBE subcontractors were performing work on the Project when they were not. The 18th affirmative defense and second counterclaim allege that Perini knowingly and falsely represented that it was making a good faith effort to comply with the DBE requirements.

In opposition to the motion to amend, Perini argued that: 1) the defendant waived its fraud claims when it entered into a Memorandum of Understanding (MOU) with Perini in May 2004 because, at that time, the defendant knew or should have known, that Perini had committed fraud; 2) the fraud claims were untimely because the alleged fraud accrued no later than 2002; 3) fraud cannot be predicated on promises of future performance; and 4) Perini's claims are barred by the equitable doctrine of laches because defendant ...


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