| Hylan Elec. Contr., Inc. v MasTec N. Am., Inc. |
| 2010 NY Slip Op 05516 [74 AD3d 1148] |
| June 22, 2010 |
| Appellate Division, Second Department |
| Hylan Electrical Contracting, Inc., Respondent, v MasTecNorth America, Inc., Appellant. |
—[*1] Tunstead & Schechter, Jericho, N.Y. (Jeremy Kalina and Marvin Schechter of counsel), forrespondent.
In an action, inter alia, to recover damages for breach of contract, the defendant appeals fromso much of an order of the Supreme Court, Richmond County (Minardo, J.), dated June 18, 2009,as granted those branches of the plaintiff's motion which were for leave to amend its complaintto add causes of action to recover damages for fraudulent inducement and breach of fiduciaryduty, and a demand for punitive damages.
Ordered that the order is reversed insofar as appealed from, on the facts and in the exerciseof discretion, with costs, and those branches of the plaintiff's motion which were for leave toamend its complaint to add causes of action to recover damages for fraudulent inducement andbreach of fiduciary duty, and a demand for punitive damages, are denied.
On September 10, 1999, nonparty Telergy Metro, LLC (hereinafter Telergy), engaged thedefendant, MasTec North America, Inc. (hereinafter MasTec), an entity incorporated in the Stateof Florida, to construct a fiber optic telecommunications network in New York. On May 26,2000, MasTec subcontracted with the plaintiff, Hylan Electrical Contracting, Inc. (hereinafterHylan), to perform installation and termination services to complete the telecommunicationsinfrastructure in the New York City metropolitan area. The subcontract, which was governed byFlorida law, included a clause which made MasTec's obligation to pay Hylan contingent uponand subject to MasTec's receipt of payment from Telergy for work performed. The parties alsoagreed that termination, suspension, or delay of the primary contract between Telergy andMasTec would result in automatic termination, suspension, or delay of the subcontract on thesame basis and effective date. In the event of termination, suspension, or delay, Hylan would beallowed to recover from Telergy amounts payable to MasTec less any anticipated gross profitfrom the work. In August 2001 Telergy became insolvent and terminated its contract withMasTec, effectively terminating the subcontract. MasTec, and, in turn, Hylan, were not fullypaid for their work.
In January 2002 Hylan commenced this action against Mastec to recover an unpaid balanceof more than $1,350,000 under the subcontract, asserting causes of action to recover damages forbreach [*2]of contract and on an account stated. Hylan thenmoved for leave to amend its complaint to add causes of action alleging fraudulent inducementand breach of fiduciary duty, and to recover in quantum meruit and for unjust enrichment, aswell as a claim for punitive damages. The proposed amendment was based upon the additionalallegations that, in discussions concerning the payment of amounts due under the subcontract,MasTec, responding to Hylan's concerns about Telergy's financial condition, represented thatTelergy had the money to pay, although MasTec knew that Telergy was then in default of certainloans extended by MasTec, and thereby induced Hylan to continue working on the project to itsdetriment.
The Supreme Court granted that branch of the motion which was for leave to amend thecomplaint to add causes of action alleging fraudulent inducement and breach of fiduciary duty,and a demand for punitive damages, and otherwise denied the motion.
The Supreme Court improvidently exercised its discretion in granting those branches of themotion which were for leave to amend the complaint to add causes of action alleging fraudulentinducement and breach of fiduciary duty, and a claim for punitive damages, since the proposedamendments were patently devoid of merit on their face (see Rudden v Bernstein, 61 AD3d 736 [2009]; Scofield v DeGroodt, 54 AD3d1017 [2008]). A cause of action to recover damages for fraud does not lie where, as here, theonly fraud claimed relates to an alleged breach of contract (see Rocchio v Biondi, 40 AD3d 615, 617 [2007]; Sokol vAddison, 293 AD2d 600, 601 [2002]; Mastropieri v Solmar Constr. Co., 159 AD2d698, 700 [1990]). Further, the allegations that MasTec fraudulently represented that Hylan wouldbe paid for its work on the project amounted to nothing more than allegations of amisrepresentation of an intention to perform under the subcontract (see WIT Holding Corp. vKlein, 282 AD2d 527, 528-529 [2001]).
Similarly, a cause of action alleging breach of fiduciary duty which, as here, is merelyduplicative of a breach of contract claim, cannot stand (see Celle v Barclays Bank P.L.C., 48 AD3d 301, 302 [2008]; Brooks v Key Trust Co. N.A., 26AD3d 628, 630 [2006]; William Kaufman Org. v Graham & James, 269 AD2d 171,173 [2000]). Contrary to Hylan's contention, MasTec's duty to treat certain funds as trust assetsfor the benefit of Hylan and other subcontractors under Lien Law article 3-A did not renderMasTec a fiduciary in any other respects (see Wildman & Bernhardt Constr. v BPMAssoc., 273 AD2d 38 [2000]).
Finally, the proposed amended complaint neither alleges conduct of such an egregious naturedirected at Hylan, nor a pattern of such conduct directed at the public in general, sufficient tosustain a demand for punitive damages (see Johnson v Allstate Ins. Co., 33 AD3d 665, 666 [2006]; Flores-King v Encompass Ins. Co., 29AD3d 627 [2006]; Logan v Empire Blue Cross & Blue Shield, 275 AD2d 187, 194[2000]). Skelos, J.P., Santucci, Dickerson and Leventhal, JJ., concur.