X.L.O. Concrete Corp. v. Rivergate Corp.

190 A.D.2d 113, 597 N.Y.S.2d 302, 1993 N.Y. App. Div. LEXIS 4518
CourtAppellate Division of the Supreme Court of the State of New York
DecidedMay 4, 1993
StatusPublished
Cited by4 cases

This text of 190 A.D.2d 113 (X.L.O. Concrete Corp. v. Rivergate Corp.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
X.L.O. Concrete Corp. v. Rivergate Corp., 190 A.D.2d 113, 597 N.Y.S.2d 302, 1993 N.Y. App. Div. LEXIS 4518 (N.Y. Ct. App. 1993).

Opinion

OPINION OF THE COURT

Carro, J.

On May 12, 1983, plaintiff X.L.O. Concrete Corp. (XLO), as subcontractor, entered into a written contract with defendant, The Rivergate Corporation, as general contractor, for construction of the concrete superstructure of a project located at [115]*115401-429 East 34th Street in Manhattan, for the price of $16,300,000. By reason of certain work changes the contract price was adjusted to $16,544,125.07. XLO performed the work agreed to under the contract, and in an action commenced on or about May 20, 1991, alleging causes of action for breach of contract, account stated and unjust enrichment, sought payment of $844,125.07 due and owing since May 25, 1988.

Some years prior to the execution of the contract, the "Commission” of La Cosa Nostra, a nationwide criminal society which operates through local organizations known as "families,” organized an arrangement (the Club) with the seven concrete superstructure construction companies working in New York, whereby the Commission would designate which contractor would get any particular construction contract worth over $2 million, and the designated contractor would be required to pay the Commission 2% of the contract price in exchange for "labor peace”. Any contractor who did not join the Club or comply with its rules was threatened with physical harm, disruption of supplies, and labor unrest, even to the point of driving a company out of the concrete construction business. (See, United States v Salerno, 868 F2d 524, 529, cert denied 493 US 811.)

XLO resisted the threats of the Commission until it was the last concrete superstructure contractor doing business in New York City which was not a member of the Club, but eventually capitulated to the threats and joined the Club in May of 1981. The Rivergate project was allocated to XLO pursuant to the aforesaid arrangement, and XLO paid the required 2% of the contract price to Ralph Scopo, then the president and business manager of the District Council of Cement and Concrete Workers, Laborers International Union of North America, a member of the Colombo family who, along with others, supervised the Club on behalf of the Commission. Both XLO and Rivergate negotiated the contract for the project with knowledge of the Club and its rules.

Rivergate’s answer set forth affirmative defenses urging that the complaint should be dismissed because the contract sued upon violated the Donnelly Act (New York General Business Law § 340 et seq.) and the Sherman Antitrust Act (15 USC § 1), and counterclaimed for damages and attorney’s fees in amounts to be determined at trial, under General Business Law § 340 (5) (first counterclaim) and the Clayton Act (15 USC § 15) (second counterclaim). A third counterclaim sought attorney’s fees and costs under the contract. XLO responded to the [116]*116counterclaims with an assertion that they were barred by the Statute of Limitations.

XLO moved for summary judgment dismissing Rivergate’s first and second counterclaims on the ground that they were time barred, and Rivergate cross-moved for partial summary judgment dismissing the complaint. The IAS Court dismissed the complaint, concluding that the contract was illegal because it was an integral part of a conspiracy that eliminated competition in violation of the Donnelly and Clayton Acts (from which XLO has appealed). The court also dismissed Rivergate’s first two counterclaims as time barred under the four-year limitation of action provisions in General Business Law § 340 (5) and 15 USC § 15b, and dismissed the third counterclaim for attorney’s fees and costs pursuant to the contract on the ground that the contract was void (from which Rivergate has cross-appealed).

XLO’s complaint should be reinstated. We observe first that the Donnelly Act (General Business Law § 340 et seq.) was modelled after the Sherman Antitrust Act, and "should generally be construed in light of Federal precedent and given a different interpretation only where State policy, differences in the statutory language or the legislative history justify such a result [citations omitted].” (Anheuser-Busch, Inc. v Abrams, 71 NY2d 327, 335.) We find no difference in the language of the Sherman and Donnelly Acts, or the public policies sought to be protected therein, which suggest that Federal precedents should not govern this appeal. While both Acts would unquestionably render void the agreement, arrangement or combination in restraint of trade that formed the basis of the Club (People v Rattenni, 81 NY2d 166), neither Act in haec verba renders void every contract for services or goods entered into by a person or entity which is a member of such illegal arrangement or combination.

The determinative question is whether the alleged illegality is collateral to the contract that is sought to be enforced, viz., as here applicable, whether the contract can be proved without any reference to the arrangement whereby XLO became a member of the Club (Connolly v Union Sewer Pipe Co., 184 US 540, 547-550). In the Connolly case, the defendants sought to avoid liability on promissory notes given to purchase pipe on the ground that the seller was part of an illegal combination with other pipe manufacturers to set prices in restraint of trade. The Supreme Court refused to allow this as a defense to the action, holding as here pertinent: "The buyer could not [117]*117refuse to comply with his contract of purchase upon the ground that the seller was an illegal combination which might be restrained or suppressed in the mode prescribed by the act of Congress; for Congress did not declare that a combination illegally formed under the act of 1890 should not, in the conduct of its business, become the owner of property which it might sell to whomsoever wished to buy it. So that there is no necessary legal connection here between the sale of pipe to the defendants by the plaintiff corporation and the alleged arrangement made by it with other corporations, companies and firms. The contracts under which the pipe in question was sold were, as already said, collateral to the arrangement for the combination referred to, and this is not an action to enforce the terms of such arrangement. That combination may have been illegal, and yet the sale to the defendants was valid.” (Supra, at 551.)

In Kelly v Kosuga (358 US 516), the petitioner, an onion grower, purchased unwanted onions from the respondent on constraint of the respondent’s threat that if petitioner and other onion growers did not purchase onions from the respondent, the respondent would dump large quantities of stored onions on the market for the purpose of depressing the futures and cash market prices of onions. The petitioner interposed as a defense that the sale was made pursuant to and as an indivisible part of an agreement which violated section 1 of the Sherman Antitrust Act, which defense the District Court struck as insufficient in law. The Supreme Court affirmed, holding that the completed agreement to sell onions at a fair price was divisible from the agreement to fix prices, and constituted "an intelligible economic transaction in itself’ (358 US, supra, at 521). The Court in Kelly expressed its rationale as follows: "Past the point where the judgment of the Court would itself be enforcing the precise conduct made unlawful by the [Sherman] Act, the courts are to be guided by the overriding general policy, as Mr.

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Cite This Page — Counsel Stack

Bluebook (online)
190 A.D.2d 113, 597 N.Y.S.2d 302, 1993 N.Y. App. Div. LEXIS 4518, Counsel Stack Legal Research, https://law.counselstack.com/opinion/xlo-concrete-corp-v-rivergate-corp-nyappdiv-1993.