Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d 382 (1987)
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A valid and enforceable contract precludes recovery in quasi contract or tort for events arising from the same subject matter unless a duty independent of the contract has been violated.
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Summary
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Clark-Fitzpatrick, Inc. sued the Long Island Rail Road Company (LIRR) for breach of contract, quasi contract, fraud, and negligence relating to a track improvement project. The plaintiff alleged the LIRR provided flawed engineering designs and failed to acquire necessary property rights. The Court of Appeals held that the plaintiff could not recover under quasi-contract or negligence theories because a valid contract governed the dispute, and the plaintiff did not establish a legal duty independent of the contract. Additionally, the court found the LIRR, as a public benefit corporation, was immune from punitive damages.
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Facts
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Clark-Fitzpatrick, Inc. contracted with the Long Island Rail Road Company (LIRR) to improve a section of railroad track. The project began in September 1983. The plaintiff alleged that the LIRR was unprepared to proceed with the project due to flawed engineering designs, failure to acquire property rights, and failure to relocate utility lines. Despite these issues, the plaintiff completed the project in July 1986, almost a year behind schedule.
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Procedural History
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The plaintiff commenced an action against the LIRR and its parent, the Metropolitan Transportation Authority (MTA), alleging breach of contract, quasi contract, fraud, gross negligence, and negligence, seeking compensatory and punitive damages. The defendant moved to dismiss the negligence and quasi-contract claims, and to dismiss the demand for punitive damages. Special Term granted the motion in its entirety. The Appellate Division affirmed. The Court of Appeals granted leave to appeal.
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Issue(s)
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1. Whether the LIRR, as a public benefit corporation, is subject to punitive damages.
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2. Whether a cause of action sounding in quasi contract can be maintained when a valid and enforceable written contract governs the subject matter.
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3. Whether a simple breach of contract can be considered a tort in the absence of a legal duty independent of the contract itself.
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Holding
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1. No, because the LIRR serves an essential public function and receives significant public funding, warranting the same immunity from punitive damages as the State and its political subdivisions.
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2. No, because the existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi contract for events arising out of the same subject matter.
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3. No, because a simple breach of contract is not considered a tort unless a legal duty independent of the contract itself has been violated.
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Court’s Reasoning
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Regarding punitive damages, the Court reasoned that imposing such damages on the LIRR would ultimately punish taxpayers, as the LIRR is heavily supported by public funds and provides an essential governmental function in commuter transportation. Quoting *Sharapata v. Town of Islip, 56 N.Y.2d 332, 337*, the Court emphasized that municipalities are not organized for profit but for administering government for the public good. The Court extended this reasoning to the LIRR because of its essential public function and public funding.
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As to the quasi-contract claim, the Court stated that a quasi contract