Najjar Industries, Inc. v. City of New York, 74 N.Y.2d 943 (1989)
A party that elects to pursue a claim for rescission and quantum meruit damages in a contract dispute, and secures a jury verdict on that basis, cannot later argue on appeal that it should have been allowed to pursue a breach of contract claim for compensatory damages.
Summary
Najjar Industries contracted with New York City to construct an air pollution device. Disputes arose, and Najjar eventually sued the city. Critically, Najjar chose to present its case to the jury as a claim for rescission of the contract, seeking damages under a quantum meruit theory (reasonable value of services). The jury found the city breached the contract and that Najjar properly rescinded. After an initial damages award was overturned, a second trial limited to damages resulted in a much smaller award. On appeal, Najjar argued it should have been allowed to pursue a traditional breach of contract claim. The Court of Appeals held that Najjar was bound by its initial choice of legal theory.
Facts
Najjar Industries contracted with the City of New York to build an air pollution device for a fixed price of $5,119,000. The contract stipulated work would begin January 5, 1973, and finish by July 8, 1975. Delays occurred, and Najjar stopped working around November 1976, with the job unfinished. By then, Najjar had received $4,176,553 from the city.
Procedural History
Najjar sued the City, including a breach of contract claim. At trial, Najjar pursued a rescission theory, seeking quantum meruit damages. The jury found for Najjar, awarding $2,088,795.26. The Appellate Division affirmed the jury’s findings on breach and rescission, but ordered a new trial on damages. On retrial, Najjar received a much smaller judgment of $121,745.44, which the Appellate Division affirmed. Leave to appeal to the Court of Appeals was denied. This appeal was taken as of right from the first Appellate Division order.
Issue(s)
Whether, in an action to recover for the defendant-owner’s material breach of a construction contract, after a remand for a trial solely on damages, the Appellate Division properly restricted the plaintiff to proving damages on a quantum meruit basis, or whether it should have permitted proof and recovery of compensatory (contract) damages.
Holding
No, because Najjar chose to try the case to the jury on a theory of rescission entitling it to quantum meruit damages, with the jury charge and verdict premised on this theory. Najjar could not later argue that it should have been permitted to pursue an alternate theory alleged in the complaint.
Court’s Reasoning
The Court of Appeals emphasized that Najjar made a deliberate choice to present its case as a rescission claim entitling it to quantum meruit damages. The jury was instructed on this basis, and Najjar did not object. The court relied on the principle that a party cannot pursue one legal theory at trial and then argue on appeal that a different theory should have been applied. The Court stated, “Having itself deliberately chosen to try its case to the jury on a theory of rescission entitling it to quantum meruit damages, with the charge and verdict premised on this theory, plaintiff cannot now be heard to complain that it should be permitted to pursue the alternate theory alleged in the complaint.” This highlights the importance of making strategic choices at trial and adhering to those choices on appeal. The court cited Martin v. City of Cohoes, 37 N.Y.2d 162, further reinforcing the principle that parties are bound by the legal theories they advance at trial.