X.L.O. CONCRETE CORP. V. RIVERGATE CORP.
N.Y. App. Ct., 83 N.Y.2d 513, 634 N.E.2d 158 (1994).
NATURE OF THE CASE: The trial court granted Rivergate's (D) motion for partial summary
judgment for X.L.O's (P) breach of contract action and granted P's motion to dismiss D's
counterclaims. The Appellate Division modified the judgment by reinstating the suit and the
counterclaims to the extent of the demand in the complaint. D appealed.
FACTS: P and D entered into a written contract on May 12, 1983 for construction of the
concrete superstructure and fills of a project located in Manhattan. P fully performed its
obligations under the contract and sought payment of $844,125.07, the balance due and owing.
D refused to pay on the ground that the contract was an integral feature of an extortion and
labor bribery operation known as the 'Club'. The 'Club' was a ruling body comprised of four
of the five New York City organized crime family bosses, and concrete construction
companies, and labor unions. The Commission decided which concrete companies would be
permitted to undertake construction jobs in New York City worth more than $2 million
dollars. The Club charged 2% of the contract price for guaranteed 'labor peace' for amounts
over $2 million. The Commission rigged the bidding to ensure that the designated company
would submit the lowest bid. The Rivergate project was allocated to P on the assumption that
it would not exceed $15 million. P paid the 2% 'labor peace' fee. P then negotiated the
terms of the contract with D. They agreed on a figure of $16,300,000 (later adjusted to
$16,544,125.07). This price exceeded the amount approved by the Commission. P refused to
abandon the project and gave a $50,000 'gift' for speaking favorably on P's behalf to the
Commission. D negotiated the contract with full knowledge of the Club and its rules. D
negotiated the contract in full awareness of the involvement of the Mafia. P performed the
contract and D refused to pay the outstanding balance. P sued for breach of contract. D
contends that the contract was an integral element of an antitrust conspiracy in violation
of the Donnelly Act. D also counterclaimed seeking recovery of monetary damages for injuries
sustained allegedly as the result of P's violations of the Sherman Antitrust Act (15 USC
1). P moved for summary judgment and D cross-moved for partial summary judgment dismissing
the complaint. Ds motion for summary judgment was granted and D's first two counterclaims
were dismissed as time-barred and the third counterclaim on the ground that the contract was
void. The Appellate Division modified the order and judgment reinstating P's complaint. The
Appellate Division also reinstated D's counterclaims 'to the extent of the demand in the
complaint', and as so modified, affirmed. This appeal resulted.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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