American Electronics, Inc. v. Neptune Meter Co.

McNally, J.

In this action in unfair competition tried by the court, plaintiffs have been granted compensatory damages of $250,000, punitive damages of $50,000, extra allowance of $3,000, and interest from the date of the commencement of the action, for a total of $456,051.

The record establishes by overwhelming proof that defendants willfully and deliberately engaged in a conspiracy and a course of conduct which violated elementary standards of morality in the business community and secured for themselves at plaintiffs’ expense a public contract for the manufacture and installation of toll collection equipment on the Connecticut Turnpike. (Defler Corp. v. Kleeman, 19 A D 2d 396, 401, affd. 19 N Y 2d 694.) The evidence discloses that defendants used their knowledge of plaintiffs’ prices and confidential price pro *119 posals fraudulently obtained and thus were able to underbid plaintiffs. They appropriated plaintiffs’ manufacturing information from stolen drawings, induced plaintiffs’ employees and a subcontractor to violate restrictive agreements, and attempted to conceal their activities by artifice and subterfuge.

The trial court in this long, involved, intricate and complex case awarded compensatory and punitive damages and properly granted an additional allowance pursuant to CPLR 8303 (subd. [a], par. 2). The trial covered 60 trial days, with some 8,000 pages of record, hundreds of exhibits and' 343 extensive findings of fact and conclusions of law.

We hold, however, that plaintiffs are not entitled to punitive damages since no public right is involved and the underlying private wrong is susceptible of adequate compensation. (James v. Powell, 19 N Y 2d 249; Walker v. Sheldon, 10 N Y 2d 401.)

In the interests of justice, the case is remanded to the trial court solely for the assessment of compensatory damages, since we feel that the proper rule of damage was not applied. In the circumstances, plaintiffs are entitled to recover damages in the amount they would have made on the Connecticut contract, in other words their profit. These dámages need not be proven with precision. Damages should be based on the contract price, less the cost of labor, material and applicable overhead. By applicable overhead we mean only the additional overhead, if any, necessary for the completion of this contract. In other words, plaintiffs’ damages are measured by the contract price less what would have been plaintiffs’ cost of performance. The basic rule of damage in a case of unfair business competition is the amount plaintiff would have made except for defendant’s wrong. (Westcott Chuck Co. v. Oneida Nat. Chuck Co., 199 N. Y. 247, 252 ; Defler Corp. v. Kleeman, supra, p. 403; Santa’s Workshop v. Sterling, 2 A D 2d 262, affd. 3 N Y 2d 757; Ronson Art Metal Works v. Gibson Lighter Mfg. Co., 3 A D 2d 227, 232; Conviser v. Brownstone & Co., 209 App. Div. 584, 592 ; Champlin v. Stoddard, 34 Hun 109 , 110, cited with approval in Michel Cosmetics v. Tsirkas, 282 N. Y. 195, 202 ; see, also, Duane Jones Co. v. Burke, 306 N. Y. 172 .)

For the foregoing reasons, the judgment should be reversed, on the law and the facts, without costs, the cause remanded to the trial court, and a new trial directed limited solely to the issue of compensatory damage.