Fischer v. Machon Bais Yaakov

— Order and judgment (one paper), Supreme Court, New York County (Karla Moskowitz, J.), entered May 10, 1991, which, inter alia, denied plaintiff’s motion for a judgment on default against two of the three defendants, and sua sponte dismissed the claim for fraud and punitive damages against all defendants, unanimously affirmed, with costs. Plaintiff sued defendants for failure to repay a $10,000 loan made to defendant school. The initial check tendered in the amount of $10,000 was unpaid because of insufficient funds in the corporate account. Thereafter two checks in the amount of $5,000 each were delivered and accepted but never cashed. Plaintiff thereafter commenced this action by substituted service against the individual and corporate defendants alleging breach of contract and fraud, seeking compensatory and punitive damages. Plaintiff moved for a default judgment against all defendants and an inquest to determine the amount of punitive damages. Defendants opposed the motion. The court granted judgment against one of the individual 656 defendants, finding no evidence that the second individual defendant signed the note, or evidence of service upon the corporate defendant. Sua sponte, the court dismissed the cause of action for punitive damages on the ground that the transaction did not meet the necessary criteria. Payment of principal and interest was thereafter tendered and accepted, and consequently the contract action is now moot. There is no showing that punitive damages were warranted herein as they are not available in a breach of contract action based upon a mere private wrong (Samovar of Russia Jewelry Antique Corp. v Generali, Gen. Ins. Co., 102 AD2d 279, 281-284), but are awarded only where the fraud is "aimed at the public generally, is gross and involves high moral culpability”, not merely an isolated transaction incident to the conduct of a legitimate business (Walker v Sheldon, 10 NY2d 401, 405). Nor do we find the instant case to be one in which sanctions are warranted. Concur — Carro, J. P., Milonas, Ellerin, Wallach and Ross, JJ.