ADVERTISEMENT

A construction company removed in May from the Canalside project at the former Aud site can proceed with its legal claims of defamation and contract interference against Erie Canal Harbor Development Corp., its parent Empire State Development and three individuals, a state judge has ruled.

But the judge threw out its claims for injurious falsehoods and punitive damages.

A spokesman for DiPizio Construction said the judge’s refusal to dismiss the company’s defamation and contract-interference claims means that the two agencies and the individuals – Sam Hoyt, regional president of Empire State Development and a board member of the harbor agency; agency President Thomas P. Dee; and agency employee Mark E. Smith – could be held liable for their actions in firing DiPizio from the nearly $20 million project last year.

And that could end up costing state taxpayers if the lawsuit goes to trial and the agencies and the officials are found liable, DiPizio spokesman Tony Farina said. Michael E. Applebaum, attorney for the defendants, and a spokeswoman for the harbor agency declined to comment.

DiPizio was the lowest bidder on the project, at slightly less than $20 million, and was named general contractor in 2012. But the company was fired May 8, 2013, after the project fell far behind schedule. DiPizio blamed the waterfront agency for the delays and filed a wrongful-termination lawsuit later in May and then the defamation suit in September.

When the project is completed, it will include historically aligned canals that serve as reflecting pools for most of the year and skating rinks in the winter, along with pedestrian bridges.

The defendants moved to dismiss the defamation suit, leading to the ruling earlier this month by State Supreme Court Justice Timothy J. Walker.

In his decision, Walker said DiPizio will be required to prove its allegations at trial. In refusing to dismiss the defamation claim, the judge said the claim is based on statements the defendants made in the termination letter to DiPizio and the publication of excerpts from the letter in an article in The Buffalo News. The judge said the May 25 article attributes project delays to DiPizio and quotes from the termination letter that the harbor agency and its consultants have “repeatedly advised your firm of its deficient work and taken all reasonable steps to ensure that the work can be completed in a timely and efficient manner.”

The judge noted that while public officials’ statements made in the course of discharging their duties are entitled to qualified immunity, the privilege may be lost if the speaker acted with malice. He said the court, in ruling on the motion to dismiss, “shall not determine the truth of such allegations.”

In dismissing the claim for punitive damages, the judge said that Empire State Development, the harbor agency and its officers and employees are state subsidiaries and that punitive damages cannot be awarded against them.

email: jstaas@buffnews.com