Preferred Capital v Halkios Rest. Corp.

[*1] Preferred Capital v Halkios Rest. Corp. 2004 NY Slip Op 50687(U) Decided on June 22, 2004 Appellate Term, Second Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on June 22, 2004
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS
PRESENT:DECIDED June 22, 2004 SUPREME COURT OF THE STATE OF NEW YORK APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS PRESENT : ARONIN, J.P., GOLIA and RIOS, JJ.
NO. 2003-1423 Q C

PREFERRED CAPITAL, INC., Appellant,

against

HALKIOS RESTAURANT CORP., d/b/a SILVER SPOON DINER, and GEORGE RAKITZIS, Individually, Respondents.

Appeal by plaintiff from an order of the Civil Court, Queens County (A. Gazzara, J.), entered November 27, 2002, which denied its motion for summary judgment.

Order unanimously reversed without costs and plaintiff's motion for summary judgment granted.

Plaintiff commenced the instant action to recover damages against the corporate defendant based on a breach of what purported to be a finance lease agreement and against the individual defendant based on his guaranty of said lease agreement. We note that although the agreement is referred to as a finance lease agreement of an ATM machine, it is clear from a review of the subject agreement and the "Guaranteed Purchase Requirement" attached thereto which required the corporate defendant to purchase the ATM machine for the sum of $1,134.06, plus taxes, at the expiration of the term of the lease, that said agreement was a sales contract and, as such, is governed by article 2 of the Uniform Commercial Code (see Industralease Automated & Scientific Equip. v R.M.E. Enterprises, 58 AD2d 482, 487 [1977]). In support of plaintiff's motion for summary judgment, it submitted a copy of the contract and proof of nonpayment. In opposition, defendants argued that plaintiff fraudulently induced them to execute the underlying agreement with Credit Card Center, the supplier of the ATM machine, since plaintiff had full knowledge that Credit Card Center would be filing for bankruptcy shortly after the defendants [*2]executed the contract with plaintiff. Paragraph 6 (b) of the contract specifically stated that no broker, supplier or salesman was an agent of plaintiff. This placed the defendants on notice that the representative of the supplier (Credit Card Center), who provided defendants with plaintiff's blank form contract, was not an agent of plaintiff. In addition, Alan Velotta, plaintiff's president, denied the existence of any alleged relationship with Credit Card Center in his affidavit in support of plaintiff's motion for summary judgment.

Turning to defendants' contention that the contract was unconscionable (see UCC 2-302), in order to establish same, defendants had to prove both an absence of meaningful choice as well as the existence of contract terms which were unreasonably favorable to the plaintiff (see Rodriguez v Nachamie, 57 AD2d 920, 921 [1977]); Rzepko v GIA Gem Trade Lab.,115 Misc 2d 755 [1982]). While it could be argued that the disclaimer of warranties in the contract was unconscionable since from the date of delivery, the ATM machine did not work and was useless (see Industralease Automated & Scientific Equip. v R.M.E. Enterprises, 58 AD2d 482, supra), defendants have made no showing that they lacked a meaningful choice to enter into the contract and that they did not freely consent to the sales contract.

In light of the foregoing, we are of the opinion that defendants failed to submit sufficient evidence to establish the existence of a triable issue of fact and, as such, the lower court improperly denied plaintiff's motion for summary judgment.
Decision Date: June 22, 2004