City Line Auto Mall, Inc. v American Honda Fin.

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[*1] City Line Auto Mall, Inc. v American Honda Fin. 2005 NY Slip Op 52072(U) [10 Misc 3d 1062(A)] Decided on December 20, 2005 Civil Court Of The City Of New York, Queens County Markey, J. 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 December 20, 2005
Civil Court of the City of New York, Queens County

City Line Auto Mall, Inc., Claimant,

against

American Honda Finance, Defendant.



SCQ 60359/05



For Claimant City Line: City Line Auto Mall, Inc., pro se, Long Island City, Queens, NY, by its principal Joseph Fischer

For Defendant American Honda: Michael A. Rosenberg, Esq., 122 East 42nd Street [No.606], NY, NY 10168

Charles J. Markey, J.

The present motion and cross motion raise interesting questions on the permissible scope of court-ordered discovery in an action in the Small Claims Part of this Court.

Claimant, City Line Auto Mall, Inc. ("claimant"), moves for an order pursuant to CCA § 1804-A granting it leave to obtain disclosure from defendant, American Honda Finance Corporation ("defendant"), by directing the defendant to produce the retail installment contract and security agreement signed by Wilguerson Georges ("Georges") with respect to a 1998 Honda Accord bearing Honda Finance's consumer Auto Loan Account No. 001-108-4540069-0001.

Defendant cross-moves pursuant to CPLR 3212 for an order granting it summary judgment dismissing the complaint, and granting it sanctions pursuant to 22 NYCRR § 130-1.1a [sic; the cross-motion seeks sanctions pursuant to § 130-1.1 (a) for an alleged violation of § 130-1.1-a].

Claimant commenced this commercial claims action seeking to recover $5,000.00 by completing a statement of claim, which provided as follows:

On 1/29/02 City Line paid $1,330.92 to Honda

Finance against account number 001-108-4540069-

0001 to reinstate a loan and lien it held against a 1998 Honda Accord, VIN 1HGCG6674WA060982,

which vehicle City Line Acquired from Georges

Wilguerson. After accepting City Line's $1,330.[9]2

payment Honda Finance refused to reinstate the loan,

which it agreed, and was required by law to reinstate,

once the delinquent charges ha[d] been paid and satisfied.

On January 15, 2001, Georges purchased a 1988 Honda Accord under a retail installment contract and security agreement, which was assigned by the vendor to defendant. The New Jersey Division of Motor Vehicles issued a title in the name of Georges, with a lien recorded in favor of defendant.

Claimant asserts that it entered into an agreement with Georges, whereby Georges would sell the subject vehicle to claimant, subject to defendant's lien, and upon sale of the vehicle, claimant [*2]would satisfy the loan and lien held by defendant; that defendant issued a monthly bill to Georges (annexed as Exhibit A to the motion) dated January 17, 2002, indicating that he had until February 6, 2002, to pay $1,330.92, which included the monthly payment $352.88, plus past due amounts and late charges in the sum of $978.04; that claimant sent a bank check (annexed as Exhibit B to the motion) dated January 24, 2002, in the sum of $1,330.92, to the defendant; that the defendant negotiated said bank check; that defendant refused to reinstate the loan after receiving payment; that the defendant informed Georges that due to his default, the loan matured and that as a result the loan would not be reinstated; that defendant threatened to issue an adverse credit report about Georges; that as a result Georges rescinded his agreement with claimant and retrieved the subject vehicle; and that defendant never refunded the $1,330.92 to claimant.

Claimant points out that in accordance with Article 9 of the New York Personal Property Law, § 301 et seq., and General Obligations Law § 7-401 (1) and (2), a retail installment contract for a vehicle used primarily for personal purposes may not contain an acceleration clause which would prevent the purchaser from redeeming the vehicle after a default by paying all past due amounts, and any applicable costs. However, since this retail agreement was entered into in New Jersey, claimant concedes that the agreement must be construed in accordance with New Jersey law. Claimant then points to N.J. Statutes, Title 17, Chapter 16c, sub. 1, entitled The Retail Installment Sales Act of 1960 (annexed as Exhibit C to the motion), which limits the right of the sales finance agency to accelerate the loan.

Claimant asserts that it requested a copy of the underlying retail installment contract and security agreement, but that defendant has refused to produce it. Claimant claims that it needs to see the contract in order to determine if defendant had a right to accelerate the loan. If defendant did not have the right to accelerate the loan, claimant asserts that then defendant should have reinstated the loan upon receiving from claimant all the arrears due under the contract.

Defendant claims that since claimant seeks equitable relief, to wit, the reinstatement of the loan agreement, this court does not have jurisdiction to grant such relief.

It is clear from the statement of claim that claimant does not seek reinstatement of the agreement but merely seeks to recover $5,000.00 in resultant damages including the refund of the $1,330.92 it paid as a result of defendant's failure to reinstate the loan agreement, which claimant asserts defendant was required to do after it received the payment.

This Court has the subject matter jurisdiction to award damages and, accordingly, defendant's motion to dismiss this commercial claims proceeding on the ground that the court lacks subject matter jurisdiction is denied.

Defendant claims that Georges traded in the subject vehicle to LT of Queens Auto Sales, Inc. ("LT of Queens") for a 1995 Nissan Maxima (agreement and bill of sale annexed as Exhibit 1 to the cross-motion); that LT of Queens failed to pay off the lien on the subject vehicle and, as a result, Georges filed a complaint in New Jersey with the Department of Consumer Affairs; that defendant issued a repossession assignment dated February 22, 2002 (annexed as Exhibit 6 to the cross-motion); that the repossession assignment indicates that Georges turned in the plates to the Department of Motor Vehicles and turned over the vehicle to a dealership, who sold it without title to claimant, who refused to return it to defendant, despite its lien on the vehicle; that subsequently, LT of Queens issued a check (annexed as Exhibit 5 to the cross-motion) dated May 7, 2002, in the sum of $13,005.54 to defendant; that as a result LT of Queens obtained title to the vehicle, and the underlying loan agreement was extinguished; and that prior to sending defendant the check in the [*3]sum of $1,330.92, claimant attempted to pay off the subject vehicle by issuing a check (annexed as Exhibit 7 to the cross-motion) dated June 20, 2001 in the sum of $13,500.00 but that check bounced since it was drawn on a closed account.

In reply, claimant claims that although its check for $13,500.00 bounced, at the time it made the payment of $1,330.92, that payment made Georges' loan account current; and that under the circumstances, defendant should have not closed Georges' accounts.

In addition, claimant submits a copy of a letter dated February 8, 2002 which it sent to defendant and which is also signed by Georges under the line "I AGREE TO THE ABOVE:" which states as follows:

This is to confirm yesterday's phone conversation between us and Mr. Wilguerson Georges, wherein I

requested that the account be reinstated, and offered

that City Line Auto Mall will make all future monthly installment payments, and when we need the lien release, we will pay the total balance due on the loan.

As I also informed you, your office issued a statement

on January 17, 2002, with the payment coupon of February

6, 2002, a copy of which is annexed.

In reliance of the foregoing, on January 29, 2002 City Line

transmitted payment of $1,330.92 by FedEx Overnight, as per

your January 17, 2002 invoice.

Given the foregoing, I don't believe that it was appropriate

to close the account.

Defendant claims that it is entitled to summary judgment because claimant has no privity with the Georges contract; that the contract which claimant seeks to have reinstated was extinguished by the payment made by LT of Queens; and that this action should have been brought in New Jersey and not in New York.

Claimant asserts that it does not seek to have the Georges contract reinstated, but merely seeks damages for defendant's failure to reinstate the contract when it made the $1,330.92 payment and damages for defendant's interference with its contract with Georges.

As indicated above, the Court has determined that a reading of the statement of claim indicates that claimant is seeking damages incurred as a result of defendant's failure to reinstate the contract and is not seeking reinstatement of the contract. Thus, the fact that LT of Queens paid off the lien and took possession of the subject vehicle, which extinguished the contract, does not mean that claimant is barred from recovering damages, if defendant acted wrongfully. If defendant was obligated to reinstate the loan agreement with Georges upon receipt of the $1,330.92 from claimant, claimant may seek damages from defendant for its failure to do so.

The function of a court on a motion for summary judgment is issue finding, not issue determination. (Kolivas v Kirchoff, 14 AD3d 493 [2nd Dept 2005]; Dallas v W.R. Grace and Co., 225 AD2d 319 [1st Dept 1996]; Socrates Psychological Servs, P.C. v. Progressive Cas. Ins. Co., 7 [*4]Misc 3d 642, 652 [NYC Civ Ct Queens County 2005] [citing leading federal and state appellate cases]).

In this case, it is clear that when defendant negotiated claimant's check in the sum of $1,330.92, that payment made Georges' contract with defendant current. In addition, although there is evidence that Georges transferred the car to LT of Queens in May 2001, claimant's letter of February 8, 2002, which was agreed to by Georges, indicates that Georges was still involved in the process of trying to get claimant to make the payments for the vehicle.

It is claimant's assertion that defendant refused to reinstate Georges' loan agreement because Georges was behind in his payments and defendant had accelerated the loan. In addition, claimant asserts that once the payment of $1,330.92 was received by defendant, in accordance with the monthly bill it sent in January 2002, which gave Georges the right to make the payment, the loan was current. On the other hand, defendant apparently claims that it sought to repossess the subject vehicle due to the fact that Georges' giving possession of the vehicle to claimant was a breach of the retail installment contract and security agreement. The court notes that defendant fails to submit a copy of the contract upon which it relies on for the relief it seeks herein. In addition, claimant and defendant conversed prior to claimant sending the check, so at trial, it will have to be shown the purpose for which the check was sent. Accordingly, depending on the facts, defendant may have not had a right to attempt to repossess the vehicle after it negotiated claimant's check for $1,330.92, or at the very least, claimant may be entitled to a refund of the money it paid.

Accordingly, issues of fact exist which preclude the granting of summary judgment.

Defendant, pointing to General Obligations Law § 5-701, claims that a writing signed by defendant is necessary for an assignment of the contract, and permitting claimant to assume the debt of Georges. Even if this statute applies herein, if claimant, after a conversation with defendant, sent the check for a specific purpose, and that purpose was not accomplished, then claimant may be entitled to a refund of the amount it paid.

Defendant's claim that claimant lacks privity with the underlying contract between defendant and Georges has no bearing on this action. Apparently, claimant and defendant spoke prior to claimant sending the check for $1,330.92, and if defendant failed to credit the check for the purpose it was intended, claimant may maintain an action despite the lack of privity with the underlying agreement.

Defendant's claim that claimant was required to commence this action in New Jersey, the place where the underlying agreement was entered into, lacks merit. Claimant spoke to defendant from New York and issued a check from New York. More importantly, defendant was served at its New York City address. Thus, this court obtained jurisdiction and what defendant is really trying to do is claim that based on forum non conveniens, this action should be tried in New Jersey. Defendant has failed to make any valid arguments for said relief.

Finally, defendant's request for sanctions pursuant to 22 NYCRR § 130-1.1a [sic; 22 NYCRR § 130-1.1 (a)] is denied. The section specifically provides that it does not apply "to proceedings in a small claims part of any court." In addition, since claimant has survived defendant's cross-motion, there is no basis to award sanctions.

Accordingly, defendant's cross-motion is denied in its entirety.

Claimant seeks production of the retail installment contract and security agreement signed by Georges.

Civil Court Act §1804-A provides that disclosure is unavailable in the commercial claims [*5]part except upon order of the court on a showing of proper circumstances.

In order to obtain disclosure in the small or commercial claims setting, the party must show a special need which would allow the court, in the exercise of its discretion, to order disclosure which would complicate and delay a proceeding which is supposed to be uncomplicated and swift. (MacCollam v Arlington, 94 Misc 2d 692 [City Ct, Albany County 1978]; Dorfman v Bell, 86 Misc 2d 359 [Dist Ct, Nassau County 1976].)

In this case, claimant claims that defendant wrongfully refused to reinstate the agreement, and wrongfully accelerated the loan. Claimant asserts that it needs a copy of the contract in order to show that defendant improperly refused to reinstate the agreement.

Claimant has shown a special need for discovery, especially since defendant claims, in part, that this action must be dismissed based on the terms of said contract. Accordingly, the claimant's motion is granted, and the Court hereby directs the defendant to provide to claimant a copy of the retail installment contract and security agreement (Acct No. 001-108-4540069-000) signed by Georges within twenty (20) days after service of a copy of this decision and order with notice of entry.

This constitutes the decision and order of the Court.

Dated:Queens, New York _________________________________

December 20, 2005 J. C. C.

Appearances:

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