Kim v BMW of Manhattan, Inc.

[*1] Kim v BMW of Manhattan, Inc. 2005 NY Slip Op 52293(U) [11 Misc 3d 1078(A)] Decided on December 22, 2005 Supreme Court, New York County Solomon, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 22, 2005
Supreme Court, New York County

Shelly Kim and GARY CHUN, Plaintiffs,

against

BMW of Manhattan, Inc., BMW OF NORTH AMERICA, LLC, BMW (U.S.) HOLDING CORP., T. PURVES and F. MALDONADO, Defendants.



601447/05

Jane S. Solomon, J.

By interim order dated September 21, 2005, this court notified the parties that, pursuant to CPLR 3211 (c), it would treat defendants' motion to dismiss the complaint as a motion for summary judgment. The parties have now submitted such additional papers as they wished, and plaintiff has cross-moved for partial summary judgment as to liability.

The following facts are undisputed. On April 21, 2004, plaintiff Gary Chun brought his wife's BMW (Car) to defendant BMW of Manhattan, Inc. (BMW Manhattan) for service under the Car's extended warranty coverage, which was then still in effect. That coverage, which plaintiffs had purchased on June 10, 2000, was due to expire on June 10, 2004. Chun requested that the air conditioning in the Car be checked and the coolant replaced, and that the brakes be checked. In the course of discussing Chun's service requests, non-party Phil Maher, a then-service advisor at BMW Manhattan, offered Chun an extension (Extension) of the warranty coverage that was soon to expire. Mr. Maher showed plaintiff a computer monitor which displayed "72/100" as the term of the Extension, and Chun contends, without dispute, that Mr. Maher represented to him that the Extension would run for 72 months, commencing on June 11, 2004, and that it would cost $1,069.96. Mr. Maher then made an entry on his computer, but he neither advised Chun that he was processing the Extension, nor informed him that the Extension could not be cancelled. The BMW maintenance program is offered and administered by BMW of North America, LLC (BMWNA), and sold through any authorized BMW center in the United States or Puerto Rico. Mr. Maher handed plaintiff a written estimate of the service charges, all of which were covered by the then-existing warranty, and a statement of the charge for the Extension.

The following day, the Car was serviced and ready to be picked up. That morning, plaintiff was told, in a phone conversation with a different service advisor, that the term of the Extension was not 72 months, but 24 months, which when added to the coverage then in effect would result in coverage for a total of 72 months from the original in-service date of the Car. Plaintiff called defendant Maldonado, the then-customer service director at Manhattan BMW, to tell him that he was rejecting the Extension on the basis of this new information, and he requested that the Car be released to him. Maldonado called plaintiff back later that day and told him that the Extension could not be cancelled, and that BMW Manhattan would not release the Car until plaintiff paid for the Extension.

The next day, April 23, 2004, Chun called non-party Toby Conrad, a service representative of BMWNA to discuss the matter. Mr. Conrad told Chun that BMW service centers may require payment of all charges on a written estimate, regardless of the nature of such charges, prior to release of a vehicle. That afternoon, Chun appeared at BMW Manhattan, to [*2]retrieve the Car. An employee delivered the Car and the keys, and plaintiff proceeded to drive toward the street. He was stopped at the exit; he told the service person who had stopped him that the charge for the Extension was in dispute; the exit was closed; and plaintiff was prevented from leaving. Plaintiff remained in the Car for several hours, and then requested that the police be called. Two officers arrived and advised plaintiff to pay for the Extension. Plaintiff paid the charge with his American Express credit card, and he was then permitted to drive away. Plaintiff thereafter disputed the charge with American Express. On November 23, 2004, American Express issued a chargeback of $1069.96 to BMW of Manhattan, and issued a credit in the same amount to plaintiff's credit card. On or about December 6, 2004, American Express reversed the chargeback issued to BMW of Manhattan as a goodwill gesture. On or about March 31, 2005, BMWNA cancelled the Extension, removed the Car from the 72 month/100,000 mile upgrade program, and issued a refund in the amount of $895 to BMW of Manhattan. The difference between that amount and the $1,069.96 that plaintiff had been charged was the profit that BMW of Manhattan made on the sale of the Extension. On June 2, 2005, BMW Manhattan refunded the cancelled chargeback of $1,069.96 to American Express.

The amended complaint alleges the following nine causes of action: (1) violation of 18 USC §§ 1962 (c), 1961 (1) (A), and 1961 (1) (B); (2) violation of 18 USC § 1962 (d); (3) violation of Insurance Law § 7903; (4) violation of Insurance Law § 7905; (5) violation of General Business Law (GBL) § 349; (6) false imprisonment; (7) fraudulent misrepresentation; (8) specific performance; and (9) recision.

At the outset, the court notes that, inasmuch as it is undisputed that BMWNA has cancelled the Extension, and that Chun has been reimbursed the sum that he had paid for it, plaintiffs' cause of action for recision is moot.

In order to proceed on a RICO claim (plaintiffs' first two causes of action), a plaintiff must show at the pleading stage that he or she has suffered an injury to "business or property." 18 USC § 1964 (c); see e.g. Town of W. Hartford v Operation Rescue, 915 F2d 92 (2d Cir 1990). The only damages that plaintiffs claim to have suffered are the $1069.96 charge that was placed on Chun's American Express card on April 23, 2004, and which was offset by a credit in that amount on November 23, 2004, and the withholding of the Car from plaintiffs for as much as a full day. Plaintiffs have failed to show that, as a result of either the temporary charge, or the temporary withholding of the Car, they even incurred a cost, e.g., interest payments, or the price of a replacement vehicle, or have foregone any concrete opportunity, much less that they suffered an injury to their business or property. Plaintiffs contend that they suffered an injury in the form of a reduction in available credit, but they have not alleged that Chun's American Express card had a pre-set limit. In Gonzales v Colonial Trust Co. (7 Misc 2d 508 [Sup Ct, NY County 1957], affd 6 AD2d 679 [1st Dept 1958]), the court held that a plaintiff who claimed damage to his credit, as the result of defendant bank's dishonor of a number of his checks, had adequately pled that he had been damaged. No analogous claim is made here. Plaintiffs plainly lack standing to bring their RICO-based claims.

Article 79 of the Insurance Law governs the sale and performance of service contracts. Leaving aside whether a private right of action may be implied under Article 79, plaintiffs' third and fourth causes of action fail for failure to show any damages. The court notes, however, that, inasmuch as the Extension provides for the repair or replacement of parts, due to wear and tear, it is a service contract within the meaning of Article 79. See Insurance Law § 7902 (k).

GBL § 349 (a) provides that "[d]eceptive acts or practices in the conduct of any business ... in this state are hereby declared unlawful." In order to make out a claim under GBL § 349, a plaintiff must show that he or she has suffered harm, albeit not necessarily pecuniary harm, as the result of a materially deceptive act that was directed toward the consuming public. Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, N.A., 85 NY2d 20 (1995). In marked distinction from a plaintiff alleging common-law fraud, a plaintiff alleging violation of GBL § 349 need not show that he or she relied upon the allegedly deceptive act. Stutman v [*3]Chemical Bank, 95 NY2d 24 (2000); Singh v Queens Ledger Newspaper Group, 2 AD3d 703 (2d Dept 2003).

The deceptive act that plaintiffs allege here is that, without disclosing to Chun that the Extension could not be cancelled, BMW Manhattan placed the charge for the Extension on his service invoice, and acted as though such placement gave BMW Manhattan a mechanic's lien on the Car. Such action constituted a deceptive practice within the meaning of GBL § 349. See In re Scrimpsher, 17 BR 999 (ND NY 1982). As a result of that practice, plaintiffs were deprived of the use of the Car for a significant time, and Chun was prevented from driving away, while he sat in the Car for several hours, until he had paid for the Extension.

Defendants argue that the Extension added value to the Car, and, therefore, came within the Lien Law, and that, in any event, plaintiffs have shown no more than a private dispute, which does not implicate the consuming public. A lone act may suffice as the predicate of a GBL § 349 claim if it is not a "single-shot transaction," but a "typical consumer transaction" with a potential impact on consumers at large. Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d at 25, quoting Genesco Entertainment v Koch, 593 F Supp 743, 752 (SD NY 1984). In a March 24, 2005 letter responding to an enquiry from the New York State Department of Law, the General Counsel of BMWNA wrote that, under that company's then-current computer system, a maintenance upgrade could not be retracted, once entered, but that the company was seeking to modify its computers to allow for the cancellation of maintenance upgrade agreements. See Chun, Aff. in Opp., Exh. F. Accordingly, regardless of how many customers may, in fact, have sought to cancel maintenance upgrades, plaintiffs' inability to cancel the Extension was not a merely private one-shot transaction.

With regard to defendants' argument that it had a lien on the Car, because it was a bailee thereof, and had added value to it by way of the Extension, Lien Law § 184 applies only to a bailee who "tows, stores, maintains, keeps, or repairs any motor vehicle ... ." The Extension neither towed, nor stored, nor maintained, nor kept, nor repaired the Car. Indeed, the Extension had not even become effective, inasmuch as the then-existing warranty was still in effect, and would remain in effect for more than another month. Consequently, defendants had no lien under Article 8 of the Lien Law. Defendants' argument, that BMW Manhattan had a lien on the Car by virtue of maintenance that might be performed at some time in the future by one or another BMW center, under a warranty that would not take effect for more than another month, is reminiscent of the jurisprudence of the Queen of Hearts: "Sentence first-verdict afterwards."

GBL § 349 (h) provides that plaintiff in a private action brought under GBL § 349 may recover his or her "actual damages or fifty dollars, whichever is greater ... [as well as] reasonable attorney's fees." Plaintiffs here have not alleged pecuniary damages. Accordingly, they are entitled to the statuary damages of $50. In addition, plaintiffs have proceeded pro se, and accordingly they are not entitled to attorney's fees. Logue v Cottage Assocs., 66 AD2d 769 (2d Dept 1978).

Chun's claim alleging false imprisonment must fail, because he has not shown that any of the defendants intended to imprison him, as distinguished from retaining possession of the Car. See Stauber v New York City Tr. Auth., 10 AD3d 280 (1st Dept 2004). Indeed, plaintiffs acknowledge, at paragraph 95 of the amended verified complaint, that Chun could have exited the Car and left.

Plaintiffs' claim alleging fraudulent misrepresentation is based on their assertion that Mr. Maher misrepresented the term of the Extension to Chun. The measure of damages in a fraud action is the "actual pecuniary loss sustained as the direct result of the wrong." Lama Holding Co. v Smith Barney Inc., 88 NY2d 413, 421 (1996) (internal quotation marks omitted). [*4]Plaintiffs have not alleged that they have suffered a pecuniary loss.

Finally, plaintiffs seek to enforce the oral contract that Chun asserts that he made with Maher. Defendants do not dispute Chun's account of his conversation with Maher, but argue, instead, that any contract agreed to in the course of that conversation is barred by the statute of frauds, General Obligations Law (GOL) § 5-701. GOL § 5-701 provides, in relevant part, that an oral contract is void if "[b]y its terms [it] is not to be performed within one year from the making thereof or the performance of which is not to be completed before the end of a lifetime." A contract the terms of which do not dictate performance in more than a year's time is not within the statute of frauds, "even if, as a practical matter, it were well nigh impossible of performance within a year." Polykoff Adv., Inc. v Houbigant, Inc., 43 NY2d 921, 922 (1978) (citation omitted); see also D&N Boening v Kirsch Beverages, 63 NY2d 449 (1984); Kestenbaum v Suroff, 268 AD2d 560 (2d Dept 2000). The Extension does not by its terms require performance in more than a year's time, and as a practical matter, it could be entirely performed within a year by plaintiffs driving the Car for 100,000 miles, or by the total destruction of the Car.

In sum, plaintiffs are entitled to recover the statutory sum of $50 on their GBL 349 claim, and to receive an extended warranty, with a term of 72 months or 100,000 miles from the time of the making thereof, at a cost of $1,069.96, if they so desire.

Finally, plaintiffs' request for injunctive relief is denied, because plaintiffs have given no indication that the practice complained of will recur. Accordingly, it hereby is

ORDERED that defendants' motion for summary judgment dismissing the complaint is granted as to the first through fourth causes of action, and as to the sixth, seventh and ninth causes of action, and otherwise is denied; and it further is

ORDERED that plaintiffs' cross-motion for summary judgment is granted with respect to the fifth and eighth causes of action, and otherwise is denied; and it further is

ORDERED that plaintiffs are entitled to $50 under

GBL § 349, with interest from April 21, 2004; and to specific performance on the oral contract with BMW Manhattan for an extended warranty on the Car with a term of 72 months or 100,000 miles from the time of the making thereof, at a cost of $1,069.96; and it further is

ORDERED that the Clerk of the Court shall enter judgment accordingly, with costs and disbursements to plaintiffs as taxed.Dated: December , 2005

ENTER:

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J.S.C.