Matter of South Shore Auto Sales Inc. v Mintz
Annotate this CaseDecided on May 7, 2012
Supreme Court, Kings County
In the Matter of the Application of South Shore Auto Sales, Inc., Petitioner, For a Judgment pursuant to Article 78 of the Civil Practice Law and Rules Vacating the September 17, 2010 and January 6, 2011 Decisions and Orders of the City of New York Department of Consumer Affairs and the March 30, 2011 Denial by the City of New York Department of Consumer Affairs of Petitioner's Appeal thereof
against
Jonathan Mintz, Commissioner, City of New York Department of Consumer Affairs, Respondent.
8687/11
Petitioner
South Shore Auto Sales, Inc.
Steven Blatt, Esq.
Bellavia, Gentile and Associates, LLP
Mineola NY
Respondent:
DCA
Michael A Cardozo, Corp Counsel
by Teresita V Magsino, Esq.
NY NY
Arthur M. Schack, J.
Petitioner SOUTH SHORE AUTO SALES, INC. (SOUTH SHORE) moves, by
order to show cause, for: an order vacating the September 17, 2010 and January 6, 2011 decisions and orders of respondent JONATHAN MINTZ, COMMISSIONER, CITY OF NEW YORK DEPARTMENT OF CONSUMER AFFAIRS (DCA), fining petitioner SOUTH SHORE $91,400 and terminating its used car sales business, and DCA's March 30, 2011 denial of petitioner SOUTH SHORE's appeal; a preliminary injunction enjoining enforcement of respondent DCA's determination; an order directing DCA to permit petitioner to file a renewal application for a Second Hand Dealer Automobile License; an order permitting petitioner to continue to operate as a second hand automobile dealer pending the determination of its renewal application; an order enjoining DCA from commencing any proceeding or action alleging that petitioner is operating without a proper license until the instant proceeding is resolved; and, DCA to pay petitioner's attorney's fees, costs and disbursements in the instant proceeding.
Background
Petitioner SOUTH SHORE commenced the instant CPLR Article 78 proceeding to vacate respondent DCA's September 17, 2010 and January 6, 2011 decisions and orders and DCA's March 30, 2011 denial of petitioner's appeal of DCA's September 17, 2010 and January 6, 2011 decisions and orders. Following below is the background for the instant order to show cause and Article 78 proceeding.
Petitioner SOUTH SHORE, on or about December 30, 2005, applied to DCA for a Second Hand Dealer Automobile License. The license application listed Louis Cretella (Cretella) as President and Massimo Barricella (Barricella) as Vice President, with each owning 50% of petitioner SOUTH SHORE's stock. DCA, on or about January 17, 2006, issued a Second Hand Dealer Automobile License to petitioner SOUTH SHORE, with an expiration date of July 31, 2007.
Petitioner SOUTH SHORE, on or about August 29, 2007, submitted to DCA its Second Hand Dealer Automobile License renewal application. Ultimately, in May 2008, [*2]DCA denied SOUTH SHORE'S renewal application, because Vice President Barricella, who had been arrested on felony drug charges on June 22, 2007, failed to provide DCA with detailed information about his arrest and the disposition of his case. New York City Administrative Code (AC) § 20-266.1 permits DCA's Commissioner to:
after notice and an opportunity to be heard . . . refuse to issue or
renew . . . or revoke, a license required under this subchapter if
the applicant or licensee, or any of its principals, officers or directors,
or any of its stockholders owning more than ten percent of the
outstanding stock of the corporation has been convicted of a crime
which, in the judgment of the commissioner, has a direct relationship
to such person's fitness or ability to perform any of the activities for
which a license is required under this subchapter or has been convicted
of any other crime which, in accordance with article twenty-three-a of
the correction law, would provide a justification for the commissioner
to refuse to issue or renew, or to suspend or revoke, such license.
Petitioner SOUTH SHORE, despite DCA's May 2008 denial of its license renewal, continued to operate its used car dealership.
Then, in early August 2010, petitioner received a Notice of Violation (NOV) from
DCA, alleging that petitioner was operating as a Second Hand Dealer Automobile without a valid license, in violation of AC § 20—265, which states, "[i]t shall be unlawful for any person to act as a dealer in second-hand articles without a license therefore."Cretella failed to appear at the scheduled September 8, 2010 hearing. He claims that he was on vacation, out of the country, on that day. DCA issued a default decision and order, dated September 17, 2010, finding petitioner SOUTH SHORE guilty of engaging in
unlicensed activity from August 6, 2010 to September 8, 2010. DCA fined petitioner
SOUTH SHORE $3,400 and directed petitioner SOUTH SHORE to immediately discontinue its unlicensed activity.
Subsequently, on or about November 12, 2010, petitioner SOUTH SHORE received another NOV from DCA for operating as a Second Hand Dealer Automobile
without a license. Cretella appeared at the December 15, 2010 hearing before DCA Administrative Law Judge (ALJ) Judith Gould.
ALJ Gould held, in her January 6, 2011 decision and order, that petitioner SOUTH SHORE engaged in "unlicensed second hand dealer auto activity from May 12, 2008, the date its renewal application was denied, through December 15, 2010, the date of the [*3]hearing," in violation of AC § 20-265. Further, ALJ Gould ordered petitioner SOUTH SHORE to pay a $91,400 fine, $100 per day for 914 days of unlicensed activity, and discontinue any unlicensed activity at the premises. ALJ Gould noted in her decision and order that: on the date of DCA's inspection, November 12, 2010, DCA Inspector Franz Michel witnessed that petitioner SOUTH SHORE had more than 19 used vehicles displayed on its premises, some with Buyers Guides affixed to them; and, petitioner SOUTH SHORE's President Cretella quoted to Inspector Michel the prices for four vehicles.
Thereafter, petitioner SOUTH SHORE appealed ALJ Gould's January 6, 2011 decision. DCA's Appeals ALJ David L. Wolfe, on March 30, 2011, affirmed ALJ Gould's January 6, 2011 decision and order. Appeals ALJ Wolfe, in his decision affirming ALJ Gould, held:
The respondent claims that its president, Louis Cretella,
hired Metropolitan Towing & Auto Body Assn. ("Metropolitan")
to prepare and submit its initial license application to the Department
[DCA] on its behalf; that, for "reasons unknown" to him, Metropolitan
listed one "Mr. Barricella" as its vice-president on the application that,
despite this alleged inaccuracy, Mr. Cretella signed the application and
had Metropolitan submit it the Department; and, that although the
Department granted the initial license, it denied the respondent's 2007
renewal application because Mr. Barricella had a criminal record.
Mr. Cretella further argues that the Department never notified him
that the renewal application had been rejected, and that it refuses to
renew its license or allow it to submit a new application.
These assertions, even if true, are not meritorious. Mr. Cretella
was personally responsible for verifying the contents of the application
before he signed it and had it submitted. The respondent was responsible
for ensuring that it was properly licensed at all times of operation and
was obligated to follow up with the Department if it had not received
its renewal license document. Whether or not the Department will allow
the respondent to either renew its license or apply for a new one does not
constitute a meritorious defense to the charge of unlicensed activity, and
does not raise a legal or factual issue to be considered on appeal.
Subsequently, petitioner SOUTH SHORE moved, by the instant order to show cause, dated April 15, 2011, for an order vacating DCA's various decisions and orders, a
preliminary injunction and other relief.
Discussion
It is axiomatic that in an Article 78 proceeding the Court's function is to determine whether the action of an administrative agency had a rational basis or was arbitrary and capricious. (Pell v Board of Educ. of Union School District No.1 of the Towns of [*4]Scarsdale and Mamaroneck, Westchester County, 34 NY2d 222, 230-231 [1974]). "Arbitrary action is without sound basis in reason and is generally taken without regard to the fact." (Pell at 231). A rational basis exists where the determination is "[supported] by proof sufficient to satisfy a reasonable [person], of all the facts necessary to be proved in order to authorize the determination." (Ador Realty, LLC v Division of Housing and Community Renewal, 25 AD3d 128, 139-140 [2d Dept 2005], quoting Pell at 231).
A reviewing court will not substitute its judgment for that of the agency unless the agency's determination is arbitrary, capricious or contrary to law. (See Pell at 231; Matter of Brockport Cent. School Dist. v New York State & Local Employees' Retirement System, 270 AD2d 706, 707-708 [3d Dept 2000]). Pursuant to CPLR § 7803 (3), the question raised in an Article 78 proceeding is "whether a determination was made in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion." Thus, the "court limits judicial review of an administrative determination solely to the grounds invoked by the agency, and if those grounds are insufficient or improper, the court is powerless to sanction the determination by substituting what it deems a more appropriate or proper basis." (Matter of Trump— Equitable Fifth Ave. Co. v Gliedman, 57 NY2d 588, 593 [1982]).
Petitioner SOUTH SHORE, in the instant action, maintains that its President, Cretella, was not able to attend the first NOV hearing, resulting in the September 17, 2010 default decision and order determining that petitioner SOUTH SHORE had been operating without a licence, because President Cretella was vacationing out of the country when the NOV was served on petitioner SOUTH SHORE and when the hearing took place. President Cretella claims he assumed that petitioner SOUTH SHORE's license had been renewed, because he never received any notice from DCA that the renewal application submitted in August 2007 had been rejected or was otherwise denied.
It is undisputed that DCA denied petitioner SOUTH SHORE's renewal application because Barricella, listed on petitioner SOUTH SHORE's license application as Vice President, has a criminal record. However, petitioner SOUTH SHORE claims President Cretella hired Metropolitan Towing & Auto Body Assn. (Metropolitan) to prepare and submit its initial license application to DCA and President Cretella was unaware that Barricella was incorrectly listed as Vice President of petitioner SOUTH SHORE. Further, Cretella claims Barricella was just an employee of petitioner SOUTH SHORE and never Vice President or any other officer of petitioner SOUTH SHORE. Thus, petitioner SOUTH SHORE asserts, in light of DCA's failure to notify it of the rejection of its renewal application and the clerical error regarding the naming of petitioner's principals, it should be permitted to either file a corrected renewal Second Hand Dealer Automobile License or apply for a new Second Hand Dealer Automobile License. Moreover, petitioner SOUTH SHORE maintains that DCA's determination, that it was operating without a licence, fining it $91,400 and terminating its business, is excessive, arbitrary and capricious. [*5]
"DCA is charged with the maintenance of standards of honesty, integrity and fair dealing among persons engaging in licensed activities." (Laureiro v New York City Department of Consumer Affairs, 41 AD3d 717, 719-720 [2d Dept 2007]). DCA's licensing powers are enumerated in AC Title 20 and Title 6 of the Rules of the City of New York (RCNY), which were enacted to safeguard and protect consumers against fraudulent practices. As noted above, AC § 20—265 makes it unlawful for any person to act as a used car dealer without a license. Moreover, applicants for a Second Hand Dealer Automobile License are required to be fingerprinted and provide DCA with a passport size photograph for a criminal background check. (AC § 20—266 [c]; 6 RCNY § 1—01). The Court, in the instant proceeding finds, upon reviewing the record and after hearing oral argument, that DCA's: denial of petitioner SOUTH SHORE's license renewal application; determination that petitioner SOUTH SHORE violated AC § 20-265 from May 12, 2008 through December 15, 2010; and, $91,400 fine imposed upon petitioner SOUTH SHORE; is not arbitrary, capricious, an abuse of discretion, an error law or in violation of lawful procedure. It is undisputed that petitioner SOUTH SHORE's license to operate a second hand auto dealership was not current from May 12, 2008, the date its renewal application was denied, to December 15, 2010, the date of the hearing before ALJ Gould. DCA decided not to renew petitioner SOUTH SHORE's license because Barricella, Vice President on petitioner SOUTH SHORE's license application, has a criminal record. DCA, pursuant to AC § 20-266.1, has authority not to renew petitioner SOUTH SHORE's Second Hand Dealer Automobile License.
DCA rationally found that petitioner SOUTH SHORE failed to demonstrate its
eligibility for a license renewal because one of its named officers has a criminal record. Cretella, despite his assertion that he was unaware that petitioner SOUTH SHORE's license renewal application erroneously listed Barricella as Vice President, does not dispute that he signed the license application that Metropolitan submitted on petitioner's behalf. DCA is correct that petitioner SOUTH SHORE's President, Cretella, was responsible for verifying the contents of the license application before he signed and submitted it. Further, Cretella signed in the license application an acknowledgment that he received a "a copy of the laws and regulations relating to the license for which this application is being made" and in consideration being granted the license "it is agreed that the applicant will comply with the rules and regulations of the Department of Consumer Affairs that are now in force or that may in the future be promulgated." Therefore, petitioner SOUTH SHORE is responsible for any errors in the license application that Metropolitan submitted on its behalf. Furthermore, petitioner SOUTH SHORE failed to provide documents pertaining to the arrest of Barricella, its Vice President and 50% shareholder. To the extent that Cretella alleges that Barricella was merely an employee, not a shareholder, petitioner SOUTH SHORE's initial license application reflects the [*6]contrary.Moreover, it is well settled that in reviewing DCA's rational determination, the Court must defer to the fact-finder's assessment of the evidence and credibility of the witnesses. (See Colton v Berman, 21 NY2d 322 [1967]; Matter of Interliners Lounge Social Club, Ltd. v Department of Consumer Affairs, 176 AD2d 169 [1d Dept 1991]). "In reviewing administrative findings pursuant to the very limited authority conferred by CPLR article 78, this Court may not weigh the evidence, choose between conflicting proof, substitute its assessment of the evidence for that of the Administrative Law Judge, or interfere with the Administrative Law Judge's findings as to the credibility of witnesses." (Amann v New York City Loft Bd., 262 AD2d 234, 234 [1d Dept 1999]). In the instant proceeding there is no basis to disturb DCA's determination, premised largely upon the assessment of witness credibility by ALJ Gould and Appeals ALJ Wolfe during
their hearings with Cretella.
With respect to DCA's $91,400 fine imposed upon petitioner SOUTH SHORE, the Court observed that when petitioner SOUTH SHORE initially applied for its license, it agreed to comply with DCA's rules and regulations. DCA, pursuant to AC § 20-104 [e] [2], is authorized to impose penalties for violation of any provisions of law within its jurisdiction, including the power to redress injuries caused to consumers. Further, pursuant to AC § 20—105 (b) (1), with respect to unlicensed business activity, DCA's "Commissioner may impose fines . . . of one Hundred dollars per violation per day for each and every day during which such person" engages in unlicensed business activity. (See Matter of Marin Const. Corp. v Scatliffe, 271 AD2d 206 [1d Dept 2000]; Matter of V & A Towing v City of New York, 197 AD2d 386 [1d Dept 1993]). Therefore, DCA's determination, finding that petitioner SOUTH SHORE engaged in unlicensed second hand auto dealer activity in violation of AC § 20-265 for more than two and one-half years, May 12, 2008 through December 15, 2010, and imposing a fine of $91,400, $100 per day of unlicensed activity for 914 days, is not arbitrary, capricious, an abuse of discretion, an error law or in violation of lawful procedure.
That branch of petitioner SOUTH SHORE's order to show cause seeking a preliminary injunction to enjoin enforcement of DCA's determinations is denied. "In support of a motion for a preliminary injunction the movant must demonstrate (1) a likelihood of ultimate success on the merits; (2) irreparable injury absent the granting of the preliminary injunction; and (3) that a balancing of equities in favor of the movant's
position." (Radiology Assoc. of Poughkeepsie, PLLC v Drocea, 87 AD3d 1121, 1123 [2d Dept 2011]). (See W.T. Grant Co. v Srogi, 52 NY2d 496, 517 [1981]; EdCia Corp. v McCormack, 44 AD3d 991, 993 [2d Dept 2007] ). Petitioner SOUTH SHORE failed to establish any of the foregoing criteria for injunctive relief. Petitioner is unable to prove why it is likely to prevail on the merits. Notwithstanding petitioner SOUTH SHORE's allegations, DCA's determination, that petitioner SOUTH SHORE violated AC § 20-265 by operating its business without a valid license for 914 days, is rational and reasonable. [*7]Petitioner SOUTH SHORE cannot demonstrate that irreparable harm is imminent or certain in the absence of a preliminary injunction. Petitioner SOUTH SHORE failed to submit any specific evidence about its prior sales and alleged economic harm. (Neos v Lacey, 291 AD2d 234, 235 [2d Dept 2002]; Benjamin Kurzban & Son, Inc. v Board of Educ. of City of New York, 129 AD2d 759 [2d Dept 1987]; L & J Roost, Ltd. v Department of Consumer Affairs, 128 AD2d 677, 679 [2d Dept 1987]). A balance of the equities tips in respondent's favor. If the Court granted petitioner SOUTH SHORE a preliminary injunction, it would prevent DCA from enforcing the Administrative Code and undermine DCA's authority to issue and adjudicate violations. In effect, the granting of the instant order to show cause would allow petitioner SOUTH SHORE to operate its used car dealership without a valid license.
Petitioner SOUTH SHORE's remaining arguments are without merit. Therefore,
since DCA's determination is not arbitrary, capricious, an abuse of discretion, an error of law or in violation of lawful procedure and supported by the evidence, petitioner SOUTH SHORE's instant order to show cause is denied and petitioner SOUTH SHORE'S instant
Article 78 petition is dismissed.
Conclusion Accordingly, it is
ORDERED, that petitioner SOUTH SHORE AUTO SALES, INC.'s order to show cause is denied; and it is further
ORDERED, the petitioner SOUTH SHORE AUTO SALES, INC.'s verified petition is dismissed; and it is further
ORDERED, that all stays currently in effect will expire fifteen (15) days after petitioner, SOUTH SHORE AUTO SALES, INC., is served by counsel for respondent, JONATHAN MINTZ, COMMISSIONER, CITY OF NEW YORK DEPARTMENT OF CONSUMER AFFAIRS, with notice of entry of this Decision and Order.
This constitutes the Decision and Order of the Court.
ENTER
_____________________________HON. ARTHUR M. SCHACK
J. S. C.
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