North Shore Auto & Towing v Nassau County

[*1] North Shore Auto & Towing v Nassau County 2007 NY Slip Op 52472(U) [18 Misc 3d 1108(A)] Decided on December 31, 2007 Supreme Court, Nassau County Austin, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 31, 2007
Supreme Court, Nassau County

North Shore Auto & Towing, Plaintiff,

against

Nassau County and Nassau County Police Department, Defendants.



6678/07



Counsel for Plaintiff Counsel for Defendant

Nancy K. Galassi, Esq.Lorna B. Goodman, Esq., County Attorney

By: Scott F. GuardinoBy: Donna A. Napolitano, Esq,

Deputy County Attorney

300 Garden City PlazaOne West Street

Suite 330Mineola, NY 11501

Garden City, NY 11530

Leonard B. Austin, J.

INTRODUCTION

This application was brought on by order to show cause dated April 23, 2007 wherein Plaintiff, North Shore Auto & Towing ("North Shore"), sought a preliminary injunction to enjoin Defendants, Nassau County ("County") and Nassau County Police Department ("NCPD") (collectively "Nassau County"), from terminating its towing and impound contract.

The issues presented were set down for a hearing which was held on June 11 and 12, 2007. At that hearing, North Shore presented the testimony of Detective Salvatore Scalone, who submitted an affidavit in opposition to North Shore's motion,

and Robert Stern, the mayor of the Incorporated Village of Thomaston.

Defendants called North Shore's principal, Scott R. Balderman, Sgt. Israel Santiago of the NCPD Legal Bureau and Sgt. Robert Johnston, the administrative supervisor of the Sixth Precinct.

Before the hearing began, an issue arose with regard to documents subpoenaed by North Shore. Nassau County argued that the subpoena should be quashed because much of the material [*2]sought was necessary for an on-going grand jury investigation of North Shore. To bolster that claim, an assistant district attorney appeared to urge that the information sought, if disclosed, would negatively impact the work of the grand jury.

Over objection, the subpoena was quashed. However, Nassau County was barred from introducing evidence of any incidents which were the part of the basis of the decision to terminate North Shore's towing and impound contract which were not already disclosed in the opposing papers submitted by Nassau County. That is, Nassau County was limited to proof of incidents which occurred prior to the renewal of the Contract in May, 2006.

FINDINGS OF FACT

North Shore and the County entered into a towing and impound contract ("Contract") on May 4, 2006. The term of the contract was three years. This Contract was the renewal of an expired towing and impound contract between the parties and the third overall between them. North Shore is also a licensed tow operator in a number of local municipalities. As such, North Shore has been on a rotational tow list for approximately 30 years.

The Contract allowed the NCPD to call upon North Shore to remove and impound a vehicle which was involved in an arrest, placed on a detective hold, involved in a felony DWI or felony unlicensed operation of the vehicle, used as a weapon or involved in a crime or which was to be held for further testing, such as brakes or some other investigation. If the vehicle was involved in an accident or became disabled on a road or highway, the vehicle would be towed pursuant to the local municipality's rotational tow list.

As a result of various complaints, NCPD sent a letter dated January 10, 2007 terminating the Contract for cause [FN1]. Specifically, the termination letter refers to Contract ¶ 11(a)(ii) and (b)(i) which provide:

11. Termination. (a) Generally. This Agreement may be terminated ... (ii) for "Cause" by the COUNTY immediately upon the receipt by the CONTRACTOR of written notice of termination...

(b) As used in this Agreement the word "Cause" includes:

...(i) a breach of this Agreement...

Specifically, the termination letter pointed to North Shore's breach of ¶ 2(m) of the Contract, which sets forth the impound rates and fixed-sum charges by which the contractor "must abide".

The letter further advised North Shore that as a result of the termination, it could no longer provide towing and impound services for zones 1, 4 and 6 [FN2]. [*3]

The termination was apparently based upon three instances of overcharging although Det. Scalone, who submitted an affidavit in opposition to North Shore's motion for a preliminary injunction, could not testify from his personal knowledge of any of them. Indeed, the three instances, which predated the May 4, 2006 renewal of the Contract, were not brought to the attention of the Commissioner of Police prior to the renewal. Apparently, the fact that there was an on-going investigation of North Shore at that time was not presented to the Commissioner either.

Sgt. Israel Santiago, the Commanding Officer of the Legal Bureau of the Nassau County Police Department, acknowledged that the termination of North Shore was not as a result of the three instances presented during the hearing of this matter.

Further, North Shore contends that the instances presented were with regard to impounds in zone 10 which was in the Sixth Precinct and not an area covered by the Contract. However, it appears that zone 10 is adjacent to the zones allowed under the Contract and, therefore, by its terms, was covered. Sgt. Santiago testified that he directed the termination letter based upon four complaints which originated in the Sixth Precinct; not the Fifth.

With regard to the three subject instances, it appears that none of them relate to overcharges and none seemed to affect the general public. Much of what was presented on the hearing of this matter suggested that, while facial violations of the Contract may have occurred, such alleged violations were not fully investigated.

Ultimately, pursuant to the termination letter of June 27, 2007, the Contract between the parties was terminated without cause. Contract ¶ 11(a)(i) allows the Contract to be terminated "for any reason by the COUNTY on thirty (30) days notice to the CONTRACTOR."

CONCLUSIONS OF LAW

A. Legal Standard

As the movant, it is North Shore's burden to establish irreparable harm, likelihood of success on the merits and a balancing of the equities in its favor. Aetna Ins. Co. v. Capasso, 75 NY2d 860 (1990); W.T. Grant & Co. v. Srogi, 52 NY2d 496 (1981); and Hightower v. Reid, 5 AD3d 440 (2nd Dept. 2004).

A "preliminary injunctive relief is a drastic remedy which will not be granted 'unless a clear right thereto is established under the law and the undisputed facts upon the moving papers, and the burden of showing an undisputed right rests upon the movant.' " Peterson v. Corbin, 275 AD2d 35, 37 (2nd Dept. 2000), quoting Nalitt v. City of New York, 138 AD2d 580, 581 (2nd Dept. 1988). The failure to meet the requisite showing mandates denial of the preliminary injunction motion. See, Abinanti v. Pascale, 41 AD3d 395 (2nd Dept. 2007); Hoeffner v. John F. Frank, Inc., 302 AD2d 428 (2nd Dept. 2003); Peterson v. Corbin, supra; and Carman v. Congregation De Milta of New York, Inc., 269 AD2d 416 (2nd Dept. 1992).

B. Irreparable Harm

Economic loss which is compensable by money damages does not constitute irreparable harm so as to warrant the granting of a preliminary injunction. EdCia Corp. v. McCormack, 44 AD3d 991 (2nd Dept. 2007). See, 1659 Ralph Ave. Laundromat Corp. v. David Enteprises LLC, 307 AD2d 288 (2nd Dept. 2003)(seeking money damages for breach of lease and tortious interference with contract provides an adequate remedy at law). [*4]

Relying on Reuschenberg v. Town of Huntington, 16 AD3d 568 (2nd Dept. 2005), North Shore contends that the improper termination of its Contract with Nassau County threatens to destroy its ongoing business concern which constitutes irreparable harm. However, such is not the case where the business is disrupted but not destroyed. See, Newport Tire & Rubber Co., Inc. v. Tire & Battery Corp., 504 F. Supp. 143, 149-150 (E.D.NY 1980), citing Jack Kahn Music Co., Inc. v. Baldwin Piano & Organ Co., 604 F.2d 755 (2nd Cir. 1979); and Jackson Dairy Inc. v. H.P. Hood & Sons Inc., 596 F.2d 70 (2nd Cir. 1979).

Here, the record apply demonstrates that the towing and impound business realized by North Shore was one of three facets of its business; to wit: towing, general automotive repairs and collision repair. While the Contract with Nassau County has been terminated, that has not impacted North Shore's remaining on the rotational towing lists of various municipalities from which it derives income. Nor has North Shore lost any of the other parts of its business.

Indeed, North Shore has been a successful family owned and operated business in Thomaston since 1956. It has only had a towing and impound business relationship with Nassau County since 1999, when the first of the three contracts was entered into. It has been on the rotational towing list for 20 years from which it realizes 300 to 375 calls per year. Thus, it is difficult to fathom that the loss of the business realized from this Contract (approximately 1,200 impounds annually), even if it was wrongfully terminated, will result in the destruction of North Shore's business. North Shore has not met its burden in this regard notwithstanding the fact that some workers have been laid off.

Although there was no testimony during the hearing establishing the monetary loss sustained by North Shore as a result of the loss of the Contract by reason of its wrongful termination in January 2007, North Shore claims in its post-hearing memorandum of law that North Shore has sustained "incalcuable exponential damages" which is "a minimum of approximately $500,000.00 generated per year in body work as well as there are additional moneys which cannot be specifically calculated from referrals from the very same people that the Plaintiff corporation did

body work for since they had their car towed by the Plaintiff." (Plaintiff's Post-Hearing Memorandum of Law, p.24).

The difficulty in North Shore's argument is that Nassau County always had the right to terminate the Contract without cause. Thus, at most, its damages are limited to the period between the first termination letter and 30 days after receipt of the last termination letter. That is, from January to approximately July 2007. Based on its long-standing business relationship and experience with the County, its damages should be calculable, if the Contract was not properly terminated or it is determined that Nassau County had no cause to terminate it. See, Ashland Mgt. Inc. v. Janien, 82 NY2d 395 (1993); and Kenford Co. v. County of Erie, 67 NY2d 257 (1986) (damages may be recovered if they were within the contemplation of the parties and capable of measurement without undue speculation). Here, notwithstanding North Shore's conclusory hyperbole, common sense dictates that North Shore's loss including lost profits, if any, can be determined, even if by approximation. See, Suburban Graphics Supply Corp. v. [*5]Nagle, 5 AD3d 663 (2nd Dept. 2004).

C. Likelihood of Success on the Merits [FN3]

From the credible proof submitted, it is unclear that the Contract was properly terminated for cause. Many of the complaints which were the subject of the original termination letter of January 10, 2007 occurred prior to the renewal of the Contract on May 4, 2006. Thus, Nassau County may well have waived its right to terminate on known instances of wrongdoing which did not rise to the level of refusal to renew or termination under the second of the three towing and impound agreements which were entered into between the parties.

In choosing to renew the contract with North Shore, Nassau County waived its right to pursue termination for the pre-renewal breaches. Inter-Power of New York, Inc. v. Niagra Mohawk Power Corp., 259 AD2d 932, 934 (3rd Dept.), lv. app. den., 93 NY2d 812 (1999). See, Strasbourger v. Leerburger, 233 NY 55 (1922); Awards.Com, LLC v. Kinko's Inc., 42 AD3d 178 (1st Dept. 2007); and ESPN, Inc. v. Office of the Commissioner of Baseball, 76 F,Supp.2d 383 (S.D.NY 1999).

While termination of the Contract for cause may be foreclosed on the instances of wrongdoing heard during the hearing [FN4], it must be remembered that on June 27, 2007, Nassau County exercised its right to terminate the Contract without cause (Contract ¶ 11[a][i]). Thus, the question as to whether the two termination for cause letters were proper in terms of their service, contents and grounds are valid and enforceable is rendered academic for the purpose of this [*6]hearing inasmuch as they have been superceded by a binding termination notice which became effective thirty (30) days from its receipt which is conceded. Thus, thirty days after receipt of the June 27, 2007 termination letter, the Contract between North Shore and Nassau County was effectively terminated.

While North Shore may have a basis to claim that the termination between the time of the first termination for cause letter (January 10, 2007) and the effective date of the termination without cause letter which is assumed to be late July 2007 or early August 2007 was wrongful, it no longer enjoys a likelihood of success on the merits since the granting of a preliminary injunction at this juncture is, at best, a pyrrhic victory. That is, since the purpose of a preliminary injunction is to maintain the status quo pending the hearing of the case. 360 West 11th LLC v. ACG Credit Co. II, LLC,

AD3d , 2007 WL 4394501 [1st Dept. 2007]), the granting or denial of this motion will have no effect on the status quo as it existed when this matter was finally submitted for determination.

Thus, under the circumstances, North Shore does not enjoy a likelihood of success on the merits to warrant a preliminary injunction.

D. Balancing of the Equities

Since the Contract has been terminated, the granting or denial of the preliminary injunction will not have any impact on the parties one way or the other.

CONCLUSION

The credible evidence has not demonstrated that North Shore is entitled to a preliminary injunction. As a matter of law, the application must be denied.

Settle an order on ten (10) days notice. Such order shall include a provision setting this matter down for a preliminary conference on February 11, 2008 at 9:30 a.m.

Dated: Mineola, NY

December 31, 2007

______________________________

Hon. LEONARD B. AUSTIN, J.S.C. Footnotes

Footnote 1: The termination letter was rejected by North Shore. A second termination for cause letter was sent by Nassau County on June 1, 2007. It was also rejected. Finally, on June 27, 2007, a third termination letter was sent. This letter terminated the Contract without cause pursuant to ¶ 11(a)(i) of the Contract.

Footnote 2: Nassau County is divided into various zones for which towing and impound contracts are given. Pursuant to the terms of the contract with North Shore, it was permitted to answer calls within its contracted zones as well as adjoining zones.

Footnote 3: In addressing the merits of North Shore's position in this matter, the Court will not address or credit the conspiracy theory offered during the hearing. That is, North Shore contends that, at least, in part, the determination of the NCPD to terminate North Shore's towing and impound contract has its genesis in a zoning dispute with the Village of Thomaston where North Shore's business is located. No credible proof was adduced to establish any link between Nassau County's decision to terminate the Contract and the zoning dispute which caused the Village to sue its own Board of Zoning Appeals over a variance granted to North Shore. The implication of North Shore's conspiracy claim is that the variance was granted to allow it to expand. Such expansion would be unnecessary if the Contract was terminated. Thus, the Village involved itself in causing North Shore to lose its towing and impound contract with Nassau County to obviate the expansion.

Footnote 4: Several other acts of wrongdoing on the part of North Shore, which occurred after the Contract was entered into were introduced by Nassau County. Based upon the ruling made on Nassau County's motion to quash North Shore's subpoena, that proof is not being considered here.