Carter v Mike's Auto, Inc.

[*1] Carter v Mike's Auto, Inc. 2010 NY Slip Op 50692(U) [27 Misc 3d 1212(A)] Decided on February 26, 2010 City Court Of Poughkeepsie Garrity, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 26, 2010
City Court of Poughkeepsie

Ashonta Carter, Plaintiff,

against

Mike's Auto, Inc. AND SHAWN NESHEIWAT, Defendants.



SC-09-1616



Ashonta Carter

Pro se Plaintiff

75 Garden Street, Apt. 3B

Poughkeepsie, NY 12601

Mike's Auto, Inc.

Pro se defendant

402 North Road

Poughkeepsie, NY 12601

Shawn Nesheiwat

Pro se defendant

402 North Road

Poughkeepsie, NY 12601

New York State Attorney General

Consumer Protection Division

235 Main Street, 3rd Floor

Poughkeepsie, NY 12601-3144

New York State Department of Motor Vehicles

Consumer Protection Safety

6 Empire State Plaza

Albany, NY 12228

State Banking DepartmentConsumer Protection Division

80 South Swan Street

Suite 1157

Albany, NY 12210

John B. Garrity, J.

Plaintiff has sued defendant seeking to recover $5,000.00, said sum representing the value of two automobiles that plaintiff purchased from the defendant's used car sales business. Plaintiff claims that the defendant wrongfully sold her car without the plaintiff's consent. The defendant argues that the plaintiff abandoned the car, and that he sold the damaged car for $1,500.00. Defendant further argues that he never agreed to allow the plaintiff to store her car on his property for free. A trial on the matter was held on October 28, 2009. Both parties proceeded pro se. The Court having duly deliberated upon the evidence introduced at trial, hereby finds and determines the matter as follows:

FACTS & ARGUMENTS:

At the outset of the trial, an inquiry was made of Mr. Shawn Nesheiwat who had appeared on behalf of the defendant relative to his authority to bind the company because the defendant corporation did not appear by an attorney as required by statute. Upon inquiry, Mr. Nesheiwat represented that he was named Vice-President of Mike's Auto, Inc. two months prior. As such, the court permitted him to proceed with the trial on the condition that after the trial, he provide to the Court proof of a copy of the filed receipt from the Secretary of State naming him Vice President of the corporation. Despite being given extensive time to provide such proof to the Court and having never received credible documentation establishing that Mr. Shawn Nesheiwat was an officer authorized to bind the corporation, the Court now concludes that the defendant failed to appear by an authorized agent in accordance with U.C.C.A. § 1809 (2); Rembrandt Personnel Group Agency v. Van-Go Transp. Co., 162 Misc 2d 64 (App. Term 2d Dept. 1994).

Notwithstanding the defendant's default in appearance, the Court would have still found in favor of the plaintiff as based upon the evidence:

In February 2006, the plaintiff, Ashonta Carter, purchased a 1998 Chevrolet Malibu from the defendant for $4,200.00. In particular, she bought the vehicle from Shawn Nesheiwat. The vehicle had approximately 85,000 miles on it. Since she financed the vehicle through the defendant's corporation, she paid a total purchase price of $4,420.00. The plaintiff paid off the vehicle by February 2007. Plainitff testified that she filed a lien release with the Department of Motor Vehicles.In January 2008, Ms. Carter's Malibu was impounded for failure to maintain car insurance and her license was subsequently suspended for six months. Since Ms. Carter had lost her job, she [*2]did not have the money to retrieve the car from the impound lot and called Shawn Nesheiwat of Mike's Auto, to see if he could help her. The defendant agreed and paid $590.00 to retrieve her car from the impound. He further agreed to store her car on his lot until July 2008 - which was the time that her license would be restored. While the defendant testified at trial that he never agreed to store the car on his lot for free, he could not tell the Court how much he agreed to charge, he could provide no proof of an agreement to store the car for money, and failed to bring to Court any of the relevant books or records to support this claim. Plaintiff testified that she called to check in with Mr. Nesheiwat on her car routinely, and that in April 2008, Mr. Nesheiwat informed her that his father had crashed into her car with a flatbed truck. Thereafter, he told the plaintiff that he had junked the car. On April 30, 2008, the evidence showed that the Malibu title was recorded with DMW to a new owner, "Brendan R. Chapman." Defendant testified that he got very little money for the car [FN1], but failed to provide a bill of sale on the Malibu. In May 2008, plaintiff went to Mike's Auto, Inc. with $500.00 to repay defendant for the impound fees and to recover her car - as she did not believe that the defendant had junked her vehicle. Instead, she confirmed that the defendant had actually sold her car to someone else. Somehow, even though the plaintiff had clear title to the Malibu, the defendant managed to transfer the title of the Malibu to "Brendan R. Chapman" without her knowledge or permission. Defendant testified that his corporation filed and executed as lien holders on the lien, but could provide no proof of this. On the other hand, plaintiff testified that she had previously filed a lien release in February 2007, which eliminated the defendant as a lien holder.

Plaintiff asked for a car of equal value. Defendant told her that her Malibu was only worth $1,000.00 (one-year after she purchased it) and that he would give her a $1,000.00 credit toward the purchase of another car off his lot. The Malibu had approximately 104,000 miles on it at that point in time. Plaintiff testified that she believed she had no other choice and so she agreed to take the $1,000.00 credit. In October 2008 she purchased a 2000 Nissan Maxima with 122,000 miles on it for $7,284.00 from the defendant. She financed this car through the defendant as well, paying him $400.00 per month. However, after she bought the car, the engine light kept going on and extensive mechanical trouble with the car soon followed. She immediately notified the defendant about it and went to his shop ever day after work. The defendant concedes that problems arose within the first two weeks of her taking the Nissan. Defendant tried to fix it and would reset the engine light and explained to plaintiff that the trouble was due to bad gas in the car and bad sensors. When the plaintiff went to make her November 2008 payment, the defendant told her that he increased the purchase price of the car by $1,456.00 for "financing purposes" - raising the price to $8,740.00. The bill of sale for the car was for $7,284.00. Plaintiff's Exhibit 2 and 4. By January, the car was inoperable and plaintiff was taking taxi cabs to work. Notwithstanding the condition of the Nissan, plaintiff still made a $200.00 payment in December and a $400.00 payment in January 2009.

In January 2009, the defendant loaned the plaintiff a 1999 Honda Accord with a dealer plate on it. Defendant testified that he did this because he sent the Nissan to the dealer for repairs. When the Nissan came back from the dealer, the defendant called plaintiff, but she said she wanted to keep the Honda - as it was more affordable. After the defendant's insistence that plaintiff return the dealer plate to him, she did so and placed her Nissan license plates on the Honda and switched her insurance over to the Honda. On February 12, 2009, a bill of sale for the Honda was executed by [*3]the parties. Plaintiff's Exhibit 5. Defendant sold the Honda to plaintiff for $3,500.00. Defendant's Exhibit E. When she went to DMV to officially switch the plates to the Honda, serendipitously she ran into the defendant who advised her that she could not switch the plates over, but that only he could switch the plates since "he had a lien on the car." Believing that defendant would switch the plates for her, plaintiff left DMV. Defendant never switched the plates and thus she could never obtain insurance on the Honda. Plaintiff found this out when via letter dated April 10, 2009, plaintiff was notified by her insurance company that they were going to suspend her license since her registration and insurance were not in the same name. Plaintiff's Exhibit 8. Her insurance was in her name, but since the defendant never gave the plaintiff title to the Honda Accord, the registration of the Honda was not in her name. On April 22, 2009, the plates for the 2000 Nissan were turned into DMV and destroyed. Plaintiff's Exhibit 7. Confused, plaintiff telephoned the defendant to find out why she was encountering this insurance problem with the plates that Nesheiwat said he would take care of, and instead of explaining the situation, Nesheiwat had the Honda towed away from the plaintiff's house shortly after the telephone call. Defendant testified that he seized the car because plaintiff failed to make her monthly payments, but again, defendant provided no proof to support this contention. Plaintiff had made several monthly auto payments of $250.00 towards the Honda Accord. Plaintiff's Exhibit 4.

When plaintiff tried to get the Honda back from defendant, she was ordered off of his lot.

In short, plaintiff paid the defendant over $5,000.00 to purchase three separate cars. The defendant sold plaintiff the Malibu which she paid off. Defendant stored it at his lot, damaged it, and then illegally sold the Malibu in an unauthorized transaction without her permission. Knowing plaintiff was desperate and had no support, defendant took advantage of the plaintiff's naivete holding her financially captive to him. Thereafter, the defendant sold plaintiff an inoperable Nissan and illegally increased the price of it after the Bill of Sale was executed and payments had been made on the car. Finally, the defendant sold plaintiff a Honda, but miraculously was able to withhold the title from plaintiff, and then he seized the Honda from her when she discovered that he never transferred the plates from the Nissan to the Honda, as he had repeatedly promised. By keeping the title in his name, he was able to continue to dispossess her of her belongings, her money, and abuse his authority. Despite all of the money plaintiff paid defendant to buy a car, she came to the small claims trial owning no car and having no form of transportation to go back and forth to work.

DETERMINATION AND ANALYSIS OF THE LAW

A. The Chevrolet Malibu:

With respect to the first car the plaintiff purchased from the defendant (the Chevrolet Malibu), the plaintiff's cause of action for this automobile rests upon the theory that a bailment was established between the parties. A bailment is defined as "a delivery of personalty for some particular purpose, or on mere deposit, upon a contract express or implied, that after the purpose has been fulfilled it will be redelivered to the person who delivered it, or otherwise dealt with according to that person's directions, or kept until it is reclaimed." 9 N.Y.JUR. BAILMENTS & CHATTEL LEASES § 1 citing Herrington v. Verrilli, 151 F. Supp. 2d 449 (S.D.NY 2001) (applying New York Law); Ellish v. Airport Parking Co. of America, Inc., 42 AD2d 174 (2d Dept. 1973) affirmed 34 NY2d 882 (1974). Here, a bailment was created for the sole benefit of the plaintiff/bailor, who sought to secure her automobile at the defendant's property until her license was no longer suspended. Establishing the type of bailment is necessary because the type of [*4]bailment dictates the standard of care imposed by law upon the bailee (defendant) in order to assess liability .

As such, the Court finds that the only possible bailment that could have been established in this matter would have been a gratuitous bailment, which exists when the bailor is the only one who benefits. In a gratuitous bailment, the bailee is bound to the exercise of only slight care and diligence. 9 N.Y.JUR. BAILMENTS & CHATTEL LEASES § 61; E.P. Dutton & Co. v. Isaac Goldmann Co., 277 A.D. 556 (1st Dept. 1950); Pettinelli Motors, Inc. v. Morreale, 39 Misc 2d 813 (County Ct. 1963). Therefore, the bailee (defendant) can only be held liable for gross negligence or bad faith. 9 N.Y.JUR. BAILMENTS & CHATTEL LEASES § 61 citing Dalton v. Hamilton Hotel Operating Co., 242 NY 481 (1926); Jay Creations, Inc. v. Hertz Corp., 42 AD2d 534 (1st Dept. 1973).

Moreover, in an action to recover damages based upon a bailee's negligence, the bailor must establish that the bailment relationship existed and that the bailee failed to exercise the required standard of care in maintaining the goods. 9 N.Y.JUR. BAILMENTS & CHATTEL LEASES § 117 citing Daoust v. Palmenteri, 109 AD2d 774 (2d Dept. 1985). Of course, the party bringing the small claim has the burden of proof and may not obtain a judgment unless he or she has demonstrated a prima facie case of liability on the part of the other party.

Here, it has been sufficiently established that a gratuitous bailment was created, as the only person that stood to benefit was the plaintiff. Generally, if a bailee fails to return a bailor's property, there is a presumption of liability, and a prima facie case of negligence exists. Maisel v. Gruner & Jahr USA, Inc. 89 AD2d 503 (1st Dept. 1982); Hutton v. Public Storage Management, Inc., 177 Misc 2d 540 (App. Term 1998). However, this presumption may be rebutted by the bailee, if the bailee comes forward with an explanation for failing to return the property entrusted to its care. Voorhis v. Consolidated Rail Corp., 60 NY2d 878 (1983).

Here, while the defendant contends that he never agreed to store the vehicle on the property for free, defendant was unable to produce a written agreement between the parties setting forth any terms or a price for which the plaintiff could store her car. Moreover, the defendant could not even tell the court how much he had agreed to store the car for with the plaintiff. As such, the credible evidence before this Court supports the plaintiff's testimony that there was no fee for storing the vehicle on the property. Most importantly, the defendant failed to come forward with a reasonable explanation for failing to return the car entrusted to its care - damaged or not.

While, the defendant is held to the lower standard of exercising slight care and diligence, the evidence proved that while the automobile was under the defendant's care, the defendant's father crashed into the plaintiff's vehicle with a flatbed truck causing damage to the plaintiff's car. Instead of calling the plaintiff and advising her of what had happened, the defendant sold the car without the owner's permission and somehow transferred title on a car that did not belong to him. While the defendant claims that he sold the car for $1,500.00, conveniently he could provide no bill of sale with respect to same. It would be of notable interest if such document was produced to find who was listed as the owner of the Malibu. As such, the Court does not credit defendant's testimony and finds the defendant liable for failing to exercise slight care and diligence over the vehicle left under his care.

This Court is empowered by statute to adjudicate small claims in such a manner as to do [*5]"substantial justice" between the parties according to the rules of substantive law. Uniform City Court Act §1804. The party bringing the small claim has the burden of proof and may not obtain a judgment unless he or she has demonstrated a prima facie case of liability on the part of the other party. Tedeschi v. Crocker, 23 Misc 3d 1134(A); 889 N.Y.S.2d 508 (Poughkeepsie City Court 2009); Sanders v. Hudson Valley Federal Credit Union, 23 Misc 3d 1134(A); 889 N.Y.S.2d 507 (Poughkeepsie City Court 2009); Bowen v. Dunn, 306 AD2d 929 (4th Dept. 2003). Here, plaintiff has met her burden. Plaintiff purchased the vehicle from the defendant in 2006 for $4420.00 and he damaged it while it was in his care and possession and then wrongfully sold it without any legal authorization to do so or permission from the plaintiff. Indeed, since plaintiff possessed clear title and defendant was no longer a lien holder on the Malibu, it is reasonable to infer that some manner of fraud or forgery was employed by defendant to sell plaintiff's vehicle without her knowledge or permission.

B. The Nissan Maxima:

The Bill of Sale for the Nissan incorporated a written warranty certifying that the vehicle was in "condition and repair to render, under normal use, satisfactory and adequate service upon the public highway at the time of delivery."[FN2] Plaintiff's Exhibit 2. The defendant conceded that the Nissan gave the plaintiff mechanical problems immediately upon delivery. Therefore, despite the certification issued by defendant, the vehicle was not what defendant had represented and promised. Rather it was in no condition to render it satisfactory and adequate for service upon a public highway, for it had extensive mechanical defects.

Moreover, the plaintiff discovered the defect and reported it to the defendant immediately. Upon learning of the defects, the defendant tried to repair the defects, but was unable. While he claims he sent the vehicle out to be serviced by the Nissan dealership, the defendant provides no proof of same, nor does he provide any evidence of what repairs were performed. As such, since defendant breached its own certification stating that the Nissan was in good condition, plaintiff is entitled to be fully reimbursed for the payments she made on a vehicle (totaling $800.00) that was unfit for use upon delivery. Plaintiff's Exhibit 2.

This Court is compelled to address the unethical and illegitimate business practices employed by the defendant as evidenced in not only his first, but his second motor vehicle sale to the plaintiff. After having damaged and sold the Malibu that did not belong to him, the defendant used intimidation tactics upon this naive plaintiff who believed she had no option but to accept the $1,000 credit (for the Malibu) he offered her towards another car on his lot. Then, after selling her the Nissan with a $1,000.00 off the purchase price, defendant illegally and conveniently raised the price of the car by $1,456.00 (for "financing purposes"), further fleecing this unwitting customer. This was all in spite of the fact that they had already entered into and signed an agreement with an agreed upon price. Plaintiff's Exhibit 2.Defendant charged plaintiff late fees even though there were no detailed terms set forth in the loan agreement for late [*6]fees. Not only was there no terms upon which the loan agreement was based, the interest rate was undisclosed, and further probing at trial revealed that defendant may have been charging her usurious interest rates in violation of New York State usury laws. Plaintiff did not challenge defendant on any of this, rather she merely accepted all of these terms, not knowing that she had any relief otherwise available to her.

Eventually, plaintiff's car insurance was canceled only after the defendant, through more deceptive business practices, convinced her that she could not switch her license plates at DMW over to the Honda under the wrongful guise that "only he could switch the plates since he had a lien on the car"- which this gullible plaintiff trusted. Any one of defendant's actions alone is reprehensible. Collectively these acts reach a level of such unethical business practices that it shocks this Court's conscience and requires further investigation by the appropriate regulating agencies.

C.The Honda Accord:

Plaintiff testified that she made a few payments towards the Honda and introduced proof of one of the $250.00 payment she made when she purchased from the defendant. Plaintiff's Exhibit 5. It is inconceivable how this defendant duped the plaintiff into paying him even more money, but he did. This time the defendant sold plaintiff a third vehicle, and while they exchanged bill of sale paperwork, the defendant never transferred the vehicle title over to the plaintiff. Meanwhile, the defendant, a licensed dealer, took advantage of plaintiff for a third time by withholding the title, thereby allowing him to seize the vehicle, resell the vehicle, and maintain legal possession of the vehicle even though she was making car payments to him each month. It is un-refuted that the defendant sold plaintiff the Honda as evidenced by the documents and testimony, yet maintained legal possession of the car. Plaintiff's Exhibit 5; Defendant's Exhibit E. Questionably the payment terms of the loan agreement on the bill of sale and price of the Honda were not completely filled in, leaving the defendant with the opportunity to endlessly hold plaintiff hostage to his whim.

The Court credits plaintiff's testimony that she made several monthly payments towards the Honda Accord that defendant "sold" to her, and thus she is entitled to recover $750.00 from the defendant for payments made on a car that she was duped into believing she owned - but never even held title to.

D.Unethical business practices:

This Court has had the opportunity to hear extensive testimony and documentary proof that strongly implies that the defendant's corporation and Shawn Nesheiwat are engaging in illegal consumer practices while carrying on, conducting, and transacting its licensed business. During the trial, it was revealed that the defendant was charging its customers undisclosed interest, and that the interest charged was in violation of the usury laws of this State. Moreover, the terms of the loan were not disclosed to the customer, nor were the late payment fees that it indiscriminately would assess to the loan, secreting the terms of the loan, and illegally carrying out its licensed business.

Under the duty vested upon this Court pursuant to U.C.C.A. § 1805(e), this Court hereby refers this matter to the New York State Attorney General's Office, the New York State Department of Motor Vehicles, and the New York State Banking Department for further investigation. [*7]Moreover, the Court advises the plaintiff of her right to file a complaint with said agencies as well as any other state or local licensing or certifying authority concerning this matter.

THEREFORE, based upon the foregoing, this Court finds that the plaintiff has sufficiently established her cause of action, and it is now

ORDERED, that the defendant failed to appear by an authorized agent in accordance with U.C.C.A. § 1809 (2), and thus defaulted in its appearance; and it is further

ORDERED, that judgment is awarded in favor of the plaintiff in the amount of $5,000.00; and it is further

ORDERED, that the Clerk of this Court file a copy of this Decision and Order with the New York State Attorney General's Office, New York State Department of Motor Vehicles, State Banking Department for further investigation.

SO ORDERED.

Dated: February __, 2010

Poughkeepsie, New York

_______________________

John B. Garrity

CITY COURT JUDGE

To:

ENTERED this ____ day of February 2010

_________________________

JEAN JICHA, CHIEF CLERK

An appeal from this judgment must be taken no later than the earliest of the following dates: (I) thirty days after receipt in court of a copy of the judgment by the appealing party, (ii) thirty days after the personal delivery of a copy of the judgment by another party to the action to the appealing party (or by the appealing party to another party), or (iii) thirty-five days after the mailing of a copy of the judgment to the appealing party by the clerk of the court or by another party to the action. Footnotes

Footnote 1:Later on in his testimony, defendant claimed he sold the car for no more than $1,500.00.

Footnote 2: The Used Car Lemon Law applies only to purchasers of used, non-commercial motor vehicles which cost $1,500.00 or more and have 100,000 miles or less at the time of sale and were bought from someone who sold or attempted to sell three or more vehicle in the previous 12 months. General Business Law § 198-b. As such, the Use Car Lemon law does not apply here.