Technovate LLC v FanelliAnnotate this Case
Decided on September 10, 2015
Civil Court of the City of New York, Richmond County
Technovate LLC d/b/a MR. SANDLESS OF STATEN ISLAND and MATTHEW GARDINER, Plaintiff,
Emily Fanelli a/k/a EMILY OLIVO, Defendant.
Emily Fanelli, Claimant, ,
Technovate LLC D/B/A MR. SANDLESS OF STATEN ISLAND Defendant.
Technovate LLC and Matthew Gardiner represented by:
Jeffrey David Eisenber, ESQ.
341 Yetman Avenue,
Staten Island, NY 10307
Emily Fanelli a/k/a Emiluy Olivo Self Represented
Philip S. Straniere, J.
"A good name is rather to be chosen than great riches." Proverbs 22:1.
Plaintiffs, Technovate LLC d/b/a Mr. Sandless of Staten Island and Matthew Gardiner, [*2]commenced this civil action against the defendant, Emily Fanelli a/k/a Emily Olivo, alleging that the defendant's postings on internet sites about the plaintiffs qualified as libel per se entitling plaintiffs to damages.
In a separate action, claimant Emily Fanelli, commenced a small claims action against defendant, Matt Gardiner, individually, alleging defective repairs to the floors of her home. The small claims action was dismissed without prejudice on April 16, 2015, when defendant established that he, as an individual, was not a proper party to the proceeding. Claimant then made a motion to restore the matter to the small claims calendar alleging in that application that there was no entity registered as Mr. Sandless. The court heard the application on August 18, 2015 and granted the motion to restore the matter to the calendar amending the caption of the defendant in the small claims matter to Technovate LLC d/b/a Mr. Sandless of Staten Island. The claim against Gardiner individually was not restored.
Plaintiffs produced documentation that since 2006 Technovate, LLC is registered as a domestic limited liability company with the Department of State and that entity has filed a certificate of doing business under an assumed name for Mr. Sandless of Staten Island, with the Richmond County Clerk.
The parties consented to have the matters tried together on August 18, 2015. Plaintiffs Technovate and Gardiner were represented by counsel in both actions. Defendant Fanelli appeared without counsel in both suits.
Mr. Sandless, which is a national franchise, advertises itself as an "affordable wood floor refinishing without the hassle of dust, odors and long drying periods." It promotes that its chemicals are "green" certified with no mess to clean up. The service is guaranteed for five years. The website advertisement also offers traditional sanding methods.
On February 25, 2015, Mr. Sandless entered into an agreement with Emily Olivo to refinish the living room and dining room floors at 50 Hudson Place, Staten Island, New York. The agreement is reflected on a "service work order" from Mr. Sandless. The work order indicates that Mr. Sandless serves "Morris and Union Counties" which are in New Jersey. The document has no indication of a local Staten Island business being involved.
The price for the services was $695.00. The invoice reflects sales tax being charged, but that amount is deleted leaving the total cost to the defendant at $695.00. At trial each side claimed the other side proposed eliminating the tax for cash. The fact that a merchant and a customer would agree to a "cash" price without the required sales tax being charged is as shocking as learning that there is gambling at Rick's. The service order is allegedly signed by the defendant as agreeing to the work and then later accepting the work as being satisfactorily performed.
Defendant stated that she located Mr. Sandless through the business listings of silive.com, which is an online service run by the Staten Island Advance. She testified that after [*3]the initial work was done, she noticed some areas that needed attention. The problem was described by the plaintiffs as being some raised acrylic. She contacted the plaintiffs and on March 4, 2015, the plaintiffs sent out a crew to address the defendant's concerns. Defendant was apparently dissatisfied with both the initial job and the corrective actions taken. Leading to her admitting to posting reviews about her experience with the plaintiffs on the internet and to the commencement of the small claims action.
On March 4, 2015 identified as "Emily" she posted the following "review" on silive (presented below as it appeared on the website):
this matt the owner is a scam
do not use mr sand less of staten island matt is the name he will destroy you floor he is a liar and con artist beware
On March 4, 2015 a similar review by "Emily F." was posted on Yelp (presented below as it appeared on the website).
this guy mat the owner is a scam do not use him you will regret doing business with this company I'm going to court he is a scam customers please beware he will destroy your floors he is nothing by a liar he robs customers and promises you everything if you want shit then go with him if you like nice work find another he is A SCAM LIAR BULLSHITTER
On March 4, 2015, defendant filed her small claims action in Civil Court (SCRNo.172/15) seeking $3,700.00 in damages for defective repairs.
On March 20, 2015, "Emily F." posted an "updated review" on Yelp (presented below as it appeared on the website).
this is a night mare of a company you can not imagine what my floors look like stay away from matt gardiner your floors start to crack the stuff comes off the floors are left with no shine i had beautify shine before matt came to my house believe me if you want to see matts work and you rare thinking of hiring him contact me per my email and i will gladly show his work here is my e email address it is firstname.lastname@example.org i would show you his terrible work you would thank me please advise any now who is thinking of wiring with him stay away he is the island biggest scam person around, DO NOT HAVE YOUR FLOORS DONE WITH THIS MAN, CUSTOMERS PLEASE BE WARE OF THIS MAN MATT GARDINER HE IS A SCAM HE TAKES YOUR MONEY AND DESTROYS YOUR HOME
he des not even deserve a one star 0 stars he gets
Defendant on April 1, 2015 hired Filippo Custom Carpentry allegedly to redo all of the floors Mr. Sandless had treated. Filippo began the work on April 7, 2015 and completed it on April 10, 2015. The defendant paid him $2,613.00, including the sales tax, for the service. The expenses incurred in correcting the plaintiff's work are the basis of defendant's small claims action. The invoice from Filippo recites that he had previously seen defendant's floors and describes what the problems he observed after Mr. Sandless treated them. The Filippo invoice is more of a narrative of the conditions at defendant's home rather than a description of the actual work Filippo performed.
On June 28, 2015, plaintiffs brought their defamation action to which the defendant filed an answer on July 30, 2015. Civil Practice Law and Rules (CPLR) §3016(a) in regard to claims for libel or slander requires that the particular words complained of as being the basis for the claim be set forth in the complaint. Plaintiffs' complaint has set forth the specific words of defendant's posting which plaintiffs assert are defamatory.
An unanswered question is how did Fanelli know to sue for $3,700.00 in damages in the small claims action filed on March 4, 2015 when the repairs were not completed until April 10, 2015 and she allegedly had additional expenses because she had to be out of the house for three days while her floors were redone?
A. Are the Internet Postings of the Defendant Libel Per Se?
In New York defamation is defined as the making of a false statement of fact which "tends to expose the plaintiff to public contempt, ridicule, aversion or disgrace" [Rinaldi v Holt, Reinhart & Winston, 42 NY2d 369, 379, cert denied 434 US 969 (1977)]. A libel action cannot be maintained unless it is based on the published assertion of fact rather than on assertions of opinion [Brian v Richardson, 87 NY2d 46 (1995)]. For defamation purposes "publication" means communicated to a third person.
The elements of defamation are (1) the publishing of a false statement to a third party; (2) without authorization or privilege; (3) fault, judged at a minimum by a negligence standard; and (4) special harm or defamation per se [Dillon v City of New York, 261 AD2d 34 (1999)]. Under New York law, among the categories where words are per se defamatory are statements that imply criminal activity, or tend to injure a party's trade, occupation or business.
"A statement which concerns a person in his trade or business and tends to injure him therein is actionable per se" (citations omitted). Likewise, with regard to business entities, "statements which impugn the basic integrity, creditworthiness, or competence of the business, are defamatory per se, and thus, special damages need not be pleaded (citations omitted).
[Prince v Fox Television Stations, Inc., 33 Misc 3d 1225(A) (2011)]
New York also adheres to the doctrine that "a publication defamatory of a place or a product is not libel against its owner unless the owner himself is accused of disreputable conduct" [El Meson Espanol v NYM Corp., 521 F.2d 737 (2d Cir 1975)].
Taking the above into account it seems that on the surface both plaintiffs have established a prima facie claim of defamation with injury to their business reputations as the defendant's Internet postings specifically mention Gardiner along with the business, Mr. Sandless. The next analysis is whether the statements of the defendant on the Internet are opinions and thereby protected speech not subject to a claim for damages.
It should be noted that New York recognizes a separate torts of defamation and disparagement of goods. Statements concerning a party's integrity or business methods form the [*4]basis of a defamation claim while statements denigrating the quality of a party's goods or services constitute disparagement of goods [Fashion Boutique of Short Hills, Inc. v Fendi USA, Inc., 314 F.3d 48 (2d Cir 2002)]. Plaintiffs did not plead a cause of action for disparagement of goods. An examination of the defendants on-line postings disclose that she is attacking the integrity of the plaintiffs and their business practices rather than the disparaging the product, so no cause of action for disparagement exists.
The courts have adopted a four part test to determine whether statements are protected opinion or unprotected assertions of fact [Ollman v Evans, 750 F2d 970 (DC Cir 1984) cert denied 471 US 1127 (1985)]. The four factors are (1) whether the statement has a precise meaning so as to give rise to a clear factual implication; (2) the degree to which the statements are verifiable, that is, objectively capable of proof or disproof; (3) whether the full context of the communication in which the statement appears signals to the reader its nature as opinion; and (4) whether the broader context of the communication so signals the reader.
The standard in New York for distinguishing protected expressions of opinion from actionable assertions of fact was clarified in Steinhilber v Alphons, 68 NY2d 283 (1986)]. The court noted:
A "pure opinion" is a statement of opinion which is accompanied by a recitation of the facts upon which it is based. An opinion not accompanied by such a factual recitation may, nevertheless, be a "pure opinion" if it does not imply that it is based upon undisclosed facts. When, however, the statement of opinion implies that it is based upon facts which justify the opinion but are unknown to those reading or hearing it, it is a "mixed opinion" and is actionable. The actionable element of a "mixed opinion" is not the false statement itself-it is the implication that the speaker knows certain facts, unknown to his audience, which support his opinion and are detrimental to the person about whom he is speaking.
The courts have been struggling with the application of the traditional analysis of defamation to the Internet. As noted in Sandals Resorts International Ltd v Google, Inc., 86 AD3d 32, 43 (2013), the culture of the Internet is characterized by a more freewheeling, anything-goes style of writing where bulletin boards and chat rooms may be the repository of a wide range of casual, emotive, and imprecise speech where the readers of the offensive statements do not necessarily attribute to them the same level of credence they would to statements made in other contexts. On-line speech often is characterized by the use of slang, grammatical mistakes, spelling errors, and a general lack of coherence. Many, if not, all of which exist in defendant's postings.
The defendant argues that she has a first amendment right to give her opinion of the plaintiffs. Courts are cognizant of the need to balance that cherished freedom of expression against the right of persons not to suffer damages as a result of defamatory comments.
In order to protect our prized First Amendment rights to free speech and press as well as debate on public issues, courts have insulated defendants from liability for stating opinions that another person was "immoral" and "unethical" (citations omitted) and for "lying, deceiving, [and] making false promises" (citations omitted).
[Rafkofsky v Washington Post, 39 Misc 3d 1226(A) (2013)]
Analyzing the three posts by the defendant, the court must decide whether they are "pure opinions" which are not actionable by the plaintiffs, or "mixed opinions" which are. Was the defendant upset about the job plaintiffs performed and just "blowing off steam" in her postings or was she intent on damaging the plaintiffs' business reputation? The defendant's actions and the post event timeline seems to lean to the conclusion the latter was her intent.
Clearly the initially posting on silive.com is not a "pure opinion" in that in it there are no facts presented in the post to support the defendant's statement "do not use mr sand less of staten island matt is his name he will destroy you floor he is a liar and a con artist beware." In this posting, the defamation is directed to plaintiff Gardiner and not the business. Defendant calls him a "liar" and "con artist." There are no specifics to support the allegations and from which a reader could determine whether there is a basis in fact for the statements as "destroy you[sic] floor" is too general to be considered the statement of a fact and indicates that the defendant has other information not being put forth in the posting. This qualifies as a "mixed opinion."
The first Yelp posting on March 4, 2015 also appears to be a "mixed opinion" and not a "pure opinion" as it does not disclose any facts from which a reader could evaluate defendant's statements for their truth. Defendant claims that Gardiner is a "scam" without reciting any specifics as to the "scam." The statement that she plans to go to court, might give a reader some belief that there is a legitimate basis for the defendant's complaints. However, it does not provide any facts to support her allegations.
The second Yelp posting on March 20, 2015 is "pure opinion" and is protected as it gives the reader some details as to why the defendant was dissatisfied and provides her email address to contact her for more information and offers to have persons interested come to her house to see the plaintiffs' work product. This posting is neither defamatory to the business, Mr. Sandless. Nor to Gardiner, although the defendant continues to seek to impugn Gardiner's integrity.
The above being said, considering at this point, March 20, 2015, the defendant had already commenced her small claims action on March 4, 2015, where any legitimate claims for damage to her floors would be resolved, the only reason to submit another posting was to damage plaintiffs' reputation.
New York also follows the "single instance rule." This provides where the defamatory statement charges the plaintiff with a single instance of misconduct in connection with the plaintiff's trade, occupation or profession, it is not actionable as defamation per se and the plaintiff must establish special harm arising from the statement [Amelkin v Commercial Trading Co., 23 AD2d 830 (1965)]. However, if the defamatory language charging only a single instance of misconduct imputes general incompetence, lack of integrity, or lack of fitness for the plaintiff's trade, office, profession or calling, the special harm requirement is obviated [November v Time Inc., 13 NY2d 175 (1963)]. Based on the facts of this case, the single instance rule is not applicable. Defendant was alleging misconduct in regard to plaintiff Gardiner's trade, occupation or profession which would cause potential customers of the plaintiff to avoid using his services. She referred to him as a "scam," "liar," "bullshitter," "con artist" and someone who "robs" you. Terms such as "scam" "con artist" and "robs" imply actions [*5]approaching criminal wrongdoing rather than someone who failed to live up to the terms of a contract. Had the defendant posted that the plaintiffs failed to do what they promised or that the floors did not turn out as she expected, she probably would not be a defendant in this litigation.
It must be concluded that the statements of the defendant about defendant Gardiner are actionable libel per se. They were personal in their invective and were designed to impugn his integrity and business practices with the intent to damage his business reputation. The statements as to the quality of the services performed by defendant Mr. Sandless are protected speech of a dissatisfied customer. They are referenced with some specific facts, the opportunity for others to contact the defendant directly and the possibility to visit her home and observe the refinishing themselves. Technovate d/b/a Mr. Sandless does not a have cause of action.
B. Are the Plaintiffs Entitled to Damages?
When a plaintiff establishes that the defendant's statements amount to defamation per se, there is no need to prove special damages. The law presumes that the making of the statement inflicts harm to the plaintiff's reputation entitling the defamed plaintiff to damages. Special damages, that is economic loss, arising from the publication of the defamation to third parties, must be proven in all cases were defamation per se is not applicable.
As stated above, the court has determined that the plaintiff Technovate has not been defamed by the defendant's statements. They were statements of opinion as to the quality of the work performed. Someone reading defendant's Internet posting could compare her statements to those made by other customers, many if not most, were positive and satisfied with Technovate's work and make there own decision on whether or not to use the company and its product.
Plaintiffs submitted documentation attempting to prove actual damages through the loss of income in March 2015 and April 2015 because of the defendant's postings [Liberman v Gelstein, 80 NY2d 429 (1992)]. Unfortunately, plaintiffs produced two statements from 2014 and none from 2015. Even if the 2015 statement was produced it would have little weight on the issue of damages because statements 2011 through 2013 show variations between monthly billings each year. In addition, the statements are not on a letterhead or in any other way described so as to be able to determine their purpose and accuracy. Plaintiff Gardiner had his self-serving testimony in regard to these issues. A better record might be copies of reports plaintiff prepared for the franchisor, Mr. Sandless, or quarterly sales tax returns, or some other document generated for a purpose other than the litigation. In any case, the loss of income would be for a claim by Technovate and not Gardiner as an individual and the court has determined Technovate was not defamed.
As to plaintiff Gardiner's damages, the court has determined that defendant's statements in regard to his honesty in business transactions qualified as defamation per se entitling him to general damages without proof of special harm. The amount of general damages in a defamation action must be supported by competent evidence concerning the injury, but there is no need to produce evidence which assigns an actual dollar value to the injury [Wolf Street Supermarkets v McPartland, 108 AD2d 25 (1985)]. The court finds that the general damages suffered by the [*6]plaintiff Gardiner amounts to $1,000.00. Based on the documentation submitted by the parties concerning the defendant's Internet postings, it does not appear that too many people are viewing comments about Mr. Sandless on either the silive or the Yelp website. Thereby limiting the harm Gardiner suffered to his reputation.
C. Should Plaintiff Be Licensed?
Neither plaintiff, Technovate nor Gardiner is licensed as a home improvement contractor pursuant to New York City Administrative Code (NYCAC) §20-386. Plaintiffs contend that they are not required to be licensed by the New York City Department of Consumer Affairs. The statute defines a "home improvement" as "the construction, repair, replacement, remodeling, alteration, conversion, rehabilitation, renovation, modernization, improvement or addition" to a building used for residential purposes. Excluded from the definition is "painting" not incidental or related to a home improvement.
There is also a state law requiring licensing [General Business Law (GBL) Article 36-A]. Although the NYCAC does not refer to flooring, the state statute does. Because the both statutes are designed to protect consumers from unscrupulous business practices, the failure of the local law to specify "flooring" in its definition does not mean that the state law requiring licensing is inapplicable. A reading of both statutes leads to the conclusion that the type of improvements listed are not meant to be exclusive but are in fact examples of some of the work specifically covered. The failure to list something does not mean licensing is not necessary. The nature of the work determines whether it is a home improvement and not the label placed on it.
Based on the description of its services, Mr. Sandless is engaged in a home improvement and needs to be licensed. This is supported by the services offered on the "contract" which include "wood floor" and "carpentry."
It should be noted that the "contract" with the defendant is on a New Jersey billhead of Mr. Sandless and gives no information about Mr. Sandless of Staten Island such as a local address or telephone number. This information is available on the businesses website.
The fact that the plaintiff is not licensed and that the "contract" is for a New Jersey business and not the plaintiff, a Staten Island based franchisee, amounts to a deceptive business practice under GBL §349 entitling the defendant to damages. The extent of those damages is what is difficult to assess.
The court will not address the issue of whether the "contract" and the acknowledged acceptance of the work were signed by the defendant. She denies signing them and neither signature appears close to the signature on the affidavit accompanying the order to show cause in the small claims action. Although the signatures on the plaintiffs' "contract" appear to be closer to the defendant's signature on the Filippo Custom Carpentry contract.
In the past this court has on numerous occasions held that the failure of the business to be licensed prevents that business from collecting any money due to it on a breach of contract [*7]claim. Likewise, the court has denied recovery to any consumer seeking his or her money back once they learned that the contractor was unlicensed. The court has taken the position that because there was no license and the consumer failed to investigate the license status with the Department of Consumer Affairs, the agreement is illegal and the court will not enforce its terms leaving the parties without redress in the court system.
The court has allowed the consumer recovery when the unlicensed contractor actually caused physical damage to the property requiring remedial measures to correct the improper work. However, that work must be done by a licensed contractor in order to recover. The theory of recovery is based on negligence of the unlicensed contractor and not contract.
The problem in this action is that the defendant was dissatisfied with the work of the unlicensed contractor but that when she had the work corrected, she hired another unlicensed contractor, or at least his billhead does not indicate licensing, and no proof of Filippo being licensed was presented. Based on the description of what he observed and proposed to do, Filippo did work far beyond that of the plaintiffs. The corrective work was a traditional sanding and refinishing and not a "green" treatment of the floors. As a result the court cannot award her any actual damages in this regard. Any damages she suffered must be based on some other legal theory.
Under the statute, GBL §349(h), a consumer who is subjected to deceptive business practices, is entitled to actual damages or fifty dollars, whichever is greater as well as punitive damages not to exceed three times the actual damages up to one thousand dollars. She cannot collect the money she paid to plaintiffs as actual damages, because she hired an unlicensed contractor and lacked expert testimony to establish that the work was not properly performed by the plaintiffs. Likewise she cannot claim actual damages for the monies paid to Filippo because there is no showing he was licensed, his invoice does not describe the work he actually did, the rooms serviced or square footage, or any charge for materials and labor.
The court finds that each violation of the statute, not being licensed and using a New Jersey form for a New York entity entitles the consumer to a separate $50.00 award or a total of $100.00. In addition, punitive damages of $150.00 on each violation calculated as three times each $50.00 award. The total due from Mr. Sandless for violating the General Business Law is $400.00.
However, because the defendant did not file a counterclaim, this award cannot be made in the plaintiffs' civil court action. Neither can it be used as a set-off against the damage award assessed against her because that award is in favor of the individual plaintiff, Gardiner, on his defamation claim. This award to Fanelli is for the business entity, Technovate, LLC not comply with the General Business Law. The defamation claim of Technovate was dismissed.
D. Defendant's Small Claims Action.
Defendant's small claims action was amended to eliminate Gardiner as an individual defendant and to allow her to proceed against Technovate LLC d/b/a Mr. Sandless of Staten [*8]Island. This entity agreed to be the named defendant even though as noted above the "contract" between the parties is between the claimant and "Mr. Sandless" as a trademarked entity at an undisclosed address but with New Jersey telephone numbers and a statement that it services Morris and Union Counties.
The claimant is not entitled to be compensated for the work done by Filippo Custom Carpentry. There is no indication that he is a licensed contractor. In addition, the work he performed is totally different from the work Mr. Sandless performed. Filippo did a traditional floor stripping and refinishing which involved removing all of claimant's furniture from the rooms in question, and having her stay out of the house three days. At best, claimant would only be able to recover what she paid to Mr. Sandless, if the court accepted that it was not done correctly rather than she was just a dissatisfied customer. Expert testimony was needed to establish that the defendants in the small claims action breached the contract and its warranties. No expert testimony was presented. The narrative by Filippo on his invoice is not admissible evidence in that regard.
Further, the Filippo contract does not describe the floors that he redid, either by room or square footage. It does not distinguish between materials and labor. So it is not acceptable as proof of what work Filippo actually performed. The court cannot accept it as evidence.
Claimant's cause of action is dismissed on the merits. She has failed to prove her prima facie case.
However, as set forth above, the claimant has established that defendant, Technovate in this small claims action violated the General Business Law. She is entitled to $400.00 in statutory damages against Technovate in this small claims proceeding.
Plaintiff Gardiner has established that he has suffered damages as a result from the per se defamatory statements posted by defendant Fanelli on-line. He is entitled to a judgment of $1,000.00 with interest from the date of judgment costs and disbursements.
Plaintiff Technovate, LLC d/b/a Mr. Sandless of Staten Island's cause of action for defamation is dismissed on the merits. Defendant's comments about the quality of the workmanship were opinion and protected speech.
Plaintiff Technovate is required to be licensed to perform the services it advertises. The failure to be licensed and the failure to use a contract form reflecting its true name and location are both violations of the General Business Law entitling the defendant to statutory damages of $400.00 to be awarded in the small claims action.
Claimant Fanelli's small claims action for breach of contract and defective repairs is dismissed on the merits. She has failed to prove her prima facie case. However, she did establish that the defendant, Technovate, LLC, violated the General Business Law and claimant is entitled to $400.00 with interest from the date of judgment, costs and disbursements.
Exhibits, if any, will be available at the office of the clerk of the court thirty days after receipt of a copy of this decision.
The foregoing constitutes the decision and order of the court.
Dated: September 10, 2015
Staten Island, NY
HON. PHILIP S. STRANIERE
Judge, Civil Court