Matter of Manufacturers & Traders Trust Co. v Outboard Barn Inc.
Annotate this CaseDecided on July 1, 2019
Supreme Court, Albany County
Special Proceeding Application of Manufacturers and Traders Trust Co., Petitioner/,Plaintiff,
against
Outboard Barn Inc. and THE NEW YORK STATE DEPARTMENT OF MOTOR VEHICLES, , Respondents/,Defendants.
00390-18
APPEARANCES:
Law Offices of Rudolph J. Meola
Attorneys for Plaintiff
By: Rudolph J. Meola, Esq.
1822 Western Avenue
Albany, New York 12203
Phillips & Weiner
Attorneys for Defendant Outboard Barn, Inc.
By: Robert L. Weiner
152 North Wellwood Avenue, Suite 1
Lindenhurst, New York 11757
David A. Weinstein, J.
This action arises out of a petition/complaint that was brought via Order to Show Cause, dated January 25, 2018 by plaintiff-petitioner Manufacturers and Traders Trust Co ("M & T" or "the Bank"), seeking an order declaring the garage lien asserted by defendant-respondent Outboard Barn, Inc. ("Outboard" or "the Garage") in regard to a 2003 Seaswirl boat ("the boat") [*2]null and void and directing the Garage to immediately turn over the boat to the Bank.[FN1]
In its petition, the Bank alleged as follows: it held a first priority perfected lien against the boat as to which Outboard had asserted a lien (Pet ¶¶ 2, 4 and Ex 1). The Bank had demanded release of the boat, but Outboard refused until it was paid certain claimed storage charges, to which the Bank did not consent (id. ¶¶ 5-9 ). Further, the Bank asserted that the Garage did not provide it with the statutorily required notice that it was subject to such fees (id. ¶ 10). The petition sets forth causes of action for declaratory relief, replevin and conversion.
Respondent did not submit papers in opposition to the petition, but rather moved in Suffolk County Supreme Court to change venue to Suffolk County and stay the proceedings in Albany County. In a Decision and Order dated April 10, 2019, Suffolk County Supreme Court (Hudson, A.J.S.C.) denied Outboard's motion in its entirety (Affirmation in Support of Summary Judgment of Rudolph J. Meola, Esq. ["Meola Aff"], Ex 2).
Since Outboard had not submitted any opposition to this Court, it was in default, and therefore on April 23, 2018, at petitioner's request, I issued a Decision and Judgment granting the petition, cancelling the asserted lien, directing that the boat be delivered to petitioner on demand, terminating all stays that prevented petitioner from taking possession of the boat, and releasing the bond posted by petitioner (id.). I also permitted M & T to pursue damages for conversion (id.). A copy of the Order and Judgment, with notice of entry, was served on respondent's counsel on May 2, 2018 (id.).
In a letter dated May 23, 2018, respondent's counsel provided the Court with an affidavit from Outboard's president and owner stating that the boat had been removed from its premises by M & T's representative, Rob Lewis, on May 22, 2018 (Meola Aff, Ex 2 [Affidavit of James Roy, sworn to May 23, 2018 ("Roy Aff") ¶¶ 1-3, Ex A]).
On March 1, 2019, M & T brought the present motion for summary judgment on its cause of action for conversion damages, supported by the affidavit of Thomas Norton, an authorized M & T representative and the supervisor of M & T's impound and recovery department (Affidavit of Thomas Norton, sworn to on January 14, 2019 ["Norton Aff"] ¶ 1). Norton explains that in the course of his employment, he routinely determines the value of cars, boats and other vehicles, which is based on his training on standard valuation techniques used in the automotive and finance industry (id. ¶ 4). He also has experience in using standard boat valuation guides and market sales databases (id.).
According to Norton, M & T attempted to redeem the boat from Outboard in December of 2017, but Outboard refused to turn it over, and instead issued a "Notice of Lien and Sale" stating that the boat had a value of $10,500 (id. ¶ 3, Ex 1 attached thereto). The Garage, however, following M & T's motion for contempt for non-compliance with this Court's April 23, 2018 Order and Judgement, turned the boat over to M & T in May 2018 (id. ¶ 6).
Norton asserts that the Garage's valuation of the boat at $10,500 is a fair and accurate assessment of the boat's value if it had been delivered to M & T in December 2017 (id. ¶ 4). [*3]Upon recovery of the boat, on August 21, 2018, the Bank, in accordance with its regular procedures, sold the boat for $4,000, leaving a damages amount of $6,500 (id. ¶ 7). The affirmation in support flips these numbers, however, repeatedly listing the sale price as $6,5000 and the damages sought as $4,000 (see Meola Aff ¶¶ 14, 25; Reply Affirmation ¶ 16).
In opposition to the Bank's motion, Outboard submitted another affidavit from its president and owner (Affidavit of James Roy, sworn to on April 18, 2019 ["Opp Aff"] ¶¶ 1-2). Despite the findings incorporated in my April 23, 2018 Order and Judgment, Roy argues that Outboard's lien was valid and there was no conversion (id.). He explains that, upon information and belief, the boat's owner died in July 2016, and Outboard agreed to continue storing the boar after speaking with the owner's wife, who paid the Garage $600 toward the alleged outstanding bill (id. ¶¶ 6-7). Roy contends that M & T's attempt to collect conversion damages against Outboard is "without justification" as it can pursue claims against the boat's owner, who borrowed money from the Bank to purchase the boat (id. ¶ 11).
Discussion
In accordance with my April 23, 2018 Order and Judgment, M & T has established its claim for conversion against Outboard (Meola Aff, Ex 2). Conversion takes place when a defendant "intentionally without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person's right of possession" (Colavito v New York Organ Donor Network, Inc., 8 NY3d 43, 50 [2006]). In the case of a defendant who is in possession of the property, the cause of action for conversion will not accrue until someone with an ownership interest demands the return of the property and the defendant, without any legal authority, refuses (see State v Seventh Regiment Fund, 98 NY2d 249, 260-61 [2002] [holding that conversion claim did not accrue against a bona fide purchaser until demand and refusal occurred]; see also Colavito, 8 NY3d at 50 [key elements of conversion are [1] plaintiff's possessory right and [2] defendant's unauthorized dominion over the property in derogation of plaintiff's rights). Outboard's failure to release the boat based upon an improper assertion of a lien gave rise to a cause of action for conversion, and Outboard is liable to M & T for such damages that resulted (see Matter of BMW Bank of N. Am. v G & B Collision Ctr., Inc., 46 AD3d 875, 877 [2d Dept 2007] [finding that a Garage is guilty of conversion and is liable for damages if it asserts an improper lien]; see also Grant St. Constr., Inc. v Cortland Paving Co., Inc., 55 AD3d 1106, 1107 [3d Dept 2008) [action for conversion may be supported by assertion of improper lien]; Phillips v Catania, 155 AD2d 866, 866 [4th Dept 1989] [same]).
The only issue before me on this motion, therefore, is petitioner's application for summary judgment on the issue of conversion. M & T has the burden on its motion to "tender sufficient evidence to demonstrate the absence of any material issues of fact" on its damages calculation (see Alvarez v Prospect Hosp., 68 NY2d 320, 324[1986]). If it fails to meet that prima facie burden, its motion must be denied "regardless of the sufficiency of the opposing papers" (id.).
On a cause of action for conversion where, as here, a party has accepted return of the property, such party may recover only for such loss as flowed from the wrongful withholding of possession of that property (see Silverstein v Marine Midland Trust Co. of New York, 1 AD2d 1037, 1038 [2d Dept 1956]) [by resuming possession of property that had been converted, plaintiff is only entitled to damages flowing from the wrongful withholding]; see also Fischkoff v [*4]Iovance Biotherapeutics, Inc., 339 F Supp 3d 408, 414 [SD NY 2018] [citing Silverstein for the proper measure of conversion damages in New York when property returned]).
In the context of a case concerning an improper Garage lien, the value of the property at the time of conversion can be established by reference to the Garage's estimated value set forth on its notice of sale and lien (see Phillips v Cantania, 155 AD2d at 867 [notice of sale and lien prepared on Garage's behalf, which was corroborated by owner's blue book value evidence, established value of vehicle at time of conversion]). Here, Outboard's Notice of Sale and Lien estimated the value of the boat at $10,500, which M & T corroborated with Norton's affidavit, and Outboard has not contested such valuation. In the absence of any challenge to the $10,500 figure, I will accept it as the value of the boat at the time of the conversion in December 2017.
That is not the end of the inquiry, however. M & T recovered the boat approximately five months later in May 2018, thus it is only entitled to conversion damages that it incurred from its loss of possession during these five months (see Silverstein, supra).
In his affidavit, Norton, however, claims that M & T's damages was the full $10,500, but it mitigated those damages by selling the boat for $4,000, and claims that the damages should, therefore, be reduced to $6,500 [FN2] (Norton Aff ¶¶ 6-7) — erroneously re-stated in the motion papers, as noted, as $4,000.
This mode of calculation is not supported by the caselaw. If M & T wanted to recover the full value of the boat, it had the option of abandoning repossession and suing for its claimed value of $10,500 (see Silverstein, supra [citing Pierpont v Hoyt, 260 NY 26, 30 [1932][plaintiff free to forego possession of property and bring conversion claim for property's full value]). However, because M & T sought and obtained recovery of the property, its claim for conversion damages is limited to the damages incurred due directly to the loss of possession of the boat from the time of its demand in December 2017 through May 2018, when it recovered the boat (id.). It cannot, though "base[] its damage award upon the [boat's] purported value" (see De Los Santos v. Western Beef Supermarket Inc., [Sup Ct, App Term 1st Dept 2014]]
In determining the loss experienced by M & T over the five-month period it was out of possession, either or both of two measures might be used: the actual value that could have been obtained from the boat during that time (i.e., its "rental" value), plus any loss of value to the chattel that might be attributed to defendant's holding of the property (see Djidics v Wishnevsky, 179 NYS 99 [Sup Ct, App Term 1919] ["ordinarily the damages for conversion are . . . , where the detention has been temporary, the rental value of such property"]; Terranova v State, 111 Misc 2d 1089, 1097 [Ct. of Claims 1982] [measure of damages in a bailment of personal property is the difference in the fair market value thereof in its condition when delivered to the bailee versus its condition upon return to bailor]).[FN3]
Petitioner presents no evidence of the former. Its evidence of the latter is based on an apples to oranges comparison of the estimated value of the boat at the time it was wrongfully withheld, without the amount actually obtained at sale, and then presumes that this difference - based on two entirely different measures - is due somehow to the fact that it was not in possession of the boat during this period. Unlike Terranova, it does not allege that the boat was damaged by respondent — indeed, it provides no explanation for why the boat might have lost more than half its value in five months. In short, even presuming that it could have sold the boat for the full estimated value of $10,500 at the time of the Notice of Lien, or alternatively that the later sale price of $4,000 represents an actual diminution in value from that estimated when the loan was issued, M & T has proffered no evidence — or even asserted — that the $6,500 drop in value was connected to the fact that Outboard held the property for five months. Thus, it offers up no explanation for how its claim that the Boat depreciated in value $1,300 per month from December through May resulted from the wrongful withholding of the property by Outboard during that period.
Finally, I note the problem that the amount of damages sought by petitioner — $4,000 — is not actually based on this calculation in any case, but rather on a misstatement of Norton's conclusion, and is thus entirely without support in the record. While one option would be to ignore this error — not simply a typographical mistake, but one repeated throughout petitioner's papers — given the shortcomings of petitioner's proof, there is no reason to do so here.
Since I find that petitioner has not presented a viable prima facie case of damages, it is not entitled to summary judgment on that issue, and its application is denied in this regard.
As to attorney fees, a "prevailing litigant ordinarily cannot collect . . . attorney's fees from its unsuccessful opponents . . . Attorney's fees are treated as incidents of litigation, rather than damages . . . [and t]he exception is when an award is authorized by agreement between the parties or by statute or court rule" (Ambac Assurance Corp. v Countrywide Home Loans, Inc., 31 NY3d 569, 584 [2018]). Here, there is no agreement, statute or court rule cited by petitioner that would apply to support an award of attorney's fees.
The case cited by the Bank as allowing for fee recovery despite the above rule, Devore v Balboa Ins (118 AD2d 989 [3d Dept 1986]), is not applicable here, Devore discusses two exceptional circumstances where recovery of fees are allowed. The first permits an insured to recover from an insurance carrier in a successfully defended declaratory judgment action where the insurer attempts to free itself from coverage (see id. at 991). The second occurs where a defendant's tortious act requires plaintiff to incur the expense of defending or commencing an earlier separate action against a third-party (id.).
Both exceptions, in short, concern instances where a party was forced to become involved in a second, additional action as a result of its adversary's conduct. Here, M & T was not required to defend or commence a separate action against a third-party for which it incurred further legal expenses. Simply naming the Department of Motor Vehicles as a defendant in the present case did not result in legal fees from an earlier third-party action, and, therefore, is not what is contemplated in Devore to permit a damages award that includes attorney's fees (id.; see also Herman v Bahrami, 236 AD2d 516, 516 [2d Dept 1997] [attorney's fees incurred in earlier litigation with third-party my be recovered if such action naturally flowed form tortious act of defendant]; Shindler v Lamb, 25 Misc 2d 810, 812 [Sup Ct New York County 1959] [wrongful [*5]act of present adversary that caused plaintiff to commence or defend earlier litigation entitles plaintiff to seek such prior attorney's fees from defendant]). I see no other basis for M & T to recover fees here.
In light of the foregoing, I need not address the sufficiency of respondent's opposing papers.
Accordingly, it is hereby
ORDERED that petitioner's motion is denied. A conference call will be conducted on July 8, 2019 at 3:00 p.m. to schedule a trial date, and to discuss other related matters.
This Decision & Judgment is being mailed to counsel for petitioner for filing, and service on counsel for respondent. The signing of this Decision & Order shall not constitute entry or filing under CPLR Rule 2220, and counsel is not relieved from the applicable provisions of the CPLR respecting filing, entry and service of Notice of Entry.
Enter.
Dated: July 1, 2019
Albany, New York
________________________________
David A. Weinstein
Acting Supreme Court Justice
Papers Considered:
1. Notice of Motion for Summary Judgment, and Supporting Affirmation of Rudolph J. Meola, Esq., dated March 1, 2019; with exhibits annexed thereto;
2. Affidavit of James Roy, sworn to on April 18, 2019, with exhibits annexed thereto; and
3. Reply Affirmation of Rudolph J. Meola, dated April 24, 2019, with exhibits annexed thereto. Footnotes
Footnote 1:For simplicity's sake, for the remainder of this decision, the term "petitioner" shall refer to the Bank and "respondent" shall be used to reference the Garage, and the Bank's pleading will be referenced as the "petition." The petition also names the New York State Department of Motor Vehicles as a defendant-respondent, solely in its administrative capacity for purposes of restraining title on the vehicle pending a determination. All references to "respondent" are to the Garage.
Footnote 2:In the demand portion of M & T's counsel's affirmation, the Bank seeks only $4,000 in damages for conversion (Meola Aff ¶ 25).
Footnote 3:I will put to one side whether mere depreciation which occurs over time is an appropriate part of this measure of damages. After all, if the chattel depreciates a certain amount over time as a matter of course, it would have done so regardless of whether it was wrongfully withheld. I need not decide this question, though, because plaintiff has failed to show whether there was any diminution over time, but instead as noted above, has sought to extrapolate damages from the fact that two different measurements have resulted in different results.
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