Opinion
SCK 16023/2018
10-31-2018
Andrew MILLER, Claimant, v. Ivy KAMINER, Defendant.
Andrew Miller, Self-represented, claimant, 100 Ocean Parkway # 5T, Brooklyn, NY 11218; Bruno F. Codispoti, Esq., Codispoti & Associates, 111 John Street-Suite 800, New York, NY 10038-3180 (212) 962-6525
Andrew Miller, Self-represented, claimant, 100 Ocean Parkway # 5T, Brooklyn, NY 11218; Bruno F. Codispoti, Esq., Codispoti & Associates, 111 John Street-Suite 800, New York, NY 10038-3180 (212) 962-6525
Richard J. Montelione, J.
This matter came on before the Small Claims Part of the Civil Court for trial on August 22, 2018.
The court heard testimony from Andrew Miller, claimant, and Ivy Kaminer, defendant.
The issue is whether defendant Ivy Kaminer is personally responsible for child care services paid for by claimant, but not rendered, by Flowers of the Sun, Inc. Law Regarding Adjudication of Small Claims Matters
NYCCCA § 1804. Informal and simplified procedure on small claims.
The court shall conduct hearings upon small claims in such manner as to do substantial justice between the parties according to the rules of substantive law and shall not be bound by statutory provisions or rules of practice, procedure, pleading or evidence, except statutory provisions relating to privileged communications and personal transactions or communications with a decedent or mentally ill person.
Background
The court was asked to take judicial notice of its decision and order in the matter of Turkenich v. Ivy Kaminer , Flowers of the Sun, Inc., et al, Index Nos. SCK 298-2017-1,2,3, and 4 which held that the defendant was personally liable for unreimbursed child care services.
Testimony and Evidence of the Parties
The claimant asserts that he is entitled to a refund of his deposit and the advance payment for child care services from defendant because at the time he pre-paid for child care the defendant was managing Flowers of the Sun, Inc., she knew that the owner of the business was terminally ill and that the business would be closed because of the owner's demise, that the claimant would not receive a refund while she improperly benefited from the assets of the corporation. The claimant never met defendant prior to the commencement of this small claim action but is suing defendant based on subpoenaed records provided by another claimant in a similar small claims action under SCK 298-2017-1,2,3, and 4, as noted earlier, and based on two affidavits provided by former employees of Flowers of the Sun, Inc.
The claimant pre-paid $2,952.00 on December 30, 2016 for child care services to be rendered in January and February 2017 and previously made a deposit of $2,107.00. There is no issue that Flowers of the Sun, Inc., d/b/a Flowers of the Sun, was solely owned by Ilene Lieberman. The business closed in or about January 20, 2017 by the New York City Health Department due to Ms. Liberman's demise.
The claimant provided two affidavits from individuals described as former employees of Flowers of the Sun, Inc. The defendant concedes that Beata Widuchowska, one of the deponents who signed one of the affidavits, was an employee of Flowers of the Sun, Inc. and "around for a while," but denied the allegation within the affidavit that defendant managed the business.
The defendant said that she did not provide any day care services but did work for Flowers of the Sun, Inc. as a yoga instructor. Defendant also testified that she never told anyone that she was managing Flowers of the Sun, Inc. Defendant testified that Ilene Lieberman was the girlfriend of her late father and there was no blood relationship.
Defendant testified that Jonah Kaminer, Ilene Lieberman's son, was managing the business and that she did not participate in the management. Defendant conceded that she informed some of the employees at the day care center of Ilene's imminent passing but could not recall informing anyone of her death afterwards.The claimant produced copies of certain checks from Flowers of the Sun, Inc., payable to the defendant's landlord for defendant's personal rent. At some point in July 2015, defendant moved into the premises located at 366 President Street. The apartment was previously occupied by Ilene Lieberman who had a lease at this address. Because the lease was still in the name of Ilene Lieberman at the time defendant moved in, defendant was paying rent to Ilene Lieberman and continued to do so until a new lease was placed in defendant's name. Defendant testified that she took a partial credit toward the monthly rent she paid to Ilene Lieberman of a few hundred dollars because defendant was not being paid in full by Flowers of the Sun, Inc. for her work as a yoga instructor. Such credits occurred over a period of at least one year. However, there is no question of fact that when the lease was in defendant's name alone in August, September and October 2017, defendant's personal rent of $2,700.00 was being paid in full by Flowers of the Sun Inc. directly to the defendant's landlord (Claimant's Exhibit 9, check 140 dated 8/25/16 for $2,700; check 222 dated 10/12/16 [Sept. rent]; and check 223 dated 10/28/16 for $2,700).
Jonah Kaminer appears to be the brother by one parent only of defendant Ivy Kaminer. There is no blood relationship between Ivy Kaminer and Ilene Lieberman, but in the earlier proceeding Ivy Kaminer was described several times by defendant's counsel and/or defendant as the "step daughter" of Ilene Lieberman. Turkenich v. Ivy Kaminer , Index Nos. SCK 298-2017-1,2,3,4.
Although defendant testified that she received a W-2 for her services as a yoga instructor, there are no pay stubs or other documentation, except for one handwritten check dated November 20, 2016 to her for $300 with a memo reflecting "yoga, Nov," that details exactly the services rendered or when such services were rendered to the corporation or the correlation between the personal rent paid by the corporation for defendant's benefit and the actual services rendered.
Legal Analysis
The two affidavits submitted by claimant from employees of the corporation are hearsay. "(I)n small claims proceedings hearsay is admissible subject to the weight given to it." See Forte v. Westchester Hills Golf Club, Inc. , 103 Misc.2d 621, 622-23, 426 N.Y.S.2d 390, 390 (White Plains City Ct. 1980, Paul H. Blaustein, J.). However, as the court stated in Hickey v. T & E Serv. Sta. , 12 Misc.3d 133[A], 2006 N.Y. Slip Op. 51183(U), 2006 WL 1750814 (App Term 2006),
(a)lthough small claims courts are not bound by statutory provisions or rules of practice, procedure, pleading or evidence (see CCA 1804 ), a small claims judgment may not stand on hearsay alone (see Zelnik v. Bidermann Indus., USA. , 242 A.D.2d 227, 228, 662 N.Y.S.2d 19 [1997] ; Levins v. Bucholtz , 2 A.D.2d 351, 155 N.Y.S.2d 770 [1956] ;
Hudson House LLC v. Pointdujour , 5 Misc.3d 136[A], 2005 N.Y. Slip Op. 51547[U], 2004 WL 2851206 [App. Term, 2d & 11th Jud. Dists.] ).
The defendant has an absolute right to the cross examination of a witness ( Graves v. American Express , 175 Misc.2d 285, 286, 669 N.Y.S.2d 463, 463 (App. Term, 2nd Dept. 1997) and the affidavits which contains hearsay allegations regarding defendant managing Flowers of the Sun, Inc. may affect such a right. Nonetheless, the affidavits were admitted without objection, but the court's decision cannot be based on these affidavits alone.
The defendant offers testimony saying she worked as a yoga instruction for Flowers of the Sun, Inc. and she took partial credit on certain personal rent payable to Ilene Lieberman but offers no explanation as to why Flowers of the Sun, Inc. paid her full personal rent for August, September and October 2017 directly to defendant's landlord after defendant's name alone was on the lease. This is a qualitive change from the time when defendant was taking a few hundred dollars in credits on the rent she was previously paying to Ilene Lieberman. The last rent paid by Flowers of the Sun, Inc. for defendant was ten weeks prior to the death of Ilene Lieberman. The court also notes there were several cash withdrawals from the Flowers of the Sun Inc. checking account by Joel Kaminer (1/04/17 for $3,512.81, 1/06/17 for $2,702.73). There is no dispute that Joel Kaminer participated in managing the business.
The court infers from the evidence presented that the defendant either directly or indirectly, managed Sunflower of the Sun, Inc. with Joel Kaminer. The three corporate checks written to pay the personal rent of defendant; the lack of any documentation that defendant was on the payroll of Sunflower of the Sun, Inc. and even if defendant was issued a W-2, it is unlikely that the personal rent paid by Sunflower of the Sun, Inc. would be reflected in the W-2 or otherwise imputed as income; the admitted communication of defendant with employees of the company as to the imminent death of Ms. Lieberman, together with the affidavits which reflect that two employees swore that defendant managed the corporation, leads this court to find that defendant was involved, either directly or indirectly, with the management of the corporation. Moreover, even the corporate check used to pay the defendant's personal rent reflects "366 President" which is the same address on the agreement between the claimant and Flowers of the Sun. (Claimant's Exhibit 1).
The court also infers that defendant knew at the time that pre-payments for child care were being received and deposited into the corporate account, a portion of which was clearly used for defendant's personal benefit by payments to her landlord for her personal rent and a portion of which personally benefited Joel Kaminer, that such unutilized payments would never be returned to the customers of Sunflower of the Sun, Inc.
Equity and Law
Courts have found individuals personally responsible even when they were employees or shareholders of a corporation when such individuals knew customers were paying for services that would never be rendered. (Cf. Grammas v. Lockwood Assoc., LLC , 95 A.D.3d at 1075, 944 N.Y.S.2d 623 ). Courts have also imposed personal liability because of the personal gain attained by the transfer of corporate funds for an individual's benefit without any apparent consideration. (Cf., Ackerman v. Vertical Club Corp. , 94 A.D.2d 665, 462 N.Y.S.2d 657 [1st Dept. 1983], where court held that corporate officers may not be shielded from personal liability when there is conversion).
The Court rejects all of defendant's testimony which was unsupported by any documentation that payment of her rent was remuneration for services performed by her as a yoga instructor.
Notwithstanding the foregoing, piercing the corporate veil is unavailable to achieve substantial justice as this court is one of limited jurisdiction. (See Ramsey v. O'Donnell , 13 Misc 3d 142[A], 2006 N.Y. Slip Op. 52271[U], 2006 WL 3437798 [App. Term 2006] ), where appellate court held that piercing the corporate veil is an action in equity and may not be utilized by a court of limited jurisdiction such as a small claims court citing 19 West 45th St. Realty Co. v. Darom Elec. Corp. , 233 A.D.2d 184, 650 N.Y.S.2d 1 [1996] ; Intracoastal Abstract Co. v. Sadighpour & Minifar, Inc. , 12 Misc 3d 139(A), 824 N.Y.S.2d 763, 2006 N.Y. Slip Op. 51328 (U), 2006 WL 1892267 [App. Term, 9th & 10th Jud. Dists.] ; see also Battle v. Smith , 35 Misc.3d 126[A], 2012 N.Y. Slip Op. 50566[U], 2012 WL 1109249 [App. Term 2012], "(w)e note that the District Court, as a court of limited jurisdiction, lacked jurisdiction to grant the equitable relief of ‘piercing the corporate veil’ citing Intracoastal Abstract Co., Inc. v. Farmarz Sadighpour & Minifar, Inc., Ibid. ; see also Haverlin v. Gottlieb , 49 Misc.3d 151[A], 2015 N.Y. Slip Op. 51750[U], 2015 WL 7899707 [App. Term 2nd Dept. 2015], "(i)n any event, the District Court lacks jurisdiction to pierce the corporate veil [see Battle v. Smith , 35 Misc.3d 126[A], 950 N.Y.S.2d 721, 2012 NY Slip Op. 50566[U] , 2012 WL 1109249[App. Term, 9th & 10th Jud. Dists. 2012] ).
If the court had jurisdiction to pierce the corporate veil, it would find claimant is entitled to a judgment of $4,563.39. (Pro-rated reimbursement for January 2017 of $613.90 [January 2017=21 child care days/$1,841.66=$87.70 per day x 7 days [without child care]=$613.90] + $1,841.66 for February 2017=$2,455.56 + deposit of $2,107.83=$4,563.39). These same calculations apply if there is a violation under GBL § 349, infra.
The court may consider equitable defenses because there is a clear provision under the Civil Court Act allowing it to do so ( NY CCA § 905 ) and may consider a limited number of equitable remedies such as a "declaratory judgment with respect to certain arbitration awards ( NY CCA § 1808 ), because "(t)he court of city-wide civil jurisdiction shall exercise such equity jurisdiction as may be provided by law" (See NY CLS Const Art VI, § 15 ). But the lower court lacks the jurisdiction to even consider the concept of "quantum meruit" or "piercing the corporate veil" as such cannot be utilized in a small claims court, except in the third department, even when only money damages are sought. The Small Claims Part of the Civil Court also may not reform "a contract based on mistake and/or fraud" (see Mormon v. Acura of Valley Stream , 190 Misc.2d 697, 698, 740 N.Y.S.2d 548, citing generally Chimart Assoc. v. Paul , 66 N.Y.2d 570, 574, 498 N.Y.S.2d 344, 489 N.E.2d 231 ). Or, utilize the concept of "unclean hands" such as when an owner depletes the assets of a corporation for personal gain for the sole purpose of making the corporation judgment proof (cf. Manshion Joho Ctr. Co., Ltd. v. Manshion Joho Ctr., Inc. , 24 A.D.3d 189, 806 N.Y.S.2d 480 [1st Dept. 2005].) The inability to utilize these equitable concepts is certainly a challenge when the goal is "substantial justice" and the small amounts in controversy will discourage a party from seeking justice in a higher court because of the expense.
The Appellate Division, Third Department, in Rothermel v. Ermiger , 161 A.D.2d 1016, 1016-1017, 557 N.Y.S.2d 587 [3d Dept. 1990], limits its review, even when the small claims court utilizes some equitable considerations such as "piercing the corporate veil," to whether the small claims court failed to achieve substantial justice through the proper application of substantive law . As long as the small claims court applies the proper substantive law to pierce the corporate veil, the third department will not reach the jurisdictional issue. The tension is between the concepts of "substantial justice" and "equity" which are synonymous yet found to have a distinction among various courts. The third department has harmonized these two concepts by limiting the appellate court's review, to whether "substantial justice" has been done. The court in Rothermel v. Ermiger , supra., 161 A.D.2d 1016-1017, 557 N.Y.S.2d 587, stated,
"our review of small claims judgments is limited to determining whether substantial justice has been done ‘according to the rules and principles of substantive law’ ( UJCA 1807 ; see, Blair v. Five Points Shopping Plaza , 51 A.D.2d 167, 168, 379 N.Y.S.2d 532 ), we may reverse when a deviation from substantive law is readily apparent and the court's determination is clearly erroneous (citations omitted). The single substantive issue on this appeal is whether ‘piercing the corporate veil’ to find defendant liable for debts of the Resort was a clearly
erroneous deviation from substantive law. ( Emphasis Added ).
A shareholder may be held liable for corporate debts upon a showing that he used the corporation to transact his personal business (citations omitted). The corporate entity may also be disregarded upon a showing of fraud, illegality or wrongdoing (see , 13 NY Jur 2d, Business Relationships, § 26, at 287-291 ). To be sure, such a showing in small claims court need not be great and ‘alleged errors in the presentation of evidence or pleadings are not reviewable [by this court)’ ( Blair v. Five Points Shopping Plaza , 51 A.D.2d 167, 169 supra, 379 N.Y.S.2d 532 . ).
The tension is between the grounds for appeal-whether "substantial justice has ... been done between the parties according to the rules and principles of substantive law" ( UCCA 1807 ), and the jurisdictional limitations which restrict equity or equitable concepts (see Ramsey v. O'Donnell , 13 Misc.3d 142[A], 142A, 2006 N.Y. Slip Op. 52271[U], 2006 WL 3437798 [App. Term 2006] ). The issue of a small claims court being prohibited from utilizing equitable concepts is succinctly reflected in New York Practice § 581 (6th ed.), (The Late David D. Siegel, Patrick M. Connors), July 2018 Update, Chapter 21:
Small Claims, Generally
It turns tradition on its ear: while equity will stay its hand if there is an adequate remedy at law, the instant situation is the converse—it rejects a law claim because it perceives a remedy in equity—and is especially gratuitous in the small claims context. Whether ‘legal’ or ‘equitable,’ the claim is too small to be worth litigating anywhere else. Closing the small claims door thus closes the whole courthouse,
a denial of access premised on a technical distinction at war with the very concept of a ‘small claims’ part. Ironically, a rejection of jurisdiction on this ground would probably not occur to nonlawyer town and village justices who hear small claims in rural areas. They know too little about the law to be guilty of this kind of injustice.
Other lower courts have detailed the impact of not being able to utilize equitable principles. See, Rosley v. Allyn , 33 Misc.3d 756, 929 N.Y.S.2d 409 [City Ct. 2011], where claimant contracted to provide labor but failed to specify hourly wage and court did not have jurisdiction to award the value of the labor because it would require consideration of the concept of "quantum meruit". See Broja Realty, LLC v. Amparo , 32 Misc.3d 1203[A], 2011 N.Y. Slip Op. 51168[U], 2011 WL 2536203 [Civ. Ct., Bronx County 2011-Small Claims], where tenant was not able to assert defense of laches when landlord sued for late fees covering each month for a 73 month period where rent was paid after the five-day grace period. Cf. Robinson v. Robles, 28 Misc.3d 868, 906 N.Y.S.2d 844 [City Ct. 2010].) where court utilized concept of "unjust enrichment" to accomplish "substantial justice."
This court will not utilize the equitable concept of "piercing the corporate veil," because the law is clear in the second department that it cannot do so (see Paonessa v. Americore Drilling & Cutting, Inc. , 57 Misc.3d 137(A), 2017 N.Y. Slip Op. 51301[U], 2017 WL 4448171 [App. Term 2017] ), but joins the chorus of other courts of limited jurisdiction in hopes that the law will evolve by either a legislative change by amending the Small Claims Act ( CCA 1801, et seq. ) to allow usage of equitable principles or that appellate review is limited to the issue of whether substantial justice has been accomplished through substantive law even when equitable principals are applied (cf. Rothermel v. Ermiger , 161 A.D.2d 1016, 1016-1017, 557 N.Y.S.2d 587 [3d Dept. 1990] ). General Business Law § 349
The court now turns to General Business Law § 349 which states the following:
§ 349. Deceptive acts and practices unlawful
(a) Deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful.
...
(h) In addition to the right of action granted to the
attorney general pursuant to this section, any person who has been injured by reason of any violation of this section may bring an action in his own name to enjoin such unlawful act or practice, an action to recover his actual damages or fifty dollars, whichever is greater, or both such actions.
Regarding the application of GBL § 349, as stated by the Court of Appeals in N.Y. Univ. v. Cont. Ins. Co. , 87 N.Y.2d 308, 320, 639 N.Y.S.2d 283, 662 N.E.2d 763 [Ct. of Ap. 1995],
In Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 623 N.Y.S.2d 529, 647 N.E.2d 741, we stated that parties claiming the benefit of the section must, at the threshold, charge conduct that is consumer oriented. The conduct need not be repetitive or recurring but defendant's acts or practices must have a broad impact on consumers at large; ‘[p]rivate contract disputes unique to the parties would not fall within the ambit of the statute’ ( id. , at 25, 623 N.Y.S.2d 529, 647 N.E.2d 741 ; see also, Teller v. Bill Hayes, Ltd. , 213 A.D.2d 141, 630 N.Y.S.2d 769 ; Quail Ridge Assocs. v. Chemical Bank , 162 A.D.2d 917, 558 N.Y.S.2d 655, lv dismissed 76 N.Y.2d 936, 563 N.Y.S.2d 64, 564 N.E.2d 674 ). If a plaintiff meets this threshold, its prima facie case may then be established by proving that defendant is engaging in an act or practice that is deceptive in a material way and that plaintiff has been injured by it ( id. ; Varela v. Investors Ins. Holding Corp. , 81 N.Y.2d 958, 598 N.Y.S.2d 761, 615 N.E.2d 218 ).
The Court in Piscioneri v. Commonwealth Land Tit. Ins. Co. (In re Coordinated Tit. Ins. Cases) , 2 Misc.3d 1007[A], 1007A, 2004 N.Y. Slip Op. 50171[U, 2004 WL 690380 [Sup. Ct., Nassau County 2004], stated that "(a) deceptive act or practice is objectively defined as a representation or omission ‘likely to mislead a reasonable consumer acting reasonably under the circumstances.’ ( Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank , N.A., 85 N.Y.2d 20, 26, 647 N.E.2d 741, 623 N.Y.S.2d 529, [Ct. of Ap. 1995] ). The Court of Appeals has held that reliance and scienter are not elements of a General Business Law § 349 claim. (See, Ibid )."
The fact that a party never intended to meet its obligations under an agreement, standing alone, is not enough to apply GBL § 349. (See Lucker v. Bayside Cemetery , 114 A.D.3d 162, 175, 979 N.Y.S.2d 8 [1st Dept. 2013], "[m]ere allegations that a party entered into a contract lacking the intent to perform are insufficient to establish a claim of misrepresentation or fraud [see New York Univ. v. Continental Ins. Co. , 87 NY2d 308, 318, 662 N.E.2d 763, 639 N.Y.S.2d 283 [1995] ]. The conduct complained [of] is essentially that defendants failed to satisfy their contractual duties, not that they concealed or misrepresented contractual terms)." There must be a broad impact on consumers. (See Bd. of Mgrs. of the S. Star v. WSA Equities, LLC , 2014 N.Y. Slip Op. 32750[U], 2014 WL 5390551 [Sup. Ct., N.Y. County 2014], where condominium offering plan available to the general public is not "broad" enough for the application of GBL § 349 ). The Court in Chrome Corporate Mgt. Group, LLC v. Pfeil , 2009 N.Y. Slip Op. 31217[U], 2009 WL 1648753 [Sup. Ct., N.Y. County 2009], in assessing the application of GBL § 349 stated,
(t)o allege a GBL § 349 claim, a plaintiff must allege three elements: ‘first, that the challenged act or practice was consumer-oriented; second, that it was misleading in a material way; and third, that the plaintiff suffered injury as a result of the deceptive act’ ( Freefall Express, Inc. v. Hudson River Park Trust , 16 Misc.3d 1135[A], 847 N.Y.S.2d 901, 2007 N.Y. Slip Op. 51702[U], 2007 WL 2582222 [Sup. Ct. New York County 2007]citing Stutman v. Chemical Bank, N.A. , 95 N.Y.2d 24, 29, 731 N.E.2d 608, 709 N.Y.S.2d 892 [2000] ).
In dicta , the court in Cabrera v. Feiwus , 30 Misc.3d 1213(A), 924 N.Y.S.2d 308, 2011 WL 182891 (Civ. Ct. Richmond Cty. 2011) surmised that an individual defendant can be held personally liable when s/he allows a corporation to dissolve when contractual and statutory obligations still existed because it could amount to a deceptive act or practice under GBL § 349. The court in Oxman v. Amoroso , 172 Misc.2d 773, 659 N.Y.S.2d 963 [City Ct. 1997] found that the plaintiff established its prima facie GBL § 349 burden where an au pair agency promised but failed to provide properly trained au pairs.
The Court in Corsello v. Verizon N.Y., Inc. , 77 A.D.3d 344, 365, 908 N.Y.S.2d 57 [2d Dept. 2010], held:
‘In order to establish a prima facie violation of General Business Law § 349, a plaintiff must demonstrate that a defendant is engaging in consumer-oriented conduct which is deceptive or misleading in a material way, and that the plaintiff has been injured because of it’ (
Ladino v. Bank of Am. , 52 A.D.3d 571, 574, 861 N.Y.S.2d 683 [2008] ; see Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank , 85 N.Y.2d 20, 25, 647 N.E.2d 741, 623 N.Y.S.2d 529 [1995] ). Consumer-oriented conduct does not require a plaintiff to show that the defendant repeatedly committed the acts complained of. Instead, a plaintiff must demonstrate only that the acts or practices have a broader impact on consumers at large, in the sense that they are directed to consumers or potentially affect similarly situated consumers (see Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank , 85 N.Y.2d at 25, 623 N.Y.S.2d 529, 647 N.E.2d 741 ; Flax v. Lincoln Natl. Life Ins. Co. , 54 A.D.3d 992, 864 N.Y.S.2d 559 [2008] ; Cruz v. NYNEX Info. Resources , 263 A.D.2d 285, 290, 703 N.Y.S.2d 103 [2000] ). ( Emphasis Added ).
In Corsello , Verizon violated GBL § 349 when it engaged in alleged deceptive practices by failing to inform consumers that they were entitled to compensation for the use of their property and did not have to accede to their demands without such compensation. "The purpose of General Business Law § 349 is to secure an " ‘honest market place where trust prevails ... against any and all deceptive and fraudulent practices’ " ( Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, N.A. , 85 N.Y.2d at 25, 623 N.Y.S.2d 529, 647 N.E.2d 741, quoting Governor's Mem approving L 1970, ch 43, 1970 NY Legis Ann, at 472). (See Corsello v. Verizon N.Y., Inc. , 77 A.D.3d 344, 366, 908 N.Y.S.2d 57 [2d Dept. 2010] ; see also Brown v. Hambric , 168 Misc.2d 502, 638 N.Y.S.2d 873 [City Ct. City of Yonkers 1995] [where the court held that the named defendant, an individual and independent consultant, who worked for co-defendant company both violated GBL § 349 ] ). The provider/Day Care Facility agreement signed by the claimant reflects the following:
I consent to the enrollment of the child listed above in this facility and have been advised of the policies regarding administration of medications, fees, transportation and the services provided by the facility, and the Office of Children and Family Services regulations under which it operates . (Emphasis added ).
In this case, Flowers of the Sun Inc. was regulated by the New York City Department of Health (see NYC Administrative Code 17-1301, "Child care service" means any service which is permitted as a child care service in accordance with article 47 of the New York City Health Code). Child care in the City of New York is a daily challenge for tens of thousands of parents. Here, Claimant placed his child, seven-months old at the time, in the care and custody of Flowers of the Sun Inc., which was regulated by the New York City Department of Health at a time. The Claimant is a consumer. One provision under the General Business Law concerning arbitration clauses, defines "consumer" by referring to " General Business Law § 399-c (1) (c) (which) provides that the term "consumer" shall mean "a natural person residing in this state" ( Ragucci v. Professional Constr. Servs. , 25 A.D.3d 43, 47, 803 N.Y.S.2d 139 [2d Dept. 2005].) " Section 349 applies to "[deceptive] acts or practices in the conduct of any business". ( General Business Law § 349 [a]; emphasis in original. )" (See N.Y. Pub. Interest Research Group, Inc. v. Ins. Info. Inst. , 140 Misc.2d 920, 926, 531 N.Y.S.2d 1002 [Sup. Ct., N.Y. County 1988].)
NYC Administrative Code 17-1301, Section 1. "Legislative intent. The city of New York has an obligation to protect the safety and well being of its children, who are among its most vulnerable residents. This includes the regulation of child day care services regulated by the city of New York and not otherwise regulated by the state of New York, which provide care for children while their parents are at work. The Council recognizes an ever-increasing demand for day care services to help maintain the financial security of families. The Council finds, however, that parents often do not have access to complete, accurate information they need to make informed decisions when they select child care facilities for their children. The purpose of this local law is to ensure that parents have access to critical information they need to make informed decisions regarding their children's care and to improve the quality of day care throughout New York City."
NYC Administrative Code 17-1301
The population of Kings County is 2,595,259 and there are 193,409 children under the age of 5. See New York State Child Care Demographics 2017 , New York State Office of Children and Family Services, Kings County, Table 1. There is a capacity for 3,784 in regulated child care programs involving infants and toddlers in Kings County and a capacity for 44,782 in regulated child care programs involving pre-school children, Ibid. , Kings County, Table 3. See also Child Care in Crises, A Report from the Assembly, Child Care Work Group,
The court finds that the claimant is a consumer under the broad language of GBL § 349. In addition, both the state and New York City regulations inherently treat consumers of child care as a special class due to the important and vital nature of the care of children during working hours and the impact of such services on the state and city's economy (see NYC Admin Code 17-1301 and footnote 5).
Defendant had a close relationship with the owner Ilene Lieberman and in fact moved into Ms. Lieberman's apartment which is located at the same address as the corporation. Three months of her personal rent paid was paid for by the corporation without any credible information regarding consideration. The court infers that defendant, along with her brother, either directly or indirectly, managed the affairs of the business. The failure to inform claimant at the time his child was placed in child care that his deposit and pre-payment would not be reimbursed because the imminent dire health circumstances is an omission which constitutes a deceptive act thereby making defendant personally responsible for damages suffered by claimant under GBL § 349. The court further finds that the omission need not be recurring, that the dispute here is not unique to the agreement of the parties, but rather "affect(ed) similarly situated consumers" (see Corsello v. Verizon N.Y., Inc. , 77 A.D.3d 344, 365, 908 N.Y.S.2d 57 [2d Dept. 2010]citing Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, at 25, 27, 623 N.Y.S.2d 529, 647 N.E.2d 741 ) who pre-paid at this day care center which is documented by at least one other consumer (SCK 298-2017-1,2,3, and 4), and that the claim for a violation of GBL 349 has at least a broad enough impact on "consumers at large" ( Plaza PH2001 LLC v. Plaza Residential Owner LP , 98 A.D.2d 89, 104, 947 N.Y.S.2d 498 [1st Dept. 2012], quoting Thompson v. Parkchester Apts. Co. , 271 A.D.2d 311, 311, 706 N.Y.S.2d 637 [1st Dept. 2000] as would be required to accomplish substantial justice.
"Brother" is used as meaning a sibling by one parent in common.
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Based upon the foregoing, the clerk is directed to enter judgment in favor of the claimant in the amount of $4,563.39 with interest from January 20, 2017.
To the extent that the prior decision and order of the court in favor of a different claimant, in Turkenich v. Ivy Kaminer , SCK 298-2017-1,2,3, and 4, was based on piercing the corporate veil, that rationale was faulty as it should have been based on a violation of GBL § 349. The parties' respective exhibits must be picked up at the chambers of the judge which is located on the 13th floor of the court house where the trial took place in no less than 45 days or more than 90 days unless the Court must settle the record.
This constitutes the Decision and Order of the Court after trial.