Opinion
No. 034225/2011.
2012-07-18
TAXIFLEET MANAGEMENT LLC, Plaintiff, v. Valen TIN, Defendant.
Rachel L. Kaylie, Esq., Gerber & Gerber, PLLC, Brooklyn, for Plaintiff. Anthony M. Bramante, Esq., Brooklyn, for Defendant.
Rachel L. Kaylie, Esq., Gerber & Gerber, PLLC, Brooklyn, for Plaintiff. Anthony M. Bramante, Esq., Brooklyn, for Defendant.
PAMELA L. FISHER, J.
Recitation, as required by CPLR § 2219(a), of the papers considered in the review of Respondent's Order to Show Cause, Respondent's Motion, and Plaintiff's Cross–Motion.
+----------------------------------------------------------+ ¦Papers ¦Numbered¦ +-------------------------------------------------+--------¦ ¦Order to Show Cause and Affidavits Annexed ¦____ ¦ +-------------------------------------------------+--------¦ ¦Notice of Motion and Affidavit ¦1 ¦ +-------------------------------------------------+--------¦ ¦Answering Affidavits and Plaintiff's Cross–Motion¦2, 3 ¦ +-------------------------------------------------+--------¦ ¦Replying Affidavits ¦1 ¦ +-------------------------------------------------+--------¦ ¦Exhibits ¦____ ¦ +-------------------------------------------------+--------¦ ¦Other: ¦____ ¦ +----------------------------------------------------------+
After oral argument and upon the foregoing cited papers, Defendant's Motion to summary judgment, and Plaintiff's Cross–Motion for summary judgment are decided as follows:
This breach of contract action was brought by Plaintiff Taxifleet Management LLC (“Taxifleet”) against Defendant Valen Tin (“Tin”) stemming from a contract between the parties dated January 1, 2009 (the “Contract”). The Contract was to commence on February 1, 2010 and terminate on January 31, 2012. Taxifleet is a corporation engaged in the business of operating medallion taxicabs in the City of New York. Defendant Valen Tin is a taxicab medallion owner. Pursuant to the Contract, Defendant Tin granted Plaintiff Taxifleet the right to use his medallion in exchange for a guaranteed monthly payment of two thousand three hundred dollars ($2300). Under the terms of the Contract, Defendant appointed Taxifleet, as his exclusive agent for the purpose of managing his medallion. On March 16, 2011, Defendant Tin directed Plaintiff Taxifleet to surrender his medallion. Plaintiff returned the medallion and commenced this action to recover damages resulting from Defendant's breach of the Contract.
Defendant maintains that the contract is void as against public policy because it violates the “owner must drive rule” promulgated by the New York City Taxi & Limousine Commission (“TLC”). See Rules of City of N.Y. Taxi and Limousine Commission (35 RCNY) § 51–01. According to the TLC Rules, the owner of an “owner must drive” medallion is permitted to lease his medallion as long as he personally drives a minimum number of shifts per calendar year. Id. Defendant maintains that he attempted to comply with the TLC Rules, but his requests to drive were rejected by Taxifleet. See Affidavit of Defendant Valen Tin.
Plaintiff cross moves for summary judgment. Plaintiff maintains that the Contract is valid and that it is entitled to summary judgment and liquidated damages as Defendant unilaterally terminated the Contract without notice. Plaintiff contends that Defendant, as the medallion owner, entered into the Contract knowing that his medallion was subject to the TLC “owner must drive” rule and that he would be in violation of the TLC rules if he did not drive the required number of shifts per year required by the TLC rules. Plaintiff argues that Defendant knowingly entered the Contract and knowingly violated the TLC rules, and can not now be heard to complain that the Contract is illegal.
The TLC was created by the New York City Charter (“NYC Charter”) to serve a number of purposes, among them to adopt and establish an overall public transportation policy governing taxis. Metropolitan Taxicab Bd. of Trade v. New York City Taxi & Limousine Commn., 18 NY3d 329, 331 (2011). Pursuant to Chapter 65 of the NYC Charter, the TLC has the power and responsibility to promulgate rules and implement broad public policy in furtherance of its stated authority to regulate taxicabs and medallions. Pursuant to the “owner must drive” rule, an owner of an Independent Medallion is permitted to lease his medallion as long as he personally drives a minimum number of shifts in every calendar year. See 35 RCNY § 51–01. In July 2011, the TLC adopted rule changes to “owner must drive” requirements. The amended rules state that owners of independent cab medallions who bought their medallions after January 6, 1990, must drive their cabs for 180 nine-hour shifts per year. See 35 RCNY § 58–05; see also 35 RCNY § 58–20. The purpose of the “owner must drive” requirement is to promote safety and good customer service. See New York City Taxi and Limousine Commission, ht tp://www.nyc.gov/html/tlc/dow nloads/pdf/owner_must_drive_version_10.pdf (accessed July 9, 2012).Here, the Contract is not void as against public policy. Although illegal contracts are, as a general rule, unenforceable, parties should be free to chart their own contractual course unless public policy is offended. See Benjamin v. Koeppel, 85 N.Y.2d 549 (N.Y.1995); Lloyd Capital Corp. v. Pat Henchar, Inc., 80 N.Y.2d 124 (N.Y.1992); Jara v. Strong Steel Door, Inc., 58 AD3d 600 (2d Dep't 2009); Galbreath–Ruffin Corp. v. 40th & 3rd Corp., 19 N.Y.2d 354 (N.Y.1967). As stated in Village Taxi Corp. v. Beltre, 91 AD3d 92 (2d Dep't 2011), parties are not authorized to bypass TLC Codes and make private arrangements that are contrary to the regulatory scheme of the TLC. The TLC Code, together with the related regulations which are targeted at the taxicab industry, exist for the public's protection. See Id. Here the evidence submitted in the respective motions demonstrates that the parties could contract while abiding by the TLC regulations.
In the instant matter, while Defendant's medallion falls under a class of “owner must drive” medallions, the Contract does not preclude the owner from driving and fulfilling the requirements set out by the TLC rules. In his affidavit, Defendant Tin says that he offered to drive the required hours but that Plaintiff refused to accommodate him. Conversely, in his affidavit, Plaintiff states that he spoke with Defendant Tin about driving the required hours, but that Defendant Tin refused. The party affidavits raise issues of material fact that remain in dispute. As owners may lease their medallions, there remains a triable issue of fact as to whether the Defendant was precluded from or afforded the opportunity to comply with the TLC medallion rules. Accordingly, both Defendant's motion and Plaintiff's cross motions are denied.
The Court also finds that the issue of liquidated damages is a triable issue of fact. Plaintiff maintains that pursuant to the Contract, Taxifleet is entitled to liquidated damages of ten thousand dollars ($10,000) plus expenses of one thousand nine dollars and seventeen cents ($1,009.17). Section III of the Contract spells out the duties of Taxifleet which include: providing a vehicle and putting the medallion on a vehicle without additional expense to the owner; entering into a lease on behalf of the owner with a driver who has a hack license from the TLC; and, on the owner's behalf, paying for liability coverage, summonses, and other fees and costs. Plaintiff maintains that the liquidated damage costs are not unreasonable. If a valid contract existed between the parties, then according to the agreement Plaintiff is entitled to liquidated damages. The case law is clear that a liquidated damages clause will be upheld when the amount liquidated bears a reasonable proportion to the probable loss and the amount of the actual loss is incapable or difficult of precise estimation. See Harrington v. Hasan, 191 Misc.2d 617 (N.Y. Civ.Ct.2002); Truck Rent–A–Center, Inc. v. Puritan Farms 2nd, Inc., 41 N.Y.2d 420 (N.Y.1977); Vernitron Corp. v. Cf 48 Assocs., 104 A.D.2d 409 (2d Dep't 1984). In the present case, the Plaintiff's actual damages are easily ascertainable and should be established at trial.
In accordance with the above, Defendant's motion for summary judgment and Plaintiff's cross motion for summary judgment are denied as there remain material issues of fact to be decided at the time of trial.