Opinion
June 12, 2001.
Wolf, Haldenstein, Adler, Freeman Herz, New York City, for defendant.
Thomas Sun, New York City, for plaintiff.
DECISION/JUDGMENT
In this action, Plaintiff, an automobile dealership, seeks to recover $2,500 of a $4,000 down payment from Defendant, the purchaser of a second hand car.
In a pretrial motion, Defendant moves to dismiss this case in its entirety on grounds that the automobile dealership was not licensed as a second hand automobile dealer at the time it purported to sell to Defendant the used car at issue in this action and consequently according to Defendant the contract of sale is void and Plaintiff lacks standing to sue for relief in connection with the purported sale.
Defendant further moves to dismiss this case on the grounds that Plaintiff did not have title to the used car at the time it purported to sell it to Defendant and consequently the purported sale is therefore void.
The facts set forth in Defendant's Affirmation in its motion to dismiss are limited solely to the issues of licensing and title. Additional facts relating to defendants other defenses include her defense of fraudulent inducement.
In Plaintiff's opposing papers, it concedes that its New York City Department of Consumer Affairs "NYCDCA" Second Hand Automobile Dealers' license expired on July 31, 1999 and did not timely renew until October 18, 1999. Plaintiff, however, argues that the two-month lapse in its license should be excused because it has been in business for more than 20 years and has always met its obligation of being a fully licensed business and because the delay was purportedly caused by its business moving to a different address.
Moreover, Plaintiff argues that even if it did not have a valid New York City license at the time it entered into contract with Defendant, it nevertheless has standing to recover its down payment from the Defendant because it is a certified dealer registered with the New York State Department of Motor Vehicles "NYSDMV". Specifically, Plaintiff argues that the NYCDCA license is contingent upon compliance with the laws of the State of New York and therefore it is licensed and controlled by the NYSDMV. Hence, Plaintiff alleges that its failure to be licensed by NYCDCA is not a basis to preclude it from bringing this action or declare the sale contract null and void.
Plaintiff alleges that pursuant to City ordinance pertaining to a violation concerning dealers in 2nd hand articles the appropriate remedy is a fine or imprisonment and not nullification of a sales contract.
Plaintiff additionally argues that as a certified dealer, it had title of the vehicle when it acquired ownership of the vehicle and need not apply for a New York State Certificate of Title.
The determining issue before this Court, therefore, is whether a second hand dealer who sues a "consumer" may circumvent New York City's licensing requirement by complying solely with New York State's certification and be allowed to amend its complaint to plead its state certification. The Court finds it cannot.
Factual Background
By lease dated September 18, 1996 between Plaintiff as lessor and Defendant as lessee, Defendant leased a 1997 Toyota Avalon Sedan from Plaintiff. As the conclusion of the three-year lease term approached, the parties agreed to extend the lease for an additional month that is, through October 18, 1999 and to meet to work out terms for Defendant, Zelig to lease or purchase a car. Defendant mailed the additional month's lease payment on September 16, 1999.
The meeting between Plaintiff and Defendant took place at Plaintiff's dealership on September 28, 1999. At that time, the parties agreed that Defendant would purchase from Plaintiff the 1997 Toyota Avalon Sedan that Defendant had, for the prior three years leased from Plaintiff. The parties are in agreement that this contract of sale was signed on September 28, 1999. Pursuant to the sales contract Defendant was obligated to pay a down payment of $4,000.
Plaintiff "rolled over" Defendant's $1,500 security deposit on her automobile lease to pay a portion of the $4,000 down payment allegedly due on the purchase of the car. The $1,500 security deposit was applied by Plaintiff to the $4,000 down payment, leaving a $2,500 down payment due. It was agreed by and between Plaintiff and Defendant that the Defendant would return the next day with the $2,500 balance due on the down payment and that Defendant could remain in possession of the vehicle. The Defendant never returned and kept possession of the vehicle.
Discussion
The business and licensing provisions of Title 20 of the Administrative Code of City of New York "Administrative Code" and Title 6 of the Rules of the City of New York "RCNY" were enacted to safeguard and protect consumers against fraudulent practices. Specifically, Administrative Code § 20-265 provides that it is unlawful for any person to act as a Second Hand Automobile Dealer without a license. Moreover, applicants for a Dealer in Second Hand Articles license and a Second Hand Automobile Dealers' license must consent to being fingerprinted and submit a photograph so that their criminal history may be checked, Administrative Code § 20-266 (d); 6 RCNY 3 § 1-01. These stringent regulations came as a result of the historical connection to trafficking in and the sale of stolen property in the automobile dealership industries, NY Shredding Corp. v. NYCD of Investigation, 184 Misc.2d 174 (NY Co. Sup. Ct., 1st Dept, 2000).
Once a license is granted, the licensee is subject to regulations requiring inter alia the display of signs, the labeling of articles, furnishing a bond to the city, maintaining accurate records of purchase and sales and maintaining a "police book" which contains information subject to inspection without notice. Administrative Code § 20-273; 6 RCNY 3 §§ 2-101, 2-103. The license is valid for a two (2) year term and an application for renewal requires the submission of additional information concerning the licensee and the business. 6 RCNY 3 § 102. However, if the license renewal is filed sixty (60) days or more after the expiration date of such license the renewal shall be treated as a new license application. 6 RCNY 3 § 1-09. Furthermore, the city ordinance also provides that when the licensee moves its business to a different location, it is required to notify NYCDCA in writing within ten days of the change of address. 6 RCNY 3 § 1-08. Failure to abide by these rules and continue to operate as an unlicensed business in New York City is guilty of a misdemeanor. Administrative Code § 20-401 (1).
In the instant case, Plaintiff does not dispute that its NYCDCA Second Hand Automobile Dealer license operating as B L Toyota, Inc., expired on July 31, 1999 nor does it dispute that its business was unlicensed by NYCDCA at the time it entered into the sales contract, i.e., September 28, 1999 or that it took Defendant seventy-nine (79) days to renew.
Plaintiff's plea to this Court is to excuse its unlicensed status for the two month lapse by judicially administering retroactive application of the alleged renewal license which became effective October 18, 1999.
The Administrative Code does not speak to the issue of retroactive application of late renewals only to the extent that if an applicant attempts to renew its expired license more than sixty (60) days, the renewal application is considered a new application. The basis for Plaintiff's contention here is that NYCDCA kept the original expiration date that the previous license had as if the renewal was timely. This court finds Plaintiff's arguments unpersuasive.
More fundamentally, the failure of a legislative body to express its intent in prefatory language is irrelevant when the intent of the legislative body in question can easily be inferred from the plain language of the substantive provisions of the enactment. See, Goodell v. Jackson, 20 Johns 693; McKinney's Cons. Law of NY., Book 1, Statutes § 122.
Plaintiff's late renewal, by operation of law, automatically converted the renewal application to an application for a new license since more than sixty (60) days had lapsed from the date of expiration. This conversion did not recognize and in fact, terminated any tenuous covering of the expired license during the two month lapse that a renewal could have possibly offered. This is evidenced by the fact that NYCDCA did not adjust the date on the new license to encompass and include the entire unlicensed period and further, it did not keep the original license number, which stays with the business upon timely renewal.
The protective purposes of the Administrative Code and the importance it places on businesses being duly licensed when transacting with consumers is further enhanced by additional protections set forth in CPLR § 3015 (e).
Pursuant to CPLR § 3015 (e) "[Where] the plaintiff's cause of action against a consumer arises from the plaintiff's conduct of a business which is required by state or local law to be licensed by the department of consumer affairs of the City of New York . . . the complaint shall allege, as part of the cause of action, that plaintiff is duly licensed . . .".
The legislative purpose in enacting CPLR § 3015 (e) was not to strengthen business rights, but to benefit consumers by shifting the burden from the consumer to the business to establish that the business was in fact licensed. The Sponsors' Memoranda explain that the statute was introduced in the belief that CPLR § 3015 (e)'s affirmative pleading requirement would provide additional protection to consumers, increase incentives for businesses to comply with licensing requirements and help raise revenue. See, Letter of Senator Halperin to Governor's Counsel dated July 21, 1983, Letter of Assemblyman Dunne to Governor's Counsel dated July 21, 1983; Bill Jacket, L. 1983, ch. 817; see also, Todisco v. Econopouly, 155 A.D.2d 441, 442 (2nd Dept. 1989); Zandell v. Zerbe, 139 Misc.2d 737, 741 (NY Civ. Ct. 1988). Allowing the plaintiff in this case to amend its complaint to plead the new license when such license was not in effect when the purported contract of sale occurred would defeat these goals, and those underlying the provisions of the Administrative Code by permitting businesses to operate without the necessity of acquiring a license or the timely renewal of its license.
The Legislature is presumed to be aware of the law in existence at the time of an enactment and to have abrogated the common law only to the extent that the clear import of the language of the statute requiresArbegast v. Board of Educ., 65 N.Y.2d 161, 169 (1985). The Attorney-General's Memorandum to the Governor supporting the bill highlighted the case law precluding recovery by an unlicensed business (see. Mem. of Attorney-General to Governor, July 21, 1983, Bill Jacket, L. 1983, ch. 817) and there is nothing in the language of the legislative history of CPLR § 3015 (e) suggesting an intent by the Legislature to weaken this protection or expand the rights of unlicensed businesses. Indeed, the protective purposes of the statute and the various licensing laws which CPLR § 3015 (e) addresses would be undermined by overturning this body of case law and validating a sales contract during the period the business was unlicensed. Allowing the Plaintiff in this case to plead the new license, after the contract of sale was entered into, affords none of the consumer protections contained in these regulations.
Moreover, it would appear that Plaintiff's argument of it's good faith renewal efforts is disingenuous. Plaintiff failed to show the Court, through its papers, that it complied with NYCDCA regulations concerning notice to the agency upon moving its business to another location by submitting its change of address in writing within ten (10) days. Plaintiff's proof of compliance on this particular issue would have been pertinent to its good faith argument.
Further, upon review of the documents and licenses submitted by Defendant, which Plaintiff does not challenge in its opposing papers, the documents demonstrate that the business name issued on the expired NYCDCA license, i.e., B L Toyota, Inc., d/b/a B L Toyota, the party which entered into the contract with Defendant, is an entirely distinct and separate entity, albeit with a somewhat similar name, from the entity named in the new license, i.e., B L Toyota Auto Group d/b/a B L Toyota.
A corporation cannot, except as authorized by law, change its own name either directly or by the user. Scarsdale Pub. Co. Colonial Press v. Carter, 63 Misc. 271 (1909). A corporation may change its name by amendment to the certificate of incorporation, Mckinney's Business Corporation Law, "Bus Corp Law" § 801 (b)(1) which is effected by executing and filing with the department of state a certificate of amendment setting forth the change of name. Bus Corp Law § 801 (a)(1).
To determine whether Plaintiff in this case change its name as authorized by law or to determine whether B L Toyota, Inc. and B L Auto Group are one and the same corporation are issues, however, for the trier of fact.
Nevertheless, it is also important to note, that in the instant case, Plaintiff executed the sales contract under its assumed business name B L Toyota. It would appear that the purported new business entity also carried over the very same assumed business name. There is no proof in Plaintiff's papers that is was licensed pursuant to General Business Law § 130 to transact business under its assumed name.
This position is further upheld by a NYCDCA printout dated January 19, 2000 submitted by Defendant, which indicate that B L Toyota, Inc., is "out of business" and is no longer licensed. Plaintiff again does not dispute this fact in it's opposing papers.
The Court, therefore, concludes that Plaintiff's noncompliance with the NYCDCA requirements along with the fact that it acquired a new license for a new business and not a renewal license for the old business precludes Plaintiff from amending the complaint to plead the new license.
Assuming arguendo, however, that B L Toyota, Inc., d/b/a B L Toyota is the same entity as B L Auto Group d/b/a B L Toyota, the determining issue before this Court, therefore, is whether a second hand dealer who sues a "consumer" may circumvent New York City's licensing requirement by complying solely with New York State's certification and be allowed to amend its complaint to plead its State certification. The Court finds it cannot.
The Municipal Home Rule Law § 10 (1)(a)(12)(b) provides that a County may generally regulate and license occupations and businesses within the county, that same provision recites that the county law will not apply in the areas of cities, villages or towns in the county which have their own regulations or licensing requirements.
In Savarese General Contracting v. Mychalczak, 272 A.D.2d 300 (2nd Dept. 2000) The plaintiff, a home improvement contractor, licensed by the town of East Hampton "Town" pursuant to a town ordinance was precluded to bring an action against a consumer because the plaintiff failed to plead that he was licensed pursuant to a Suffolk County licensing statute applicable to home improvement contractors. In opposition to the motion, the plaintiff claimed it was only required to be licensed by the town and that county license was not required. The Appellate Division, Second Department reversed the lower court and held that plaintiff's failure to hold a county license could not serve as a basis for dismissal pursuant to CPLR § 3015 (e) because plaintiff pleaded that he was licensed by the town and proffered the relevant annual licenses.
Conversely, in Ellis v. Gold, 204 A.D.2d 261 (2nd Dept. 1994) where the home improvement contractor was licensed by other governmental agencies, the Court did not entitle the Plaintiff contractor to recover on mechanics liens for work performed in town from which he had not obtained the required contractor's license.
Similarly, here, Plaintiff did not possess a city license to have engaged in the selling of used automobiles in New York City. The certificate proffered to the Court by Plaintiff on December 12, 2000, indicating that it was "certified" or "registered" as a "dealer" under New York's Vehicle and Traffic Law, is altogether insufficient to prevent the voiding of Plaintiff's contract with Defendant or the dismissal of this action. Nor is Plaintiff alleged compliance with the state certification sufficient to proceed with this action. "Certification" or "registration" as a "dealer" under one statute is entirely separate from and cannot excuse or waive, the legal obligation to be licensed under another, entirely separate statute from a different jurisdiction.
The Court, therefore, finds that the Plaintiff's certification from NYSDMV does not obviate the requirement of acquiring a license from the NYCDCA.
The legal consequences of failing to maintain a required license are well known. It is well settled that not being licensed to practice in a given field which requires a license precludes recovery for the services performed, either pursuant to contract or in quantum merit Charlebois v. Weller Assoc., 72 N.Y.2d 587, 593 (1988); see, P.C. Chipouras and Assoc. v. 212 Realty Corp., 156 A.D.2d 549 (2nd Dept. 1989); Hammerman v. Jamco Indus., 119 A.D.2d 544, 545 (2nd Dept. 1986); Gordon v. Adenbaum, 171 A.D.2d 841 (2nd Dept. 1991); see, also Chosen Construction Corp. v. Syz, 138 A.D.2d 284 (1st Dept. 1988); Bujas v. Katz, 133 A.D.2d 730 (2nd Dept. 1987). This bar against recovery applies to home improvement contractors, architects and engineers, car services, plumbers, sidewalk vendors, and all other businesses — including secondhand automobile dealers — that are required by law to be licensed.
The law does not just bar recovery by unlicensed businesses; it altogether voids a contract between the unlicensed business and its customer. See, e.g., Primo Construction. Inc., v. Stahl, 161 A.D.2d 516 (1st Dept. 1990); Papadopulos v. Santini, 159 A.D.2d 335 (1st Dept. 1990) ("the court was warranted in determining that the oral contract entered into between the parties was void and unenforceable due to plaintiff's admitted failure to obtain a home improvement license"); Mortise v. 55 Liberty Owners Corp., 102 A.D.2d 719 (1st Dept. 1984), aff'd, 63 N.Y.2d 743 (1984); Rasmus Construction Corp., v. Nagel, 168 Misc.2d 520 (Sup.Ct. App. T. 1996) ("home improvement contracts entered into by such unlicensed entities are considered 'void'"); Anton Sattler. Inc. v. Cummings, 103 Misc.2d 4 (Sup.Ct. N.Y. Co., 1980) ("home improvement contract between respondent and petitioner, an unlicensed contractor, is void as a matter of law [citations omitted]").
Moreover, where a business is unlicensed at the time it enters into a contract or at the time it performs the contract, that contract is void and the business is precluded from recovering for such performance, even if, it subsequently obtained the requisite license that it previously lacked. B F Building Corp., v. Liebig, 76 N.Y.2d 689, 693-94 (1990);Blake Electric Contracting Co., Inc. v. Paschall, 222 A.D.2d 264 (1st Dept. 1995); Hanjo Contractors v. Wick, 155 A.D.2d 304 (1st Dept. 1989);Hammerman v. Jamco Industries. Inc., 119 A.D.2d 544 (2nd Dept. 1986).
Conclusion
The law is abundantly clear with regard to the various protections and benefits afforded to consumers in transactions conducted in the City of New York by unlicensed businesses. The Court, therefore, grants Defendants motion to dismiss to the extent that it orders the sales contract to be rescinded, Plaintiff is ordered to return the down payment and Defendant is directed to give back the used car to Plaintiff's dealership. The Court need not address the issue of title as it is deemed moot.