Opinion
39862/05.
Decided August 18, 2006.
Attorneys for plaintiff: Winston Winston, New York, NY, (By: Jay Winston, Esq.).
Defendant Lucien Alexandrescu — Pro se.
The plaintiff's action seeks to recover the amount of $9,210.41 allegedly due upon defendant's breach of an agreement entered into on June 9, 2001 for the lease of a 2001 Audi automobile.
Trial of this action was held and completed in this Part on June 30, 2006, over the objection of Plaintiff as to the decision by Judge Gottlieb who vacated on May 19, 2006, sua sponte, the previous default judgment entered against defendant on Plaintiff's summary judgment motion, with the court reserving decision thereon. Plaintiff's counsel also submitted a post-trial memorandum of law to the court on July 31, 2006. Upon the trial testimony and exhibits deemed admissible therein, the court finds that Plaintiff has failed to prove an assignment to plaintiff and, therefore, its standing as an assignee; that, even had it established standing, its actions failed to comply with the Motor Vehicle Retail Leasing Act (Article 9-A of the Personal Property Law); and that, accordingly, no deficiency was capable of calculation and only the "early termination liability" for a turn-in fee of $250 would be supported by a preponderance of the evidence.
The court notes that the deficiencies regarding plaintiff's prima facie burden found at trial are also found in its moving papers.
Statement of Facts
On or about June 9, 2001, Biener Nissan Audi, Inc., as lessor, entered into an agreement to lease a 2001 Audi to defendant, Lucian Alexandrescu for a period of 39 months commencing June 9, 2001 for a monthly rental of $620.00 per month. Although no assignment was produced, the lease provides that "[l]essor will assign this lease and leased vehicle to VWCredit Leasing, Ltd or its assignee . . .". Significantly, the instant action was commenced by "VW Credit, Inc." and not by VW Credit Leasing, Ltd. It was undisputed that defendant terminated his leasing agreement by returning the Audi on March 7, 2003 and that he made the required payment for that month. It is also undisputed that neither Plaintiff nor any predecessor served any notice regarding the sale of the vehicle upon defendant, but that an "Early Termination Final Lease Settlement Invoice" was served after the purported auction. Defendant does not dispute that he terminated the lease early, but did so because he was being deported. Upon his lawful return to the United States, defendant attempted to settle the matter, but upon his refusal to pay the balance demanded, the within action ensued.
Conclusions of Law
In the first instance, the plaintiff, as noted above, commenced this action in its alleged capacity as the assignee of the lessor Biener Nissan Audi, Inc., but did not produce any assignment from the lessor naming either the named plaintiff or V.W. Credit Leasing, Ltd. as assignee of the subject lease. The only documents introduced bearing plaintiff's name is the Lease Vehicle Return form dated March 9, 2003 and a Final Lease Settlement Invoice listing the named plaintiff as "servicer for V.W. Credit Leasing, Ltd." The court finds, therefore, that plaintiff has failed to meet its burden to prove the alleged assignment under which it has commenced the action and, hence, has failed to establish standing (see Copelco Capital, Inc. v. Packaging Plus Services, Inc., 243 AD2nd 534 [2nd Dept. 1997]; Citibank (South Dakota) NA v. Martin, 11 Misc 3d 219, at 226 [Civil Court, City of New York, New York Co. 2005]).
Accordingly, the complaint is dismissed. (See Pullman Group, LLC v. Prudential Insurance Company of America, 297 AD 2nd 578 [1st Dept. 2002]).
However, even assuming arguendo that plaintiff had established its standing to sue as an assignee herein, as discussed below, plaintiff's recovery in this matter would be limited to the sum of $250 (plus interest).
The plaintiff's complaint alleges that the amount sought is comprised of $10, 540 for remaining payments due under the lease plus a $250 "Termination/Turn-In Fee" less an unearned rent charge of $1,579.59. It should be noted that not only does the complaint not allege any unpaid monthly payments under the lease (which calls for 39 monthly payments beginning in June, 2001) accruing up to the surrender date of March 7, 2003, but neither does plaintiff's "Final Lease Settlement Invoice" (Pl's Exh. # 2 at trial) allege any prior unpaid payments, nor does the payment history allege to the contrary. Neither, it should be noted, does the complaint allege and seek to recover upon any deficiency in plaintiff's post-possession resale of the vehicle.
Even had plaintiff sought to recover for such deficiency, while Personal Property Law § 340 (which is discussed in the key case of Ford Motor Credit Company v. Esposito, 8 Misc 3d 230 [District Court, Suffolk Co. 2005]), cited by plaintiff in its memorandum of law, permits a vehicle lessor to recover any "lost profits" or deficiency after a commercially reasonable sale of the repossessed vehicle as well as any pre-surrender outstanding lease payments, despite Plaintiff's protestations, proof of service of a proper notice of sale is required.
Plaintiff simply misreads the holding of Ford Motor Credit as well as the Personal Property Law in that it insists that no notice of sale is mandated because the contractual relationship devolves from a lease where, as here, the lessee terminates early and declines its option to purchase. Although Plaintiff is correct that pursuant to the UCC Sec 9-610, there exists for a lease "no absolute requirement for actual notice of auction sale or to mandate the content of said notice" ( Ford Motor Credit, 8 Misc 3d 233), it is this loophole, together with a recognition by the New York legislature that leasing was a popular alternative to out right purchasing that lacked proper consumer protections, which is the very underpinning of the Motor Vehicle Retail Leasing Act, Article 9-A of New York Personal Property Law, enacted in 1994. The Chapter Law Memoranda makes clear that the legislation "represents landmark legislation and provides motor vehicle lessees with comparable protection to those provided to purchasers of motor vehicles. It represents a significant step toward preventing or discouraging irresponsible, fraudulent, and misleading practices in the field of consumer leases." Governor's Program Bill Mem #190R, 1994 NY Legis Ann at 5.
Accordingly, entitlement to such recovery by the lessor would be contingent upon proof of proper 10 day notice of same in accordance with the requirements set forth in Personal Property Law § 340(2). Not only does the Personal Property Law mandate the service of a 10 day notice, it also requires the contents of said notice.
"The notice of intention to sell the vehicle shall set forth separately any charges or sums due under the agreement and shall clearly and conspicuously state that the lessee will be liable for the difference between the estimated residual value of the vehicle and its realized value, if such liability exists. The notice shall state that the lessee has the right to submit a cash bid for the purchase of the vehicle." Personal Property Law § 340(3).
The court finds that plaintiff failed to establish not only that the requisite notice was provided by plaintiff, but also, in the absence of any sale document, the actual proceeds of such sale.
As to plaintiff's right to recover for future lease payments, i.e., those accruing during the term of the lease after plaintiff regained possession of the vehicle in March, 2003, counsel's contention that Ford v. Esposito, supra, supports such contention is without merit. What the court actually held in that case is that Personal Property Law § 341(a) "allows [the lessor] to recover the unpaid rental payments due prior to termination [italics by this court for emphasis] . . . [The termination date [being] the date [the lessor] took possession of the vehicle" Id., at 236. Indeed, the court found that the statute does not allow the lessor to simply charge the debtor the remaining monthly payments, rather it must calculate capitalization, depreciation and realized value so as not to cheat the debtor from realizing his "Accelerated Possession" credit. To simply apply plaintiff's formula to the within action fails to meet the consumer protections explicit in the Motor Vehicle Retail Leasing Act.
The court, therefore, finds that plaintiff would not have been entitled to recover any rental payments which would have accrued under the lease subsequent to plaintiff's taking possession of the vehicle.
With respect to the $250 "Termination/Turn-in fee" alleged in the complaint, Personal Property Law § 341(1) provides, as is relevant herein:
". . . the early termination obligation of the lessee may not exceed an amount equal to the sum of:
(a) any unpaid rental payments that accrued through the date of earlytermination;
(b) any other unpaid charges . . . arising from the failure of the lessee tofulfill his or her obligations under the agreement; . . .".
As paragraphs 3(a) and 26(C) re: Early Termination Liability, of the subject lease provide for a turn-In fee of $250, the court finds that the plaintiff would have established its entitlement to such fee in this action. However, such limited recovery would have been the sole extent of plaintiff's recovery in this action.
As the court has found, above, however, that plaintiff lacks standing herein, the complaint is dismissed.
The foregoing constitutes the decision and order of the court.