PL H



Diane Delgado and the Department of Consumer Affairs v. Cypress Motors of Ridgewood, Inc.

CITY OF NEW YORK

DEPARTMENT OF CONSUMER AFFAIRS

| |DECISION AND ORDER |

|DIANE DELGADO | |

|and |Violation No.: CD5-86148 |

|THE DEPARTMENT OF CONSUMER AFFAIRS, | |

| |License No.: 2965553 |

|Complainants, | |

| |Licensee’s Address: |

|-against- |79-03 Cypress Avenue |

| |Ridgewood, NY 11385 |

|CYPRESS MOTORS OF RIDGEWOOD, INC., | |

| | |

|Respondent-Licensee. |Date: October 4, 2006 |

| | |

A hearing in the above-captioned matter was held on August 24, 2006.

Appearances: For the Complainants: Diane Delgado. For Respondent: Pat Bonavita, President.

The respondent is charged with violating the following violations, as numbered in the Notice of Hearing:

Title 6 of the Rules of the City of New York (6 RCNY):

1. Section 1-05 for failing to clearly identify the license number set forth on its bill of sale as a NYC Department of Consumer Affairs license number.

2. Section 2-103(a)(4) by failing to include in the bill of sale the description of the car that the consumer complainant traded in by year, make, motor and serial number.

3. Section 2-103(f) for failing to draw a line from the last word of the undertaking to the signature of the purchaser.

4. Section 2-103(g)(1)(ii) for failing to set forth the “Important Notice to Buyer” provision in 10-point type in the contract of sale.

5. Section 2-103(g)(1)(ii) for failing to include the required clause (d) “Important Notice to Buyer” provision in the contract of sale.

New York City Administrative Code:

6. Section 20-101for failing to maintain the standards of integrity, honesty and fair dealing required of licensees in that the respondent sold the consumer complainant a care that was not roadworthy and in that the respondent failed to process the paper work related to the Acura properly and/or in a timely manner, to the consumer complainant’s detriment.

7. Section 20-700 for engaging in a deceptive trade practice in the sale of the Mitsubishi in that Cypress represented the vehicle to be roadworthy when it was not.

New York State General Business Law:

8. Section 198-b(b)(1)(c) in that Cypress sold the Mitsubishi without giving the consumer complainant a written warranty for a minimum of thirty days when the Mitsubishi had 92,942 miles.

9. Section 198-b(g) by failing to provide the consumer complainant with the Used Car Lemon Law Bill of Rights when she purchased the vehicle.

Based on the evidence in the record, I RECOMMEND the following:

Findings of Fact

On April 9, 2004, the consumer went to the respondent’s place of business, a used car dealership, and decided to purchase a 1994 Mitsubishi Eclipse for $2,390 plus the trade-in of her vehicle, a 1990 Acura. The Mitsubishi had 92,942 miles on it. She paid the respondent a $600 deposit on that date. On April 11, 2004, she paid the balance, delivered her Acura and took possession of the Mitsubishi. However, when she started up the Mitsubishi’s engine, she noticed that the whole car shook. She pointed out the problem to the respondent’s employee, who explained that it was just the car’s compressor that caused the shaking. The consumer then advised that she did not want the car and asked for her money back, but the employee refused, telling her that she bought the car “as is.” Believing she had no alternative, she drove the Mitsubishi off the lot and drove it home.

Whenever she drove the vehicle, it would shake, lose power and stall out. In addition, the sunroof leaked whenever it rained. She repeatedly attempted to contact Mr. Pat Bonavita, the respondent’s president, but he neither took nor responded to her calls during this time. The problems persisted and, on June 6, 2004, she took the car to Hector’s Transmissions, Inc. who advised her to purchase a new distributor. Pursuant to that advice, she purchased one from P.M. Auto Parts for $275.

The following day, June 7, 2004, the vehicle broke down. The consumer had it towed to Alfaro Motors which installed the distributor for $70.61. However, the distributor installation did not solve the problem, and the car continued to shake, lose power and stall.

On or about July 2, 2004, the car would not start. A friend of the consumer towed the vehicle back to Hector’s Transmissions, who advised her that the engine was beyond repair and needed to be replaced. She agreed to have this work done and paid Hector $1,086.25 for the parts and labor. However, despite the engine replacement, the car continued to shake and stall out.

In or about the end of July 2004, the car broke down again and could not be moved. The consumer had it towed back to Hector’s Transmissions and was advised that the transmission was shot and had to be replaced. Instead of investing any more money in the car, she sold it to Hector’s Transmissions for $50.

The respondent subsequently sold the Acura that the consumer had traded in for $650.

The Bill of Sale set forth the respondent’s DCA second hand automobile dealer’s license number. However, it did not include the vehicle by year, make, motor and serial number, as required. Furthermore, the “Notice to Buyer” contained therein was not printed in at least 10-point type and paragraph (d) of the notice was not included. Furthermore, the respondent failed to provide the consumer with a written warranty or the Used Car Bill of Rights.

Opinion

Used car buyers are protected by an arsenal of consumer protection devices, including but not limited to (1) the Used Car Lemon Law [General Business Law (“GBL”) §198-b], (2) the warranty of serviceability [Vehicle & Traffic Law (“VTL”) §417] and, (3) the prohibition against deceptive trade practices [NYC Administrative Code §20-700, et. seq. and GBL §349]. Ritchie v. Empire Ford Sale, Inc., NYLJ, November 7, 1996, at Page 25, (Yonkers City Ct.). The Used Car Lemon Law prohibits a dealer from selling a used motor vehicle (which meets certain sales price and mileage criteria[1]) to a consumer without first providing the consumer with a written warranty that covers the parts specified in the statute. The duration of the warranty varies according to the qualified vehicle’s mileage at the time of sale.[2] The statute requires the dealer or his agent to repair or, at the election of the dealer, to reimburse the consumer for the reasonable cost of repairing the failure of a covered part.[3]

The protections afforded by the Used Car Lemon Law notwithstanding, VTL §417 imposes upon dealers, without limitation, an unwaivable obligation to deliver to the purchaser a used vehicle that is in condition and repair to render, under normal use, satisfactory and adequate service on the public highway at the time of delivery. Armstrong v. Boyce, 135 Misc.2d 148, 513 NYS2d 613 (City Court of NY, Watertown, Jefferson County, 1987). Pierce v. International Harvester Co., 61 AD2d 255, 402 NYS2d 674 (App. Div. 4th Dept., 1978). This section “creates a statutory ‘warranty of serviceability’ that goes beyond the implied warranties of the Uniform Commercial Code and which cannot be waived.” The scope of this warranty is not determined by specific parts, but by performance, Williams v. Planet Motor Car, Inc., 190 Misc.2d 22, 738 NYS2d 170 (Civil Court of the City of New York, Kings County, 2001), and is not waived by any contractual limitation on liability pursuant to the Used Car Lemon Law. Barilla v. Gunn Buick-Cadillac-GMC, Inc., 139 Misc.2d 496, 528 NYS2d 273 (Oswego City Court, 1988). Courts have held that “a sale of a used vehicle in New York State ‘As Is’ no longer means ‘as is’ --- but rather it now means ‘as it should be’ under the Vehicle and Traffic Law and the Commissioner’s regulations.[4]” Rice v. Buritt Motors, 124 Misc.2d 712 (Oswego City Ct. 1984). This statutory warranty is not only a matter of protection to the consumer, but is also a matter of highway safety. Natale v. Martin Volkswagen, Inc., 92 Misc.2d 1046, 402 NYS2d 156, 23 UCCRS 898 (1978). In furtherance thereof, VTL §417 requires that the dealer execute and deliver to the purchaser a written certification

“that said motor vehicle complies with such requirements of this chapter as shall be specified by the commissioner and that it is in condition and repair to render, under normal use, satisfactory and adequate service upon the public highway at the time of delivery” (emphasis added).

15 NYCRR 78.13, part of the regulations promulgated by the Commissioner of the Department of Motor Vehicles, provides that before such certification can be issued, the dealer must conduct, and the vehicle must meet the standards of an 18-point inspection detailed in subdivision (c) therein.[5] However, meeting such standards only partially satisfies the certification requirements of VTL §417, for the vehicle must also be “in condition and repair to render, under normal use, satisfactory and adequate service upon the public highway at the time of delivery.” Thus, the Appellate Division, Fourth Department has held that “the certification is not limited to the 18 items listed in the regulations” (emphasis added). Helen Carter v. General Motors Corporation and Jay’s Chevrolet, 273 AD2d 804, 709 NYS2d 309 (App. Div., 4th Dept., 2000).

VTL §417 further provides that:

“the failure of the vendor to deliver to the vendee the certificate required by this section or delivery of a false certificate knowing the same to be false or misleading or without making an appropriate inspection to determine whether the contents of such certificate are true shall constitute a violation of this section. The delivery of a false certificate shall raise the presumption that such certificate was issued without an appropriate inspection” (emphasis added).

In Rayhn v. Nemer Volkswagon Corp, 77 AD2d 394, 434 NYS2d 775 (App. Div. 3rd Dept., 1980), the court found that the dealer never conducted an appropriate inspection despite the fact that he delivered the §417 certificate to the purchaser. It reached this conclusion given the myriad mechanical defects that became apparent shortly after the vehicle was delivered. The Rayhn court accordingly determined that the dealer was guilty of violating §417, not only for failing to conduct an appropriate inspection, but also for delivering a false certificate. The purchasers’ claim for rescission of the sales contract and a return of monies paid to the dealer was granted, the court finding that:

“to require the plaintiffs to accept the performance of the contract by Nemer would violate the public policy as found in section 417 and would lend judicial encouragement to putting dangerous vehicles upon the roadway.”

A prima facie showing of a defect raises a rebuttable presumption that it existed at the time of delivery [Armstrong v, Boyce, supra], requiring the dealer to prove that the required inspections were made and the defect did not exist when the used car was delivered. Ritchie v. Empire Ford Sales, NYLJ, November 7, 1996, at page 25 (Yonkers City Ct.). In Armstrong, the court further articulated that the presumption of VTL §417 is that if the required inspection was not performed, then the defects subsequently complained of existed at the time of delivery. In that case, the dealer failed to deliver the required certification, and apparently only inspected the vehicle pursuant to 15 NYCRR 78.21. Shortly after delivery, the purchaser discovered numerous defects, including but not limited to the absence of belts on the tires, the absence of shock bolts, defective rear load levelers, defective sway bar links and a worn-out coil. In addition, the bumper failed after a 30-day “warranty” period. The Court held that, had the dealer conducted a non-negligent inspection as outlined in 15 NYCRR 78.13, the problems would have been detected and corrected prior to delivery to the purchaser. It further held that, the fact that the bumper defect did not manifest itself for a period beyond thirty-day warranty period did not bar the purchaser’s recovery for the cost of the bumper.

In the instant case, the credible evidence establishes that the subject vehicle was not in condition and repair to render, under normal use, satisfactory and adequate service upon the public highway at the time of delivery. The consumer presented credible testimony and evidence that the car shook and repeatedly stalled, requiring that it be towed, from the moment she drove it off of the respondent’s lot. Mr. Bonavita admitted at the hearing that the respondent did not perform all of the tests required by VTL Section 417 and 15 NYCRR Section 78.13, and that only the emissions test was conducted. His testimony that, at one point, he went to the consumer’s home after she complained that the car was not working, and that that the car “started right up” fails to rebut the consumer’s detailed credible testimony regarding all of the problems she had with the car from the moment she took possession. He further failed to produce a copy of the warranty that he allegedly gave the consumer when she purchased the vehicle.

In light of all of the foregoing, it is determined that the respondent engaged in a deceptive trade practice, in violation of Administrative Code Section 20-700. Accordingly, charge #7 shall be sustained. It is further determined that the consumer is entitled to restitution in the amount of $4,421.86, said sum representing the purchase price for the Mitsubishi, the sales value of the Acura, the costs the consumer incurred, minus the price she received after selling the Mitsubishi:

$2,390.00 [amount paid for the Mitsubishi]

275.00 [cost of distributor]

70.61 [cost to install distributor]

1,086.25 [cost to remove & replace engine]

650.00 [sales proceeds that the respondent received for the Acura]

4,771.86 Subtotal

- 50.00 [amount consumer received for selling the Mitsubishi]

$4,421.86

The Bill of Sale failed to include all of the information required by 6 RCNY Sections 2-103(a)(4) and 2-103(g)(1)(ii). It also failed to set forth the “Notice to Buyer” in at least 10-point type, as required by 6 RCNY 2-103(g)(1)(ii). Lastly, in the contract, no line was drawn from the last word of the agreement to the signature of the purchaser, in violation of 6 RCNY Section 2-103(f). Accordingly, charges numbered 2, 3, 4 and 5 shall be sustained.

The contract document did clearly set forth and identify the respondent’s DCA second hand automobile dealers license. Accordingly, charge #1 shall be dismissed. This tribunal has no jurisdiction to adjudicate the cited sections of the New York State General Business Law. Accordingly, charges numbered 8 and 9 shall be dismissed. Lastly, it is determined that the respondent did not violate New York Administrative Code Section 20-101, insofar as the facts and circumstances, taken in their entirety, fail to rise to the level required to establish a violation of this section of law. Accordingly, Charge #6 shall be dismissed.

Order

The respondent is found guilty of charges numbered 2, 3, 4, 5 and 7 and is

Ordered to pay to the Department a TOTAL FINE of $1,350, computed as follows:

Charge 2: $350

Charge 3: $350

Charges 4 & 5: $300

Charge 7: $350; and, it is further hereby

Ordered that the Respondent pay to Consumer Diane Delgado restitution in the amount of $4,421.86, as hereinbefore set forth.

Charges numbered 1, 6, 8 and 9 are hereby dismissed.

This constitutes the recommendation of the Administrative Law Judge.

__________________________

Bruce M. Dennis

Administrative Law Judge

DECISION AND ORDER

The recommendation of the Administrative Law Judge is approved.

This constitutes the Decision and Order of the Department. Failure to comply with this Order with thirty (30) days will result in suspension of the license.

___________________________

Nancy J. Schindler

Deputy Director of Adjudication

NOTICE TO RESPONDENT(S): If you wish to APPEAL this decision, or file a MOTION FOR REHEARING, you must file the appeal or motion with the Director of Adjudication, Department of Consumer Affairs, 66 John Street, New York, NY 10038, within 30 days from the date of this decision. You must include with your appeal or motion for rehearing (1) a check or money order payable to the Department of Consumer Affairs for the sum of $25; and (2) a check or money order payable to the Department of Consumer Affairs for the amount of the fine imposed by the decision, or an application for a waiver, based upon financial hardship, of the requirement to pay the fine as a requisite for an appeal, supported by evidence of financial hardship including the most recent tax returns you have filed; and (3) a check or money order payable to the Department of Consumer Affairs for the entire restitution amount ordered by the decision. In addition, you must serve a copy of your appeal or motion for rehearing, and any related documents, on the Litigation and Mediation Division of the Department of Consumer Affairs, 42 Broadway, 9th Floor, New York, NY 10004, as well as on the consumer complainant(s).

NOTICE TO CONSUMER COMPLAINANT(S): If you wish to APPEAL this decision, or file a MOTION FOR REHEARING, you must file the appeal or motion with the Director of Adjudication, Department of Consumer Affairs, 66 John Street, New York, NY 10038 within 30 days of the date of this decision. You must include with your appeal or motion a check or money order for the sum of $25 payable to the Department of Consumer Affairs. In addition, you must serve a copy of your appeal or motion on the respondent(s).

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[1] The Used Car Lemon Law does not apply to used vehicles sold for less than $1,500 or to used vehicles with over 100,000 miles at the time of sale.

[2] GBL §198-b(b)(1).

[3] GBL §198-b(b)(2), which further provides that covered parts shall at least include the following items: Engine, Transmission, Drive Axel, Brakes, Radiator Steering, Alternator, Generator, Starter & Ignition System, excluding the battery.

[4] In addition, GBL §23(2)(b) provides: “Except as otherwise permitted by law, an automobile auctioneer shall not sell or offer for sale a motor vehicle on a sale basis of “as is” or “with all faults”, or by using words of similar import at or prior to the time of sale.”

[5] This inspection is separate and apart from the less detailed annual safety and emissions inspection required by 15 NYCRR 79.21, which does not satisfy the VTL 417 inspection and certification as mentioned in 15 NYCRR 78.13(a). Both inspections are required. Armstrong v. Boyce, supra.

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