Santander Consumer U.S., Inc.v.Kobi Auto Collision & Paint Ctr., Inc.

Index No.: 6546-16 (N.Y. Sup. Ct. 2019)
Index No.: 6546-162019 N.Y. Slip Op. 31588

Index No.: 6546-16



APPEARANCES: Law Offices of Rudolph J. Meola Attorneys for Petitioner By: Rudolph J. Meola, Esq. 1822 Western Avenue Albany, New York 12203 Elana Sharara, Esq. Attorney for Respondent Kobi Auto Collision 98A Wildwood Road Great Neck, New York 11024

RJI No.: 01-16-122761 (Supreme Court, Albany County, All Purpose Term) APPEARANCES: Law Offices of Rudolph J. Meola
Attorneys for Petitioner

By: Rudolph J. Meola, Esq.
1822 Western Avenue
Albany, New York 12203 Elana Sharara, Esq.
Attorney for Respondent Kobi Auto Collision

98A Wildwood Road
Great Neck, New York 11024 David A. Weinstein, J.:

In this hybrid action, petitioner/plaintiff ("petitioner") Santander Consumer USA, Inc. ("Santander"), by Order to Show Cause dated November 1, 2016, sought to take possession of a 2015 Nissan Pathfinder (VIN: 5N1AR2MN1FC603263) (the "Vehicle" or "Nissan") which was being held by respondent/defendant ("respondent") Kobi Auto Collision & Paint Center, Inc. ("Kobi" or the "Garage") pursuant to a lien claim under Lien Law § 184. Kobi failed to timely oppose Santander's application and, pursuant to this Court's Order and Judgment dated December 9, 2016, petitioner was granted a default judgment. Kobi moved to vacate the default judgment. I denied the application, which decision was reversed on appeal by the Third Department and remitted to this Court for further proceedings (see 166 AD3d 365 [3d Dept 2018]). The Appellate Division found that respondent had proffered a viable excuse for the default, and had presented certain defenses which although they "may prove unsuccessful," were sufficiently meritorious for purposes of CPLR 5015 (id. at 1366).

Following the Appellate Division's reinstatement of this matter, Santander served an Amended Petition/Complaint, dated December 4, 2018, naming as defendants Kobi and the New York State Department of Motor Vehicles ("DMV"). In that pleading, Santander alleges that it holds the first priority perfected lien on the Vehicle. It provides a copy of the Garage's Notice of Lien and Sale for the Nissan as proof of such interest, which also lists Andre Leger as the owner (Amended Petition, verified on December 5, 2018 ["Pet"] ¶ 4, Ex 1). Following receipt of a Notice of Lien and Sale from the Garage, Santander claims that, despite its demand and attempt to redeem the Vehicle, the Garage refused to turn it over, instead insisting on payment for storage fees that are allegedly not a proper basis for the lien (id. ¶ 5).

According to the petition, DMV was named solely to prevent any further transfer of title prior to the resolution of this matter. Therefore, for simplicity's sake, any reference to the term "respondent" shall not include the DMV.

The amended petition contains a claim for recovery of property, along with causes of action for declaratory relief, replevin, conversion and New York General Business Law § 349, premised on the Garage's alleged improper lien on the Vehicle, Santander's claimed right to possess the Vehicle, and the Garage's alleged failure to turn it over to petitioner upon demand (id. ¶¶ 11-35).

In response to the amended petition, the Garage served an Answer with Counterclaims for unjust enrichment and quantum meruit (Verified Answer to Amended Petition/Complaint with Counterclaims ["Answer & Counterclaims"] ¶¶ 40-61). In support of its counterclaims, Kobi made the following allegations:

Kobi has not asserted any claim under Lien Law § 184, nor does it assert such as an affirmative defense.

On or about May 9, 2016, the registered owner of the Nissan (Leger) requested that the Garage send a tow truck to pick up his Vehicle due to its involvement in an accident in Queens, New York (id. ¶ 20). Leger also executed a written authorization for Kobi to repair the damages to the Vehicle.

The counterclaims further allege that, on or about May 20, 2018, Leger's auto insurance carrier Geico inspected the Nissan and issued a repair estimate for $4,942.08 (id. ¶ 22). A claim was also filed with Hereford Insurance Company ("Hereford"), the third-party insurer, and, on or about June 1, 2016, it issued an estimate for repairs totaling $3,493.01 (id.). Because his Vehicle was being repaired, Leger also rented a car from Kobi, through its account with Enterprise Rental Car, from May 9 through June 16, 2016 (id. ¶ 23). Then, from June 16 through July 12, 2016, Leger rented another car through Kobi's Millennium Toyota account (id. ¶ 24). Kobi expected that payment for each rental would come from Geico or Hereford (id. ¶¶ 23-24).

During the first week of July, 2016 - approximately three months after Kobi had taken possession of the Nissan - the Garage's manager, Sabrina Perez, called Leger and advised him that the Vehicle had been repaired and he could pick it up (id. ¶ 25). Leger responded that his son was in the hospital, and he would arrange to pick up the Vehicle at a later date (id.). The following week, when Perez called again, Leger stated that he needed the rental car for a few more days to drive to his son's graduation and he agreed to pay any additional rental charges (id. ¶ 26). On or about July 12, 2016, Leger returned the rental car to Kobi, but refused to speak to anyone at the Garage and left without paying for anything and did not reclaim the Nissan (id. ¶ 27). Leger did not contact the Garage thereafter, but Kobi asserts that he cashed the repair check from Hereford (id. ¶ 28).

Approximately two weeks later, on or about July 25, 2016, Kobi arranged for A&E Liens, Inc. ("A&E") to file a garageman's lien in the amount of $11,880.62 on the Nissan (id. ¶ 29). During this same time frame, Perez also contacted Santander to advise that Leger refused to pay for the towing, repairs and rental charges. She also provided petitioner with copies of the estimates for the car repairs and the rental invoices, and advised that storage charges were accruing daily (id. ¶ 31-32). Perez states that she called Santander numerous times to resolve the matter by demanding that Santander pay for all of the outstanding charges (id. ¶ 32). On August 30, 2016, Santander's representative, Devin Bell, e-mailed the Garage and requested photographs of the vehicle, along with invoices for the damages (id. ¶ 33). Perez provided the requested documents on August 31, 2016 (id.).

Kobi alleges that on October 8, 2016, A&E served Notice of the Lien and Sale on Santander via certified mail (id. ¶ 30). On October 11, 2016, Perez, after receiving a request from Santander representative Gavin Watson, e-mailed him photographs of the vehicle, the estimate of the repairs and the rental car receipts (id. ¶ 34). On or about October 28, 2016, Santander's legal counsel notified the Garage that it would be presenting an OTSC to this Court on November 1, 2016, seeking return of the Vehicle for the posting of a bond for $15,000, as security for the purported garageman's lien on the Nissan (id. ¶ 35). Perez then called A&E, who advised that it would handle the matter and contact Santander to negotiate the lien (id. ¶ 36).

On or about November 3, 2016, the Garage received a signed OTSC dated November 1, 2016, ordering, among other things, the release of the Vehicle to Santander's agent upon demand (id. ¶ 37). On or about January 12, 2017, the Garage turned the Vehicle over to Santander (id. ¶ 38).

Following receipt of Kobi's answer, Santander moved to dismiss the counterclaims for failure to state a cause of action, based on the factual allegations presented in support of those counterclaims, which indicated that all of the alleged damages sought by Kobi were incurred at the behest of Leger, and Santander was not even aware of such damages until after they were incurred (Affirmation of Rudolph Meola, Esq., dated January 18, 2019 ["Meola Aff']).

Kobi opposed the motion, claiming that its causes of action for unjust enrichment and quantum meruit were adequately pled in that Santander benefitted from the towing, repairs and storage of the Vehicle (Affirmation of Elana Sharara, Esq., dated January 30, 2019 ["Sharara Aff"] ¶ 24). Kobi further argues that it had a relationship with Santander such that petitioner knew or should have known that the services provided by Kobi were only provided with the expectation of payment (id. ¶ 26). As evidence of this relationship, Kobi relies on the allegations that Perez contacted Santander several times in July 2016 to advise it of the charges that had been incurred at the behest of Leger, who refused to pay, and Santander replied that it would review the matter (id. ¶¶ 27-28). On this basis, Kobi seeks $20,268.54 in damages from Santander (id., Ex D [Affidavit of Sabrina Perez, sworn to on January 17, 2019 ["Perez Aff"] ¶ 16).

The Perez affidavit restates the factual allegations contained in Kobi's verified answer and counterclaims.

In reply, Santander contends that it never had any business dealings with the Garage nor are there any allegations that it induced the Garage to rely on Santander in any way that would have caused it to incur the towing, repair, rental and storage charges, which were all done at the behest of Leger (Reply Affirmation of Rudolph Meola, Esq., dated February 4, 2019 ["Reply Aff"] ¶ 4). Santander relies on the fact that it did not learn about the Vehicle being in Kobi's possession until after the Garage incurred the alleged damages to support its position that the counterclaims for unjust enrichment and quantum meruit fail to state a cause of action (id. ¶ 5).


In reviewing a CPLR 3211(a)(7) motion to dismiss for failure to state a cause of action, a court must "accept the facts as alleged in the [complaint/counterclaims] as true, accord [the pleading party] the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (54 Marion Avenue, LLC v City of Saratoga Springs, 162 AD3d 1341, 1342 [3d Dept 2018]).

Here, Kobi has pled counterclaims for unjust enrichment and quantum meruit, both of which sound in quasi-contract (see Damian v Clemson, 156 AD3d 422, 423 [1st Dept 2017]). In order to make out a quasi-contract claim, "plaintiff must establish (1) the performance of services in good faith; (2) the acceptance of those services by the person to whom they are rendered; (3) an expectation of compensation therefor; and (4) the reasonable value of the services" (Killian v Captain Spicer's Gallery, LLC ___ AD3d ___, 2019 WL 1218464, *1 [4th Dept March 15, 2019] [internal quotations and citations omitted]). Consistent with these elements, "to recover under a theory of quasi contract, a plaintiff must demonstrate that services were performed for the defendant resulting in its unjust enrichment" (Kagan v K-Tel Entertainment, 172 AD2d 375, 376 [1st Dept 1991] [emphasis in original]). Thus, "[i]t is not enough that the defendant received a benefit from the activities of plaintiff . . . if services were performed at the behest of someone other than the defendant, the plaintiff must look to that person for recovery" (id. [internal citation omitted]).

Indeed, to establish a claim for unjust enrichment, the plaintiff must plead facts sufficient to establish a relationship between the parties, whereby the defendant said something or took some action that could have caused plaintiff to rely on or be induced into incurring the alleged damages (see Georgia Malone & Co., Inc. v Rieder, 19 NY3d 511, 517-518 [2012] [reliance cannot be established where there is no contact between the parties at the time plaintiff engaged in actions for which it now claims damages]). Defendant's mere knowledge or awareness that plaintiff engaged in activities for which it expected payment "is insufficient to support a claim for unjust enrichment" even when defendant benefitted without compensating plaintiff (id. [defendant's mere knowledge that plaintiff created due diligence reports and defendant's use of such reports for is own benefit did not support unjust enrichment claim]; see also Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182-83 [2011] [absence of a relationship that caused "reliance or inducement" warrants dismissal of unjust enrichment claim]). The need for a showing of reliance or inducement into the relationship is also required to establish a claim under a theory of quantum meruit (see Citrin v Columbia Broadcasting System Inc., 29 AD2d 740, 740 [1st Dept 1968] [dismissal of quantum meruit claim warranted where defendant - even though it may have benefitted - is a "stranger to the entire transaction"]; Continental Ins. Co. v Consumer Towing and Collision, Inc., 189 Misc 2d 172, 177 [Civ Ct City of New York, Bronx County 2001] [a party seeking to recover in quantum meruit "must demonstrate that services were performed for the other party resulting in unjust enrichment . . . it is not enough that the other party received a benefit"]).

In the context of a garagekeeper's lien action like that at issue here, when a garage has asserted quasi-contract counterclaims, it needs to establish "that it performed services for petitioner, rather than the petitioner received a benefit as a result of respondent performing services for someone else" (Matter of Daimler Trust & Daimler Tit. Co. v SG Autobody LLC, 112 AD3d 1123, 1125 [3d Dept 2013] [emphasis in original]). Where a garage performs services for and at the request of the registered owner of an automobile, it must look to such owner for recovery, not the company that leased or financed the car for the owner (id. [finding that garage was unable to demonstrate that car leasing company received any unjust benefit by reclaiming car that was abandoned at garage by registered owner]).

The facts pled by Kobi to support its counterclaims demonstrate that it towed, repaired and stored Leger's Vehicle, and provided him with the use of three rental cars, all solely at Leger's request, without any reliance on or inducement from Santander (see Answer & Counterclaims ¶ 43). Indeed, Kobi's manager, Sabrina Perez, did not contact Santander until July 2016. after Leger refused to pay the monies allegedly owed to the Garage (id. ¶ 31). Thus, Santander - as a stranger to the transactions that transpired between Leger and Kobi - cannot be held liable under the quasi-contract causes of action for quantum meruit and unjust enrichment (see Matter of Daimler Trust & Daimler Tit. Co., 112 AD3d at 1125; Kagan, 172 AD2d at 376). Santander's mere awareness that Kobi incurred costs at Leger's behest is also insufficient to support the Garage's counterclaims, despite Santander allegedly benefitting from such costs (see Georgia Malone & Co., Inc. v Rieder, 19 NY3d at 517-518; see also Matter of Daimler Trust & Daimler Tit. Co., supra; Kagan, supra).

The Court is in receipt of Kobi's motion for summary judgment on its counterclaims, dated January 17, 2019. Santander has submitted an opposing affirmation, dated February 4, 2019, in which it argues that the motion is premature since issue has not been joined. In correspondence from counsel, dated February 30, 2019, Kobi indicated that it was seeking to withdraw the motion without prejudice, but had not been able to reach petitioner's counsel on her request that this be done by stipulation. No such stipulation was necessary in any case, and I grant respondent's application to withdraw the motion without prejudice.

For all these reasons, Kobi has failed to plead viable counterclaims for unjust enrichment and quantum meruit. Rather than pursuing claims against Santander, Kobi's only recourse in the circumstances as plead in its counterclaims - performing services for and at the request of the Vehicle's registered owner - is to seek recompense from Leger (see Matter of Daimler Trust & Daimler Tit. Co., supra [directing garage to look to registered owner and her insurance company to recover alleged damages]).

Accordingly, petitioner's motion to dismiss respondent's counterclaims is granted. Petitioner's conversion and General Business Law 349 causes of action remain pending. In light of the fact that only claims for monetary claims are left, and petitioner states that its only purposes in naming DMV as a defendant are for freezing of title, and to ensure that the Department has notice of any attempt by the Garage to alter title, DMV is dismissed from the case sua sponte (see CPLR 1003; Sagamore Auto Body, Inc. v Nassau County, 104 AD2d 818, 821 [2d Dept 1984]).

Petitioner's claims for recovery of property, declaratory judgment and replevin were resolved when the Garage returned the vehicle and chose not to pursue a defense and/or counterclaim asserting claims under Lien Law § 184. --------

A conference call shall be conducted with the parties, to be initiated by the Court, on April 23, 2019 at 1:00 p.m., to discuss a schedule for further proceedings and other matters. In the event petitioner does not intend to proceed with these causes of action, it shall notify the Court at least three days in advance of the conference call.

Accordingly, it is hereby

ORDERED and ADJUDGED that petitioner's motion to dismiss respondent's counterclaims is granted in its entirety; and it is further

ORDERED that the causes of action for conversion and GBL § 349 shall proceed in accordance with the schedule set forth above.

The original Decision and Order is being returned to counsel for the petitioner; all other papers are being transmitted to the Albany County Clerk. The signing of this Decision and Order shall not constitute entry or filing under CPLR § 2220. Counsel are not relieved from the applicable provisions of that section respecting filing, entry and notice of entry. Dated: Albany, New York

April 2, 2019


David A. Weinstein

Acting Supreme Court Justice Papers Considered:

1. Notice of Motion and Affirmation of Rudolph Meola, Esq., dated January 18, 2019, with Exhibits 1-3 annexed thereto. 2. Opposing Affirmation of Elana Sharara, Esq., dated January 30, 2019, with Exhibits A-T annexed thereto. 3. Reply Affirmation of Rudolph Meola, dated February 4, 2019.