Opinion
Index No.: 007219-05
05-09-2013
SUNRISE MOTORS, LLC, Plaintiff, v. JOSEPH PEZZA, Defendant.
Attorney for Plaintiff Philip Campisi, Esq. Westerman Ball Ederer Miller & Sharfstein Attorney for Defendant Russell Penzer, Esq. Lazer, Aptheker, Rosella & Yedid, P.C.
SHORT FORM ORDER PRESENT: HON. TIMOTHY S. DRISCOLL,
Justice.
Attorney for Plaintiff
Philip Campisi, Esq.
Westerman Ball Ederer Miller & Sharfstein
Attorney for Defendant
Russell Penzer, Esq.
Lazer, Aptheker, Rosella & Yedid, P.C.
DECISION AND ORDER AFTER TRIAL
This action was commenced by plaintiff Sunrise Motors, LLC ("Plaintiff or "Sunrise") filing a summons and complaint against defendant Joseph Pezza ("Defendant" or "Pezza"), alleging breach of contract and unjust enrichment arising out of Defendant's purchase of a 2003 Mercedes-Benz S55 automobile. Defendant asserted his own claim for breach of contract and unjust enrichment based on his delivery to Plaintiff of a 2001 Mercedes-Benz S55 automobile for which he claims he was not fully compensated. The action was tried before the Court on January 31 and February 1, 2011. The parties then submitted post-trial memoranda in April 2011.
Plaintiff's case at trial consisted of the testimony of Wayne Rivardo, the former owner of Plaintiff Sunrise, and the testimony of Arthur Hoffman, a former employee of Sunrise. The Plaintiff also introduced the deposition testimony of Ray Rivardo, who is Wayne Rivardo's father. The defense case consisted of Pezza's testimony. Each witness was subject to cross-examination, and various documents were admitted in evidence by stipulation and during the course of the testimony.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Sunrise was an automobile dealership in Massapequa that sold Mercedes-Benz automobiles. Wayne Rivardo was originally the managing partner and co-owner of Sunrise, which was founded in 2001. Rivardo was employed in the automotive industry for some 35 years prior to his retirement in approximately 2004.
Peter Terian was the other co-owner of Sunrise. Upon Terian's death in October 2002, Rivardo began to search for another equity partner. In February 2003, he began discussions with defendant Pezza, whom he claimed to know "socially," although he quickly acknowledged on cross-examination that Pezza had lent him $2.5 million on a prior occasion. The February 2003 discussions turned into negotiations regarding the terms by which Pezza and Rivardo would become equity partners in Sunrise.
In November, 2002, which is shortly before these discussions began, Pezza ordered a 2003 Mercedes S55 Mercedes vehicle from Sunrise. According to Rivardo, the vehicle with the options Pezza desired was not in stock at that time, and was thus specially ordered from the factory. Pezza disagreed that he specially selected any options, and instead stated that the vehicle came fully equipped with any option a potential purchaser might want. Pezza did acknowledge, however, that he chose the color of the vehicle and selected a built-in telephone for the car. Given the Court's evaluation of both parties' testimony, coupled with Rivardo's extensive experience in the automobile industry, the Court credits Rivardo's testimony in this area. Nevertheless, the Court further concludes, based on the parties' testimony, that the options on the vehicle were not so unique as to render the car capable of being sold only to Pezza. The Court further concludes, in the absence of any credible and corroborated evidence to the contrary, that the parties did not discuss the purchase price for the 2003 vehicle at that time.
The vehicle was ready for delivery in March 2003. At that time, Pezza and Rivardo were still in negotiations regarding Pezza acquiring an equity stake in Sunrise. Sunrise's sales manager called Pezza to tell him the vehicle was ready. Pezza had previously expressed a desire to trade in his 2001 Mercedes as part of the purchase of the 2003 Mercedes, and the parties thus then negotiated a trade-in value of $67,500 for the 2001 Mercedes.
According to Rivardo, the two men then negotiated the purchase price of the 2003 vehicle, and agreed that the price would be $117,865, which was a $5,000 discount from the MSRP. Pezza disagreed that the two men negotiated, and instead said that he would pay whatever amount Rivardo demanded. The parties did not identify any other witnesses to these conversations, or introduce into evidence any document evidencing the planned purchase. In the absence of any corroborating evidence, the Court is unable to determine whether there was, in fact, an agreement as to the purchase price.
Despite neither paying any balance due nor entering into any written agreement to memorialize the payment terms of any balance due, Pezza took delivery of the 2003 Mercedes in mid-April 2003. Rivardo admitted that it was unusual to allow a purchaser to take possession of a vehicle without a written agreement or making payment.
As part of taking delivery of the 2003 Mercedes, Pezza surrendered possession of the 2001 Mercedes, and provided the spare keys, title and registration for that car. At that time, Rivardo claimed that Pezza told him that he wanted to defer payment on the 2003 vehicle until the two men finalized their negotiations for Pezza to purchase an equity stake in Sunrise. Somewhat amplifying that concept, Pezza stated that the 2003 vehicle was supposed to be one of the "demonstrator vehicles" that he and Rivardo would receive upon the formation of their partnership. A "term sheet" (Px 21) signed by the parties reflects that each party would receive four "demonstrator vehicles." That term sheet specifically stated, however, that it was not binding on the parties.
Sunrise held title to the 2003 vehicle even after it was delivered to Pezza because (1) Pezza had not paid in full for the vehicle; and (2) the vehicle would become a demonstrator vehicle if Pezza completed his equity purchase in the dealership. Sunrise also held and paid for the insurance on the vehicle.
Pezza did not complete his planned purchase of equity in Sunrise. Rather, Rivardo sold his own interest to one Stuart Hayim, who also acquired Terian's interest. Shortly before that deal closed, Rivardo contacted Pezza by telephone. During that conversation, Rivardo told Pezza that the 2003 Mercedes could no longer be titled in Sunrise's name as that dealership was about to be sold and would change its corporate name. The terms of that sale, however, permitted Rivardo to retain Sunrise's receivables. Rivardo thus requested that Pezza pay the balance due on the vehicle, and requested that Pezza promptly bring proof of insurance (an "insurance card") to the dealership to facilitate the change of ownership of the vehicle to Pezza. Pezza refused to pay, claiming that in fact Rivardo owed him $250,000 from Pezza's unconsummated purchase of Sunrise.
In October 2004, Rivardo and Pezza had another telephone conversation regarding the 2003 vehicle. Rivardo advised Pezza that he was cancelling the insurance on the 2003 Mercedes. According to Rivardo, the two men also spoke about the unpaid purchase price, and they ultimately agreed that the price of the vehicle would be reduced to the "dealer dead cost" of $ 107,731, which is the price the dealership actually paid for the vehicle. Pezza disagreed that the men came to an agreement. The Court credits Pezza's testimony that the two men did not come to any agreement about completing the purchase of the 2003 Mercedes, as there is no independent corroboration of any agreement.
The parties continued to attempt to arrive at an agreement. Rivardo told Pezza to go to Silver Star Motors ("Silver Star"), which is another dealership in which Rivardo and his father, Ray Rivardo, had previously held an interest. Rivardo intended for Sunrise to transfer title to Silver Star because Sunrise was no longer an operating entity. Silver Star would then complete the motor vehicle paperwork necessary to assign title to Pezza. Rivardo arranged for Arthur Hoffman, who was then the general manager at Silver Star, to handle the arrangements. Rivardo stated that he instructed Hoffman that he was to collect a check to Sunrise for approximately $43,751 from Pezza, representing the difference between the newly-agreed upon purchase price of $107,731, and the trade-in value of $67,500, plus tax.
Pezza denied that he wanted to purchase the vehicle, and instead said that he wanted to return it and obtain a refund of his deposit. Nevertheless, Pezza provided, via facsimile to Hoffman, a copy of his driver's license and an insurance card for the vehicle (Px 23 and Px 26). In light of Pezza providing those documents to Hoffman, the Court does not credit Pezza's statement that he wanted to return the car and receive a refund of his deposit. As noted above, however, the Court credits Pezza's testimony that the two men did not come to any agreement about completing the purchase of the 2003 Mercedes, as there is no independent corroboration of any agreement.
Pezza went to Silver Star on October 13, 2004. He claimed that he then asked Hoffman to return the deposit for the 2003 Mercedes. Given the lack of corroboration of this conversation, as well as Hoffman's credible testimony that did not include any recollection of this conversation, the Court declines to credit Pezza's testimony in this area. Nevertheless, the Court also declines to credit Rivardo's testimony that he and Pezza actually came to an agreement on the purchase price. Indeed, it is most unusual that a sophisticated automobile dealer such as Rivardo would claim to reach such an agreement without at least attempting to reduce it to writing, particularly when the parties' other negotiations had already failed.
An application for a registration (DMV Form MV-82 — Px 24) was prepared by Pezza and Hoffman. Pezza signed the application. A DMV resale certificate (MV-50 — Px 25) was also prepared, indicating the transfer of ownership from Sunrise to Silver Star to Pezza. A temporary registration, which is at the bottom of the MV-50, was then provided to Pezza.
Pezza drove away with the 2003 Mercedes on October 13, 2004, but did not provide any additional payment. Rather, he told Hoffman that he would send Rivardo a check. Again, there was no credible testimony that Pezza actually agreed to pay any specific amount, much less pay this amount pursuant to any specific terms.
Because Pezza did not make final payment, the MV-82 and MV-50 were not submitted to DMV. Thus, the title was never transferred to Pezza, and a permanent registration was never issued to Pezza (Dx C). Hoffman acknowledged that, in his 35 years in the automobile industry, he had never taken part in any other transaction in which a potential buyer took possession of a vehicle but did not even begin to fill out the ownership paperwork until over a year later.
The temporary registration expired after 30 days, and then a second temporary registration was issued for another 30 days. Pursuant to the parties' understanding of applicable regulations, subsequent temporary registrations could not be issued.
After the second temporary registration expired, Pezza left the car in his driveway. He claimed that he called Hoffman and told him to "take the car." He also attempted to contact Rivardo, but was unsuccessful. As there is no evidence that the car was driven after the second registration expired, the Court credits Pezza's testimony that the car was not driven after that time. Nevertheless, having had the opportunity to view Pezza during his testimony, and assess his temperament and demeanor, the Court declines to credit his testimony that he told Hoffman to take the car back, or that he attempted to contact Rivardo to make these arrangements. Again, there is no writing to corroborate Pezza's statements. Given the collapse of the parties' relationship, it appears that such a conversation would have been reduced to writing if it actually took place. At some point thereafter, Hoffman called Pezza and asked for the license plates that were on the vehicle. Arrangements were then made to collect the plates from the car while it was parked in the driveway.
The vehicle remained in Pezza's driveway until July 2007. It was then transported via flatbed truck and placed in storage at Statewide Auto Auction in Plainview. As the instant litigation progressed, counsel for Pezza sent a letter to Plaintiff's counsel (Dx A) requesting that Plaintiff retrieve the vehicle. Plaintiff did not do so.
Sunrise serviced the vehicle on various occasions while it was in Pezza's possession, and the bills for the services were posted to Pezza's "house account." Documents reflecting these services were admitted in evidence (Px 12, 13, 14, 15, 17), and Sunrise seeks payment from Pezza for these services. In addition, the vehicle was apparently driven through a red light with an automated camera, and the notice of the violation (Px 18) was sent to Sunrise as the registered owner. Sunrise paid the fine.
The Court concludes that neither party has established a right to recover on its breach of contract claim. In so doing, the Court is guided by several hornbook principles. First, it is well-settled that a party seeking to recover for breach of contract must establish (1) formation of a contract between the parties, (2) performance by the plaintiff, (3) failure to perform by the defendant, and (4) resulting damages. See, e.g., JP Morgan Chase v. J.H. Elec, 69 A.D.3d 802 (2d Dept. 2010); Brualdi v. Iberia, 79 A.D.3d 959 (2d Dept. 2010). Second, a plaintiff establishes formation of an enforceable contract by demonstrating the existence of an offer, acceptance of the offer, consideration, mutual assent, and an intent to be bound. Kowalchuk v. Stroup, 61 A.D.3d 118, 121 (1st Dept. 2006).
Here, there is insufficient evidence that the parties agreed on the material terms of any alleged contract. Indeed, the parties did not reach a meeting of the minds on the terms by which Pezza would trade in his 2001 vehicle and purchase the 2003 vehicle. There was insufficient evidence regarding the agreed-upon purchase price and the ultimate payment terms. This is not altogether surprising; the transaction regarding the 2003 vehicle was immediately complicated by the parties' negotiation of Pezza's attempt to purchase an equity stake in Sunrise. The purchase of the 2003 vehicle, along with the trade-in of the 2001 vehicle, were thus a part of a far-larger transaction. That transaction never came to fruition. As the testimony demonstrated, thereafter, the parties were unable to come to an agreement about the terms for the purchase and trade-in. At most, then, the parties came to an oral "agreement to agree," which is unenforceable and cannot sustain either party's claim for breach of contract. See Minelli Constr. Co. v. Volmar Constr., Inc., 917 N.Y.S.2d 687 (2d Dept. 2011); Rogers v. Mattucci, 230 A.D.2d 725, 726 (2d Dept. 1996), app. den., 89 N.Y.2d 816 (1997).
The Court further concludes that Plaintiff is entitled to recover somewhat on its claim for unjust enrichment. To prevail on a cause of action for unjust enrichment, a party must show that "(1) the other party was enriched, (2) at that party's expense, and (3) that it is against equity and good conscience to permit the other party to retain what ought to be recovered." Anesthesia Assocs. Of Mt. Kisco, LLP v. Northern Westchester Hosp. Center, 59 A.D.3d 473, 481 (2d Dept. 2009). Thus, "the essence of unjust enrichment is that one party has received money or a benefit at the expense of another." Wolf v. National Council of Young Israel, 264 A.D.2d 416, 417 (2d Dept. 2009).
Here, it is undisputed that Pezza took possession of the 2003 Mercedes in April 2003. The credible testimony before the Court established that the vehicle was specially ordered at Pezza's request, although the evidence also established that the vehicle was not so unique that Pezza was the only potential purchaser of the vehicle. The credible testimony further established that Sunrise paid for the vehicle at a cost of over $100,000, and received only a trade-in vehicle worth $67,500 in return. Moreover, the Court declines to credit Pezza's testimony that he offered to return the vehicle to Sunrise at any time prior to his attorney's sending a letter to that effect in 2010. Thus, Pezza had use of a vehicle valued far in excess of the vehicle that he had provided as a trade-in.
Nevertheless, the credible testimony also establishes that the vehicle has not been driven since the second temporary registration expired in late 2004. Thus, given that Pezza took delivery of the vehicle in April 2003, he had the benefit of the vehicle for, at most, 21 months. There is no evidence in the record to support Plaintiff's claim that Pezza's use of the vehicle for that period enriched him to the extent of the damages that Plaintiff seeks. In fact, Plaintiff did not offer any quantitative proof of the amount to which Pezza was enriched by his use of the vehicle, and the Court declines to speculate as to this amount. Cf. Rakylar v. Washington Mutual Bank, 51 A.D.3d 995 (2d Dept. 2008) (trial court properly dismissed complaint alleging breach of contract where damages alleged were too speculative to sustain cause of action). It is true, however, that the vehicle remains under Pezza's control, as he unilaterally placed it in storage. It is thus the Court's decision that, given the lack of evidence by which the Court could quantify damages to Plaintiff resulting from Pezza's unjust enrichment, the Plaintiff's remedy for its unjust enrichment claim shall be the return of the vehicle, at Pezza's expense, to the control of the Plaintiff. The Plaintiff shall, through counsel, provide notice to Pezza within 30 days of service of this Decision and Order as to the location to which the vehicle shall be transported. The vehicle shall then be transported at Defendant's expense within 20 days thereafter. The Court concludes that this is an appropriate exercise of its discretion to fashion a suitable equitable remedy. See Town of Caroga, 62 A.D.3d 1121 (3d Dept. 2009), lv. app. den., 13 N.Y.3d 708 (2009), rearg. den., 13 N.Y.3d 931 (2010).
The Court also determines that Sunrise is not entitled to recover under unjust enrichment for the repairs that were done while Pezza had possession of the vehicle, or for the fine for the red light violation. The repairs were undertaken while Sunrise was the owner and registrant of the vehicle. As the owner, Sunrise benefitted from ensuring that the vehicle remained in good working order. Sunrise will presumably continue to benefit from those repairs upon Pezza's return of the vehicle to Sunrise. It is thus hardly "against equity and good conscience" to require Pezza to pay for services from which Sunrise has, and will continue to, benefit — particularly when Pezza will not enjoy any continued benefit from the services.
The fine for the red light violation is also not subject to an unjust enrichment claim. There is insufficient proof before the Court that the vehicle was driven by Pezza or someone operating the vehicle with his permission at the time of the offense. Thus, there is insufficient proof that Pezza received a benefit from the payment of the fine to sustain an unjust enrichment claim.
The Court further determines that Pezza is not entitled to recover on his unjust enrichment claim arising from the trade-in of his 2001 vehicle. That trade-in is not an isolated transaction, as, in effect, Pezza claims. Rather, the trade-in was part of a larger transaction in which Pezza wished to take ownership of the 2003 vehicle. Sunrise paid for that 2003 vehicle. Thus, Sunrise was not unjustly enriched by the transaction, because it paid for the 2003 vehicle and received less than the value of that vehicle in return.
Settle judgment on ten days notice. Dated: Mineola, NY
May 3, 2011
___________
Hon. Timothy S. Driscoll, J.S.C.