Continental Ins. v. CONSUMER

• Decision Date: 05 March 2001
• Citation: 728 N.Y.S.2d 627,189 Misc.2d 172
• Parties: CONTINENTAL INSURANCE COMPANY, Plaintiff,<BR>v.<BR>CONSUMER TOWING AND COLLISION, INC., Defendant.
• Court: New York Civil Court

189 Misc.2d 172

728 N.Y.S.2d 627

CONTINENTAL INSURANCE COMPANY, Plaintiff,

v.CONSUMER TOWING AND COLLISION, INC., Defendant.

March 5, 2001.

Speyer & Perlberg, Melville, for plaintiff.

Christopher Marengo, Bronx, for defendant.

OPINION OF THE COURT

MARY ANN BRIGANTTI-HUGHES, J.

Plaintiff, an insurance company, seeks to recover damages from defendant, a repairer of automobiles, for the wrongful withholding of a vehicle. Defendant counterclaims for foreclosure of a garage lien obtained pursuant to repairs performed on the automobile. Thus, the dispositive issue arising in this dispute is the validity of the garage lien, which depends on whether the exclusion of the benefits of the "Garage Keeper's" Lien Law from unregistered repair shops should be extended to a registered repair car shop that performed car repairs pursuant to a contract assignment from a business not registered to perform such type of work.

Background

In a bench trial presided over by this Court, the following facts were adduced: in 1996, Toyota Motor Credit Company leased a 1994 Toyota Land Cruiser to Dr. Richard Geltman. The car was insured by Continental Insurance Company (Continental). On March 31, 1996, Dr. Geltman reported the 1994 Toyota stolen and the police recovered it on April 2, 1996. The next day, Jem Towing Company towed the 1994 Toyota to its Bronx location.

Jem Towing Company was not registered with the State to perform car repairs. Nevertheless, on April 3, 1996, it entered into a contract with Dr. Geltman for the repair of the 1994 Toyota. The contract specifically stated: "I, Richard Geltman authorize Jem Towing to have my 1994 Toyota Landcruiser repaired as per insurance estimate. Car will be restored back to new condition." At the time, Continental had not sent a claim adjuster to view the car and prepare an "appraisal" of the cost of damages of the car.

On April 6, 1996, a "claim adjuster" for Continental went to Jem Towing's Bronx location to examine the 1994 Toyota. The claim adjuster, however, was refused access to the car reportedly because the adjuster had not made a prior appointment for an examination of the car and because the location where the car was being held was not a registered auto repair station.

By the time Jem Towing Company allowed Continental access to the 1994 Toyota, it had assigned the contract to repair the car to Consumer Towing and Collision (Consumer), which was registered as a business to do such repairs. Specifically, on April 11, 1996, a claim adjuster for Continental was permitted to examine the 1994 Toyota and prepared a written report containing an estimated cost of repairs of $3,239. An owner of Consumer, however, claims that the claim adjuster verbally informed him that the estimated cost of repairs was $20,000.

By the time the claim adjuster for Continental examined the car, Consumer had begun the repairs of the car. The claim adjuster observed that the car had been "stripped and parts were missing." The adjuster complained about the "excessiveness" of the car repairs and warned Consumer that "the car will be declared a total loss" unless the repairs were scaled down. A few days later, Consumer discovered that Continental had carried out its warning; it declared the car a total loss, the owners had been paid a total of $35,000, and Continental received title to the 1994 Toyota.

Upon learning of Continental's action, Consumer filed a "Garage Keeper's Lien" against the 1994 Toyota for the repairs made on the car. At the time, Consumer had reportedly performed 90% of the necessary repairs to the Toyota at a cost of $19,000. When Continental asked Consumer to turn over the 1994 Toyota, it refused. Consumer demanded that its lien be satisfied, but Continental refused. Instead, Continental instituted the instant action to obtain possession of the car.

Discussion

While Continental claims that defendant wrongfully withholds possession of the 1994 Toyota, Consumer counterclaims that it has a superior interest in the automobile because it has a "Garage Keeper's Lien" based on repairs made on the automobile with the alleged consent of the owner. Thus, the dispositive issue that this Court must answer is the validity of the "Garage Keeper's Lien."

Commonly known as a "Garage Keeper's Lien," Lien Law § 184 (1) provides that a garageman who "tows, stores, maintains, keeps or repairs," or otherwise furnishes services or supplies to a motor vehicle at the request or with the consent of the owner, has a lien upon such service to the extent of the sum due and owing for the services as provided. This statutory lien upon the property remaining in the garage owner's possession takes priority over even a perfected security interest. (New York Yellow Cab Co. Sales Agency v Laurel Garage, 219 App Div 329, 334 [1st Dept 1927].) The garageman may detain the vehicle until such sum is paid, and, if not paid, may secure his payment by the sale of the vehicle. (Lien Law § 201.)

The statute clearly inures to the benefit of a garage owner who can establish the following elements: (1) the garage is the bailee of a motor vehicle (see, Slank v Dell's Dodge Corp., 46 AD2d 445, 448 [4th Dept 1975]); (2) it has performed garage services or stored the vehicle with the vehicle owner's consent (cf. id.); (3) there was an agreed-upon price or, if no agreement on price had been reached, the charges are reasonable for the services supplied (see, New York Yellow Cab Co. Sales Agency v Laurel Garage, 219 App Div 329, 333, supra); and (4) the garage is a duly registered motor vehicle repair shop as required under article 12-A of the Vehicle and Traffic Law. (See, Lien Law § 184 [4].)

Here, Consumer has failed to satisfy the element of consent. To satisfy the consent element defendant relies on the agreement entered into by Jem Towing and Dr. Geltman, whereby the latter authorized the former to repair the car "to new condition." While Continental does not dispute the validity of the assignment of the performance of the repairs to Consumer, plaintiff argues that the "as per insurance estimate" clause of the repair agreement limited defendant's authority to make repairs up to the estimated cost of repairs as to be determined by the insurance company or its agent. This Court agrees. Defendant, however, does not dispute this interpretation of the car repair contract. Instead, defendant claims that the insurance claim adjuster orally informed it that the estimated cost of repairs was $20,000.

Defendant, however, has not established to the Court's satisfaction that it was granted authority to make repairs beyond the written estimate. It defies credulity that a claim adjuster would write such a low estimate of repairs ($3,239) and then, for no apparent reason, would orally provide a significantly higher amount ($20,000) to the repair shop. Rather, this Court finds that the repair shop elected to perform the work without the prior confirmation of the insurance carrier, in contravention of the repair agreement. Consumer, thus, acted at its own peril and cannot now benefit for its error or oversight by seeking to keep and sell an automobile that was repaired in violation of a New York statute. (Cf. General Motors Acceptance Corp. v Chase Collision, 140 Misc 2d 1083 [Sup Ct, Suffolk County 1988].)

Even if Consumer were to convince this Court that it received oral authority to proceed with repairs above the amount in the written estimate, defendant would have an insurmountable...