Super Glue Corp. v. Avis Rent A Car System, Inc.

• Citation: 132 A.D.2d 604,517 N.Y.S.2d 764
• Parties: , 4 UCC Rep.Serv.2d 385 SUPER GLUE CORP., etc., Appellant, v. AVIS RENT A CAR SYSTEM, INC., Respondent.
• Decision Date: 13 July 1987
• Court: New York Supreme Court Appellate Division

Page 764

517 N.Y.S.2d 764

132 A.D.2d 604, 4 UCC Rep.Serv.2d 385

SUPER GLUE CORP., etc., Appellant, v. AVIS RENT A CAR SYSTEM, INC., Respondent.

Supreme Court, Appellate Division Second Department.

July 13, 1987.

Sheldon V. Burman, P.C., New York City (Elliot B. Pasik, on the brief), for appellant.

Proskauer, Rose, Goetz & Mendelsohn, New York City (Michael A. Cardozo, John W. Ritchie and Robert C. Finkel, of counsel), for respondent.

Before MOLLEN, P.J., and WEINSTEIN, KUNZEMAN and KOOPER, JJ.

MEMORANDUM BY THE COURT.

In an action, inter alia, to recover damages for unfair trade practices, and for declaratory and injunctive relief, the plaintiff appeals from so much of an order of the Supreme Court, Queens County (Cooperman, J.), dated June 18, 1984, as (1) granted those branches of the defendant's motion which were to dismiss the second, fifth, seventh, eighth and ninth causes of action and to strike the class allegations of the first, third and fourth causes of action; and (2) denied its cross motion for an order determining that this action may be maintained as a class action.

Justice Weinstein has been substituted for former Justice Lazer (see, 22 NYCRR 670.2).

ORDERED that the order is modified, by deleting the first, third and fourth decretal paragraphs thereof and substituting therefor provisions (1) denying that branch of the defendant's motion which was for an order striking the class action allegations of the complaint, and (2) granting the cross motion; as so modified, the order is affirmed insofar as appealed from, with costs to the plaintiff, and the matter is remitted to the Supreme Court, Queens County, for entry of an order pursuant to CPLR 903.

The defendant Avis Rent A Car System, Inc. (hereinafter Avis) utilizes standardized rental agreements which provide for, among other things, the reimbursement for gasoline used during the rental (hereinafter the refueling charge), a collision damage waiver (hereinafter CDW) charge, and the imposition of late charges when the automobile is not returned at the agreed time. The plaintiff alleged, inter alia, that these charges and the methods by which they were computed were unfair and deceptive in violation of General Business Law § 349, were unconscionable and imposed in bad faith, in violation of UCC 2-302 and 1-201, and were a breach of Avis's rental contract. The plaintiff instituted this action on behalf of itself and all those who have rented automobiles from Avis within the State of New York, and were subject to or had imposed upon them the above mentioned charges.

Avis moved, pursuant to CPLR 3211, to dismiss, inter alia, those causes of action alleging unconscionability and a breach of the obligation to act in good faith. Avis also moved to strike the class allegations contained in the complaint, and the plaintiff cross-moved for an order determining that the action may be maintained on behalf of a class.

Special Term determined that a breach of the obligation to act in good faith may give rise to cause of action for which damages may be recovered, but found, under the circumstances of this case, that the plaintiff failed to allege a breach of that duty. It also determined that the doctrine of unconscionability may not be used affirmatively and, in any event, held that the plaintiff failed to establish the absence of a meaningful choice in incurring the charges. Accordingly, it dismissed, inter alia, the second, fifth, seventh, eighth and ninth causes of action of the complaint.

Special Term further held that the causes of action alleging a violation of General Business Law § 349 could not be maintained on behalf of a class because to do so, the plaintiff would have to waive the class members' right to a minimum measure of recovery and punitive damages hereunder (CPLR 901) and, consequently, would not be an adequate class representative (CPLR 901). Therefore, it struck the class action allegations contained in the first and fourth causes of action.

Finally, the court determined that the breach of contract action arose from the fact that on one of the plaintiff's rental agreements, the amount of the refueling service charge was inadvertently left blank. Since the defendant's "usual practice" was to state the amount on the face of the contract, Special Term determined that this cause of action could be maintained on an individual basis only.

We find that Special Term did not err in dismissing those causes of action alleging breach of the duty to act in good faith and unconscionability.

It has been stated that "a party acts in bad faith, he will ordinarily be denied the benefit of any provision or concept that would improve his position * * * Acting in bad faith is thus a disqualifying factor as distinguished from a liability-imposing factor. In consequence, the Code does not permit recovery of money damages for not acting in good faith where no other basis of recovery is present" (1 Anderson, Uniform Commercial Code, § 1-203:14, at 383 see also, Management Assistance, Inc. v. Computer Dimensions, Inc., 546 F.Supp. 666, 677, affd. sub nom. Computer Dimensions v. Basic Four, 747 F.2d 708 (11th Cir.); Chandler v. Hunter, 340 So.2d 818, 821 ).

Nor does UCC § 2-302 create a cause of action to recover damages in favor of a party to an allegedly unconscionable contract (see, Pearson v. National Budgeting Systems, 31 A.D.2d 792, 297 N.Y.S.2d 59; Barco Auto Leasing Corp. v. PSI Cosmetics, 125 Misc.2d 68, 478 N.Y.S.2d 505; Vom Lehn v. Astor Art Galleries, 86 Misc.2d 1, 380 N.Y.S.2d 532). The doctrine of unconscionability is to be used as a shield, not a sword, and may not be used as a basis for affirmative recovery. Under both the UCC and common law, a court is empowered to do no more than refuse enforcement of the unconscionable contract or clause (see, UCC 2-302; Pearson v. National Budgeting Systems, supra; Cowin Equipment Co. Inc. v. General Motors Corp., 734 F.2d 1581 (11th Cir.), citing Bennett v. Behring Corp., 466 F.Supp. 689, affd. on other grounds 737 F.2d 982 (11th Cir.)).

However, we find Special Term should not have denied class certification.

Although CPLR 901(b) bars a class action to recover a penalty or minimum damages imposed by statute, where, as here, the statute does not explicitly authorize a class recovery thereof, the named plaintiff in a class action may waive that relief and bring an action for actual damages only (see, McLaughlin, Practice Commentaries, McKinney's Cons.Laws of N.Y., Book 7B, CPLR C901:7, at 327-328; Burns v. Volkswagen of Amer., 118 Misc.2d 289, 460 N.Y.S.2d 410, affd. on other grounds 97 A.D.2d 977, 468 N.Y.S.2d 1017). Thus, the weight of authority holds that a class action may be maintained to recover actual damages...