Court Opinion

ID: 5838443
Source: CourtListenerOpinion
Date Created: 2022-01-12 22:45:47.346404+00
Date Added: 2024-06-11T08:43:41.361743
License: Public Domain

Greenblott, J.,
dissents and votes to affirm in the following memorandum. Greenblott, J. (dissenting). After receiving complaints on behalf of two students because their damage deposits were not returned, the Attorney-General, acting pursuant to subdivision 12 of section 63 of the Executive Law, brought this proceeding on June 9, 1978 for injunctive and affirmative relief. In his petition he alleged, inter alia, that the damage deposit provision inserted in the contracts by appellant were unconscionable and constituted persistent fraud and illegality. Special Term agreed, concluding that clause V (6) was "unconscionable as a matter of law” and granted summary judgment restraining appellant from using such contractual provisions. The court also ordered appellant to pay into a fund the amount of $14,000 so that restitution could be made to those who the Attorney-General determined were aggrieved by appellant’s conduct. Subdivision 12 of section 63 of the Executivé Law authorizes the Attorney-General to apply to the Supreme Court for injunctive and other relief "Whenever any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business”. The term "fraud” or "fraudulent” includes "unconscionable contractual provisions” (Executive Law, § 63, subd 12). I agree with Special Term that the damage deposit provision herein was unconscionable as a matter of law. As was succinctly explained in Williams v Walker-Thomas Furniture Co. (350 F2d 445, 449), "Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” The concept depends upon all the facts and circumstances of each case, and "unconscionability [may] appear in the content of the contract per se” (Matter of Friedman, 64 AD2d 70, 85). Here, the contracts were entered into for the conceded purpose of alleviating a lack of facilities to house students. The record supports Special Term’s conclusion that the students were confronted with a lack of meaningful choice, resulting in inequality in bargaining power. Moreover, the terms of the damage deposit provision unreasonably favor appellant. They permitted money in the group deposit fund to be retained by appellant when damages allegedly exceeded the individual damage deposit fund and the persons who caused the damage could not be ascertained or were not financially responsible. This provision placed each student in a position of being forced to pay for damages caused by other students. The contracts contain no procedures or basis for assessing claims of damage, and they do not prevent appellant from abusing the language of the contract by summarily claiming an inability to ascertain *694those who caused damage. There was also no requirement that records be kept to determine damages to the hotel so that students could ascertain whether they have been unjustifiably charged for damages. Under such circumstances, the finding that the damage deposit provisions were fraudulent within the meaning of subdivision 12 of section 63 of the Executive Law was proper. Next, I reject appellant’s contention that this proceeding does not lie since the contracts were completed and carried out prior to the time the proceeding was instituted. Appellant entered into 280 contracts, and thus has committed "repeated” fraudulent or illegal acts under the statute (Executive Law, § 63, subd 12). Moreover, since it has admittedly refused to refund the damage deposits, it has engaged in "persistent fraud”, which includes "continuance or carrying on of any fraudulent or illegal act or conduct” (Executive Law, § 63, subd 12). I also conclude that Special Term properly granted petitioner summary judgment. CPLR 409 (subd [b]) authorizes the court to make a "summary determination upon the pleadings, papers and admissions to the extent that no triable issues of fact are raised.” In making a summary determination, the same standards are employed as in disposing of a motion for summary judgment (Matter of Lefkowitz v McMillen, 57 AD2d 979), and here, appellant has failed to present any evidentiary facts sufficient to raise a triable issue of fact (Freedman v Chemical Constr. Corp., 43 NY2d 260, 264) as to whether the elements of unconscionability have here been made out. As noted, the students, faced with an absence of a meaningful choice, were in a position of unequal bargaining powers, and the terms of the contract were unreasonable. Lastly, appellant’s conduct was properly enjoined by Special Term as a deterrent (see Matter of Lefkowitz v E.F.G. Baby Prods. Co., 40 AD2d 364, 367; Matter of State of New York v Hotel Waldorf-Astoria Corp., 67 Misc 2d 90; Matter of People v Baumann & Co., 56 Misc 2d 153, 159-160). I, therefore, dissent and vote to affirm. [95 Misc 2d 901.]