CITY OF NEW YORK DEPARTMENT OF CONSUMER AFFAIRS KAREN McLEOD-DELEANEY -and- DEPARTMENT OF CONSUMER AFFAIRS, -against- Complainants, DECISION AND ORDER Record No.: 6040-2014-ADJC NOH No.: C0487013 License No.: 1278427 (SHAD) PLAZA HYUNDAI, LTD. Respondent. A hearing on the above-captioned matter was held on May 13, 2014. Appearances: For the Complainants: Karen McLeod-Deleaney; Eric Deleaney, Authorized Representative. For the Respondent: Tony Saunders, Authorized Representative The Notice of Hearing charged the respondent Plaza Hyundai, Ltd. with violating the following: 1. New York City Administrative Code ( Administrative Code ) 20-700 and Title 6 of the Rules of the City of New York ( 6 RCNY ) by engaging in a deceptive trade practice by engaging in a deceptive trade practice by promising certain warranty products but failing to provide them; 2. Administrative Code 20-700 and Title 6 of the Rules of the City of New York 6 RCNY 1-12 by overcharging the Consumer for the vehicle price and by including unwarranted added-on charges which Consumer did not agree to pay; 3. Administrative Code 20-113 by conducting activities under a name different from that of the person or organization to
Page 2 whom such license was issued or the trade name stated in the application therefore; 4. 6 RCNY 1-05 by failing to disclose its DCA license number on a contract; 5. 6 RCNY Section 2-103(f) by failing to include all terms which were part of the transaction on the bill of sale; 6. Administrative Code 20-101 by failing to maintain the standards of integrity, honesty and fair dealing required of licensees. Based on the evidence in the record, I recommend the following: Findings of Fact The Respondent is licensed by the Department as a second-hand automobile dealer. On September 21, 2013, Karen McLeoed-Deleaney ( Consumer ) agreed to purchase a 2010 Toyota Highlander from Plaza Hyundai ( Respondent ) for a total price of approximately $33,000. The Consumer was required to wait approximately 6 hours before she was able to obtain her vehicle from the Respondent. The Consumer paid a deposit in the amount of $10,000. The Consumer believed that such deposit was applied to the total cost of the vehicle (approximately $33,000), and several warranties, including, one AutoCare warranty, valued at $1,200, and one Platinum Vehicle Service Agreement, valued at $3,500. 1 The Consumer financed the vehicle believing payments would amount to approximately $320.37, based upon a finance agreement supplied to her by the Respondent and representations made by Respondent s employees. The Consumer later learned that the monthly payments would amount to approximately $388 and that the vehicle was not covered under either the AutoCare or Platinum Vehicle Service Agreement warranties. The Consumer was charged for add-ons and extra charges, including Back End P : $600, Admin : $395, and Prep : $695. Such charges were not discussed or explained to the Consumer, nor was the Consumer provided the opportunity to negotiate and/or waive these charges. The Consumer maintains other warranties, such as NSD and EnviroGuard for a combined value of $1,432. 1 Such warranty is referred to as both a Mechanical Service Contract on a document referred to by the Respondent as a menu, (see Consumer s exhibit 3), and a Vehicle Service Agreement Application New York (see Consumer s exhibit 5).
Page 3 There is a discrepancy between monetary amounts on Consumer s contract and Respondent s contract. The Respondent refers to documents by names not familiar to the average layperson. The information, product names, and monetary amounts differ amongst the documents provided to the Consumer. The Consumer s Platinum Vehicle Service Agreement warranty does not note Platinum status. Respondent s copy of same notes Gold. The contract or bill of sale lists Respondent s name as Plaza Auto Mall and does not note its DCA license number. AutoCare and Platinum Vehicle Service Agreement warranties are not noted on all documents provided to the Consumer. The Respondent s versions of the same documents provided to the consumer are legible, but the Consumer s copies are difficult to read due and appear to be part of a duplicate or triplicate copy. Opinion Administrative Code 20-700 and 6 RCNY 1-12 (2 counts) and 6 RCNY Section 2-103(f) A violation of Administrative Code 20-700, 6 RCNY 1-12 and 6 RCNY 2-103(f) was established by a preponderance of the credible evidence. The Consumer offered detailed and consistent testimony to establish that the respondent s employees represented to her that she would pay a certain sum in monthly payments (approximately $320) and that she was purchasing two additional warranties valued at $4,700. The Respondent s argument that the Consumer was aware of the monthly payment by virtue of the Consumer s signature on a menu, noting a monthly payment of $388 is without merit. The credible evidence establishes that the Consumer relied on representations of Respondent s finance associate, as well as the finance agreement (marked as Complainant s exhibit 9 and Respondent s exhibit D), which notes 72 monthly payments of $320.37 ). The Respondent s further contention that warranties were omitted from the bill of sale by accident does not constitute a meritorious defense, as Administrative Code 20-700 does not require proof of intent. 20-700 states in pertinent part: No person shall engage in any deceptive... trade practice in the sale, lease, rental or loan or in the offering for sale, lease, rental, or loan of any consumer goods or services.... 20-701(a) defines a deceptive trade practice as [a]ny false, falsely disparaging, or misleading oral or written statement, visual description or other representation of any kind made in connection with the sale, lease, rental or loan of consumer goods or services... which has the capacity, tendency or effect of deceiving or misleading customers (emphasis added). Furthermore Respondent s argument does not rebut the Consumer s claim that
Page 4 she was lead to believe that her $10,000 deposit included payment for the subject warranties. A review of documents submitted at the hearing by both the Consumer and the Respondent reveal the following discrepancies: Compare Respondent s exhibit A with Consumer s exhibit 7 (Consumer s version is virtually illegible, Respondent s copy is clear); compare Respondent s exhibit B with Consumer s exhibit 6 (Consumer s copy notes Back End P charge as $600, Respondent s version notes Back End P charge as $0; and compare settlement payments as $310.08, which Consumer s appear to amount to $320.37 per month); compare Consumer s exhibit 5 which does not note coverage level Platinum, Gold, and Powertrain, with Respondent s exhibit E, noting coverage level as Gold. In addition, a review of the documents revealed print that was illegible/difficult to read: A number of documents provided to the Consumer by the Respondent are confusing, difficult to decipher (the print quality is extremely light), and the documents appear to be a portion of a duplicate/triplicate rather than originals. Alternatively, documents offered at the hearing by the Respondent appear to be legible, clear, original versions of same. This practice directly contravenes Respondent s duty to ensure that the Consumer is apprised of all charges, contingencies and conditions contained in legible, easy to understand documents. The Consumer was charged for addons, including Back End P, $600, Admin, $395, and Prep, $695. 2 Such charges were not explained to the Consumer, nor was the Consumer notified that certain charges could be negotiated to a lower price or omitted entirety. It is determined that the documents provided to the Consumer had the capacity or tendency to mislead the Consumer into believing that the vehicle was protected under the subject warranties and the monthly payment would be a certain sum. Accordingly, the respondent engaged in deceptive trade practices by promising certain warranty products but failing to provide them, overcharging the Consumer for the vehicle price by including unwarranted added-on charges which Consumer did not knowingly agree to, and failing to include all terms which were part of the transaction on the bill of sale. Here, the Consumer relied on Respondent s employee s representations and the documents provided to her. The Respondent s assertion that it subsequently fired the employee/employees connected with the subject transaction, even if true, does not set forth a valid defense, nor shall it constitute sufficient grounds to warrant mitigation. This Tribunal has widely held that the Respondent is responsible for the actions of its employee. See DCA v. Stage 3 Automotive Inc., LL005305289 (Decision, ALJ D. Paul, March 1, 2013; DCA v. 14 TH Street 2 It is determined that such terms are not familiar to the average layperson without adequate explanation.
Page 5 Love, Inc. TP536147 (Decision, ALJ Miller, August 29, 2003); see also Title 6 of the Rules of the City of New York Section 2-363(h) ( Licensees may be held responsible for any act or omission of any of their employees which results in the licensee s failure to comply with such regulations as are applicable ). In the instant case, Respondent s employees were acting on its behalf and the Respondent made no showing that such employees were not acting within the scope of employment. Cf. Lundberg v. State of New York, 25 N.Y.2d 467, 306 N.Y.S.2d 947, 255 N.E.2d 177 (1969) ( An employee acts in the scope of his employment when he is doing something in furtherance of the duties he owes to his employer and where the employer is, or could be, exercising some control, directly or indirectly, over the employee s activities ). Based upon the foregoing, the charges shall be sustained. 6 RCNY 1-05 and Administrative Code 20-113 A violation of 6 RCNY 1-05 and Administrative Code 20-113 was established by a preponderance of the credible evidence. The contract or bill of sale lists Respondent s name as Plaza Auto Mall and does not note its DCA license number. 3 Respondent s claim that it is a part of a type of parent company which uses different entity names, does not set forth a valid defense. Respondent must conduct business under the name upon which it is licensed and the Consumer shall be made aware of the particular entity involved in the transaction. Based upon the foregoing, the charge shall be sustained. Administrative Code 20-101: A violation of Administrative Code 20-101 was established by a preponderance of the credible evidence. The Respondent failed to maintain the standards of integrity, honesty and fair dealing required of licensees by promising certain warranty products but failing to provide them, including unwarranted added-on charges which Consumer did not understand or knowingly agree to pay, conducting activities under a name different from that of the organization to whom such license was issued, failing to disclose its DCA license number on a contract, and failing to include all terms which were part of the transaction on the bill of sale. The credible evidence further establishes that the Consumer was lead to believe that her $10,000 deposit included the price of the AutoCare and Platinum Vehicle Service Agreement warranties and that her monthly payments were within the $320 range. 3 Consumer s exhibit 7 notes business name Plaza Auto Mall ; Consumer s exhibit 6 notes business name Plaza Hyundai, Ltd., Consumer s exhibit 2 notes Toyota Certified Used Vehicles.
Page 6 Based upon the foregoing, the charge shall be sustained and the Respondent s second hand automobile dealer s license shall be revoked. Restitution It is determined that the Consumer is entitled to restitution in the amount of $6,390., based upon the value of the AutoCare and Platinum Vehicle Service Agreements, $4,700, 4 and the cost of add-ons which were neither discussed nor explained to the Consumer prior to purchase of the vehicle: Back End P: $600, Admin: $395, and Prep: $695. 5 Based upon the foregoing, the charge shall be sustained. ORDER The respondent is found guilty of violating the charges and is hereby, ORDERED to pay to the Department a TOTAL FINE of $2,200., which is immediately due and owing, as follows: Charge Fine 1. Administrative Code 20-700 and 6 RCNY 1-12 $350 2. Administrative Code 20-700 and 6 RCNY 1-12 $350 3. Administrative Code 20-113 $500 4. 6 RCNY 1-05 $500 5. 6 RCNY 2-103(f) $500 6. Administrative Code 20-101 REVOCATION In addition, the Respondent s Second Hand Automobile Dealer License (1278427) is REVOKED, EFFECTIVE IMMEDIATELY. The respondent is directed to surrender all license documents to the Licensing Division immediately. Continued operation with revoked licenses subjects the respondent to CRIMINAL PROSECUTION and/or civil penalties of $100 per day for each day of unlicensed activity, as well as the closing of the unlicensed business and/or the removal of items sold, offered for sale, or utilized in the operation of the unlicensed business, pursuant to the Administrative Code of the City of New York Sections 20-105 and 20-106 (the Padlock Law ). 4 Note the agreement Purchase Price and Consumer s signature on the Vehicle Service Agreement (see Respondent s exhibit E). 5 Respondent admitted that charges are not mandatory.
Page 7 It is further DECLARED that respondents are not found to be unfit to hold any license issued by the Department in the future. The Respondent is further Ordered to pay RESTITUTION to the Consumers in the amount of $6,390., which is immediately due and owing, and which is calculated as follows: Autocare Warranty: $1,200 Platinum Warranty: $3,500 Back End P: $600 Admin: $395 Prep: $695 The Respondent is further Ordered to provide to the Department proof of payment of restitution to the Consumers within thirty (30) days of the date of this decision to the following address: NYC Department of Consumer Affairs, Collections Division-Accounts Receivable, 42 Broadway, 9 th floor, New York, New York 10004 or by emailing such proof to: collections@dca.nyc.gov Failure to surrender the license document shall constitute grounds for additional suspension or revocation of the license. If the respondent continues to operate during the period of suspension, the respondent is subject to CRIMINAL PROSECUTION and/or civil penalties of $100 per day for each day of unlicensed activity, as well as the closing of the respondent s business and/or the removal of items sold, offered for sale, or utilized in the operation of such business, pursuant to the Administrative Code of the City of New York 20-105 and 20-106 (the Padlock Law ). This constitutes the recommendation of the Administrative Law Judge. Eryn DeFontes Associate Director of Adjudication DECISION AND ORDER The recommendation of the Administrative Law Judge is approved. This constitutes the Decision and Order of the Department. The Department will suspend the respondent s DCA license(s) if the respondent fails to comply with this Decision and Order, including payment of the fine. Payment with a check that is dishonored or a credit card transaction that is denied or reversed will not be considered compliance with this Decision and Order. The license(s) will not be
Page 8 reinstated until the respondent has served any suspension period ordered in this Decision and has paid ALL fines owed to the Department. Date: May 28, 2014 Steven T. Kelly Deputy Director of Adjudication cc: Tony Saunders tonys@plazacars.com cathy@plazacars.com Karen McLeod-Deleaney edeleaney@hotmail.com Susan Kassapian, Esq. Jordan Cohen, Esq. Mail payment in the enclosed envelope addressed to: NYC Department of Consumer Affairs Collections Division 42 Broadway, 9 th Floor New York, NY 10004
Page 9 APPEALS RESPONDENT(S): You may file a MOTION TO VACATE this decision within 15 days from the date you knew or should have known of this decision. Your motion must include: 1) the reason you did not appear at the hearing; AND 2) a sworn statement outlining a meritorious defense to the charge(s) in the Notice of Hearing. You must include with your motion a check or money order for $25 payable to DCA; and a check or money order payable to DCA for the entire restitution amount you were ordered to pay in the decision. You may file your Motion to Vacate either by email or regular mail, as follows: BY EMAIL: Send your motion to myappeal@dca.nyc.gov and, at the same time, mail the $25 appeal fee and the restitution to: DCA Administrative Tribunal, 66 John Street, 11 th Floor, New York, NY 10038. Make sure to write the violation number(s) on your check or money order. NOTE: The determination on your motion to vacate may be sent to you by email if you choose to submit your motion to us by email. BY REGULAR MAIL: Send your motion, along with the $25 fee and the restitution, to: Director of Adjudication, Department of Consumer Affairs, 66 John Street, 11 th Floor, New York, NY 10038. Make sure to include in your motion some indication or proof that you have sent copies of the motion TO THE CONSUMER at the consumer s address, AND to DCA S LEGAL DIVISION, 42 Broadway, 9 th Floor, New York, NY 10004. CONSUMER: You may file an APPEAL of this decision within 30 days from the date of the decision. You may file your Appeal either by email or regular mail, as follows: BY EMAIL: Send your appeal to myappeal@dca.nyc.gov. NOTE: The determination on your motion to vacate may be sent to you by email if you choose to submit your motion to us by email. BY REGULAR MAIL: Send your appeal to: Director of Adjudication, Department of Consumer Affairs, 66 John Street, 11 th Floor, New York, NY 10038. Make sure to send a copy of your appeal to each of the respondents. IMPORTANT NOTICE TO BOTH PARTIES YOUR MOTION OR APPEAL MAY BE DENIED IF YOU DO NOT INCLUDE SOME INDICATION THAT YOU HAVE SENT A COPY OF IT TO EACH OF THE OPPOSING PARTIES LISTED IN THE NOTICE OF HEARING.