New York State Court of Claims

New York State Court of Claims

PHH VEHICLE MANAGEMENT SERVICES v. THE STATE OF NEW YORK, #2000-015-074, Claim No. NONE, Motion No. M-61953


Synopsis


Late claim to recover monthly lease charges on motor vehicles leased to State after expiration of original lease term allowed where motion was unopposed, defendant waived lateness defense in its answer and claim was not barred by applicable Statute of Limitations.

Case Information

UID:
2000-015-074
Claimant(s):
PHH VEHICLE MANAGEMENT SERVICES, LLC., and D.L. PETERSON TRUST, as Assignee of PHH VEHICLE MANAGEMENT SERVICES, LLC
Claimant short name:
PHH VEHICLE MANAGEMENT SERVICES
Footnote (claimant name) :

Defendant(s):
THE STATE OF NEW YORK
Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
NONE
Motion number(s):
M-61953
Cross-motion number(s):

Judge:
FRANCIS T. COLLINS
Claimant's attorney:
Whiteman Osterman & HannaBy: John J. Henry, Esquire
Defendant's attorney:
Honorable Eliot Spitzer, Attorney General
By: Reuben Goldwaser, EsquireAssistant Attorney General
Third-party defendant's attorney:

Signature date:
August 25, 2000
City:
Saratoga Springs
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)



Decision


The movants' application for an order pursuant to Court of Claims Act § 10 (6) permitting the service and filing of a late claim is granted upon the condition that the claim be served and filed within thirty days of the date of filing of this decision and order. In 1994 PHH Vehicle Management Services (PHH), a professional fleet management services company located in Maryland, entered into a contract in which it agreed to lease 83 vehicles to the New York State Office of Mental Health (OMH) for a period of three years. During March of 1998, OMH and PHH entered into discussions which ultimately resulted in the State's purchase of the 83 vehicles for the sum of $596,465.00 upon the expiration of the lease term. That sum was paid in September of 1998. However, during the period between May of 1998 and September of 1998, OMH remained in possession of the vehicles but did not pay the monthly lease charges. The position of the defendant is that the Comptroller had not approved any payments to be made after the expiration of the lease term in May, 1998 although the contract provided, "[n]otwithstanding the expiration of the contract period, the provisions of this contract shall continue in full force and effect as to each vehicle leased hereunder, so long as such vehicle is retained by the State or participating Political Subdivisions as lessees". The proposed claim seeks to recover the sum of $143,952.45, with interest from September 1998, as damages for the failure of OMH to make the monthly lease payments for the period May 1998 to September of 1998. The Assistant Attorney General representing the State has submitted an affirmation which states:
After consultation with John J. Henry, attorney for the movant [sic], the State hereby agrees that it will not oppose the motion to file a late claim and, upon answering the claim, also agrees that it will waive any defense regarding the lateness of the claim.
Subdivision 6 of section 10 of the Court of Claims Act permits this Court, if the applicable Statute of Limitations set forth in article 2 of the CPLR has not expired, to allow the filing of a late claim upon consideration of the following factors: "whether the delay in filing the claim was excusable; whether the state had notice of the essential facts constituting the claim; whether the state had an opportunity to investigate the circumstances underlying the claim; whether the claim appears to be meritorious; whether the failure to file or serve upon the attorney general a timely claim or to serve upon the attorney general a notice of intention resulted in substantial prejudice to the state; and whether the claimant has any other available remedy".

The proposed claim sets forth a breach of contract action governed by the six year Statute of Limitations set forth in CPLR § 213 making this application timely.

Turning to the statutory factors, this Court has broad discretion in deciding a motion to permit the late filing of a claim (Ledet v State of New York, 207 AD2d 965), and the statutory factors are not exhaustive or one factor controlling (Matter of Gavigan v State of New York, 176 AD2d 1117). The most important factor is whether the potential claim has merit, as it would be a futile exercise to permit litigation of a clearly baseless lawsuit (Savino v State of New York, 199 AD2d 254).

The excuse advanced for the failure to timely pursue a claim is the expectation of settlement. Expectation of a settlement is not an acceptable excuse and that factor weighs against granting the motion (Prusack v State of New York, 117 AD2d 729).

The intertwined issues of notice, opportunity to investigate and prejudice will be considered together. PHH submitted lease payment invoices which it contends placed the State on notice of PHH's position throughout the period at issue. Moreover, any investigation, even at this late stage, would not be impaired by the passage of time as the rights of the parties will be determined by the terms of the lease, the applicable law, and whether OMH remained in possession of the vehicles, all factors which can be ascertained through a review of the available records. The factors of notice, opportunity to investigate and lack of prejudice weigh in favor of granting the motion.

As to the potential merit of the proposed claim, the movants rely upon the Court of Appeal's decision in the case of City of New York v State of New York, 87 NY2d 982, in which the Comptroller approved a lease which contained a clause permitting the lessee to retain the leased property after the expiration of the lease term upon the payment of a fixed rent. Upon the expiration of the lease term, the State agency retained possession of the leased property for a period of time before abandoning it. When the City sought to recover unpaid lease arrearages, the State took the position that it was not liable for any charges accruing after the expiration of the lease term as the Comptroller had not approved such payments pursuant to State Finance Law § 112(2). The Court of Appeals held that the Comptroller's original approval of the lease, which included the holdover provision, was sufficient compliance with State Finance Law § 112 as to authorize the recovery for rental arrears accruing after the expiration of the lease term. The movants have demonstrated the potential merit of their claim.

As to the last factor, it appears that no other remedy is available to the movants should this claim not be permitted to proceed.

A consideration of all of the factors leads the Court to grant the motion.


August 25, 2000
Saratoga Springs, New York

HON. FRANCIS T. COLLINS
Judge of the Court of Claims




The Court considered the following papers:
  1. Notice of motion dated June 30, 2000;
  2. Affidavit of John J. Henry sworn to June 30, 2000, with exhibits;
  3. Affidavit of David L. Kimberling sworn to June 30, 2000, with exhibits;
  4. Affirmation of Reuben Goldwaser dated July 21, 2000.