New York State Court of Claims

New York State Court of Claims

PHH VEHICLE MANAGEMENT v. THE STATE OF NEW YORK, #2001-015-130, Claim No. 103029, Motion Nos. M-62863, CM-62995


Claimant's motion for summary judgment determining State's liability for retention by State of leased automobiles beyond stated term of contract granted based upon contract language which extended its terms and conditions upon State's retention of vehicles. Ultimate purchase of vehicles by State did not effect claimant's right to recover on the claim. Damages to be determined at trial unless parties stipulate to amount owed.

Case Information

Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
Motion number(s):
Cross-motion number(s):
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:
March 22, 2001
Saratoga Springs

Official citation:

Appellate results:

See also (multicaptioned case)


Claimants' motion pursuant to CPLR 3212 for summary judgment determining the State's liability for money damages arising out of its lease of 83 vehicles from the claimants is granted. The Court finds that damages may not be determined on the claimants' motion as a matter of law and that portion of the claimants' motion is denied. The Court also denies the State's cross-motion for summary judgment seeking dismissal of the claim upon the ground that the monthly lease charges for the months of May 1998 through September 1998 were subsumed into the purchase price paid for those vehicles in September 1998 and upon the further ground that the monthly payments sought for those vehicles are beyond the contract's three year term and were never separately approved by the State Comptroller as required by State Finance Law § 112 (2). By decision and order filed August 30, 2000 this Court granted claimants' motion to permit the service and filing of a late claim pursuant to Court of Claims Act § 10 (6). The instant claim filed on September 5, 2000 seeks to recover the sum of $143,952.45 alleged to be due as a result of the State's retention of the 83 motor vehicles for several months beyond the end of the contract's three year term. Specifically, claimants seek to recover monthly lease rentals for the period May 1998 to September 1998 which claimants characterize as a "six" month period. The parties agree that the subject vehicles were purchased by the State pursuant to a March 1998 purchase order which was approved by the Office of General Services (OGS) on May 27, 1998 and by the Office of the State Comptroller (OSC) on July 8, 1998. Payment of an adjusted purchase price of $594,105.00 did not occur until September 24, 1998. Claimants' efforts to recover monthly rentals alleged to be due for each month following the end of the three year lease period until the receipt of the purchase price were initially approved by OGS in the adjusted amount of $109,670.40 but were rejected by the Comptroller on the grounds that the payments sought extended beyond the legal contract leasing term (see, Exhibit 3 to Kimberling affidavit). Efforts to negotiate a settlement failed and claimants moved for an order allowing the service and filing of a late claim. That motion, as noted above, was granted and claimants now move for summary judgment.

Defendant opposed claimants' motion and cross-moved for summary judgment seeking an order dismissing the claim without specifying the grounds for the cross-motion. The affidavit of Barbara S. Miller, Director of the Consolidated Business Office of the New York State Office of Mental Health (OMH), the State agency which actually used the vehicles and processed the monthly lease vouchers, suggests without directly averring that the monthly lease sums sought by the claimants could only have been recovered by the claimants if the negotiated sale of the vehicles had failed. Interestingly, while making that argument, the affiant acknowledges that the purchase order was for a "fixed sum" and made "no reference to additional sums reflecting any monthly lease payments."

To obtain summary judgment the moving party must establish its cause of action or defense "sufficiently to warrant the Court as a matter of law in directing judgment" in its favor (CPLR 3212 [b]; Sevenson Envtl. Servs. v New York State Thruway Auth., 149 Misc 2d 268). Claimants, as assignees of a licensed legal corporation which entered into a three year lease contract with the State, have submitted a copy of the subject lease agreement along with the proof required by CPLR 3212 [b]. That agreement, which both parties concede was approved by the State Comptroller's Office pursuant to State Finance Law § 112 on November 18, 1994, contains the following language on page 15 under the heading"contract period":
Notwithstanding 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 contract further provides that requests for changes in any part of the contract must be made in writing to the Office of General Services, Division of Purchasing "prior to effectuation". Paragraph 5 of the contract's "General Requirements" states that each lease shall be for the term of three (3) years from the time that the vehicle is delivered to and accepted by the State or Political Subdivision and provides in several of its provisions for the return of each vehicle to the contractor upon termination of the lease (see pp 16, 18, 19) including a provision requiring the surrender of each of the vehicles to the contractor "no later than ten (10) calendar days after termination of the lease" (see paragraph (c), page 19).

It is undisputed that OMH retained possession of the subject vehicles after the expiration of their designated lease terms and that no monthly lease payments were made between the lease expiration date and the consummation of the purchase/sale by the State's tender of payment on September 24, 1998.

These motions present two issues; was the Comptroller's initial approval of this contract sufficient to bind the State to monthly payments beyond the stated three year term of the contract and, if so, did the ultimate purchase of the vehicles subsume the monthly lease charges which would otherwise have been payable pursuant to the contract? The first of these issues was squarely addressed by the Court of Appeals in City of New York v State of New York, 87 NY2d 982, which involved the State's continued occupancy of certain office space owned by the City of New York after the parties' lease agreement had expired. The contract contained language which permitted continued possession by the State upon expiration of the lease term on the same terms and conditions. As set forth above, the paragraph headed "contract period" which states that the contract's provisions shall continue in full force and effect so long as the State retained possession of the vehicles was part of the lease agreement approved by the Comptroller in November, 1994.

In City of New York v State of New York, (supra at 985) the Court of Appeals modified lower court holdings which had denied recovery of lease payments occurring after the expiration of the express lease term stating "[w]e know of no authority suggesting that the Comptroller lacked the power or discretion to approve the option to extend the agreement beyond [the termination date] on the terms set forth." In that case, as in the instant case, "the Comptroller fulfilled his legal obligation to determine that the expenditure was not improvident or extravagant" (id, at 986). Here, it is clear that the parties entered into a contract which was approved by the Comptroller and which contained provisions allowing for its continuation subsequent to the expiration of the stated lease term.

The defendant has offered no proof in opposition to the claimants' motion or in support of its own cross-motion to demonstrate that the purchase agreement admittedly negotiated at arm's length at or near the end of the lease term was contingent upon the claimants' forfeiture of its right to monthly lease payments under the lease agreement. The burden of proof in this regard rests with the party asserting it (Keis Distrib. v Northern Distrib. Co., 226 AD2d 967). There is no language in the 1998 purchase order which suggests that such a forfeiture was contemplated by the parties prior to the offer and acceptance of the purchase agreement. In fact, the affidavit of Barbara Miller offered in support of the defendant's cross-motion states the following:
9. The agreed upon purchase price was a fixed sum and made no reference to additional sums reflecting any monthly lease payments.

10. Had the negotiations for the sale of the vehicles failed, then presumably, on information and belief, PHH's monthly lease invoices for the holdover period would have been approvable by OSC
Were the intentions of the parties unclear with regard to this issue summary judgment would be inappropriate (Mayland v Craighead, 144 AD2d 344). Such is not the case here. Clearly, the parties could have negotiated and addressed such an issue within discussions concerning the purchase and sale of the vehicles. There is, however, no evidence and indeed no argument that the parties considered the matter. As a result, the terms of the prior lease agreement between the parties control and require that claimants' motion for summary judgment be granted and the defendant's cross-motion be denied.

While the State's liability for the monthly lease payments has been established, this Court is not convinced that the amount of damages sought in the claim is correct. Claimant asserts that it is entitled to $143,952.45 plus interest from September 1998 in addition to costs and disbursements. The amount sought is alleged to be based upon six monthly lease payments of $22,848.00 for the period May 1998 to September 1998. Even if the Court were to include the entire month of September 1998 which was the month in which the vehicles were purchased, the period of May through September is only five months (not six) and at $22,848 per month the total due would amount to $114,240.00 which is $29,712.45 less than the amount set forth in the claim and requested in the claimants' motion. On this record the Court finds that the judgment amount is not determinable as a matter of law and, accordingly, sets this matter down for an immediate trial on the issue of damages pursuant to CPLR 3212 (c) unless the parties shall stipulate in writing to the amount payable within 45 days of the filing of this decision and order.

March 22, 2001
Saratoga Springs, New York

Judge of the Court of Claims

The Court considered the following papers:
  1. Notice of motion dated December 19, 2000;
  2. Affidavit of John J. Henry in support of motion for summary judgment sworn to December 19, 2000 with exhibits;
  3. Affidavit of David L. Kimberling sworn to December 12, 2000, with exhibits;
  4. Notice of Cross-Motion dated January 24, 2001;
  5. Affidavit of Barbara S. Miller sworn to January 24, 2001, with exhibits;
  6. Reply affidavit of John J. Henry in support of motion for summary judgment sworn to January 30, 2001, with exhibit.