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Aetna Ins. Co. v Capasso

This is a proceeding wherein the plaintiff, NS Auto & Towing, by order to show cause dated 23 April 2007, sought a preliminary injunction to enjoin Defendants, Nassau County and Nassau County Police Department from terminating its towing and impound contract.

On 11 and 12 of June 2007, the issues were set down and witnesses were presented. The plaintiff presented the testimony of Detective SS who submitted an affidavit in opposition to their motion and RS, the mayor of the Incorporated Village of Thomaston. On the other hand, the defendants called NS’s principal, SRB, Sgt. IS of the NCPD Legal Bureau and Sgt. RJ, the administrative supervisor of the Sixth Precinct.

Prior to the hearing, an issue arose with regard to documents subpoenaed by NS. Nassau County argued that the subpoena should be quashed because much of the material sought was necessary for an on-going grand jury investigation of NS. In support, an assistant district attorney appeared to urge that the information sought, if disclosed, would negatively impact the work of the grand jury.

The subpoena was quashed and Nassau County was barred from introducing evidence of any incidents which were the part of the basis of the decision to terminate NS’s towing and impound contract which were not already disclosed in the opposing papers submitted by Nassau County. Nassau County was limited to proof of incidents which occurred prior to the renewal of the Contract in May, 2006.

The court has these findings of facts:

It is noted that on 4 May 2006, NS, a licensed tow operator in a number of local municipalities, and Nassau County entered into a three year towing and impound contract. This Contract was the renewal of an expired towing and impound contract between the parties and the third overall between them. NS has been on a rotational tow list for approximately 30 years.

The Contract allowed the NCPD to call upon NS to remove and impound a vehicle which was involved in an arrest, placed on a detective hold, involved in a felony DWI or felony unlicensed operation of the vehicle, used as a weapon or involved in a crime or which was to be held for further testing, such as brakes or some other investigation. If the vehicle was involved in an accident or became disabled on a road or highway, the vehicle would be towed pursuant to the local municipality’s rotational tow list.

Nassau County is divided into various zones for which towing and impound contracts are given. Pursuant to the terms of the DUI contract with NS, it was permitted to answer calls within its contracted zones as well as adjoining zones.

NCPD sent a letter dated 10 January 2007 terminating the Contract after receiving various complaints against NS. Specifically, the termination letter refers to Contract ¶ 11(a)(ii) and (b)(i) which provide:

“11. Termination. (a) Generally. This Agreement may be terminated … (ii) for “Cause” by the COUNTY immediately upon the receipt by the CONTRACTOR of written notice of termination…
(b) As used in this Agreement the word “Cause” includes:
…(i) a breach of this Agreement…”
Specifically, the termination letter pointed to NS’s breach of ¶ 2(m) of the Contract, which sets forth the impound rates and fixed-sum charges by which the contractor “must abide.”
Further, the letter advised NS could no longer provide towing and impound services for zones 1, 4 and 6.

The termination letter was rejected by NS. A second termination for cause letter was sent by Nassau County on 1 June 2007. It was also rejected. Finally, on 27 June 2007, a third termination letter was sent. This letter terminated the Contract without cause pursuant to ¶ 11(a)(i) of the Contract.

The termination was apparently based upon three instances of overcharging although Det. SS, who submitted an affidavit in opposition to NS’s motion for a preliminary injunction, could not testify from his personal knowledge of any of them. Indeed, the three instances, which predated the 4 May 2006 renewal of the Contract, were not brought to the attention of the Commissioner of Police prior to the renewal. Apparently, the fact that there was an on-going investigation of DWAI NS at that time was not presented to the Commissioner either.

It is to be noted that Sgt. IS, the Commanding Officer of the Legal Bureau of the Nassau County Police Department, acknowledged that the termination of NS was not as a result of the three instances presented during the hearing of this matter.

In addition, NS contends that the instances presented were with regard to impounds in zone 10 which was in the Sixth Precinct and not an area covered by the Contract. However, it appears that zone 10 is adjacent to the zones allowed under the Contract and, therefore, by its terms, was covered. Sgt. IS testified that he directed the termination letter based upon four complaints which originated in the Sixth Precinct and not the Fifth.

The court finds that with regard to the three subject instances, it appears that none of them relate to overcharges and none seemed to affect the general public and the alleged violations were not fully investigated.

To Be Cont…..

Ultimately, pursuant to the termination letter of 27 June 2007, the Contract between the parties was terminated without cause. Contract ¶ 11(a)(i) allows the Contract to be terminated “for any reason by the COUNTY on thirty (30) days notice to the CONTRACTOR.”

As the movant, it is NS’s burden to establish irreparable harm, likelihood of success on the merits and a balancing of the equities in its favor akin to Aetna Ins. Co. v Capasso, W.T. Grant & Co. v Srogi and Hightower v Reid.

It was held in Peterson v Corbin and Nalitt v City of New York that a preliminary criminal injunctive relief is a drastic remedy which will not be granted unless a clear right thereto is established under the law and the undisputed facts upon the moving papers, and the burden of showing an undisputed right rests upon the movant. In Abinanti v Pascale, Hoeffner v John F. Frank, Inc. and Carman v Congregation De Milta of New York, Inc., it was held that the failure to meet the requisite showing mandates denial of the preliminary injunction motion.

Economic loss which is compensable by money damages does not constitute irreparable harm so as to warrant the granting of a preliminary injunction for DWI.

It is NS’s contention that the improper termination of its Contract with Nassau County threatens to destroy its ongoing business concern which constitutes irreparable harm based on the ruing in Reuschenberg v. Town of Huntington.

However, the court notes that such is not the case where the business is disrupted but not destroyed akin to Newport Tire & Rubber Co., Inc. v. Tire & Battery Corp., Jack Kahn Music Co., Inc. v. Baldwin Piano & Organ Co. and Jackson Dairy, Inc. v H. P. Hood & Sins, Inc.

In the case at bar, the record apply demonstrates that the towing and impound business realized by NS was one of three facets of its business; to wit: towing, general automotive repairs and collision repair. While the Contract with Nassau County has been terminated, that has not impacted NS’s remaining on the rotational towing lists of various municipalities from which it derives income. Nor has NS lost any of the other parts of its business.

NS claims in its post-hearing memorandum of law that NS has sustained “incalcuable exponential damages” which is “a minimum of approximately $500,000.00 generated per year in body work as well as there are additional moneys which cannot be specifically calculated from referrals from the very same people that the Plaintiff corporation did body work for since they had their car towed by the Plaintiff.

The court finds that its damages are limited to the period between the first termination letter and 30 days after receipt of the last termination letter, from January to approximately July 2007. Based on its long-standing business relationship and experience with the County, its damages should be calculable, if the Contract was not properly terminated or it is determined that Nassau County had no cause to terminate it. The court notes that NS’s loss including lost profits, if any, can be determined, even if by approximation.

The court finds it unclear that the Contract was properly terminated for cause. Many of the complaints which were the subject of the original termination letter of 10 January 2007 occurred prior to the renewal of the Contract on 4 May 2006. Thus, Nassau County may well have waived its right to terminate on known instances of wrongdoing which did not rise to the level of refusal to renew or termination under the second of the three towing and impound agreements which were entered into between the DUI parties.

In choosing to renew the contract with NS, Nassau County waived its right to pursue termination for the pre-renewal breaches as was also held in Inter-Power of New York, Inc. v. Niagra Mohawk Power Corp., LLC v. Kinko’s Inc., and ESPN, Inc. v. Office of the Commissioner of Baseball.

The question as to whether the two termination for cause letters were proper in terms of their service, contents and grounds are valid and enforceable is rendered academic for the purpose of the hearing inasmuch as they have been superceded by a binding termination notice which became effective thirty (30) days from its receipt which is conceded. The court finds that thirty days after receipt of the 27 June 2007 termination letter, the Contract between NS and Nassau County was effectively terminated.

The Court will not address or credit the conspiracy theory offered during the hearing in addressing the merits of NS’s position. NS contends that, at least, in part, the determination of the NCPD to terminate NS’s towing and impound contract has its genesis in a zoning dispute with the Village of Thomaston where NS’s business is located. No credible proof was adduced to establish any link between Nassau County’s decision to terminate the Contract and the zoning dispute which caused the Village to sue its own Board of Zoning Appeals over a variance granted to NS. The implication of NS’s DWAI conspiracy claim is that the variance was granted to allow it to expand. Such expansion would be unnecessary if the Contract was terminated. Thus, the Village involved itself in causing NS to lose its towing and impound contract with Nassau County to obviate the expansion.

As consequence of the contract termination, the granting or denial of the preliminary injunction will not have any impact on the parties one way or the other.

The credible evidence has not demonstrated that NS is entitled to a preliminary injunction. As a matter of law, the court denies the application.

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