Lazaroff v Paraco Gas Corp. (2011 NY Slip Op 52541(U))

Lazaroff v Paraco Gas Corp.

2011 NY Slip Op 52541(U) [38 Misc 3d 1217]

Decided on February 25, 2011

Supreme Court, Kings County

Schmidt, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and will not be published in the printed Official Reports.

The following papers numbered 1 to 9 read on this motion:

Papers Numbered
Notice of Motion/Order to Show Cause/
Petition/Cross Motion and
Affidavits (Affirmations) Annexed 1-2, 3-6
Opposing Affidavits (Affirmations) 7-8
Reply Affidavits (Affirmations) 9
Affidavit (Affirmation)
Other Papers

Upon the foregoing papers, defendant Paraco Gas Corporation moves for an order, pursuant to CPLR 3211(a)(1) and (7), dismissing plaintiff's complaint. Defendant Porco Energy Corporation also moves for an order, pursuant to CPLR 3211(a)(1) and (7) and /or CPLR 3212 dismissing the plaintiff's complaint insofar as asserted against it.

This purported class action, which was commenced by the plaintiff Peretz Lazaroff, individually and on behalf of all others similarly situated (plaintiff), arises out of the alleged purchase and/or exchange of propane gas cylinders manufactured by defendants Paraco Gas Corporation (Paraco) and Porco Energy Corporation (Porco). Accepting the allegations of the complaint as true, as this Court must in connection with a motion to dismiss, the following is a recitation of the facts underlying this case. Paraco, a family owned New York [*2]corporation, is an independent propane gas distributor. Porco is also a New York company, that engages in the business of supplying/selling various energy products, including propane gas. The complaint alleges, in pertinent part, that Paraco and Porco both, but separately, package and sell propane in metal cylinders, which can attach to grills and/or other suppliers as a fuel source. Paraco and Porco also engage in a propane cylinder exchange program which involves exchanging an empty cylinder for a pre-filled full container. In this regard, the defendants' cylinders are placed in locked metal cages at various retail stores, such as gas stations and convenience stores. Customers are then able to purchase appropriately filled cylinders from the retail stores and may exchange empty cylinders for filled ones.

In the complaint, the plaintiff alleges that the propane cylinders supplied by Paraco and Porco that are sold and/or exchanged at a retailer each have a capacity to safely hold 20 pounds of propane gas. Plaintiff further alleges that each cylinder bears a blue plastic cap which reads "FULL". Based upon the "full" representation on the cap, when on display at a retailer, plaintiff claims that the 20-pound capacity cylinder creates the visual appearance and impression that it actually contains 20 pounds of propane. Plaintiff, however, alleges that the defendants have short weighted the containers by 25%, filling it with only 15 pounds of propane rather than 20 pounds, thereby supplying consumers with only partially filled cylinders, although the cap on the cylinder reads "full." Thus, plaintiff alleges that the defendants have falsely represented in their advertisements, packaging and labeling that they are selling full 20 pound propane cylinders instead of cylinders that only contain 15 pounds of propane.

Plaintiff additionally alleges that the defendants misrepresented the exact amount of pure propane contained in their respective cylinders. As a result, plaintiff alleges that he and the members of the class he seeks to represent would not have purchased defendants' propane cylinders absent defendants' deceptive misrepresentations. He further alleges that they received much less propane than what they were entitled to receive and paid a higher price per gallon/pound of propane. The complaint asserts six causes of action: (1) deceptive trade practices in violation of General Business Law § 349; (2) false advertising in violation ofGeneralBusiness Law § 350; (3)breach of contract; (4)unjust enrichment; (5) constructive trust; and (6) breach of express and implied warranties.

Defendants Paraco and Porco both move for an order, pursuant to CPLR 3211(a)(1) and (7), to dismiss the plaintiff's complaint in its entirety. On a motion to dismiss pursuant to CPLR 3211(a)(7), the pleadings are liberally construed, and the court accepts the facts alleged in the complaint as true, according plaintiffs the benefit of every favorable inference. The court considers only whether the facts, as alleged in the complaint, fit within any cognizable legal theory (see Leon v Martinez, 84 NY2d 83, 87-88 [1994 ]; Uzzle v Nunzie Court Homeowners Ass',. Inc., 55 AD3d 723 [2008]; Simmons v Edelstein, 32 AD3d 464 [2006]; Hartman v Morganstern, 28 AD3d 423 [2006]; Ark Bryant Park Corp. v Bryant Park Restoration Corp., 285 AD2d 143, 150 [2001]). The court may freely consider affidavits and [*3]other documentary evidence submitted by the plaintiff to remedy any defects in the pleading (see Leon, 84 NY2d at 88; Ackerman v 305 East 40th Owners Corp., 189 AD2d 665, 666 [1993]; see also Well v Yeshiva Rambam, 300 AD2d 580, 580 [2002]; Rovello v Orofino Realty Co., 40 NY2d 633, 635-636 [1976]). Therefore, in addition to the allegations asserted in the complaint, the facts alleged in plaintiff's affidavit submitted in opposition to the defendants' motions must also be assumed to be true and considered in determining the motions.

"General Business Law § 349 prohibits deceptive business practices" (Andre Strishak & Assocs., P.C. v Hewlett Packard Co., 300 AD2d 608, 609 [2002]). To state a cause of action under Section 349, a plaintiff must plead: "first that the challenged act or practice was consumer-oriented; second, that it was misleading in a material way; and third, that the plaintiff suffered injury as a result of the deceptive act'"(Lonner v Simon Prop. Group, Inc., 57 AD3d 100, 110 [ 2008], quoting Singh v Queens Ledger Newspaper Group, 2 AD3d 703, 704 [2003], quoting Stuman v Chemical Bank, 95 NY2d 24, 29 [2000]). "In determining whether a representation or omission is a deceptive act, the test is whether such act is likely to mislead a reasonable consumer acting reasonably under the circumstances'" (Andre Strishak & Assocs. P.C., 300 AD2d at 609, quoting Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 26 [1995]).

In support of its motion, Porco argues that the plaintiff's GBL § 349 cause of action must be dismissed as against it. Porco has submitted the affidavit of Dominick J. Porco, the President of Porco. Mr. Porco states that the retail stores are Porco's direct customers and that they (retail stores) establish their own prices at which they sell to their customers. According to Mr. Porco, Porco never sells directly to individuals. Mr. Porco additionally claims that Porco has always utilized product labels which truthfully and accurately disclose the amount of propane contained in each cylinder. During the time period alleged in the [*4]complaint (November 5, 2005 to present), Mr. Porco claimed that Porco sold exchange cylinders in two different weights. From November 6, 2005 to approximately February 1, 2009, Porco filled its exchange cylinders to 17 pounds of propane. Porco claims, however, that its product sleeves (which stretches around the cylinder) specifically contained a disclosure that stated in two places as follows "Net Weight 17 lbs (7.72 kg) Propane" (see Porco Affidavit, Exhibit A).

Mr. Porco avers that his company began reducing the weight of the cylinders from 17 to 15 pounds in February 2009, and that Porco changed the product sleeves to show the reduced weight (see Porco Affid, Ex B). Porco claims that both disclosures were clearly visible to customers since they were 4 ½ inches long and ½ inch high. Porco has also submitted a photograph of a Porco cylinder which it claims fairly and accurately depicts a typical exchange cylinder with a sleeve in place. Porco contends that the cylinder plainly displays the notice that it contains only 15 pounds of propane. Mr. Porco further states that none of its exchange cylinders have labels or inscriptions which indicate that the cylinder contains 20 pounds of propane. Porco further claims that in 2009, after it began filling the cylinders to 15 pounds, it also began putting place cards on the exterior of the cages to advise purchasers that its cylinders were filled to only 15 pounds. Based upon the forgoing, Porco argues that the plaintiff has failed to allege any deceptive or misleading act by it. Porco further argues that the documentary evidence, including, its clear labeling of the weight of its cylinders warrants a dismissal of the GBL § 349 claim.

Paraco additionally argues that the GBL § 349 claim must be dismissed insofar as asserted against it because it fails to allege a single deceptive act that was misleading in a material respect. Paraco further argues that the allegation that "true characteristics of the propane cylinders were omitted" is directly disputed by the plastic label, a copy of which is submitted herein, which stated that the actual net weight of propane in the cylinder was 15 pounds. In fact, Paraco claims that the complaint purposefully omitted that Paraco's cylinder had a large label which clearly disclosed the net weight of the cylinder's contents (15 lbs). As such, Paraco contends that neither the plaintiff, nor any other consumer, has suffered an injury pursuant to GBL § 349 since they received the exact amount of propane that was represented on Paraco's label (15 lbs.). In support of these contentions, Paraco has submitted the affidavit of Michael Gioffre, the Vice President of Paraco, wherein he states that the plaintiff fails to allege in the complaint that he purchased or exchanged a propane cylinder from Paraco. He further states that the plaintiff has failed to state the specific language or verbal or written misrepresentations, promotions and solicitations that were false. Paraco additionally states that the plaintiff has failed to identify the location of the purchase and/or exchange of any of Paraco's propane cylinders.

Thus, Paraco and Porco (collectively, defendants) argue that the complaint fails to state a cause of action because a Section 349(a) claim may not be based on fully disclosed facts. In this regard, defendants both contend that the cylinders in question each contained a clearly visible plastic sleeve which represented the accurate amount of propane (i.e., 17 lbs [*5]or 15 lbs). Defendants, therefore, argue that plaintiff's GBL § 349 cause of action must be dismissed because the documentary evidence establishes that they did not engage in any deceptive or misleading practices.

In opposition, the plaintiff initially argues that the defendants' motions should be denied pursuant to CPLR 3211(d), on the ground that additional facts essential to justify plaintiff's opposition to the current motions may exist but cannot now be stated (i.e., facts related to defendants' relationship with their retailers, the full scope of defendants' point of sale materials and advertisements exact composition and weights of what defendants put into their cylinders).

In addition, the plaintiff has submitted his own affidavit, wherein he avers that he has purchased and/or exchanged 20-pound capacity cylinders that were sold and distributed by both Porco and Paraco since the summer of 2008 from retailers like Home Depot. In particular, plaintiff claims that his last transaction was a cylinder exchange involving a Paraco cylinder at a Home Depot located in Brooklyn in the fall of 2009, and that he also purchased a Porco cylinder in the summer of 2008. According to plaintiff, the cylinders he purchased/exchanged from Paraco and Porco represented that they were 20-pound capacity cylinders and that they contained pure propane. In this regard, he claims that the cylinder plastic cap on each Porco and Paraco cylinder read "FULL". In purchasing/exchanging these 20 pound cylinders from Porco and Paraco, plaintiff claims that he relied on defendants' representations that their 20 pound cylinders were in fact "full" of pure propane gas. Plaintiff further claims that Paraco and Porco both represented on their cylinders and other material that the product they were selling was purely propane rather than a mixture of liquid petroleum gases.

Although defendants claim that their cylinders all contained plastic labels which disclosed that it contained 15 lbs of propane, plaintiff avers that, at the time that he purchased and/or exchanged his cylinders, he did not observe any representations which contradicted the defendants' representation that their cylinders were full. He claims that the defendants' alleged labeling which disclosed the "15 pound net weight" of propane was not visible to him until after the transaction was completed when the cylinder was removed from its mesh metal cage enclosure. Thus, plaintiff claims that the labels were not conspicuous to him or the other consumers. As a result, the plaintiff claims that he exclusively relied on the defendants' false representations of fullness that he observed on the cylinder caps at the time of his purchase/exchange of defendants' propane product.

Plaintiff also alleges that he was verbally assured by retail personnel that the cylinders he either purchased/exchanged were in fact full as stated on the cylinder's cap. Plaintiff argues that defendants' representations and labels indicating that their cylinders were "full" when in fact they were only partially full were deceptive and misleading in a material way. Plaintiff also argues that the defendants' cylinders contained a mix of propane, butane, propylene and ethane, whose combined weight was falsely represented as being the net weight of pure propane. Based upon the forgoing, plaintiff argues that he, as well as other [*6]consumers who he seeks to represent, were forced to pay a higher inflated price per gallon/pound of propane, and therefore received less propane than bargained for.

Based upon the parties' submissions, and assuming the truth of the allegations in the complaint as amplified by his affidavit, the court finds that the plaintiff has sufficiently alleged that Paraco and Porco have engaged in deceptive and misleading practices by mislabeling and misrepresenting its partially filled containers as "full" and providing less pure propane in its cylinders than represented on its cylinder's net weight declarations. Plaintiff alleges that the cap on the cylinder which states "full" gives the false impression that the consumer is buying more than they are actually receiving and, thus, sufficiently pleads that the misrepresentation is "misleading in a material way."

Contrary to defendants' assertion, the documentary evidence submitted by the defendants does not resolve all factual issues in the matter, as required for dismissal under CPLR § 3211(a)(1) (see City Line Rent a Car, Inc. v. Alfess Realty, 33 AD3d 835, 835 [2006]; New York Community Bank v Snug Harbor Square Venture, 299 AD2d 329, 329-30 [2002]). Although, defendants have both submitted evidence that their cylinders bore labeling (and/or place cards) which disclosed that they contained 15 pounds of propane, such proof does not dispose of the plaintiff's allegation that the 15-pound disclosure was hidden by the mesh metal cages in which the cylinders were kept and, therefore, not conspicuous for the average consumer until after the propane had already been purchased. Nor does it address plaintiff's allegation that the defendants' cylinders bore labeling which falsely represented that it only contained propane gas, as opposed to a mixture of other chemicals in addition to propane, which is what the plaintiff alleges he and the purported class members received when they purchased/exchanged propane cylinders from the defendants. The issue of whether defendants' disclosure of the 15 pound weight declaration was adequately conspicuous to the plaintiff and other consumers is a question of fact (see Gaidon v Guardian Life Ins. Co. of America, 94 NY2d 330, 345 [1999]; Sims v First Consumers Nat Bank, 303 AD2d 288 [2003]).

Additionally, the court finds that the plaintiff has adequately alleged an injury as a result of the defendants' conduct. Plaintiff alleges that, had he understood the true amount of the product, he would not have purchased it, and that he and the purported members of the class paid a higher price per gallon/pound of propane and failed to receive what was promised and/or the benefit of his bargain, i.e., a full 20 pound cylinder and the amount of propane he was promised (see Goshen v Mut. Life Ins. Co. of New York, 98 NY2d 314, 324 [2002]). Thus, plaintiff has properly alleged injury. Accordingly, the court finds that the plaintiff has stated a claim for a violation of GBL § 349, and that defendants' documentary evidence does not dispose of said claim.

Further, without any depositions or discovery taking place at this juncture, no testimony regarding the alleged deceptive practices is available, and as a result, all allegations in the complaint, as well as plaintiff's affidavit in opposition, must be construed liberally in favor of the plaintiff which does not warrant dismissal (see Gershon v Goldberg, [*7]30 AD3d 372, 373 [2006]). Consequently, that branch of defendants' motion seeking to dismiss plaintiff's GBL § 349 claim is denied.

General Business Law § 350 prohibits false advertising. A plaintiff must demonstrate that the advertisement (1) had an impact on consumers at large, (2) was deceptive or misleading in a material way, and (3) resulted in injury (see Scott v Bell Atl. Corp., 282 AD2d 180, 183-184 [2001], mod on other grounds 98 NY2d 314 [2002]). The test is whether the advertisement is "likely to mislead a reasonable consumer acting reasonably under the circumstances" (Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, NA, 85 NY2d 20, 26 [1995]; Scott v Bell Atl. Corp., 282 AD2d 180, 184 [2001]). While there is no requirement that the plaintiff allege reliance on defendants' deceptive practices in a GBL § 349 claim (see Stutman v Chemical Bank, 95 NY2d 24, 29 [2000]; Small v Lorillard Tobacco Co., 252 AD2d 1, 7 [1998], affd 94 NY2d 43 [1999]), to state a claim under GBL § 350, plaintiff must allege reliance on the false advertisement (see Andre Strishak & Assoc., P.C., 300 AD2d at 610).

Contrary to defendants' assertions, the court finds that the plaintiff has sufficiently alleged a false advertisement within the meaning of GBL§ 350. GBL § 350-a expressly defines "advertisement" to include "labeling." Thus, the statute includes representations that appear on a product's package, such as defendants' cylinder containers. Here, the plaintiff has alleged that both Paraco and Porco placed caps on its cylinders which falsely represented that the partially filled cylinders were in fact "full" of propane. He further alleged that the labeling that appeared on the cylinders represented that it contained only propane, which the plaintiff also claims was false and that the cylinders in question actually contained a mixture of other chemicals in addition to propane. Plaintiff further alleges that he and other members of the class relied upon these representations by purchasing defendants' propane products, and, as a result, paid a higher, inflated price per gallon/pound of propane. Thus, assuming the truth of plaintiff's allegations, as amplified by his opposition papers, and affording them every favorable inference, the court finds that the plaintiff has stated a viable cause of action under GBL § 350 against defendants. Additionally, the court notes that, at this early stage of the proceedings, it is unclear whether either defendant was in compliance with the New York State labeling laws, thereby entitling them to a defense to plaintiff's GBL § 350 claim. Accordingly, those branches of defendants' respective motions to dismiss plaintiff's GBL § 350 claim are denied.

The court finds that the plaintiff has also sufficiently stated a breach of express warranty cause of action. The Uniform Commercial Code (UCC), as adopted in New York, provides that "[a]ny affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis for the bargain creates an express warranty that the goods shall conform to the affirmation or promise" (UCC 2-313 [1][a]). To establish a claim for breach of express warranty, the plaintiff must show that there was an [*8]" affirmation of fact or promise by the seller, the natural tendency of which [was] to induce the buyer to purchase,' and that the warranty was relied upon" (Schimmenti v Ply Gem Indus., 156 AD2d 658, 659 [1989], quoting Friedman v Medtronic, Inc., 42 AD2d 185, 190 [1973]; see also Schneidman v Whitaker Co., 304 AD2d 642, 643 [2003]). Furthermore, it is well settled that privity is not required to sustain a cause of action seeking to recover damages for breach of an express warranty (see Randy Knitwear v American Cyanamid Co., 11 NY2d 5 [1962]).

Here, plaintiff has alleged that both Paraco and Porco made specific representations in the labeling of the propane cylinders upon which plaintiff relied (see Randy Knitwear v American Cyanamid Co., 11 NY2d 5, 14 [1962]). In this regard, the plaintiff alleged that the cylinder caps, which read "full," constituted a promise/warranty to the plaintiff and the purported members of the class that defendants' 20-pound-capacity cylinders were in fact full with a pure propane product. Plaintiff further alleged that defendants breached this promise/representation by providing him and fellow consumers with cylinders that were only partially (75%) filled (15 lbs. rather than 20 lbs.), of a product that contained a mixture of different gases rather than pure propane. Plaintiff has also adequately alleged reliance by claiming that, but for defendants' representations as to the amount of propane the cylinder contained, he and the purported members of the class, would not have purchased the product, which resulted in paying a higher price per gallon/pound of propane. In this court's view, plaintiff's breach of express warranty claim satisfies the liberal pleading standards and thus may proceed. Accordingly, that branch of defendants' motions seeking to dismiss plaintiff's breach of express warranty claim is denied.

Plaintiff's breach of implied warranty claim must be dismissed. In a breach of implied warranty action, a plaintiff must demonstrate that the product was not fit for the purpose for which it was intended (see also Schimmenti v Ply Gem Indus., 156 AD2d 658, 659 [1989]). Moreover, it is settled that no implied warranty will extend from a manufacturer to a remote purchaser not in privity with the manufacturer where only economic loss and not personal injury is alleged (see Gordon v Ford Motor Co., 239 AD2d 156 [1997]; Lexow & Jenkins, P.C. v. Hertz Commercial Leasing Corp., 122 AD2d 25 [1986]; Arthur Jaffee Assoc. v Bilsco Auto Serv., 58 NY2d 993 [1983]).

Here, there was no privity of contract between the plaintiff and either defendant. Plaintiff does not allege that he purchased and/or exchanged the propane cylinders by dealing directly with Paraco or Porco. Since plaintiff does not seek damages for personal injury, his cause of action for breach of implied warranty must be dismissed. Moreover, assuming arguendo that privity did exist between the parties, the plaintiff has failed to allege that the propane gas was in any way defective or not fit for the purpose for which it was intended. Therefore, the cause of action based on an implied warranty is hereby dismissed as against Paraco and Porco (see Codling v Paglia, 32 NY2d 330, 338 [1973]; J.C. Const. Management [*9]Corp. v Nassau-Suffolk Lumber & Supply, 15 AD3d 623, [2005]; see also Friedman v Medtronic, Inc., 42 AD2d 185, 188 [1973]).

Defendants both seek to dismiss plaintiff's breach of contract claim on the ground that the plaintiff lacked privity with either defendant. In this regard, defendants claim that there was never any contract between plaintiff and Paraco or Porco, and further that the retailers of the propane cylinders were not defendants' authorized agents. "In order to plead a breach of contract cause of action, a complaint must allege the provisions of the contract upon which the claim is based" (Atkinson v Mobil Oil Corp., 205 AD2d 719, 720 [1994]; see also Murrin v Ford Motor Co., 303 AD2d 475 [2003]; Rattenni v Cerreta, 285 AD2d 636 [2001]). Moreover, it is well settled that one may not maintain a contract action against a party with whom it lacks privity (see M. Paladino, Inc. v J. Lucchese & Son Contracting Corp., 247 AD2d 515, 516 [1998]; see also , Jesmer v Retail Magic, Inc., 55 AD3d 171, 173, 182-183 [2008] [rejecting contract claims brought by "a dissatisfied end user of a computer system . . . against the system's manufacturer . . . where the end user did not purchase the system from the manufacturer"]; Comsewogue Union Free School Dist. v Allied-Trent Roofing Systems, Inc., 272 AD2d 360, 361 [2000]).

Here, since the plaintiff has failed to sufficiently plead facts suggesting that he had privity with either Paraco or Porco, his breach of contract claim is hereby dismissed insofar as asserted against the defendants for failure to state a cause of action.

Plaintiff's constructive trust claim must also be dismissed. The four elements of a constructive trust are (1) a confidential or fiduciary relationship; (2) a promise; (3) a transfer in reliance on the promise; and (4) unjust enrichment (see Sharp v Kosmalski, 40 NY2d 119 [1976]; Church of God Pentecostal Fountain of Love, MI v Iglesia De Dios Pentecostal, MI, 27 AD3d 685 [2006]; Nastasi v Nastasi, 26 AD3d 32 [2005]). Plaintiff has failed to demonstrate the elements of a constructive trust such that it would be applicable in this case (see Iwanow v Iwanow, 39 AD3d 476, 476-477 [2007] ). In this regard, there is no evidence that Paraco or Porco had a confidential or fiduciary relationship with the plaintiff or any other consumers.

"To state a cause of action for unjust enrichment, a plaintiff must allege that it conferred a benefit upon the defendant, and that the defendant will obtain such benefit without adequately compensating plaintiff therefor" (Smith v Chase Manhattan Bank, USA, N.A., 293 AD2d 598, 600 [2002], quoting Nakamura v Fujii, 253 AD2d 387, 390 [1998]).

Here, the court finds that the plaintiff has adequately alleged that he and members of the class he seeks to represent were forced to pay a higher inflated price per gallon/pound of propane to the defendants as a result of their deceptive and misleading practices, and that the defendants were unjustly enriched as a result. Therefore, that branch of defendants' motions [*10]seeking to dismiss plaintiff's unjust enrichment claim is denied at this early stage of the proceedings.

In sum, Paraco's motion to dismiss is only granted to the extent that plaintiff's breach of contract, breach of implied warranty and constructive trust causes of action are hereby dismissed as against Paraco. The remainder of Paraco's motion is denied. Porco's motion to dismiss is likewise only granted to the extent that plaintiff's breach of contract, breach of implied warranty and constructive trust causes of action are dismissed as against Porco. The remainder of Porco's motion is denied.