City Court of Gloversville, November 9, 2020

Roger Paul, Public Defender (Brian Toal of counsel), for defendant.

Chad Brown, District Attorney (Katherine Ehrlich of counsel), for plaintiff.

By notice of motion dated October 1, 2020, defendant moves for dismissal of the accusatory instrument based upon facial insufficiency.

The accusatory instrument charging the defendant with the crime of misapplication of property, under Penal Law § 165.00 (1) (b), alleges

"The said defendant, on or about the 18th day of March, 2020, after being served a demand letter . . . did fail to pay the outstanding balance of $1,081.35 for a 6 piece Fairbanks bedroom set . . . rented to own from that business on November 11, 2019, or return the same to Rent-A-Center."

A copy of the "Rental-Purchase Agreement," attached to the accusatory instrument, contains the written warning "If you decide not to continue this agreement, you agree to return the merchandise to the store at the address above or to arrange for us to pick it up immediately upon our request. If you refuse to return the merchandise, you may subject to prosecution."

A copy of a demand letter, dated February 10, 2020, and attached to the accusatory instrument, warns the defendant of criminal prosecution if she fails to return the merchandise within 10 days.

Penal Law § 165.00 states:

"A person is guilty of misapplication of property when, knowingly possessing personal property of another pursuant to an agreement that the same will be returned to the owner at a future time, . . . he intentionally refuses to return personal property {**70 Misc 3d at 416}. . . to the owner pursuant to the terms of the rental agreement provided that the owner shall have made a written demand for the return of such personal property . . . and he intentionally refuses to return such [*2]personal property for a period of thirty days." (Penal Law § 165.00 [1] [b].)

In addition to the service of a 30-day demand for return of the merchandise under Penal Law § 165.00, General Business Law § 399-w requires that all rental agreements include a warning that the refusal to return rented merchandise is punishable as a class A misdemeanor.

The General Business Law defines a "rental agreement" as the total legal obligation that results from a written contract for the rental of personal property. (See General Business Law § 399-w [1] [c].) Under the terms of a "rental agreement," a consumer rents personal property, for a specified period, with the expectation that the property will be returned to the owner. A refusal to return rented merchandise under a rental agreement will subject a consumer to criminal prosecution under Penal Law § 165.00.

By contrast, a "rental-purchase agreement" is a contract for the purchase and use of merchandise, renewable with each payment, and permits the consumer to become the owner of the property. (See Personal Property Law § 500 [6].) The breach of a "rental-purchase agreement" is not punishable as a crime.

Rent-A-Center's standardized contracts include all of the required Personal Property Law article 11 statutory provisions including the specification of the cash price of the merchandise (Personal Property Law § 503); the cost of rental (Personal Property Law § 500 [7]); the number of periodic payments necessary to acquire ownership of the merchandise (Personal Property Law § 500 [12]); the early purchase option (Personal Property Law § 504); the consumer's statutory right to reinstatement, after surrender (Personal Property Law § 501 [5] [b]-[c]); and the right to apply for reduced payments in the event the consumer experiences a loss of income (Personal Property Law § 504-a).

Make no mistake, Rent-A-Center's self-titled "Rental Purchase Agreement" is exactly what it purports to be. The friendly representative at the local Rent-A-Center showroom is selling merchandise to consumers, not renting it, and the "rental fee" that Rent-A-Center charges to consumers is simply interest on their deferred payments.{**70 Misc 3d at 417}

This court agrees with the holding in People v Sagesse that Penal Law § 165.00 and General Business Law § 399-w are statutes in pari materia, and must be read in conjunction. The legislature clearly intended to preclude from criminal prosecution an alleged breach of a "rental-purchase agreement" governable under article 11 of the Personal Property Law. (See People v Sagesse, 13 Misc 3d 435, 440 [Watertown City Ct 2006].)

The fact that Rent-A-Center includes a summarized version of the General Business Law § 399-w criminal prosecution warnings within their contract does nothing to convert their "rental-purchase agreement" into a "rental agreement" and renders their threats of criminal prosecution meaningless, and unenforceable, under the law.

Based upon the foregoing, defendant's motion for dismissal of the accusatory instrument for facial insufficiency is hereby granted.