People v. Quinn

Traci DiMezza, J.

Brian Toal, Esq., of counsel to the Fulton County Public Defender, Roger Paul, Esq Katherine Ehrlich, Esq. of counsel to the Fulton County District Attorney, Chad Brown, Esq. Traci DiMezza, J.

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

Findings of Fact

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 ten (10) days. Conclusions of Law

PL §165 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 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 personal property for a period of thirty days"

In addition to the service of a thirty-day demand for return of the merchandise under PL §165, 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.

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, GBL § 399-w. 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.

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, NY Pers. Prop. Law §500. The breach of a "Rental-Purchase Agreement" is not punishable as a crime.

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

This Court agrees with the holding in People v. Sagesse that PL §165 and GBL §399-w are statutes 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 (NY City Ct. 2006) 13 Misc 3d 435, 440 [816 N.Y.S.2d 902, 906].

The fact that Rent-A-Center includes a summarized version of the GBL §399 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.

The foregoing constitutes the decision and order of this Court. Dated: November 9, 2020 __________ Entered: Gloversville, New York Hon. Traci L. DiMezza J.C.C.