People v. Chazy Hardware, Inc.

176 Misc. 2d 960, 675 N.Y.S.2d 770, 1998 N.Y. Misc. LEXIS 232
CourtNew York Supreme Court
DecidedApril 24, 1998
StatusPublished
Cited by4 cases

This text of 176 Misc. 2d 960 (People v. Chazy Hardware, Inc.) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
People v. Chazy Hardware, Inc., 176 Misc. 2d 960, 675 N.Y.S.2d 770, 1998 N.Y. Misc. LEXIS 232 (N.Y. Super. Ct. 1998).

Opinion

OPINION OF THE COURT

John A. Lahtinen, J.

This is a special proceeding brought by the Attorney-General of the State of New York against respondent Chazy Hardware, Inc., pursuant to Executive Law § 63 (12) and General Business Law § 396-r (entitled “Price gouging”). Petitioner seeks injunctive relief, an accounting, restitution to all entitled consumers, a civil penalty and costs.

The proceeding was commenced by petition and an order to show cause signed by this court on January 20, 1998 which, inter alia, temporarily restrained respondent from selling any consumer goods or service for an amount which represents an unconscionably excessive price during periods of abnormal disruption of the market for such goods in this State.

Respondent answered the petition and has moved to dismiss same. Respondent has also moved by order to show cause signed by this court on February 11, 1998 for discovery and inspection of certain documents and policies of petitioner.

Respondent operates a hardware store in the Village of Chazy, Clinton County, New York. In early January 1998 Clinton County was subjected to a severe ice storm which left thousands of homes and businesses without electrical power. The power outages persisted for several days in most areas of the County. Prior to the ice storm respondent had on hand one electric power generator which had been in stock since October 1, 1996.

On January 9, 1998, during the ice storm, in an effort to help a number of its customers obtain a source of electrical power, respondent secured the purchase of 54 Homelite electric generators from a supplier in Burlington, Vermont. Respondent purchased these generators at a price of $533 each for the LR 4400 model (34 units) and $656 each for the LR 5400 unit (20 units). It only sold 50 of these units, retaining the others. [962]*962On Saturday, January 10,1998, respondent took orders for the generators, charging $780 for the 4400 model and $890 for the 5400 model. Respondent established these prices by adding its customary average margin of 28% profit to the cost of the generators.

Respondent sent one of its trucks to Vermont to pick up the generators on Sunday, January 11, 1998, and opened its business to distribute those generators that had been ordered the previous day.

On Sunday, January 11,1998, respondent increased the price of the 14 uncommitted 4400 model generators and the one remaining 5400 model to $1,190. Respondent claims without the increase it could not recoup its additional costs for opening on a Sunday (a day it is normally closed), servicing the generators and picking up the generators. It is the Sunday price increase which triggered this proceeding, and restitution is sought by petitioner only for those consumers who purchased the generators at the $1,190 price.

The “price gouging” statute, General Business Law § 396-r, reads in pertinent part as follows:

“§ 396-r. Price Gouging * * *
“2. During any abnormal disruption of the market for consumer goods and services vital and necessary for the health, safety and welfare of consumers, resulting from stress of weather, convulsion of nature, failure or shortage of electric power or other source of energy, strike, civil disorder, war, national or local emergency, or other cause, no merchant shall sell or offer to sell any such consumer goods or services for an amount which represents an unconscionably excessive price. For the purposes of this section, the term consumer goods and services shall mean those used, bought or rendered primarily for personal, family or household purposes; provided, however, that with respect to home heating oil the term merchant shall include any supplier, wholesaler, distributor or retail seller of home heating oil, and the term consumer goods and services shall include home heating oil sold by one merchant to another when the product sold was located in the state prior to the sale. Consumer goods and services shall also include any repairs made by a merchant on an emergency basis as a result of such abnormal disruption of the market.
“3. Whether a price is unconscionably excessive is a question of law for the court. Evidence that (a) the amount charged represents a gross disparity between the price of the goods or [963]*963services which were the subject of the transaction and their value measured by the price at which such consumer goods or services were sold or offered for sale by the merchant in the usual course of business immediately prior to the onset of the abnormal disruption of the market or (b) the amount charged grossly exceeded the price at which the same or similar goods or services were readily obtainable by other consumers in the trade area, and, in addition, that (c) the amount charged by the merchant was not attributable to additional costs imposed by its suppliers, shall constitute prima facie proof of a violation of this section in any proceeding commenced by the attorney general pursuant to subdivision four hereof.”

Petitioner contends respondent raised the price of its electric generators on Sunday, January 11, 1998, to an unconscionably excessive price, thus violating this statute.

There is little argument that the January ice storm created an abnormal disruption in the market for consumer goods and services or that electric generators fall within the scope of such goods vital and necessary for the health, safety and welfare of consumers (see, People v Two Wheel Corp., 71 NY2d 693). Nevertheless, respondent raises several arguments regarding, the applicability of the terms of General Business Law § 396-r to its hardware business and its actions regarding sales of electric generators.

Respondent argues it is not a “merchant” within the meaning of the statute because it was not in the business of selling electric generators prior to January 10, 1998. By respondent’s admission it had at least one generator for sale in its inventory prior to the ice storm. Notwithstanding the fact that the generator had remained unsold for 15 months, there is no proof this unit was for respondent’s own use. Uniform Commercial Code § 2-104 (1) defines a “merchant” as “a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge * * * peculiar to the * * * goods involved in the transaction”. The court finds that respondent is a merchant selling consumer goods as contemplated by General Business Law § 396-r (2).

Respondent next claims that it did not have a price for generators “immediately prior to the onset of the abnormal disruption” and cannot be considered a merchant in the usual course of business (of selling generators) and, consequently, subject to the provisions of General Business Law § 396-r (3) (a). The challenged sales are those made on or after January 11, 1998 which increased the price set by respondent during [964]*964the abnormal disruption. Respondent claims that its initial generator price was set by adding its customary average margin of 28% profit. Accordingly, the court finds respondent’s method of establishing a retail price for its merchandise was established prior to the onset of the abnormal disruption and its price increase challenged herein falls within the provisions of the statute.

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Cite This Page — Counsel Stack

Bluebook (online)
176 Misc. 2d 960, 675 N.Y.S.2d 770, 1998 N.Y. Misc. LEXIS 232, Counsel Stack Legal Research, https://law.counselstack.com/opinion/people-v-chazy-hardware-inc-nysupct-1998.