Larkin v. Saber Automotive, LLC

Background

Stirling Larkin sued Saber Automotive, also referred to in the opinion as Rezvani Motors, concerning his order for a customized 2022 Rezvani TANK Military Edition. The configured vehicle had a total stated price of $521,680. Larkin paid a $130,420 deposit and later paid a second installment of more than $230,000.

Larkin said Saber employee Cynthia Karimi represented that the tank would be delivered in approximately 12 to 16 weeks, would have a two-year warranty, and would use an engine that was “drop in ready.” Larkin also said Saber represented or implied that it had a factory, would provide certain information, and would handle matters including registration. The tank was not delivered within 12 to 16 weeks. Larkin said Saber did not provide the promised build agreement or warranty information after receiving his deposit and later sent a one-year limited warranty instead of the two-year warranty he expected.

In January 2023, Larkin demanded information and confirmation of the warranty and stated that he intended to cancel the order and seek the return of his money if Saber did not comply. After receiving additional information and photographs, Larkin canceled the order on March 3, 2023. Saber later said the tank was complete and ready for delivery, but Larkin did not withdraw his cancellation and rejected the tender. Saber eventually sold the tank to a buyer in Mexico for $125,000.

Summary-judgment standards

The court applied Rule 56, which requires summary judgment when there is no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment as a matter of law. The court viewed disputed evidence in favor of the party opposing the motion. Where the opposing party would have the burden of proof at trial, that party had to identify evidence supporting each essential element of its position.

Contract claims

The court held that the agreement was for the sale of goods governed by Article 2 of New York’s Uniform Commercial Code, rather than principally for services. The agreement referred to an order for a tank, a production line, a factory, and building a vehicle; displayed the final product; and listed the physical features and their prices. It did not list or charge for services. The court also reasoned that Saber’s purchase of the “donor” Jeep before Larkin’s order showed that the Jeep was an input into producing the final tank, not an item Larkin brought to Saber for upgrades.

On Larkin’s perfect-tender theory, the court denied Larkin’s motion. Under the UCC’s perfect-tender rule, a buyer may reject goods that fail in any respect to conform to the contract. But Larkin canceled before Saber made a tender, and a buyer’s repudiation can eliminate the seller’s obligation to continue performing. The court stated that the remaining question—whether Larkin had reasonable grounds for insecurity, could demand adequate assurance, and had the right to cancel—was filled with factual disputes and was not resolved on this motion. The court also stated that whether Saber’s later communications constituted a tender was disputed.

The court denied Saber’s motion concerning the approximately 12-to-16-week delivery language. It held that a factfinder could determine whether that language was a binding promise or merely a general estimate, considering its wording, placement, the disclaimer, and the reference to a later confirmation letter. The court also declined to rule as a matter of law that 61 weeks was an unreasonable performance period, because the appropriate period depended on disputed facts about custom-built tanks, the parties’ expectations, and the circumstances of performance. The court likewise held that whether “2022 Rezvani TANK” was a label or an outside deadline was disputed.

The court denied summary judgment on Larkin’s implied-warranty claims. The parties disputed whether the tank was street legal, whether the evidence concerned the engine installed in Larkin’s tank or another engine, whether certain materials were merely boilerplate disclaimers, and how applicable New York regulations should be interpreted. The court also held that factual disputes remained about whether the tank’s ordinary use was the same as an ordinary car’s use and whether Saber knew Larkin intended to use the tank on public streets in New York and Connecticut. Because the tank was never delivered, the court further held that any warranty breach would have to involve anticipatory repudiation—an overt and positive statement that the party will not perform—and found disputed facts on that issue.

The court denied summary judgment on Larkin’s claim for breach of the implied covenant of good faith and fair dealing because that claim depended on the same disputed promises and information involved in the warranty claims.

Magnuson-Moss Warranty Act claim

The court denied both sides’ motions on Larkin’s claim under the Magnuson-Moss Warranty Act, a federal statute governing written warranties on consumer products. The court rejected Saber’s arguments that the transaction was a resale, that the warranty concerned only services, and that Larkin was not a protected consumer because he had not completed the purchase. The court concluded that the tank was a newly manufactured consumer product and that the warranty addressed the tank’s workmanship, replacements, and repairs. It nevertheless found a genuine factual dispute about whether the parties had entered into a contract for Larkin to buy the tank and, if so, when.

Other claims

The court denied Saber’s motion for summary judgment on unjust enrichment because it was unclear what the DocuSign agreement covered. The court noted that, if no valid contract governed the second installment payment, Larkin might be able to pursue an unjust-enrichment theory.

The court granted Saber summary judgment on Larkin’s conversion claim. Larkin’s theory was that Saber misappropriated money he had paid for the tank by not dedicating it to the tank’s construction. The court held that Larkin had not shown that the money was held in a specific, identifiable fund or was subject to a duty to be treated separately. Once paid to Saber, the money appeared to be fungible.

The court denied Saber’s motion on Larkin’s fraud and fraudulent-inducement claims. Larkin alleged that Saber made misleading statements about matters including its factory, the warranty, registration, and other features or services. The court held that disputed issues remained about whether the statements were false, whether Saber knew they were false, whether Larkin reasonably relied on them, and whether they caused injury. The court also held that the claims were not necessarily improper attempts to relabel contract claims because some alleged statements could be collateral to the written agreement.

The court denied Saber’s motion on Larkin’s claim under New York General Business Law § 349, which prohibits materially deceptive acts directed at consumers. The court held that factual disputes remained about whether Saber’s conduct was deceptive and whether the standardized DocuSign document could have affected consumers beyond Larkin. The court also allowed Larkin’s punitive-damages demand to survive for the time being, while stating that it was skeptical that Larkin would ultimately be entitled to punitive damages and that Saber could renew the issue in later motions.

Saber’s counterclaims

Larkin moved for summary judgment on Saber’s counterclaims. The court found factual disputes concerning the parties’ breach-of-contract claims, so it did not grant Larkin summary judgment on Saber’s breach-of-contract counterclaim. But Saber did not respond to Larkin’s arguments concerning counterclaims for breach of the implied covenant of good faith and fair dealing, promissory estoppel, and declaratory relief. The court deemed those claims abandoned and granted Larkin summary judgment against them.

Other rulings and disposition

The court required future footnotes in the case to match the body text’s font size and spacing. It denied Larkin’s renewed motion for discovery sanctions without prejudice to renewal before trial if Larkin could show that an adverse inference was relevant. Larkin sought an inference that the tank had never been completed to his specifications, but the court said that inference appeared relevant to a perfect-tender theory, which was not the proper framework after Larkin’s cancellation.

The court concluded that the summary-judgment motions were granted in part and denied in part. Larkin’s motion was granted as to the specified counterclaims; Saber’s motion was granted as to the conversion claim; and both motions were otherwise denied. The parties’ motion to adjourn the final pretrial conference and trial was granted in part and denied in part: the trial date remained unchanged, while the final pretrial conference was moved to July 2, 2024, and the joint pretrial materials were due June 18, 2024.