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Costco Wholesale Corp. v. Rendina

District Court of Nassau County, First District

November 28, 2012

Costco Wholesale Corporation, Plaintiff(s),
Kristen Rendina and Salvatore Lume, Defendant(s).

Gallagher, Walker, Bianco & Plastaras, Attorneys for Plaintiff.

Kristen Rendina and Salvatore Lume, Pro-Se Defendants.

Michael A. Ciaffa, J.


This action by plaintiff, Costco, alleges that defendants defrauded Costco in connection with the purchase and return of a $5, 000.00 engagement ring. When defendants failed to appear for a scheduled trial, the Court set the matter down for an inquest on damages. Proof of plaintiff's damages was submitted, in the first instance, by affidavit and supporting documents (see Uniform District Court Rules, §212.32[b]). However, upon application of defendant Kristen Rendina, the inquest was reopened, and further evidence was taken from Rendina and from a Costco supervisor (Shevon Cunningham). Throughout the inquest, defendant Salvatore Lume neither appeared nor contested plaintiff's proof of damages. (See accompanying decision respecting plaintiff's claim against defendant Lume).

Costco's evidence at the inquest establishes that defendants purchased a $5, 000.00 engagement ring for Rendina at a Costco store in Lawrence in June, 2008. The purchase, totaling $5, 431.24 (tax included), was initially made through credit card charges on their separate American Express credit cards. Rendina's card was charged $3, 431.24. The balance ($2, 000.00) was charged to Lume's card.

Due to a cashier's error, the transaction was mistakenly recorded under another customer's Costco account number. Upon learning of the error, defendants complained that the mistake would deprive them of the ability to obtain a 2% Costco rebate.

After a supervisor became involved, Costco attempted to resolve the problem in several ways, which included voiding the transaction, and reprocessing it as new purchase on defendants' American Express cards. According to Rendina, she called American Express and was advised that such a repurchase could not be effected the same day. Since it would take a day or so to process a request to void the initial charges, Rendina would have to come back another day to conclude the purchase. She was unwilling to do so. Other alternatives were proposed. One involved issuing Rendina a "store credit" which she could use to repurchase the ring. Another involved issuance of a Costco "cash card" which could be used like a store credit to effect a repurchase. Neither alternative was acceptable to Rendina. Neither would enable her to obtain a full refund if she should decide to return the ring to Costco.

Ultimately, defendants left the store with the ring and a "cash" receipt, signifying a "cash" purchase. The following day, defendants purchased a different engagement ring at a different Costco store, in Broooklyn. The second purchase was properly credited to Rendina's Costco account and was later paid for, without dispute. In the meantime, the first ring was returned to the other Costco store in Brooklyn, and after Costco verified that the ring had not been altered, a cash refund was given to Rendina.

Subsequently, the credit card charges from the original purchase were billed to defendants by American Express. Defendants promptly contested the charges with American Express. After receiving submissions from Rendina, Lume, and Costco, the disputes were resolved in defendants' favor, and they were given "permanent" credits to their American Express accounts. Costco thereafter requested a further review of the matter. The result was the same.

Plaintiff's central claim in this lawsuit, as amplified by the Supervisor's testimony at the inquest, is that the defendants did not really pay cash for the ring. Instead, the sale was recorded as a "cash" sale as an accommodation for Costco's unhappy customers.

Significantly, Costco's supervisor acknowledged that defendants had the ability to obtain a legitimate "cash" refund when the ring was returned, using the "cash" receipt. However, he maintained that defendants remained responsible, in such event, for paying the American Express charges. According to the supervisor's testimony, once Rendina obtained the refund, defendants should have used it to pay American Express. Instead, defendants contested the charges, and in Costco's view, they wrongly prevailed in that dispute. Consequently, Costco alleges that it lost $5, 431.24 due to defendants' fraudulent actions.

Rendina's testimony, in contrast, was that defendants actually paid cash for the ring, as the "cash" receipt indicates. After the initial transaction had been voided, Rendina claimed that the cash was retrieved from Lume's car, and used to purchase the ring. Consequently, upon the ring's return, a "cash" refund was properly paid to Rendina, and she did nothing wrong in subsequently contesting the American Express charge for the purchase.

Notwithstanding Rendina's initial default when the matter was calendared for trial, she was entitled to present her version of the events as a defense to plaintiff's claimed damages. Under well settled precedent, Rendina could give testimony and present evidence "involving circumstances intrinsic to the transactions at issue that, if proven, will be determinative of the plaintiff's real damages, which cannot be established by the mere fact of the defendants' default." See Rokina Optical Co., Inc. v. Camera King, 63 N.Y.2d 728, 730-1 (1984). Like the circumstances presented in Rokina Optical, supra, testimony and evidence respecting "alleged payments made and credit[s] ...

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