## Facts

- A consumer purchased a used 1992 Oldsmobile from an automobile dealer under a retail installment contract and traded in a 1989 Chevrolet Blazer for a $10,000 credit, with financing arranged through a bank.
- The buyer returned the Oldsmobile and keys to the dealer the next day and demanded return of the Blazer.
- Before title certificates were exchanged, the dealer had sold the Blazer to another customer and could not return it.
- The dealer sued to compel the buyer to transfer the Blazer’s certificate of title.
- The buyer counterclaimed for fraudulent inducement and conversion.
- After an initial judgment for the buyer and a first appeal reversing and dismissing the counterclaim, the case was remitted to determine (i) the dealer’s damages under UCC § 2-708 and (ii) the buyer’s restitution, if any, under UCC § 2-718(2).
- On remittal, the trial court found no seller damages and awarded the buyer $9,500 in restitution (trade-in credit minus $500 under UCC § 2-718(2)(b)).
- The dealer appealed, disputing whether UCC § 2-718(2) applied and, if so, the amount of restitution.

## Issues

1. Whether the dealer “justifiably with[held] delivery of goods because of the buyer’s breach” under UCC § 2-718(2) when the buyer returned the vehicle the next day and the dealer claimed the bank repossessed it and sold it back to the dealer.
2. Whether restitution, if available, had to be reduced to account for benefits conferred on the buyer, including the dealer’s payoff of the buyer’s existing Blazer loan.

## Decision

- The appellate court held UCC § 2-718(2) applied because the dealer, in substance, withheld possession/delivery of the Oldsmobile after the buyer’s breach.
- The court found the record did not support the dealer’s claim that an intervening repossession by the bank broke the continuity of the dealer’s control over the vehicle.
- The court accepted the finding that the dealer proved no compensable damages under UCC § 2-708.
- The court modified the restitution award, holding it must be reduced by the amount of the benefit the buyer received from the dealer’s payoff of the Blazer loan.
- As modified, the judgment awarding restitution to the buyer was affirmed.

## Legal Principles

- Under UCC § 2-718(2), when a seller justifiably withholds delivery because of the buyer’s breach, the buyer may recover restitution of payments made, subject to statutory limits and offsets.
- “Withholding delivery” may be determined functionally from possession and control of the goods; conclusory testimony of a purported repossession, without supporting proof, may be insufficient to avoid UCC § 2-718(2).
- Restitution in sales disputes is subject to equitable adjustment to prevent unjust enrichment; the buyer’s recovery may be reduced by measurable benefits received from the seller (including discharge of the buyer’s debt).
- The interaction between UCC § 2-708 and UCC § 2-718 permits restitution where the seller proves no damages, but the restitution amount remains subject to offsets and statutory deductions.

## Conclusion

The court held that the buyer’s prompt return of the vehicle permitted restitution under UCC § 2-718(2) because the dealer effectively retained control of the goods after the breach, but the restitution award had to be reduced to reflect the value of the dealer’s payoff of the buyer’s trade-in loan.


Lewin Chevrolet-Geo-Oldsmobile v. Bender, 264 A.D.2d 913, 695 N.Y.S.2d 425 (N.Y. App. Div. 3d Dep’t 1999)