C & J Vantage Leasing Co. v. Course
| Decision Date | 30 March 2011 |
| Docket Number | No. 08–1100.,08–1100. |
| Citation | 795 N.W.2d 65 |
| Parties | C & J VANTAGE LEASING CO., Assignor to Frontier Leasing Corp., Assignee, Appellee,v.Thomas WOLFE d/b/a Lake MacBride Golf Course and Thomas Wolfe, Individually, Appellants. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Billy J. Mallory and Allison M. Steuterman of Brick, Gentry, Bowers, Swartz & Levis, P.C., West Des Moines, for appellants.Edward N. McConnell and Aaron Ginkens of Ginkens & McConnell, P.L.C., Clive, for appellee Frontier Leasing Corporation.WIGGINS, Justice.
Thomas Wolfe d/b/a Lake MacBride Golf Course and Thomas Wolfe, individually (hereinafter collectively referred to as Lake MacBride), seek a ruling reversing the district court's entry of summary judgment in favor of C & J Vantage Leasing Company, assignor to Frontier Leasing Corporation, assignee, and dismissal of Lake MacBride's counterclaims and third-party claims. The court of appeals affirmed the district court's rulings. On further review, we find there are genuine issues of material fact with regard to some of Lake MacBride's affirmative defenses, counterclaims, and third-party claims. Accordingly, we vacate the decision of the court of appeals, reverse the judgment of the district court, and remand the case to the district court for further proceedings consistent with this opinion.
In 2003, a sales representative of Royal Links USA, Inc., an advertising company, called Lake MacBride Golf Course and informed Lake MacBride that it could receive a nonmotorized snack and beverage cart at no cost in exchange for displaying advertising on the cart. The sales representative also informed Lake MacBride that Royal Links would make all the necessary arrangements, and Lake MacBride simply had to execute a program agreement, a lease agreement, and several other documents.
Accordingly, in July, Tracy Hufford, Lake MacBride's general manager, executed a credit application on behalf of Lake MacBride for one beverage cart and sent the application to Royal Links. Royal Links then transmitted the credit application to C & J, who approved the application. Thereafter, the sales representative informed Lake MacBride the credit application had been approved. Later in July, Royal Links sent Lake MacBride a program agreement, a lease agreement, and a personal guaranty for the beverage cart, which Thomas Wolfe, Lake MacBride's owner, and Hufford executed.
The program agreement provided Lake MacBride would permit Royal Links to display advertising on the beverage cart in exchange for sixty monthly payments from Royal Links in the amount of $299 each month. Upon the expiration of this initial term, Royal Links agreed to continue to pay Lake MacBride $2000 a year for the next five years for the right to continue displaying advertising on the beverage cart. The program agreement also provided, “Upon expiration or termination of this Agreement, Royal Links USA will have the option to purchase any or all of the Beverage Caddy Express units from [Lake MacBride] for $1.00 each.”
The lease agreement identified C & J as the lessor, Lake MacBride as the lessee, and Royal Links as the equipment supplier of the beverage cart. The lease agreement stated, “The Equipment Supplier Is Not An Agent Of The Lessor.” Mirroring the program agreement, the lease agreement purported to lease the beverage cart to Lake MacBride in exchange for sixty monthly payments to C & J in the amount of $299 each month. Thus, from Lake MacBride's perspective, the result of this transaction appeared to be that Lake MacBride would receive a beverage cart at no cost because the monthly amount it was obligated to pay C & J to lease the beverage cart was equal to the monthly amount it would receive from Royal Links in exchange for allowing advertising to be displayed on the beverage cart.
The lease agreement stated in bold capital letters, “THIS LEASE IS NONCANCELABLE.” The lease agreement also provided, “Lessee may purchase equipment at the end of the lease for $1.00 provided the terms of the lease are met.” Finally, the lease agreement disclaimed any causes of action based on express or implied warranties against C & J. Wolfe also executed a personal guaranty in favor of C & J in relation to Lake MacBride's obligations under the lease agreement.
Thereafter, C & J purchased one beverage cart from Royal Links for $12,500 and shipped it to Lake MacBride. Upon receipt of the beverage cart, Hufford signed a “Delivery and Acceptance Certificate” addressed to C & J. By signing this document, Hufford acknowledged Lake MacBride satisfactorily received the beverage cart and Royal Links was not an employee or agent of C & J.
In October 2004, Royal Links notified Lake MacBride that it would no longer pay Lake MacBride the monthly advertising sums of $299 pursuant to the program agreement. C & J still expected Lake MacBride to continue to make the monthly lease payments of $299 pursuant to the lease agreement. Nevertheless, Lake MacBride stopped making payments to C & J.
In May 2005, C & J brought a breach of contract action against Lake MacBride to recover the defaulted payments under the lease agreement. In response, Lake MacBride asserted the affirmative defenses of estoppel, unconscionability, mutual mistake, fraud in the inducement, frustration of purpose, and negligent supervision, among others. Lake MacBride also filed a counterclaim/third-party petition against C & J, the President/CEO of C & J (hereinafter collectively referred to as C & J), and Royal Links.1 The counterclaim/third-party petition raised claims of fraudulent misrepresentation, equitable and constructive fraud, violation of the business opportunity statute, and concert of action. It also attempted to pierce the corporate veil. Lake MacBride further alleged the lease agreement was a disguised secured transaction that violated Iowa law. In responding to the counterclaim/third-party petition, C & J disavowed any agency relationship with Royal Links and claimed Lake MacBride was barred from raising any counterclaims/third-party claims against C & J due to the presence of the hell-or-high-water clause in the lease agreement.
On November 1, 2006, C & J assigned the lease agreement and personal guaranty to Frontier. C & J then amended its petition to substitute Frontier in the place of C & J as the real party in interest. Subsequently, Frontier and Lake MacBride filed competing motions for summary judgment.
The court determined the lease agreement constituted a finance lease that contained an enforceable hell-or-high-water clause prohibiting Lake MacBride from asserting any counterclaims against Frontier. The court also held no agency relationship existed between C & J and Royal Links. In addition, the court rejected Lake MacBride's affirmative defenses and counterclaims/third-party claims of unconscionability, mutual mistake, violation of the business opportunity statute, and failure to mitigate damages. Further, the court rejected the claim raised in Lake MacBride's resistance that the lease agreement was void because it failed to disclose an interest rate. Finally, the court held the lease agreement's integration clause and the parol-evidence rule barred extrinsic evidence of the lease agreement. Thus, the district court granted Frontier's motion for summary judgment, denied Lake MacBride's motion for partial summary judgment, and entered judgment in favor of Frontier for $14,431.50.
Following the entry of judgment, both Frontier and Lake MacBride filed motions to enlarge, amend, or modify the district court's ruling and judgment. The parties sought clarification as to whether or not the court had dismissed Lake MacBride's counterclaims and third-party-petition claims. Accordingly, the district court modified its judgment and dismissed Lake MacBride's counterclaims and third-party claims with prejudice. In addition, the district court awarded Frontier $13,088.91 in attorney fees.
Lake MacBride filed a notice of appeal, and we transferred the case to the court of appeals. The court of appeals affirmed the district court's judgment. Thereafter, Lake MacBride filed an application for further review, which we granted.
In this appeal, we must consider six issues. First, we must decide whether the lease agreement constitutes a finance lease or a sale with a security interest. Second, we must determine the enforceability of the agreement's hell-or-high-water clause. Third, we must consider if there are genuine issues of material fact regarding whether Royal Links was acting as an agent for C & J. Fourth, we must decide whether there are genuine issues of material fact supporting Lake MacBride's affirmative defenses, counterclaims, and third-party claims. Fifth, we must resolve whether the lease agreement's integration clause and the parol-evidence rule prohibit the admission of extrinsic evidence of the agreement. Finally, we must consider the issue of attorney fees.
We review a district court decision granting or denying a motion for summary judgment for correction of errors at law. Hills Bank & Trust Co. v. Converse, 772 N.W.2d 764, 771 (Iowa 2009). If the moving party has met his or her burden of showing the nonexistence of a material fact, summary judgment is appropriate. Bank of the W. v. Kline, 782 N.W.2d 453, 456 (Iowa 2010). We afford the nonmoving party every legitimate inference that can be reasonably deduced from the evidence. Pillsbury Co. v. Wells Dairy, Inc., 752 N.W.2d 430, 434 (Iowa 2008). Where reasonable minds can differ on how an issue should be resolved, a fact question has been generated, and summary judgment should not be granted. Id. Accordingly, our review is limited to whether a genuine issue of material fact exists and whether the district court applied the correct law. Bank of the W., 782 N.W.2d at 457.
In addition, we review issues of statutory construction for correction of...
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