Computer Leasco, Inc. v. Volvo White Truck Corp.

• Decision Date: 11 May 1993
• Docket Number: No. 91-75273.,91-75273.
• Citation: 820 F. Supp. 326
• Parties: COMPUTER LEASCO, INC., Plaintiff, v. VOLVO WHITE TRUCK CORPORATION and Volvo GM Heavy Truck Corporation, Defendants.
• Court: U.S. District Court — Western District of Michigan

820 F. Supp. 326

COMPUTER LEASCO, INC., Plaintiff, v. VOLVO WHITE TRUCK CORPORATION and Volvo GM Heavy Truck Corporation, Defendants.

No. 91-75273.

United States District Court, E.D. Michigan, S.D.

May 11, 1993.

COPYRIGHT MATERIAL OMITTED

Edward J. Gudeman, Ronald M. Barron, Barron & Rosenberg, Bloomfield Hills, MI, for plaintiff.

Thomas F. Myers, Garan Lucow, Detroit, MI, for defendant.

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND MOTION TO DISMISS

GADOLA, District Judge.

On April 2, 1992, plaintiff filed a second amended complaint. On May 14, 1992, a stipulation and order was filed dismissing defendant Volvo White Truck Corporation. Defendant Volvo GM Heavy Truck Corporation filed an answer to the second amended complaint on May 19, 1992. On February 8, 1993, defendant filed the instant motion to dismiss and motion for summary judgment. Plaintiff responded March 15, 1992. On March 22, 1993, defendant filed a reply. Oral argument was heard on April 8, 1993.

I. Facts

In 1985, Computervision leased to Volvo White Corporation certain computer equipment and software for use in its business. In 1986, plaintiff purchased that same computer equipment from Computervision Corporation and then leased that equipment to defendant Volvo White Corporation which later became Volvo GM Heavy Truck. Exs. 1, 2 and 7 to Defendant's Brief. The software that was to be used on the equipment was licensed to plaintiff so that Computervision maintained ownership rights in the software. Ex. 3 to Defendant's Brief.

Attached to the master lease agreement were several schedules listing the equipment leased, the amount to be paid quarterly (in advance), and the expiration date of the lease; pertinent to this case are schedules 2A, 3, 10, 12, and 13. Ex. 4 to Defendant's Brief. Upon the expiration of each schedule, defendant had the option to purchase the equipment at fair market value or to renew the lease at 90% of the original rental rate or at fair market rental value, whichever was lower. Id. Schedules 2A and 3 both expired on March 31, 1991.

On May 25, 1990, defendant sent to plaintiff a letter indicating that at the expiration of lease schedules 2A and 3, defendant wished to exercise its option to purchase the equipment covered by those schedules rather than continue leasing said equipment. Ex. 8 to Defendant's Brief. In the letter, defendant noted its belief that the schedules were to expire on September 30, 1990; in fact, the schedules were set to expire March 31, 1991. Id.

On February 27, 1991, defendant sent to plaintiff an offer to purchase the equipment listed in schedules 2A and 3 at a price of $31,550. Ex. 9 to Defendant's Brief. On April 4, 1991, plaintiff made a written counter-offer, offering to sell the equipment for $60,000 plus tax. Ex. 10 to Defendant's Brief. On April 19, 1991, plaintiff sent a letter to defendant stating that plaintiff considered defendant in default. Ex. 11 to Defendant's Brief. The letter further stated that as a result of said default, plaintiff was exercising its right under the Master Lease to accelerate payment on all of the lease schedules covered. Id.

On May 3, 1991, defendant responded by letter to plaintiff's claim of default. Defendant indicated that it did not believe it was in default on any provision of the Master Lease. Defendant reminded plaintiff that the parties had been engaged in good faith negotiations for the purchase of the equipment. Defendant gave notice to plaintiff of its intent to return the equipment by June 7, 1991 and to issue a check to plaintiff for $18,373.41 to cover the period April 1, 1991 through June 7, 1991.

Despite plaintiff's claim of default, negotiations for the sale of the equipment to defendant continued through the month of May 1991. Ex. 13 to Defendant's Brief. On June 7, 1991, defendant returned to plaintiff all of the equipment listed in schedules 2A and 3, but did not return the software listed therein. Ex. 12 to Defendant's Brief. Defendant claims that plaintiff has no proprietary interest in the software and that therefore plaintiff was not entitled to possession.

Despite the existence of the licensing agreement between plaintiff and Computervision Corporation whereby Computervision retains all proprietary interests in the software issued to plaintiff and leased to defendant, plaintiff claims to have an ownership interest in this software. Plaintiff attempts to support this claim through attaching to its response two bills of sale dated January 30, 1987 and January 5, 1989, ostensibly between plaintiff and Computervision. Ex. 1 to Plaintiff's Response. The January 30, 1987 bill of sale pertains to "all of the equipment and accessories ... listed on Schedule A thereto." Id. The January 5, 1989 bill of sale pertains to "all of the equipment listed in Exhibit A annexed thereto." Id. However, neither bill of sale has attached to it any schedule or exhibit.

Plaintiff's counsel admitted at the hearing on this matter that the attachments to these bills of sale are irretrievably lost. Plaintiff's only evidence that these bills of sale covered the software previously licensed to plaintiff by Computervision is found in the affidavit of plaintiff's sole stockholder and chief operating officer, Ferris Haddad. Ex. A to Plaintiff's Response. Defendant, on the other hand, offers the deposition testimony of Karin Ameral, a representative of Computervision. Ms. Ameral attests to Computervision's practice of never passing title to its software. Plaintiff's counsel thus is unable to offer the testimony of the alleged seller of the software to prove that the bills of sale covered software; to the contrary, the alleged seller of the software denies the sale occurred.

Following the return by defendant of the equipment covered by schedules 2A and 3, defendant issued a check to plaintiff in an amount of $18,373.41. Plaintiff admits that this payment was made for the prorated rental of the equipment covered by schedules 2A and 3 for the period of April 1, 1991 through June 7, 1991; and plaintiff admits to receiving and cashing this check. Ex. 25 to Defendant's Brief.

Count I of plaintiff's complaint alleges breach of contract on the part of defendant Volvo GM Heavy Truck Corporation. The breach allegedly consists of defendant's failure to give timely notice that it was opting to terminate the lease as to the equipment listed in schedules 2A and 3 and its subsequent failure to make timely rental payments on said leases. Count II of the complaint alleges a claim of delivery. Plaintiff claims that it is entitled to possession of the software listed in schedules 2A and 3 and, by virtue of an acceleration clause in the Master Lease, to possession of the equipment listed in schedules 10, 12 and 13. The third and final count of plaintiff's complaint alleges that defendant has been unjustly enriched through its continued use of the software listed in schedules 2A and 3 and through the continued use of the equipment listed in schedules 10, 12 and 13.

In the instant motion for summary judgment, defendant seeks summary judgment as to counts I and II, claiming that there is no genuine issue of material fact as to whether defendant breached the Master Lease and no genuine issue of material fact as to whether plaintiff is entitled to possession of the software listed in schedules 2A and 3 and the equipment listed in schedules 10, 12, and 13. As to plaintiff's Count III claim of unjust enrichment, defendant requests dismissal for failure to state a claim upon which relief can be granted and, in the alternative, moves for summary judgment.

II. Analysis of Defendant's Motion for Summary Judgment as to Counts I and II

A. Standard of Review

The parties cite to Michigan law as governing the court's decision as to summary judgment. The standard of review for summary judgment motions brought in diversity actions is a procedural matter governed by federal law and not by the law of the forum state. Schultz v. Newsweek, Inc., 668 F.2d 911, 917 (6th Cir.1982). Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment may be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." "A fact is `material' and precludes grant of summary judgment if proof of that fact would have the effect of establishing or refuting one of the essential elements of the cause of action or defense asserted by the parties, and would necessarily affect the application of appropriate principles of law to the rights and obligations of the parties." Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir.1984) (quoting Black's Law Dictionary 881 (6th ed. 1979)) (citation omitted). The Court must view the evidence in a light most favorable to the nonmovant as well as draw all reasonable inferences in the nonmovant's favor. See United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 993, 8 L.Ed.2d 176 (1962); Bender v. Southland Corp., 749 F.2d 1205, 1210-11 (6th Cir. 1984).

The movant bears the burden of demonstrating the absence of all genuine issues of material fact. See Gregg v. Allen-Bradley Co., 801 F.2d 859, 861 (6th Cir.1986). The initial burden on the movant is not as formidable as some decisions have indicated. The moving party need not produce evidence showing the absence of a genuine issue of material fact; rather, "the burden on the moving party may be discharged by `showing' —that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). Once the moving party discharges that burden, the burden shifts to the nonmoving party to set forth specific facts showing a genuine triable issue. Fed.R.Civ.P. 56(e); Gregg...