Doss v. EPIC Healthcare Management Co.

• Decision Date: 27 April 1995
• Docket Number: 19566,Nos. 19595,s. 19595
• Citation: 901 S.W.2d 216
• Parties: Henry E. DOSS, Respondent, v. EPIC HEALTHCARE MANAGEMENT COMPANY, Appellant, v. BOATMEN'S BANK OF SOUTHERN MISSOURI, Respondent.
• Court: Missouri Court of Appeals

Page 216

901 S.W.2d 216

Henry E. DOSS, Respondent, v. EPIC HEALTHCARE MANAGEMENT COMPANY, Appellant, v. BOATMEN'S BANK OF SOUTHERN MISSOURI, Respondent.

Nos. 19595, 19566.

Missouri Court of Appeals,

Southern District.

April 27, 1995.

Motion for Rehearing and/or

Transfer Denied June 6, 1995.

Application to Transfer Denied

July 25, 1995.

Mary Johnson Tidholm, Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C., Oklahoma City, OK, Rana L. Faaborg, Woolsey, Fisher, Whiteaker & McDonald, Springfield, for appellant.

Jim D. Loftis, James L. Menzer, Loftis & Menzer, P.A., Norman, OK, for respondent Henry E. Doss.

Mark E. Pfeiffer, Farrington & Curtis, P.C., Springfield, for respondent Boatmen's Bank, for respondent.

PER CURIAM.

Respondent Henry E. Doss sued as assignee of a lease of copy machines executed between Equity Rental Co. Inc. (also known and here referred to as "Copytech") as lessor and appellant EPIC Healthcare Management Co., as lessee. EPIC filed a third-party petition against respondent Boatmen's Bank of Southern Missouri, a prior assignee of the lease. The trial court sustained motions for summary judgment filed by Doss and Boatmen's, entering judgment for Doss in the amount of $19,250.24 principal, $7,723.52 interest, attorneys' fees of $8,901.34, and costs. The court also entered judgment in favor of Boatmen's, thus disposing of all issues. EPIC appeals. We conclude that the record does not demonstrate absence of genuine issues of fact, and therefore reverse and remand for further proceedings. We review the facts in the light most favorable to EPIC, as the party opposing summary judgment. Zafft v. Eli Lilly & Co., 676 S.W.2d 241, 244 (Mo.banc 1984).

1. The Factual Setting

Under date of July 1, 1989, Copytech leased two copying machines to EPIC. Paragraph 13 of the lease embodied the clauses known as "waiver of defenses" and "hell or high water," reading as follows:

"ASSIGNABILITY BY LESSOR. Lessor may without the consent of the Lessee at any time and from time to time assign this Lease.... The assignee of any of Lessor's rights hereunder shall be under no obligation to perform any of Lessor's duties, obligations, covenants or agreements under this lease and such duties, obligations, covenants and agreements shall remain the full liability of Lessor. The rights of any such assignee in and to the rents and other sums payable by the Lessee under this Lease ... shall not be subject to any defense, setoff, counterclaim or recoupment, whether by reason of any defect in Lessor's title or any interruption from any cause in the use, operation or possession of the Equipment ... or by reason of any other indebtedness or liability however, and whenever arising of Lessor to Lessee or to any other person ..., or for any cause whatsoever, it being the intent hereof that Lessee shall be unconditionally and absolutely obligated to pay any such assignee hereof all of the rents and other sums provided for by this Lease and assigned to such assignee."

The lease also had a non-cancelable provision, and a "zipper" clause, providing that the lease constitutes "the entire agreement of the parties with respect to the subject matter ...," disclaiming warranties, and specifying that the lease may "only be modified, extended or renewed by a writing signed by the parties hereto."

The recitals in the lease notwithstanding, EPIC executed and delivered two additional documents under date of June 30, 1989. One was a purchase order, stating that the lease could be cancelled on thirty days' notice by either party. The second was a copier management program. Copytech also provided a letter dated June 30, 1989, in which it confirmed EPIC's right of cancellation on 30-day notice. Robert Koch, who acted for EPIC with relation to the lease transaction, stated in an affidavit that all of these documents were exchanged at the time the lease was signed.

In July or August of 1989, Copytech assigned the lease to Boatmen's. EPIC was paying the installments of rent regularly at the time of this assignment. Boatmen's officers denied knowledge of any agreement allowing EPIC to cancel the lease on 30 days' notice, and, as a matter of policy, Boatmen's would not have purchased a lease of personal property which was subject to cancellation. Boatmen's obtained a service contract for the copiers, with EPIC paying the charges. Following the assignment, payments were made to Boatmen's through October of 1990.

Koch complained to Ron Pender, an officer of Boatmen's, about service problems, and advised him that EPIC was going to cancel the lease. On September 5, 1990, Koch wrote Pender as follows:

"Per the original terms of our agreement with Copytech stated on our Purchase Order # 399444-442, as well as in the attached letter signed by Steve Moore, this letter will serve as our 30 days written notice to terminate our contract for copy machines.

"Please pick up the two Sharp 8100 model copiers at our back dock by 11-1-90, at which time we will cease our payments for these machines."

Pender made no response, oral or written. He executed an affidavit stating in pertinent part:

"Because Epic was refusing to make any further payments and because I did not want the copiers sitting on a loading dock, I instructed Boatmen's maintenance to pick up the copiers. Never once did I nor anyone else at Boatmen's, to my knowledge, ever communicate to Bob Koch or anyone else at Epic that Boatmen's would not pursue its rights under the terms of the Lease. Never once, to my knowledge, did any agent of Boatmen's tell Epic that Boatmen's agreed that Epic had the right to terminate the lease on 30 days written notice."

Beverly Kay Jones, another Boatmen's officer who was familiar with the transaction, gave a deposition. When asked whether she directed anybody at the bank to communicate with EPIC after receiving the September 5th letter, she responded as follows: "I don't know if I communicated with them or whether Ron Pender did, but one of our point people to ensure that machines were picked up was Ron Morgan."

When asked whether Morgan was instructed to communicate with EPIC or the hospital after Boatmen's received the letter she replied, "I would assume."

A Boatmen's representative picked up the machines on November 2, 1990, at EPIC's dock. Jones issued a cancellation order for the service contract. Boatmen's charged the transaction off on its books. Jones explained that the charge-off was customary as to transactions which were in default, so that the books would not assign value to doubtful assets. The bank ceased sending notices of installments to EPIC, and made no attempt to collect further payments. In December of 1990 it leased the machines to another customer.

On March 1, 1991, Boatmen's assigned 129 leases of machines to Henry E. Doss. He paid a lump sum and did not compute the value of each individual item. His affidavit regarding the EPIC transaction reads as follows: "Prior to purchasing the lease, I was provided a copy of the file maintained by Boatmen's Bank of Southern Missouri with regard to the lease. In that file was a copy of the September 5, 1990, correspondence of Bob Koch, all three pages of which are attached hereto."

He then expressed the conclusion that EPIC's attempt to cancel the lease was legally ineffective. The record does not show whether he also received papers regarding the post-repossession leasing of the copiers as testified to by Jones, or whether he collected any payments from the new lessee. As part of the transaction, Boatmen's provided Doss a list of "nonperforming leases," which included the EPIC lease. Doss knew before he agreed to purchase the leases that the EPIC copiers had been picked up and were no longer in EPIC's possession.

On October 28, 1992, a lawyer for Doss wrote EPIC, demanding payment of installments through October 26, 1992, of $17,070.65, with interest. Doss then filed suit against EPIC, seeking recovery of lease installments after November of 1990. EPIC filed a third-party petition against Boatmen's, seeking indemnity and cost of defense, on several legal theories. The trial court entered summary judgment in favor of Doss and Boatmen's, and against EPIC, as has been said.

2. Unilateral Contract or Waiver?

EPIC does not appear to argue that the cancellation provisions in the purchase order and the side agreement were binding on Boatmen's at the time of the assignment, and there is no occasion to determine whether the parol evidence rule would stand in the way of binding Copytech. EPIC rather characterizes its letter of September 5, 1990, as an offer for a unilateral contract, and the pickup of the machines by Boatmen's on November 2, 1990, as the acceptance of that offer. It says that a court or jury could so find after hearing evidence. Therefore, there is a genuine issue of material fact as to whether the lease had been cancelled or rescinded.

The concept of "unilateral contract" is well established in the common law and in the law of Missouri. Garrity v. A.I. Processors, 850 S.W.2d 413 (Mo.App.1993). In a unilateral contract an offer is made which calls for acceptance by an act rather than by communication. In Garrity the issue was the place of making the contract, in which a Utah corporation transmitted an offer to sell a dryer from its Iowa office and called for acceptance by deposit of the purchase price in a bank in Utah. The court said that the contract was effected in Utah when the deposit was made.

There is no reason why a unilateral contract would not result if EPIC were to say to Boatmen's: "We propose to cancel our lease which you hold and to relinquish our rights in the copy machines. If you agree, pick the machines up after November 1," and Boatmen's then picked up the machines. There would be a legal detriment to EPIC in surrendering the machines, and a benefit to Boatmen's in obtaining possession of them free of the lease. The requirement of consideration would then be...