Greatam. Leasing Corp. v. Davis-lynch Inc
| Decision Date | 18 January 2011 |
| Docket Number | No. 10-CV-13-LRR,10-CV-13-LRR |
| Parties | GREATAMERICA LEASING CORPORATION, Plaintiff, v. DAVIS-LYNCH, INC., Defendant. |
| Court | U.S. District Court — Northern District of Iowa |
TABLE OF CONTENTS
I. INTRODUCTION....................................... 2
II. PROCEDURAL HISTORY................................. 2
III. SUBJECT MATTER JURISDICTION......................... 2
IV. SUMMARY JUDGMENT STANDARD......................... 3
V. RELEVANT FACTUAL BACKGROUND....................... 3
A. Players......................................... 3
B. Agreements and Assignments...........................4
C. Defendant's Alleged Default........................... 6
VI. ANALYSIS........................................... 6
A. Hell or High Water Clauses............................ 7
1. Acceptance.................................. 8
2. Holder in due course........................... 10
3. Defenses................................... 12
B. Waiver of Defense Clauses........................... 16
C. Holder in Due Course............................... 20
D. Damages....................................... 21
VII. CONCLUSION....................................... 21
I. INTRODUCTION
The matter before the court is Plaintiff GreatAmerica Leasing Corporation's Motion for Summary Judgment ("Motion") (docket no. 24).
II. PROCEDURAL HISTORY
On November 26, 2009, Plaintiff filed a Petition at Law ("Complaint") (docket no. 3) in the Iowa District Court for Linn County, case no. 066574, against Defendant Davis-Lynch, Inc. In the Complaint, Plaintiff alleges that Defendant entered into two agreements with Seamless Solutions ("Seamless") and that Seamless assigned both agreements to Plaintiff. Plaintiff claims that: (1) Defendant breached both of the agreements by failing to make the required payments, and (2) because Defendant has enjoyed the possession of equipment that Plaintiff financed, Defendant will be unjustly enriched unless it is ordered to pay Plaintiff the rental value of the equipment.
On January 29, 2010, Defendant removed the action to this court on the basis of diversity jurisdiction. On February 9, 2010, Defendant filed an Answer (docket no. 9). On October 4, 2010, Plaintiff filed the Motion. On October 28, 2010, Defendant filed a Resistance (docket no. 28). On November 8, 2010, Plaintiff filed a Reply (docket no. 34).
III. SUBJECT MATTER JURISDICTION
The court has subject matter jurisdiction over this case because complete diversity exists among the parties and the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332 ().
IV. SUMMARY JUDGMENT STANDARD1
Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "An issue of fact is genuine when 'a reasonable jury could return a verdict for the nonmoving party' on the question." Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir. 2005) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A fact is material when it "might affect the outcome of the suit under the governing law." Anderson, 477 U.S. at 248. "[T]o establish the existence of a genuine issue of material fact, 'a [non-moving party] may not merely point to unsupported self-serving allegations.'" Anda v. Wickes Furniture Co., 517 F.3d 526, 531 (8th Cir. 2008) (quoting Bass v. SBC Commc'ns, Inc., 418 F.3d 870, 872 (8th Cir. 2005)). Rather, the nonmoving party " 'must substantiate [its] allegations with sufficient probative evidence that would permit a finding in [its] favor.'" Anda, 517 F.3d at 531 (quoting Bass, 418 F.3d at 873). The court must view the record in the light most favorable to the nonmoving party and afford it all reasonable inferences. Baer Gallery, Inc. v. Citizen's Scholarship Found. of Am., Inc., 450 F.3d 816, 820 (8th Cir. 2006) (citing Drake ex rel. Cotton v. Koss, 445 F.3d 1038, 1042 (8th Cir. 2006)).
V. RELEVANT FACTUAL BACKGROUND
Viewing the facts in the light most favorable to Defendant and affording it all reasonable inferences, the facts are as follows:
A. Players
Plaintiff is a an Iowa corporation with its principal place of business in Cedar Rapids, Iowa. Plaintiff provides financing to equipment vendor customers. Defendant isa Texas corporation with its principal place of business in Pearland, Texas. Seamless, a non-party in this action, is an office equipment supplier.
B. Agreements and Assignments
In January 2004, Plaintiff and Seamless entered into a "Private Label Vendor Agreement." Defendant's Appendix ("Def. App'x") (docket no. 28-3) at 1-3. In February 2005, Plaintiff and Seamless entered into a second "Private Label Vendor Agreement."2 Id. at 4-6. Under the terms of the Private Label Vendor Agreements, Plaintiff could provide financing to Seamless's customers at Seamless's request, and Seamless consented "to the assignment of any Customer Purchase Agreement or Purchase Order for Equipment to [Plaintiff.]" Defendant's Statement of Additional Material Facts in Support of Resistance to Motion for Summary Judgment ("Def. Statement of Additional Facts") (docket no. 28-2) at 2. The Private Vendor Label Agreements provided that, in any transaction documents between Seamless and a customer, Seamless would be named as the sole owner of the transaction, even though the transaction was to be immediately assigned to Plaintiff. Def. App'x at 2, ¶ 11. The Private Label Vendor Agreements also provided that a customer would not receive notice of the assignment unless the customer defaulted. Id. To this end, Seamless appointed Plaintiff as its attorney-in-fact and gave Plaintiff the authority to act in Seamless's name in maintaining any transaction assigned to it.
Subsequently, Plaintiff and Seamless executed an "Amendment to Private Label Program Agreement" and an "Agreement and Blanket Assignment of Lease." Def. App'x at 7-8. Under the terms of the Agreement and Blanket Assignment of Lease, Seamless agreed to "enter into Lease Agreements with various customers, " and Plaintiff agreed to "provide the funding for the [e]quipment which [wa]s the subject of the Lease Agreements." Id. at 8. Seamless then agreed to assign to Plaintiff "all of its rights, title and interest in the Transaction Documents, including the Lease Agreements and the rental payments, and the Equipment which [wa]s subject to the Lease Agreements." Id.
Between about 2006 and 2007, Defendant entered into approximately thirteen separate agreements with Seamless for copy machines. These transactions were characterized as "C/CAMP Customer/Client Asset Management Program" ("C/CAMP") agreements. Plaintiff's Statement of Undisputed Material Facts in Support of Plaintiff's Motion for Summary Judgment ("Pl. Statement of Facts") (docket no. 24-2) at ¶ 11. Defendant maintains that Nancy Moreno, the individual who signed the C/CAMP agreements on Defendant's behalf, engaged in fraud when entering into the agreements with Seamless.
Immediately after Defendant and Seamless entered into the C/CAMP agreements, Seamless assigned the C/CAMP agreements to Plaintiff pursuant to the Private Label Vendor Agreements. Defendant's Response to Plaintiff's Statement of Undisputed Material Facts in Support of Plaintiff's Motion for Summary Judgment ("Def. Response to Pl. Statement of Facts") (docket no. 28) at ¶ 13. Defendant was not told about the assignment. Instead, Defendant made regular monthly payments under the C/CAMP agreements and addressed each of the payments to Seamless. Id. at ¶ 14. Defendant did not know that it was actually sending the monthly payments to Plaintiff at one of Plaintiff's addresses.
On June 20, 2008, Defendant and Seamless amended and consolidated the thirteen separate agreements into two C/CAMP agreements ("C/CAMP Agreements"). Seamless then immediately assigned the C/CAMP Agreements to Plaintiff. Again, Plaintiff did not inform Defendant of the assignment. Instead, Plaintiff sent Defendant billing statements which stated that they were from Seamless. On August 27, 2009, after the instant lawsuit was filed, Defendant received notice of the assignment and learned that it had actually beenmaking payments to Plaintiff at one of Plaintiff's addresses.
C. Defendant's Alleged Default
From July 2008 until April 2009, Plaintiff billed Defendant in Seamless's name, and Defendant made regular monthly payments during that time. Defendant alleges that it learned that Seamless and Nancy Moreno had engaged in fraudulent activity and, therefore, stopped making payments under the C/CAMP Agreements. Defendant alleges that it "first became aware of Seamless and Nancy Moreno's fraudulent activity when it discovered that the amount it was paying under the terms of the C/CAMP [A]greements were many times over the market rate for that type of lease arrangement." Def. Statement of Additional Facts at ¶ 17. Defendant maintains that Seamless knowingly delivered one of the fifteen copy machines listed in the C/CAMP Agreements to a business owned by Moreno's son.
In the Motion, Plaintiff alleges that Defendant's failure to continue making payments under the C/CAMP Agreements constitutes a default. As a result, Plaintiff asks the court to find that, as a matter of law, Defendant breached the agreements, and to order Defendant to pay the full amount owed under the C/CAMP Agreements.
VI. ANALYSIS3
Plaintiff argues that it is entitled to summary judgment because: (1) the C/CAMP Agreements contain "hell or high water" clauses; (2) the C/CAMP Agreements contain waiver of defense clauses; and (3) Plaintiff is a holder in due course. Plaintiff's Brief in Support of Its Motion for Summary Judgment ("Pl. Br.") (docket no. 24-1) at 2. The court will address each of these arguments, in turn.
A. Hell or High Water...
To continue reading
Request your trial