Lease Acceptance Corp. v. Adams
| Decision Date | 31 August 2006 |
| Docket Number | Docket No. 256582.,Docket No. 255487. |
| Citation | 724 N.W.2d 724,272 Mich. App. 209 |
| Parties | LEASE ACCEPTANCE CORPORATION, Plaintiff-Appellee, v. Scott ADAMS, Defendant, and Javier Alcaraz, Brian Aubuchon, Joseph Aubuchon, Darlene Ballew, Tracie Ballew, Adam Boyd, Shawn Faria and Duane Johnson, Defendants-Appellants. Lease Acceptance Corporation, Plaintiff-Appellant, v. Vinson Abell, Heather Bakker, Darrin Tall and Sherri Tall, Defendants, and Andrew Asman, James Humenik, Mai Vi Hoang, Alan B. Thompson, Tuan V. Vo, Arnold Wilson, Elizabeth Wilson, Marc Bell, James Ray Fackler, Anita Rozzi, James E. Rozzi and Eneas O. Souza, Defendants-Appellees. |
| Court | Court of Appeal of Michigan — District of US |
Sakis & Sakis, P.L.C. (by Raymond S. Sakis, Dennis J. Grifka, and Jason R. Sakis), Troy, for Javier Alcaraz and others.
Before: MURRAY, P.J., and MARK J. CAVANAGH and TALBOT, JJ.
In Docket Nos. 255487 and 256582, plaintiff Lease Acceptance Corporation (LAC) sued defendants, all individuals who signed equipment leases and subsequently defaulted on the contract payments, for breach of contract in the Oakland Circuit Court.1 Defendants are all nonresidents of Michigan, residing in western states.2
In Docket No. 256582, the trial court held that there was no personal jurisdiction against these defendants, and consequently dismissed the cases. Our Court initially denied leave to appeal, but the Michigan Supreme Court entered an order directing this Court to "address the appropriate standard of review for determining whether Michigan `is a reasonably convenient place for the trial of the action' within the meaning of MCL 600.745(2)(b)." Lease Acceptance Corp. v. Adams, 473 Mich. 862, 701 N.W.2d 745 (2005).
In Docket No. 255487, the trial court entered a well-written opinion and order denying defendants' motion for summary disposition, holding that the forum selection clause in the lease was sufficient to establish personal jurisdiction over defendants and that the exercise of limited jurisdiction was consistent with the requirements of due process. Our Court initially reversed the trial court's order, concluding that there was no personal jurisdiction because Michigan was not a reasonably convenient place for the trial. However, as indicated, the Supreme Court entered an order directing this Court to "address the appropriate standard of review for determining whether Michigan `is a reasonably convenient place for the trial of the action' within the meaning of MCL 600.745(2)(b)." Lease Acceptance Corp v. Adams, supra at 862, 701 N.W.2d 745.
We review the question presented by the Supreme Court, as well as the ultimate conclusions reached by the trial courts. Having done so, we vacate the decisions of the trial courts and remand for further proceedings consistent with this opinion.
LAC is a Michigan corporation that finances equipment leases. In early 2000, LAC financed the transactions at issue in the present matter. How these transactions came to be is as follows. Defendants responded to advertisements in local California newspapers allegedly recruiting people to perform alarm and satellite television installations. These ads were placed in the papers by a California corporation and Emnet Management Systems, Inc. (Emnet), a company transacting business in California, through an individual named Hans Huo. Huo is not a party to this lawsuit and is incarcerated for charges relating to a fraudulent scheme that was the impetus of the lower court actions.
The advertisements instructed interested persons to call a toll-free telephone number located in San Dims, California, and, subsequently, Coin, California, where employees of Emnet offered free training in alarm and satellite television installations. Defendants were offered a free three-day training seminar in West Coin, California. Emnet agreed to reimburse defendants for travel expenses, lodging, and meals and to make commission payments for recruiting individuals into the installation program.
Huo made misrepresentations to some or all defendants about a scheme to sell computers to defendants and then hire them to use the computers for work. Specifically, victims of Ho's scheme were required to lease a "low end" personal computer, worth less than $1,000, in order to pick up alarm and antenna installation orders from an electronic bulletin board operated by Ho's company. The payments under the lease typically totaled $10,000 to $20,000, and, according to Huo, he concealed from the victims the fact that his company received several thousand dollars from the leasing companies at the time the victims entered into the lease and that his company had no orders for alarm or antenna installation jobs. LAC alleges that it was a victim of Ho's scheme to defraud because "Emnet, in its invoices, made false representations regarding the cost of the equipment being purchased and induced LAC to enter into the leases and pay Emnet for the equipment listed with inflated values."
The terms set forth in the lease4 provide, in pertinent part:
THIS LEASE IS NON-CANCELABLE FOR THE INITIAL TERM. LESSEE UNDERSTANDS AND AGREES THAT NEITHER SUPPLIER NOR ANY AGENT OF SUPPLIER IS AN AGENT OF LESSOR OR IS AUTHORIZED TO WAIVE OR ALTER ANY TERM OR CONDITION OF THIS LEASE.
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1. ORDERING EQUIPMENT. Lessee hereby requests Lessor to order the Equipment from the Supplier named above, to arrange for delivery to Lessee at Lessee's expense, to pay Supplier for the Equipment after its delivery to Lessee, and to lease the Equipment to Lessee.
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3. DISCLAIMER OF WARRANTIES AND WAIVER OF DEFENSES. LESSOR, NEITHER BEING THE MANUFACTURER, NOR THE SUPPLIER, NOR A DEALER IN THE EQUIPMENT MAKES NO WARRANTY, EXPRESS OR IMPLIED, TO ANYONE AS TO THE FITNESS, MERCHANTABILITY, DESIGN, CONDITION, CAPACITY, PERFORMANCE OR ANY OTHER ASPECT
OF THE EQUIPMENT OR ITS MATERIAL OR WORKMANSHIP AND DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR USE OF PURPOSE. LESSOR FURTHER DISCLAIMS ANY LIABILITY FOR LOSS, DAMAGE OR INJURY TO LESSEE OR THIRD PARTIES AS A RESULT OF ANY DEFECTS, LATENT OR OTHERWISE, IN THE EQUIPMENT WHETHER ARISING FROM THE APPLICATION OF THE LAWS OF STRICT LIABILITY OR OTHERWISE. AS TO LESSOR, LESSEE LEASES THE EQUIPMENT "AS IS". LESSEE HAS SELECTED THE SUPPLIER OF THE EQUIPMENT AND ACKNOWLEDGES THAT LESSOR HAS NOT RECOMMENDED THE SUPPLIER. LESSOR SHALL HAVE NO OBLIGATION TO INSTALL, MAINTAIN, ERECT, TEST, ADJUST OR SERVICE THE EQUIPMENT, ALL OF WHICH LESSEE SHALL PERFORM, OR CAUSE TO BE PERFORMED BY QUALIFIED THIRD PARTIES. IF THE EQUIPMENT IS UNSATISFACTORY FOR ANY REASON, LESSEE SHALL MAKE CLAIM ON ACCOUNT THEREOF SOLELY AGAINST THE SUPPLIER OR MANUFACTURER AND SHALL NEVERTHELESS PAY LESSOR ALL RENT PAYABLE UNDER THE LEASE. LESSEE ACKNOWLEDGES THAT DISSATISFACTION WITH THE EQUIPMENT OR LOSS OF THE EQUIPMENT WILL NOT RELIEVE LESSEE OF ANY OBLIGATION UNDER THIS LEASE, REGARDLESS OF THE CAUSE, LESSEE WILL NOT ASSERT ANY CLAIM WHATSOEVER AGAINST LESSOR FOR LOSS OF ANTICIPATORY PROFITS OR ANY OTHER INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, NOR SHALL LESSOR BE RESPONSIBLE FOR ANY DAMAGES OR COSTS WHICH MAY BE ASSESSED AGAINST LESSEE IN ANY ACTION FOR INFRINGEMENT OF ANY UNITED STATES LETTERS PATENT. LESSOR MAKES NO WARRANTY AS TO THE TREATMENT OF THIS LEASE FOR TAX OR ACCOUNTING PURPOSES.
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16. GOVERNING LAW, JURISDICTION AND CONSENT TO SERVICE OF PROCESS. THIS LEASE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN. LESSEE CONSENTS TO THE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE STATE OF MICHIGAN WITH RESPECT TO ANY ACTION ARISING OUT OF THE LEASE OR ANY SCHEDULE.
Defendants moved to dismiss on the basis of lack of personal jurisdiction. The trial court held a hearing regarding defendants' motions on May 19, 2004. After a lengthy recitation of the facts and the positions of the parties, the trial court issued its ruling from the bench, granting defendants' motions for summary disposition and ruling that (1) plaintiff failed to establish that jurisdiction was warranted under the long-arm statute, (2) plaintiff failed to show that due process guarantees were satisfied, (3) the forum selection clause was invalid because it was procured through fraud, and (4) Michigan was not a reasonably convenient forum. Specifically, the trial court held:
I do find that I have the power to entertain the action pursuant to MCL 600.745. I do not feel that this a reasonably convenient place for any trial to be held. I also agree that, in my opinion, the agreement was obtained by misrepresentation, duress and abuse of economic power and unconscionable means, based upon my opinion as cited before — and as recited already today, I should say.
And also, that I'm satisfied the defendants are properly served. There is no consent here to what occurred in connection with this particular matter. [The] Court will grant defendants' motion for summary disposition.
As noted earlier, the trial court issued a detailed opinion and order denying defendants' motion for summary disposition, concluding that personal jurisdiction existed on the basis of the forum selection clause and was consistent with due process. The trial court also rejected defendants' argument that plaintiff engaged in fraud by having defendants sign the lease.
However, neither trial court engaged in an analysis of whether Michigan was a reasonably convenient forum, as required by MCL 600.745(2)(b).
Defendants' motion for summary disposition was granted in Docket No. 256582 on the basis that ...
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