Svege v. Mercedes-Benz Credit Corp.

• Decision Date: 22 July 2004
• Docket Number: No. 3:01CV1771(MRK).,3:01CV1771(MRK).
• Parties: Alice SVEGE, Plaintiff, v. MERCEDES-BENZ CREDIT CORP., et al., Defendants.
• Court: U.S. District Court — District of Connecticut

329 F.Supp.2d 272

Alice SVEGE, Plaintiff, v. MERCEDES-BENZ CREDIT CORP., et al., Defendants.

No. 3:01CV1771(MRK).

United States District Court, D. Connecticut.

July 22, 2004.

Jeffrey C. Pingpank, Cooney, Scully & Dowling, Hartford, CT, Leo Gilberg, Office of Attorney Leo Gilberg, New York City, for Plaintiff.

Daniel J. Foster, Day, Berry & Howard, Paul D. Williams, Jessica J. Mitchell, Day, Berry & Howard, Hartford, CT, for Defendants.

MEMORANDUM OF DECISION

KRAVITZ, District Judge.

Presently pending before the Court is the motion of defendant Mercedes-Benz Credit Corporation ("MBCC") for summary judgment [doc. # 90] on the three remaining causes of action directed against it, counts two, four, and six of plaintiff's Amended Complaint [doc. # 35], all of which assert claims under the Connecticut Product Liability Act, Conn. Gen.Stat. §§ 52-572m et seq. ("CPLA").¹

The issue on the present motion is whether MBCC is a "product seller" within the contemplation of Conn. Gen.Stat. § 52-572m(a) with respect to its ownership and leasing of a 1998 Freightliner Model No. FLD132064T (the "Truck"), one of the vehicles involved in the motor vehicle accident giving rise to the present case. MBCC argues that it did not manufacture the Truck, and had no role in the vehicle's assembly, design, or distribution, and that its financing activities surrounding the sale and leasing of the Truck and thousands of other Freightliner trucks are not sufficient to render it a "product seller" under the CPLA. See Mercedes-Benz Credit Corp.'s Memorandum in Support of Motion for Summary Judgment [doc. # 91], at 3-4 ("Mem. in Supp. of Mot. for Summ. J."). The Court disagrees. Because the Court concludes that MBCC is a "product seller" for purposes of the CPLA, the Court DENIES MBCC's motion for summary judgment.

I.

The following facts are derived from the parties' submissions, including the Deposition of Robert Hartshorn [doc. # 93], Ex. 3, and transactional documents attached as exhibits to the parties' pleadings. All ambiguities are set forth in the light most favorable to the non-moving party, the plaintiff. Goldstein v. Hutton, Ingram, Yuzek, Gainen, Carroll & Bertolotti, 374 F.3d 56, 59-60 (2nd Cir.2004). Accordingly there are no genuine issues of material fact regarding the issues relevant to the pending motion.

MBCC is incorporated under the laws of Delaware, has its principal place of business in Lisle, Illinois, and is in the business of financing commercial vehicle purchases. On September 1, 1997, MBCC and Kentucky Freightliner Trucks, Inc. ("Kentucky Freightliner") entered into an "Equipment Purchase and Lease Assignment Agreement for Freightliner Dealers" [doc. # 91], Ex. A ("Assignment Agreement"), which govern MBCC's and Kentucky Freightliner's respective roles in the January 1998 sale and leasing of the Truck. The Assignment Agreement was similar or identical to agreements MBCC had in place nationwide with all 300 dealers of trucks made by Freightliner Corporation, Inc. ("Freightliner") during the time period from September 1997 to January 1998.

Of relevance to the Court's "product seller" analysis below are the following provisions of the Assignment Agreement:

KENTUCKY FREIGHTLINER TRUCKS, INC. (hereinafter called "Dealer") desires to sell to Mercedes Benz Credit Corporation (hereinafter called "MBCC"), on the terms set forth below, certain equipment, including but not limited to new ... trucks, truck-tractors ... covered by closed or open-end lease agreements acceptable to MBCC.

Dealer and MBCC agree as follows:

1. Unless MBCC consents otherwise, the paper offered to MBCC shall consist of leases ...

. . . . .

4. Dealer warrants that: ... (h) Dealer will ensure that a title reflecting MBCC as owner of the equipment (and additionally as lienholder, if requested by MBCC) will be filed or recorded so as to be effective against all persons, and will file any financing statement with respect to any Lease as may be requested by MBCC.

... Dealer shall have performed all proper pre-delivery servicing on all new equipment covered by a Lease in the manner prescribed by the manufacturer thereof and shall deliver new and used equipment to the lessee thereof only after proper execution of all documents applicable to the Lease. Dealer agrees no equipment will be placed in service by the lessee until such equipment has been sold and the applicable Lease assigned to MBCC.

Assignment Agreement at 1.

On January 8, 1998, Freightliner transferred the Truck to Kentucky Freightliner with an invoice listing its dealer as the buyer and MBCC as the entity responsible for the wholesale purchase price. See Invoice [doc. # 93], Ex. 6. This method of bringing trucks to the showroom was a standard procedure under which MBCC financed (by loans to dealers paid directly to Freightliner) approximately 40% of all wholesale inventory purchases of Freightliner trucks by Freightliner dealers during the years 1998, 1999, and 2000. Deposition of Robert Hartshorn² [doc. # 93], Ex. 3, at 58-59 ("Hartshorn Depo."). In each year, the 40% figure approximated roughly 80,000 wholesale truck purchases. Id. at 60.

Between the transfer of the Truck on January 8, 1998 and January 13 of the same year, Hensley Industries, Inc. ("Hensley") took steps towards becoming the lessee of the Truck.³ On January 13, 1998, MBCC sent Kentucky Freightliner a "Lease Financing Commitment" [doc. # 91], Ex. B ("Commitment") for the Truck, setting forth MBCC's commitment to provide lease financing for Hensley and listing multiple conditions for the lease financing. The Commitment stated that the financing was provided pursuant to a "Published Freightliner Success Program" ("Success Program").⁴ The Success Program and other programs like it were designed solely by MBCC specifically for financing Freightliner trucks, were marketed in published finance manuals to dealers, and included a joint advertising component pursuant to which Freightliner would offer a product and MBCC a rate reduction and the combined package would be marketed to end user lessees through print media. One such advertisement in the record displays both Freightliner's and MBCC's logos and pictures of Freightliner trucks. See "SelecTrucks of Florida" Ad [doc. # 93], Ex. 8. The advertisement also highlights the "Power to Succeed Program," listing incentives such as "retail financing through MBCC," "new set of batteries," "free brake relining kit coupons," and "new tires all the way around," etc. The familiar Mercedes-Benz logo is located at the lower corners of the ad, along with "Mercedes-Benz Credit Corporation." Id.

On January 15, 1998, Hensley and Kentucky Freightliner signed a Kentucky Freightliner document titled "Retail Order for a Motor Vehicle." See doc. # 91, Ex. E. Handwritten above the upper border of the document is the heading "Bill of Sale." Although the document lists MBCC as the purchaser and lessor of the Truck and Hensley as lessee, Hensley signed as purchaser. Id.

On January 16, 1998, Kentucky Freightliner and Hensley entered into an open-end lease agreement [doc. # 93], Ex. 1-A (the "Lease Agreement"), the subject of which was the Truck. Of the roughly 80,000 Freightliner trucks for which MBCC provided wholesale financing in 1998, MBCC subsequently provided retail financing for 6,604 pursuant to agreements identical or substantially similar to the Lease Agreement. Hartshorn Depo at 60, 62. In addition, as a general matter during this time period, there was tension in the relationship between Freightliner and MBCC. Freightliner was looking for additional finance sources to help it sell vehicles, since financing was an important to dealers' abilities to make sales. Hartshorn Depo. at 37. Freightliner urged MBCC to increase the number of vehicles for which it would provide retail financing, but MBCC declined to finance as many vehicles as Freightliner requested. Id.

Critical to the Court's analysis of MBCC's status as a "product seller" for purposes of the CPLA are the following Lease Agreement provisions:

. . . . .

2. TERM. This Lease shall commence on the delivery date stated on the applicable Schedule and shall continue until all rental payments as hereinafter described, and all of Lessee's other obligations hereunder, have been satisfied in full by Lessee.

. . . . .

9. ASSIGNMENT. All right, title and interest in and to this Lease, as well as to the Equipment, may be assigned at any time by Lessor without Lessee's consent... It is expressly understood that any reference in this Lease to "Lessor" shall be construed to mean Lessor or Lessor's assignee.

. . . . .

10. OWNERSHIP/TITLE. Ownership of and title to all Equipment shall be and remain in Lessor, notwithstanding possession and use thereof by Lessee.

. . . . .

15. PURCHASE OPTION. It is understood and agreed that Lessee has no option to purchase the Equipment at any time; however, Lessee may have the opportunity to purchase the Equipment upon the expiration of the Lease for an amount equal to the Residual Value set forth in the Schedule(s).

. . . . .

16. END OF LEASE TERMINATION LIABILITY. Upon the expiration of this Lease, Lessee shall, at Lessee's expense assemble and return the Equipment unencumbered at Lessor's place of business, or at such other place as Lessor specifies, in the same condition, appearance and functional order as received, reasonable and ordinary wear and tear excepted.

Upon the return of the Equipment as herein provided, Lessor will sell the Equipment at a public or private sale with or without notice to Lessee. If the amount received from the sale ... exceeds Residual Value of the Equipment as set forth in the Schedule(s), the amount of such surplus shall be paid to Lessee. If the amount received from the sale ... is less than the Residual Value of the Equipment ..., Lessee shall be liable ... for, and shall pay upon demand, the amount of such deficiency to Lessor. Lessee acknowledges that the...