What's New in the Law

Polzin v. Appleway Equipment Leasing, Inc., 191 P.3d 476 (Mont. 2008). The Montana Supreme Court reverses a lower court's denial of a lessor's motion to dismiss for improper venue. The lease contained provisions choosing the state of Washington ' both for the law governing the lease and for the venue of any action (if elected by the lessor). The decision holds both that Washington law recognizes forum selection clauses as valid and that, contrary to statements in the lower court's opinion, Montana law does not regard such clauses as void as against public policy.

Robert W. Ihne is an attorney with 25 years of experience in commercial financing, primarily in the areas of secured transactions and equipment leasing. Such experience has included drafting, negotiating and providing advice related to direct transactions, syndications, vendor financing arrangements, and various forms of credit enhancements such as guaranties and letters of credit. He may be reached at [email protected]. The author gratefully acknowledges the assistance of Erin Staton and Ed Gross of Vedder Price Kaufman & Kammholz, P.C. in the preparation of this update.

Vendor Issues

Capitol Business Solutions, LLC v. Konica Minolta Business Solutions USA, Inc., 2008 WL 2761307 (U.S.Dist.Ct. D.Kansas July 14, 2008). While this decision focuses on the particularities of the plaintiff-lessor's pleadings, it serves to illustrate potential risks when a lessor relies on its vendor partner to bill and collect lease payments from the lessees whose use of the vendor's equipment is being financed by the lessor. Here, the lessor contends that the vendor failed to remit such payments to the lessor in a timely manner, causing various types of damage to the lessor, including injury to its relationship with its bank.

Forum Selection, Jurisdiction, and Choice of Law

New Horizons Electric, Inc. v. IFC Credit Corp., 2008 WL 4597419 (Colo.App. Oct. 16, 2008) (unpublished). This Colorado appellate court affirmed the dismissal of actions brought by a number of NorVergence lessees against a group of NorVergence assignees. The dismissal was the result of enforcing forum selection clauses in the leases ' some containing the so-called “floating” forum selection clause ' requiring that actions be brought in other states. Holding, consistent with another Colorado appellate court, that forum selection clauses are prima facie valid, this court found that the plaintiff-lessees did not demonstrate that they were fraudulently induced to agree to the forum selection clauses specifically (as opposed to being fraudulently induced to enter into the leases generally). The court also dismissed plaintiffs' arguments that their agreement to the forum selection clauses was induced by fraud in the factum inasmuch as such claim was tied to a claim of relief based on the Uniform Consumer Credit Code, which the court held is not applicable to commercial transactions such as these.

Polzin v. Appleway Equipment Leasing, Inc. , 191 P.3d 476 (Mont. 2008). The Montana Supreme Court reverses a lower court's denial of a lessor's motion to dismiss for improper venue. The lease contained provisions choosing the state of Washington ' both for the law governing the lease and for the venue of any action (if elected by the lessor). The decision holds both that Washington law recognizes forum selection clauses as valid and that, contrary to statements in the lower court's opinion, Montana law does not regard such clauses as void as against public policy.

Robert W. Ihne is an attorney with 25 years of experience in commercial financing, primarily in the areas of secured transactions and equipment leasing. Such experience has included drafting, negotiating and providing advice related to direct transactions, syndications, vendor financing arrangements, and various forms of credit enhancements such as guaranties and letters of credit. He may be reached at [email protected]. The author gratefully acknowledges the assistance of Erin Staton and Ed Gross of Vedder Price Kaufman & Kammholz, P.C. in the preparation of this update.