WilTel Communications, LLC, Respondent, vs. Sunrise International Leasing Corporation, et al., Appellants.
Annotate this CaseThis opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480 A. 08, subd. 3 (2004).
STATE OF MINNESOTA
IN COURT OF APPEALS
A04-1054
WilTel Communications, LLC,
Respondent,
vs.
Sunrise International Leasing Corporation, et al.,
Appellants.
Filed February 15, 2005
Reversed and remanded; motion granted in part and denied in part Hudson, Judge
Hennepin County District Court
File No. CT03-13040
Carla B. Paul, John A. Halpern & Associates, 500 Plymouth Building, 12 South Sixth Street, Minneapolis, Minnesota 55402-1510 (for respondent)
David B. Potter, Christine L. Nessa, Douglas G. Barkema, Oppenheimer Wolff & Donnelly LLP, Suite 3300, Plaza VII Office Tower, 45 South Seventh Street, Minneapolis, Minnesota 55402 (for appellants)
Considered and decided by Peterson, Presiding Judge; Klaphake, Judge; and Hudson, Judge.
U N P U B L I S H E D O P I N I O N
HUDSON, Judge
On appeal from summary judgment, appellants, Sunrise International Leasing (Sunrise), argue that the summary judgment was not proper because (1) the district court erred in its application of the doctrine of account stated, and (2) genuine issues of material fact exist, precluding the award of summary judgment. Respondent, WilTel Communications, LLC (WilTel), moves to strike statements in Sunrise's brief and documents in Sunrise's supplemental brief that WilTel contends are outside the record on appeal. We reverse the district court's order granting summary judgment and remand for further proceedings. We grant in part and deny in part WilTel's motion to strike.
FACTSSunrise's primary business is the leasing of computer and communications-related equipment through third-party leases. Sunrise enters into a lease agreement with its lessee and, thereafter, orders equipment from the manufacturer, which then delivers the equipment to the lessee. WilTel sells telecommunications equipment. When the purchaser intends to lease the equipment to a third party, WilTel communicates with both the purchaser and the third party, but the purchaser becomes the owner of the equipment and is responsible for payment to WilTel. This matter involves an alleged third-party lease transaction between Sunrise as purchaser, WilTel as manufacturer, and a company, EZ2Get.com (EZ), as the third-party lessee.
In March 2000, the parties entered into negotiations with EZ for the sale of telecommunications equipment. WilTel provided a quotation to EZ detailing the quantity, description, and price of the specific equipment to be shipped to EZ as well as the cost of professional services. WilTel contends that it sent its "Terms and Conditions of Purchase" document to Sunrise shortly thereafter, but Sunrise contends that it did not receive the terms-and-conditions document. The terms-and-conditions document is a one-page document outlining the agreement (WilTel agrees to selland the customer to buy) that included provisions addressing payment, risk of loss, limited warranty, default, and other terms relevant to the transaction. As proof that Sunrise did in fact receive the terms-and-conditions document, WilTel produced a copy of the document with a fax signature line listing a fax number used by Sunrise's employees.
On or about April 17, 2000, Sunrise and EZ executed master lease agreements containing equipment schedules setting forth the exact items of equipment being leased. Sunrise attached WilTel's quotation to EZ as part of its equipment schedules. Sunrise then solicited and received a down payment from EZ of roughly $300,000 that included EZ's payment of first and last months' rent. Following receipt of the down payment, Sunrise placed two purchase orders with WilTel, enclosing WilTel's quotation to EZ for equipment and services. Both orders contained instructions to ship the equipment to EZ and provide Sunrise with an invoice listing the serial number of each piece of equipment. Sunrise submitted a "change order" to WilTel in August 2000, but Sunrise contends that this order was for equipment unrelated to the purchase orders submitted in April 2000.
WilTel delivered the equipment to EZ between April and September 2000. Sunrise maintains that they did not receive any confirmation of receipt or communication regarding the purchase orders or delivery of the equipment, despite numerous telephone calls to WilTel, and that WilTel failed to provide the required invoices. Sunrise contends that it did not bill EZ for lease payments during this period because they did not know that the equipment had been delivered. But WilTel produced a series of e-mails between WilTel's employees and "commerce-agents@cisco.com" from March to September 2000 listing delivery information as proof that Sunrise was apprised of the delivery.
On September 14, 2000, Sunrise sent a fax transmission to WilTel stating that the purchase orders were over 120 days old and had expired. The transmission further stated: "If any equipment has shipped, please contact us so we can update our records and issue new purchase orders." On September 15, 2000, WilTel provided Sunrise with a statement of account/invoice identifying the merchandise delivered and requesting payment of $951,772.50 within 30 days. Sunrise denies ever receiving this statement of account/invoice for payment.
EZ filed for bankruptcy in March 2001. In April 2001, WilTel's representatives pursued collection of the amount allegedly owed by Sunrise pursuant to the statement of account/invoice. In response to WilTel's collection efforts, Sunrise maintained that WilTel had not accepted its purchase orders, which had subsequently expired and been revoked and, therefore, the lease transaction with EZ had never closed. Sunrise did not pay WilTel any portion of the amount allegedly owed under the statement of account/invoice, but Sunrise did not return to EZ its initial down payments for the equipment.
WilTel filed a complaint in Hennepin County district court in December 2002. The complaint listed two grounds for relief, alleging that (1) Sunrise was indebted to WilTel in the amount of $950,281.82, "pursuant to a stated account," and (2) Sunrise was indebted to WilTel "for telecommunication equipment and services that plaintiffs sold or rendered to [Sunrise] at the latter's special instance and request." WilTel filed a motion for summary judgment in October 2003, arguing that WilTel had put forth sufficient evidence to confirm a contract for the sale of goods. In that motion, WilTel argued that legal presumptions codified by the Uniform Commercial Code supported formation of the contract and that the statement of account/invoice was prima facie evidence of the accuracy and correctness of the information contained therein.
Throughout this litigation, the parties have disputed the relationship between Sunrise and the entity Cisco Systems. Sunrise maintained that Cisco Systems is a completely separate entity from Sunrise and, thus, communications with Cisco did not constitute communications with Sunrise. But several documents introduced into evidence suggest that the companies share a business relationship and that Sunrise transacts business as Cisco Systems Capital Corporation, Cisco Systems, and Sunrise International Leasing.
The district court granted WilTel's motion for summary judgment in May 2004, characterizing the matter as a contract dispute. The district court concluded that no genuine issue of material fact existed regarding the formation of a contract between the parties: Sunrise accepted WilTel's offer (the quotation and terms-and-conditions document) by submitting the purchase orders. Accordingly, because WilTel completed delivery and presented a statement of account/invoice to Sunrise, the court concluded as a matter of law that WilTel was entitled to summary judgment in its favor in the amount of $951,772.50. The district court subsequently amended its order to include an award of 18% interest. The clerk entered judgment in the amount of $1,572,107.82 on May 28, 2004. This appeal follows.
D E C I S I O N I
Sunrise argues that the district court improperly awarded summary judgment because it erred in its application of the doctrine of account stated. In an appeal from summary judgment, this court reviews two determinations: whether a genuine issue of material fact exists, and whether an error occurred in the application of law. Offerdahl v. Univ. of Minn. Hosps. & Clinics, 426 N.W.2d 425, 427 (Minn. 1988). This court reviews the evidence in the light most favorable to the non-moving party without deferring to the district court's application of the law. Id. Summary judgment is proper "when the nonmoving party fails to provide the court with specific indications that there is a genuine issue of fact." Thiele v. Stitch, 425 N.W.2d 580, 583 (Minn. 1988). There is no genuine issue of material fact "when the nonmoving party presents evidence which merely creates a metaphysical doubt as to a factual issue and which is not sufficiently probative with respect to an essential element of the nonmoving party's case to permit reasonable persons to draw different conclusions." DLH, Inc., v. Russ, 566 N.W.2d 60, 71 (Minn. 1997).
The doctrine of account stated is an alternative means of establishing liability for a debt other than pursuant to a contract claim. Am. Druggists Ins. v. Thompson Lumber Co., 349 N.W.2d 569, 573 (Minn. App. 1984). An account stated is a manifestation of agreement between a debtor and creditor that a stated amount is an accurate computation of an amount due. Id. To establish an account stated, a party must show: (1) a prior debtor-creditor relationship between the parties; (2) mutual assent as to the correct balance owed; and (3) a promise by one of the parties to pay that balance. 1 Am. Jur. 2d Accounts and Accounting § 26 (1994). The retention of a statement of account without objection for more than a reasonable period of time demonstrates debtor acquiescence, implies a promise to pay the balance owed without further proof, and operates to create an account stated. Meagher v. Kavli, 251 Minn. 477, 487, 88 N.W.2d 871, 879 (1958); Am. Druggists, 349 N.W.2d at 573. An account stated constitutes prima facie evidence of the liability of the debtor. Erickson v. Gen. United Life Ins. Co., 256 N.W.2d 255, 259 (Minn. 1977).
Sunrise contends that the district court improperly granted summary judgment because it erred in its application of law. Specifically, Sunrise argues that WilTel initially pleaded this claim under the doctrine of account stated, but the district court granted summary judgment as though Sunrise had pleaded a claim based solely on contractual liability. Here, the district court characterized this claim as a "contractual dispute" and focused its analysis solely on whether an enforceable contract existed. The district court concluded as a matter of law that a contract existed and that WilTel was entitled to summary judgment because WilTel "completed delivery and presented a statement of account to Sunrise."
In response, WilTel argues that the district court did not err in granting summary judgment because WilTel initially pleadedand the parties argueda contractual claim. We disagree. WilTel's complaint listed one count that expressly sought relief on the basis of account stated. The second count states that Sunrise was indebted to WilTel "for telecommunication equipment and services that plaintiffs sold or rendered to [Sunrise] at the latter's special instance and request." Hence, the second count vaguely references a debt allegedly owed to WilTel following the sale of equipment and does not request relief based on a theory of contractual liability. Sunrise did argue a lack of contract formation in its memoranda in opposition to WilTel's motion for summary judgment, but, as noted above, a prior debtor-creditor relationship is one element of an account-stated claim. In other words, it appears that Sunrise argued a lack of contract formation to refute the debtor-creditor relationship element of the account-stated claim. Sunrise's lack-of-contract-formation argument does not therefore demonstrate acquiescence to a claim based on contractual liability. Moreover, an examination of WilTel's discussion of damagesan essential element in a breach-of-contract claimdemonstrates that WilTel considered this claim to be under the doctrine of account stated. WilTel chose not to itemize its damages in one of its interrogatory responses; objecting to the use of the term "damages" because "the within lawsuit is for a debt pursuant to a contract and a stated account." (Emphasis added.)
Finally, the district court's characterization of this matter as a contractual dispute is not dispositive. The district court thoroughly analyzed whether the parties formed a contract, but did not address the remaining elements of the breach-of-contract claim. Specifically, the district court failed to address Sunrise's request for an itemization of damages stating only that WilTel had "presented a statement of account to Sunrise." On this mixed record, we cannot say that the parties argued this case as a breach-of-contract claim.
Accordingly, the district court also erred in its application of the law by granting WilTel's summary judgment motion on a theory of account stated without addressing all of the elements of that claim. The district court considered only the existence of a prior contractual relationship and not the extent to which either party's conduct manifested assent to the statement of account, an essential element of a claim under the account-stated doctrine. Significantly, the district court did not discuss whether Sunrise mutually assented to the statement of account/invoice as an accurate computation of the amount owed, or impliedly acquiesced by retaining WilTel's statement of account/invoice without objection for an unreasonable period of time. This omission is particularly significant considering that Sunrise has consistently denied receipt of the September 15 statement of account/invoice. A party cannot assent to an account stated without first examining the document containing the computation of the amount due. Hall-Vesole Co. v. Durkee-Atwood Co., 227 Minn. 379, 384, 35 N.W.2d 601, 604 (1949). Thus, we conclude that the district court improperly granted summary judgment without consideration of all the elements of an account-stated claim.
Finally, summary judgment was also improper in this matter because there were genuine issues of material fact regarding the existence of a prior debtor/creditor relationshipi.e., there were genuine issues of material fact regarding the existence of a contract between the parties. The district court found that Sunrise received WilTel's terms-and-conditions document, despite Sunrise's repeated denial of receipt, because WilTel produced a copy of the document with a fax signature line containing a fax number used by Sunrise's employees. Viewing the evidence in the light most favorable to the non-moving party, there is no indication from the document that any of Sunrise's employees involved in this particular transaction received or reviewed the document. Additionally, while WilTel demonstrated that EZ received the equipment, WilTel did not demonstrate that Sunrise had knowledge of the delivery. The evidence that Sunrise frequently conducts business under the name Cisco Systems is insufficient to establish that all communications with Cisco are effectively communications with Sunrise. Moreover, although Sunrise retained EZ's initial down payment, Sunrise did not collect monthly lease payments from EZa strong indicator that Sunrise did not believe a contract existed. The district court therefore erred in granting summary judgment when genuine issues of material fact regarding the existence of a prior debtor-creditor relationship remained unresolved. Consequently, we reverse the entry of summary judgment for WilTel and remand to the district court for further proceedings.
IIWilTel moved to strike portions of Sunrise's brief as well as documents contained in Sunrise's supplemental record. The papers filed in the trial court, the exhibits, and the transcript of the proceedings shall constitute the record on appeal in all cases. Minn. R. Civ. App. P. 110.01. This court may not consider matters outside the record on appeal and must strike references to such matters from the parties' briefs. Fabio v. Bellomo, 489 N.W.2d 241, 246 (Minn. App. 1992), aff'd, 504 N.W.2d 758 (Minn. 1993). The majority of WilTel's motion to strike consists of objections to statements and arguments in Sunrise's brief allegedly raised for the first time on appeal. Because this court did not address the substance of these statements or arguments in its decision on the merits, we deny WilTel's motion to strike with respect to these statements and arguments. See Keller v. Von Holtum, 583 N.W.2d 761, 766 (Minn. App. 1998) (denying respondents' motion to strike issues or arguments that relate to an issue that the court declined to address on the merits); see also Thiele v. Stitch, 425 N.W.2d 580, 582 (Minn. 1988) (noting that this court will generally not consider matters not argued and considered in the court below).
We grant WilTel's motion to strike factual statements in Sunrise's brief unsupported by and/or not included in the record. Specifically, we strike the portions of Sunrise's brief stating that: (1) the purchase orders sent to WilTel by Sunrise were EZ's purchase orders, and not Sunrise's purchase orders; (2) the September 15 invoice produced in this lawsuit by WilTel is the same invoice produced in a separate federal lawsuit; and (3) EZ's down payment was provided in "good faith" and that Sunrise intended to return the payment upon request. Additionally, we grant WilTel's motion to strike documents contained in Sunrise's supplemental record including the summons, complaint, and order in United States District Court case NextiraOne, LLC v. Sunrise Leasing Corp., No. 01CV2279 (D. Minn. Nov. 5, 2002) (order dismissing action with prejudice following settlement) as well as Williams Communication Group's 2000 annual report. Although public records, these documents were not submitted to the district court and they are not part of the record on appeal.
Reversed and remanded.
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