Snap-On Credit, LLC v M&B Auto

[*1] Snap-On Credit, LLC v M&B Auto 2006 NY Slip Op 52524(U) [14 Misc 3d 1213(A)] Decided on December 4, 2006 Buffalo City Ct Manz, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through January 8, 2007; it will not be published in the printed Official Reports.

Decided on December 4, 2006
Buffalo City Ct

Snap-On Credit, LLC, Plaintiff,

against

M&B Auto and Michael Buczynski, Defendants.



B92459



Yenisey Rodriguez-McCloskey, Esq.

Danzig Fishman & Decea

Attorneys at Law

One North Broadway

Suite 1202

White Plains, New York 10601

Attorneys for Plaintiff

George J. Navagh, Esq.

Attorney at Law

1100 Cathedral Park Tower

37 Franklin Street

Buffalo, New York 14202

Attorney for Defendants

David M. Manz, J.

The plaintiff brought this action seeking to recover money damages for a breach of contract; specifically an equipment finance lease agreement and related documents. The plaintiff alleges that the defendants leased certain equipment for its automotive repair shop from an independent franchise dealer of Snap-on Tools Company, LLC (hereinafter referred to as "Snap-on Tools.") The independent franchise dealer then assigned its rights under the lease agreement to the plaintiff, Snap-[*2]on Credit, LLC (hereinafter referred to as "Snap-on Credit.") Snap-on Credit is a financing entity which finances the purchases of tools manufactured or distributed by Snap on Tools.

The plaintiff alleges that the defendants are in default under the terms of the lease agreement. The defendants have denied that claim. The plaintiff is now moving for summary judgment, and the defendants are opposing that motion. Oral arguments were heard on the matter, the Court reserved decision, and this Order followed.

FINDINGS

First, the court is aware of the minimal showings, which normally would suffice for the granting of summary judgment under an equipment finance lease. Unistar Leasing v. Betco, Inc. 12 AD3d 1161 (4th Dept 2004), Preferred Capital v. PBK, Inc., 309 AD2d 1166 (4th Dept 2003). But the court does not believe that these cases are controlling in this matter.

First, it appears that the documents that make this transaction are a "finance lease" in name only; and in fact make up an assignment of a sales contract with a security interest on the part of the plaintiff. Industralease Automated & Scientific Equip. v. R.M.E. Enterprises, 58 AD2d 482 (2nd Dept 1977), Citipostal, Inc. v. Unistar Leasing, 283 Ad2d 916 (4th Dept 2001). Here, ¶ 6.2, entitled Ownership, states that upon payment of the lease terms, the equipment will become the property of the defendants.

Second, both Unistar Leasing v. Betco, Inc. and Preferred Capital v. PBK cite to Canon Financial Services v. Medico Stationary, 300 AD2d 66 (1st Dept 2002) as their primary authority. However, Canon also does not appear to be controlling because the agreement in that case specifically excluded the manufacturer's warranty from the agreement. Here, the manufacturer's warranty is specifically included in the agreement under ¶ 3, entitled Warranties.

Warranty provisions are relevant when determining summary judgment motions involving waivers and are binding on the parties, even when they appear on the reverse side of an agreement, as appears to be the case here. Rogers Fence, Inc. v. Abele Tractor, 26 AD3d 788 (4th Dept 2006).The general rule in New York is that a written agreement must be ascertained from the instrument itself, if it is possible to do so. But where there are additional writings relating to the subject, they may be examined to ascertain the intention of the parties at the time of the making of the contract. Other instruments may be construed as a part of a contract where they are referred to therein. Hallmark Synthetics v. Sumitomo Shoji New York, 26 AD2d 481, 484 (1st Dept 1966), affd, 20 NY2d 871 (1967), Mayo v. Royal Ins., 242 AD2d 944 (4th Dept 1997), lv dismissed, 91 NY2d 887 (1998).

Here, the defendants claimed that the goods covered by the agreement were not in working order, could not be repaired and were returned to a representative of Snap-On Tools and their account was credited. Under these facts, the provisions of the warranty clause may be essential in determining both liability and damages. Rhythm & Hues, Inc. v. The Terminal Marketing Co., 2002 WL 1343759. Unfortunately, neither party provided the court with a copy of the warranty documents.

The warranty's provisions are potentially in direct conflict with the "hell or high water provision" that the plaintiff is relying on in ¶ 4, entitled Net Lease which reads; Regardless of any defect in or damage of the equipment or any dispute which lessee may have with any person, including lessor, lessee is unconditionally obligated to pay all lease payments and other amounts owing hereunder.

While warranty provisions can be waived by agreement of the parties even if an agreement [*3]is not a finance lease under UCC 2-A-103(g), (General Electric Capital v. National Tractor Trailer, 175 Misc 2d 20, 27-28 [1997]), that apparently did not occur here.Since it is the duty of the court to read a contract and to interpret it to avoid inconsistencies and to give meaning to all of the terms (Robshaw v. Health Mgt. Inc., 98 AD2d 986 (4th Dept 1983), lv dismissed, 62 NY2d 942 [1984]), the court cannot fulfill that duty without having the missing documents for review.

Both parties agree that a substantial amount of "activity" took place after the agreements in questioned were signed; including the exchanging of inoperable equipment which was involved in the original equipment lease. This leads the court to believe that the warranty clause must have remained in effect, despite the presence of the "hell or high water provision that the plaintiff is basing its' motion on. Such an arrangement cannot possibly function without some further written agreement or understanding between Snap-On Tools and the plaintiff and defendant which further explains or supplements the lease agreement that has been presented to the court.

Additionally, the plaintiff now admits in its moving papers that some of the equipment invoiced on the original agreement were not part of the lease agreement as it alleged in its' complaint.

In light of all of the above, the court finds that it must examine not only the language and structure of the contract as a whole, but also the parties' usage and course of performance under the contract (see, Fruin-Colon Corp. v. NFTA, 180 AD2d 222, 230 [4th Dept 1992], UCC 2-202, in order to determine both the defendants liability and the plaintiff's damages, therefore;

It is hereby ordered that the plaintiff's motion for summary judgment is denied.

This decision constitutes the Order of this Court.

Hon. David M. Manz

Buffalo City Court Judge

Dated: December 4, 2006

Buffalo, New York