Lyon Fin. Servs., Inc. v. IL Paper & Copier Co., No. 12-2210 (7th Cir. 2013)Annotate this Case
Under a 2008 master contract, governed by Minnesota law, Lyon, a Minnesota finance firm, had a right of first refusal to provide lease financing for Illinois Paper’s customers. Lyon had the option to purchase office equipment supplied by Illinois Paper and lease the equipment to Illinois Paper’s customers who were interested in that type of financing. Illinois Paper expressly warranted that “all lease transactions presented ... for review are valid and fully enforceable agreements.” Lyon purchased a copy machine from Illinois Paper and leased it to the Village of Bensenville for a term of six years. The Illinois Municipal Code provides that municipal equipment leases may not exceed five years. When the Village stopped paying, Lyon sued Illinois Paper for breach of the contractual warranty. The district court concluded that the warranty was a representation of law, not fact, and was not actionable in a suit for breach of contract or warranty. The Seventh Circuit certified the question to the Minnesota Supreme Court, noting that Minnesota adheres to the maxim that a person may not rely on another’s representation of law, so where reliance is an element of a tort claim (such as fraud), representations of law are not actionable.
The court issued a subsequent related opinion or order on August 29, 2014.