C & J Vantage Leasing Co., Assignor to Frontier Leasing Corp., Assignee v. Thomas Wolfe D/B/A Lake Macbride Golf Course and Thomas Wolfe, Individually
795 N.W.2d 65
Iowa2011Background
- Lake MacBride Golf Course entered into a vendor-financed beverage-cart arrangement with Royal Links and C&J Leasing (later Frontier), including a program agreement and a noncancelable lease with a nominal $1 purchase option.
- The lease labeled as a “LEASE IS NONCANCELABLE” and provided a $1 buyout, creating simultaneous ongoing payments to C&J and receipts from Royal Links.
- Lake MacBride signed a delivery/acceptance certificate acknowledging receipt of the cart and that Royal Links was not an agent of C&J.
- Royal Links stopped paying the advertising sums; Lake MacBride ceased making lease payments to C&J/Frontier.
- Frontier (assignee of C&J) brought suit for breach of the lease; Lake MacBride defended with multiple affirmative defenses and counterclaims.
- The district court granted summary judgment for Frontier, dismissed counterclaims/third-party claims, and awarded fees; on appeal the court of appeals’ decision was vacated and the case remanded for factual development.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Finance lease or sale with security interest | Lake MacBride argues the arrangement is a true lease/finance lease. | Frontier argues the contract is a disguised sale with a security interest. | The court held it is a sale with a security interest, not a lease or finance lease. |
| Enforceability of the hell-or-high-water clause | Lake MacBride contends the clause is unenforceable if the transaction is a secured sale. | Frontier contends the clause is fully enforceable in a secured transaction. | The court held the express hell-or-high-water clause is fully enforceable in a disguised sale with a security interest. |
| Agency of Royal Links for C&J | Lake MacBride argues genuine issues exist that Royal Links acted as C&J’s agent. | Frontier contends no agency existed; defenses cannot be based on agent misrepresentations. | The court found genuine issues of material fact regarding apparent agency, sending the issue to fact-finder. |
| Affirmative defenses, counterclaims, and third-party claims | Lake MacBride contends defenses like fraud, estoppel, unconscionability, and business-opportunity claims survive. | Frontier argues those defenses/claims are barred or unsupported. | The court found genuine issues on several defenses (fraud in inducement, equitable estoppel) and remanded others for proper adjudication; unconscionability and some claims were resolved against Lake MacBride. |
| Integration and parol-evidence rule | Lake MacBride seeks to admit extrinsic evidence to prove fraud/inducement. | Frontier argues the agreement is fully integrated and parol evidence barred. | The court held extrinsic evidence may be admitted to prove fraud in the inducement and questions of contract formation, not to vary the agreement. |
Key Cases Cited
- C&J Vantage Leasing Co. v. Outlook Farm Golf Club, LLC, 784 N.W.2d 753 (Iowa 2010) (distinguishes lease vs. security interest; discusses agency and integration concepts)
- Outlook Farm Golf Club, LLC, 784 N.W.2d 753 (Iowa 2010) (discusses bright-line test for security interests and leases)
- PSINet, Inc. v. Cisco Sys. Capital Corp. (In re PSINet, Inc.), 271 B.R. 1 (Bankr. S.D.N.Y. 2001) (bright-line test applicability in security interests)
- In re O.P.M. Leasing Servs., Inc., 21 B.R. 1006 (Bankr. N.D. Ohio 1998) (contracts with provisions affecting remedies and incorporation of hell-or-high-water clauses)