General Electric Capital Corporation v. FPL Service Corp.
1:13-cv-00059
| N.D. Iowa | Dec 3, 2013Background
- GECC (lessor/secured party) and FPL (lessee/debtor) entered a written agreement titled "Lease Agreement" (June 14, 2011) for two Ricoh copiers; FPL agreed to 60 monthly payments of $6,229.30.
- Hurricane Sandy (Oct. 2012) destroyed FPL’s equipment including the copiers; FPL stopped payments after making 19 installments.
- Contract contains strong risk-allocation language ("payments absolute and unconditional," "responsible for loss and damage . . . from any cause whatsoever," and a $1.00 end-of-lease purchase option).
- GECC repossessed both copiers (one in Jan. 2013; the other in June 2013), then sold them through a third-party remarketer for $2,200 each; GECC seeks damages of $258,424.39 plus fees.
- Procedural posture: GECC moved for summary judgment on liability and damages; court granted summary judgment as to liability but deferred ruling on damages pending admissible evidence about whether GECC’s disposition complied with UCC Article 9 (commercial reasonableness and notice).
Issues
| Issue | Plaintiff's Argument (GECC) | Defendant's Argument (FPL) | Held |
|---|---|---|---|
| 1. Whether Sandy excuses nonpayment (impracticability / frustration) | Contract assigns risk to FPL; hell-or-high-water language makes payments unconditional so defenses unavailable | Sandy was unforeseeable act of God; FPL excused under Restatement doctrines | Payment obligation enforced; liability for default granted (hell-or-high-water controls) |
| 2. Whether the agreement is a lease (Article 2A) or a secured transaction (Article 9) | Parties labeled it a "finance lease," so Article 13 applies | Economic realities control; criteria of Iowa Code § 554.1203 show it created a security interest | Court: transaction is a secured transaction (Article 9 applies) |
| 3. Whether GECC resold collateral in a commercially reasonable manner under Article 9 | GECC sold via its regular remarketer and obtained $2,200 each; sale was commercially reasonable | GECC produced no admissible evidence proving commercial reasonableness; FPL disputes compliance | Court: genuine issue exists because GECC’s affidavit lacked personal-knowledge foundation; GECC failed to meet its burden at summary judgment |
| 4. Whether GECC gave proper notice of disposition and effect on damages | GECC sent notice referencing sale but listed only one copier; any waiver argument rests on contract clauses | FPL: no authenticated post-default waiver and no notice for second copier; lack of notice triggers UCC remedies limiting deficiency | Court: GECC failed to prove adequate notice as to second copier; rebuttable presumption may limit deficiency to zero unless GECC proves admissibly it would have obtained equivalent proceeds |
Key Cases Cited
- Wells Fargo Fin. Leasing, Inc. v. LMT Fette, Inc., 382 F.3d 852 (8th Cir. 2004) (summary-judgment fact-viewing rule)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment allocation of burden)
- Torgerson v. City of Rochester, 643 F.3d 1031 (8th Cir. 2011) (summary judgment standards en banc)
- C & J Vantage Leasing Co. v. Wolfe, 795 N.W.2d 65 (Iowa 2011) (enforcement of hell-or-high-water clauses; lease vs. secured-transaction analysis)
- Mel Frank Tool & Supply, Inc. v. Di-Chem Co., 580 N.W.2d 802 (Iowa 1998) (recognizing impracticability and frustration defenses under Iowa law)
- John Deere Leasing Co. v. Fraker, 395 N.W.2d 885 (Iowa 1986) (burden on secured party to prove commercial reasonableness)
- Van Sloun v. Agans Bros., Inc., 778 N.W.2d 174 (Iowa 2010) (contract interpretation is a question of law when unambiguous)