Xerox Corporation v. JoJoMonster Graphics, LLC et al
DECISION AND ORDER granting 15 Motion for Summary Judgment. Xerox's motion for summary judgment and to dismiss counterclaims [#15] is granted. JoJoMonster's counterclaims are dismissed with prejudice. Xerox is granted summary judgment on Claims I-III in the amount of $135,896.44. Signed by Hon. Charles J. Siragusa on 9/6/17. (KAP)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
JOJOMONSTER GRAPHICS, LLC,
Tony R. Sears, Esq.
Harold A. Kurland, Esq.
Abigail L. Giarrusso, Esq.
Ward Greenberg Heller & Reidy LLP
1800 Bausch & Lomb Place
Rochester, New York 14604
Edwin M. Larkin, Esq.
Maura C. McGuire, Esq.
Harter Secrest & Emery LLP
1600 Bausch & Lomb Place
Rochester, New York 14604
Xerox Corporation brought this action alleging that JoJoMonster Graphics, LLC, breached
finance leases, defaulted in paying a promissory note and failed to return leased equipment. Now
before the Court is Xerox’s unopposed motion (Docket No. [#15]), for summary judgment on its
claims, and for dismissal of JoJoMonster’s counterclaims. Xerox’s application is granted.
The facts contained in Xerox Corporation’s Statement of Facts [#15-1] are not opposed,
and are therefore deemed admitted. See, Local Rule of Civil Procedure 56(a)(3). The Court will
only summarize those facts to the extent necessary to explain its decision. To the extent that there
are any other relevant facts that are disputed, the Court views them in the light most-favorable to
JoJo Monster Graphics, as the non-moving party.
At all relevant times Xerox Corporation (“Xerox” or “Plaintiff”) manufactured and leased
commercial printing equipment, while JoJo Monster Graphics (“JoJoMonster” or “Defendant”)
was a commercial printer. In February 2010, Xerox leased a commercial printer and server to
JoJoMonster, pursuant to an equipment finance lease. The lease contained three significant
provisions. First, the parties agreed that the lease was “a ‘finance lease’ under Article 2A of the
Uniform Commercial Code,” and that except as provided in the lease, JoJoMonster waived its
“rights and remedies as a lessee under Article 2A.” Second, the lease contained a “hell or high
water clause,” that stated in pertinent part:
YOUR OBLIGATION TO MAKE ALL PAYMENTS, AND TO PAY ANY
OTHER AMOUNTS DUE OR TO BECOME DUE, IS ABSOLUTE AND
UNCONDITIONAL AND NOT SUBJECT TO DELAY, REDUCTION, SETOFF, DEFENSE, COUNTERCLAIM OR RECOUPMENT FOR ANY REASON
WHATSOEVER. IRRESPECTIVE OF XEROX’S PERFORMANCE OF ITS
OBLIGATIONS HEREUNDER, ANY CLAIM AGAINST XEROX MAY BE
ASSERTED IN A SEPARATE ACTION AND SOLELY AGAINST XEROX.
Third, the lease provided JoJoMonster with a “Total Satisfaction Guarantee” that stated, in
pertinent part: “If you are not totally satisfied with any Xerox-brand Equipment delivered under
this Agreement, Xerox will, at your request, replace it without charge with an identical model or,
at Xerox’s option, with Xerox Equipment with comparable features and capabilities.”
By 2013, JoJoMonster had failed to make all required payments under the lease. At
JoJoMonster’s request, the parties executed an Account Modification Agreement. Pursuant to this
agreement, JoJoMonster executed a promissory note in the amount of $44,000.00., and Xerox
conditionally credited JoJoMonster $15,000.00, with the condition being that JoJoMonster
henceforth make all required payments.
Also in 2013, the parties entered into a second finance lease for another commercial printer
and server. Again, the parties agreed that the lease was “a ‘finance lease’ under Article 2A of the
Uniform Commercial Code,” and that except as provided in the lease, JoJoMonster waived its
“rights and remedies as a lessee under Article 2A.” Additionally, the second lease contained a
“hell or high water clause” and “Total Satisfaction Guarantee” identical to those in the first finance
Since April 2015, JoJoMonster has not made payments to Xerox as required by the
promissory note. Further, since August 2015, JoJoMonster has not made payments to Xerox as
required by the two finance leases and the modification agreement.
On February 3, 2016, Xerox commenced this action. In pertinent part, the Complaint [#1]
purports to assert three claims for monetary damages: 1) breach of the first finance lease, as
modified; 2) breach of the promissory note; and 3) breach of the second finance lease.1 The
Complaint also seeks a declaratory judgment that Xerox has the right of ownership and possession
of the leased equipment.
On April 8, 2016, JoJoMonster filed an Answer [#10], which, inter alia, admits that
JoJoMonster executed the finance leases, modification agreement and promissory note. The
Answer further admits that JoJoMonster stopped paying Xerox by August 2015, but implies that
this was due to Xerox’s failure to provide instructions.2 The Answer purports to assert the
The fourth cause of action was against JoJoMonster’s owner, individually, for breach of
guaranty, but that claim has been dismissed.
See, Answer at paragraph 141 (“In August of 2015, despite accepting payment, . . . Xerox’s
collections department told Defendants that their account was being referred to a different
department and that the new department’s assigned representative would contact Defendant
within two to three weeks. No one from the new department ever contacted Defendant.”).
following affirmative defenses: 1) failure to state a claim; 2) unclean hands; 3) laches; 4) any
damages were caused by Plaintiff’s own actions; 5) breach of contract; 6) fraudulent inducement
of contract; 7) lack of proximate cause; and 8) unconscionability. With regard to these affirmative
defenses, the Answer asserts that the subject contracts were “contracts of adhesion”; that Xerox
used “high pressure tactics and deceptive language,” including the “total satisfaction guarantee”;
and that JoJoMonster was not “totally satisfied” with the products or with Xerox’s maintenance
The Answer also purports to set forth three counterclaims, all of which relate to the
aforementioned “Total Satisfaction Guarantee” in the finance leases. In particular, JoJoMonster
contends that it was not totally satisfied with Xerox’s performance, because Xerox failed to
properly service the printers and to provide the necessary supplies, such as toner. JoJoMonster
contends that Xerox’s deficiencies in these areas hindered JoJoMonster’s ability to meets its
customers’ demands, resulting in lost business and poor credit ratings. In particular, the Answer
details several instances, beginning in 2012, of repeated malfunctioning of the leased equipment
and of untimely or inept servicing of the same, and contends that JoJoMonster was consequently
forced to turn away a large volume of business on several occasions, and to have lost business to
such an extent that their ensuing credit issues precluded them from leasing other equipment. The
three counterclaims are: 1) Breach of the first finance lease, as modified, and breach of the second
finance lease; 2) breach of express warranties (“total satisfaction”) in the lease agreements; and 3)
breach of the finance leases’ implied covenant of good faith and fair dealing (by failing to maintain
the leased equipment in “good working order”).
On May 20, 2016, Xerox filed the subject motion [#15] for summary judgment as to several
of its claims,3 and for dismissal of JoJoMonster’s counterclaims. In support of the application for
summary judgment, Xerox has submitted, inter alia, an affidavit [#15-2] from Janet Atkinson
(“Atkinson”) who is employed in Xerox’s Recovery Department. Atkinson’s affidavit reviews the
terms of the subject finance leases, modification agreement and promissory note, JoJoMonster’s
payment history, and the circumstances of JoJoMonster’s defaults, and contends that the total
amount owed to Xerox, including costs, disbursements and attorney’s fees, is $135,896.44, plus
Xerox contends that there are no material issues of fact, and that as a matter of law it is
entitled to summary judgment on its claims relating to the finance leases because JoJoMonster’s
obligation to pay is “absolute and unconditional” pursuant to the finance leases’ “hell or high water
clauses” and UCC Article 2A, regardless of any complaints that JoJoMonster may have about the
leased equipment. Similarly, Xerox maintains that its right to payment under the promissory note
is clear, since JoJoMonster executed the note and has defaulted in paying. Xerox further contends
that JoJoMonster’s affirmative defenses are no obstacle to summary judgment, because they are
mere “boilerplate” and lack merit in any event. In particular, Xerox contends that the first, second
and third affirmative defenses are meritless and inapplicable to this action; that the fourth, fifth
and seventh affirmative defenses are inadequately pleaded and also precluded by the “hell or high
water clause”; that the sixth affirmative defense is barred by the finance leases’ merger clauses, by
New York law which requires a fraud independent of the alleged breach, and by the failure to plead
fraud with particularity; and that the eighth affirmative defense lacks merit factually and because
commercial agreements such as those involved here give rise to a presumption that they are not
Xerox has not moved for summary as to Count V (declaratory judgment).
unconscionable, which JoJoMonster has not overcome.
Xerox further maintains that JoJoMonster’s three counterclaims must be dismissed for
failure to state a claim. Xerox states that the first counterclaim, for breach of contract, is barred
by the release provisions in the modification agreement, and by the plain language of the finance
leases, referring to the “hell or high water clauses” and the references to UCC Article 2A. Xerox
further contends that as to the alleged breach by Xerox, JoJoMonster agreed that its exclusive
remedy was to have Xerox replace the leased equipment. Xerox maintains that the second
counterclaim, for breach of express warranty, is barred for the same reasons as the first
counterclaim, and because the express warranties are limited to those contained in the parties’
agreements. Xerox contends that the third counterclaim, for breach of the implied warranty of
good faith and fair dealing, also fails, as a matter of law, since it is duplicative of the breach of
contract counterclaim, and New York does not permit such duplicative claims.
On June 9, 2016, the Court issued a motion scheduling order [#16], directing, inter alia,
that JoJoMonster file and serve any response by July 7, 2016. However, JoJoMonster never filed
a response. The parties subsequently asked the Court to hold the motion in abeyance while they
attempted to work out a settlement. See, Docket Nos. [#20, 23, 25]. However, on February 22,
2017, the parties jointly asked [#27] the Court to rule on Xerox’s unopposed motion for summary
judgment and for dismissal of JoJoMonster’s counterclaims.
Plaintiff has moved for summary judgment pursuant to Fed. R. Civ. P. 56. Summary
judgment may not be granted unless "the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A
party seeking summary judgment bears the burden of establishing that no genuine issue of material
fact exists. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 26 L.Ed.2d 142
(1970). “[T]he movant must make a prima facie showing that the standard for obtaining summary
judgment has been satisfied.” 11 Moore's Federal Practice, § 56.11[a] (Matthew Bender 3d ed.).
“In moving for summary judgment against a party who will bear the ultimate burden of proof at
trial, the movant may satisfy this burden by pointing to an absence of evidence to support an
essential element of the nonmoving party's claim.” Gummo v. Village of Depew, 75 F.3d 98, 107
(2d Cir.1996) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S. Ct. 2548, 91 L.Ed.2d
265 (1986)), cert denied, 517 U.S. 1190 (1996).
The burden then shifts to the non-moving party to demonstrate “specific facts showing that
there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S. Ct.
2505, 91 L.Ed.2d 202 (1986). To do this, the non-moving party must present evidence sufficient
to support a jury verdict in its favor. Anderson, 477 U.S. at 249. The underlying facts contained
in affidavits, attached exhibits, and depositions, must be viewed in the light most favorable to the
non-moving party. U.S. v. Diebold, Inc., 369 U.S. 654, 655, 82 S. Ct. 993, 8 L.Ed.2d 176 (1962).
Summary judgment is appropriate only where, “after drawing all reasonable inferences in favor of
the party against whom summary judgment is sought, no reasonable trier of fact could find in favor
of the non-moving party.” Leon v. Murphy, 988 F.2d 303, 308 (2d Cir.1993).
“Once the moving party has asserted facts sufficient to show that the non-movant's claims
or affirmative defenses cannot be sustained, the opposing party must set out specific facts showing
a genuine issue for trial, and cannot rely merely on allegations or denials contained in the
pleadings.” Canon Inc. v. Tesseron Ltd., No. 14CV5462 DLC, 2015 WL 4508334, at *4 (S.D.N.Y.
July 24, 2015) (citations omitted).
In the instant case, JoJoMonster has not opposed Xerox’s motion. Nevertheless, the Court
may not simply grant the motion on that basis.
[E]ven where a summary judgment motion is wholly unopposed, the district court
may not grant the motion without first examining the moving party's submission to
determine if it has met its burden of demonstrating that no material issue of fact
remains for trial. In determining whether the moving party has met this burden the
district court may not rely solely on the statement of undisputed facts contained in
the moving party's Rule 56.1 statement. It must be satisfied that the citation to
evidence in the record supports the assertion. If the evidence submitted in support
of the summary judgment motion does not meet the movant's burden of production,
then summary judgment must be denied even if no opposing evidentiary matter is
presented. An unopposed summary judgment motion may also fail where the
undisputed facts fail to show that the moving party is entitled to judgment as a
matter of law.
Gachette v. Metro N.-High Bridge, 598 F. App'x 803, 804 (2d Cir. 2015) (citing Vermont Teddy
Bear Co. v. 1-800 Beargram Co., 373 F.3d at 244 (internal citations and quotation marks omitted)).
Xerox has also moved to dismiss JoJoMonster’s counterclaims pursuant to Rule 12(b)(6)
of the Federal Rules of Civil Procedure (“FRCP”). The legal principles applicable to such a motion
Federal Rule of Civil Procedure 8(a)(2) requires only a short and plain statement of
the claim showing that the pleader is entitled to relief, in order to give the defendant
fair notice of what the claim is and the grounds upon which it rests. While a
complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed
factual allegations, a plaintiff's obligation to provide the grounds of his entitlement
to relief requires more than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do. Factual allegations must be enough to
raise a right to relief above the speculative level, on the assumption that all the
allegations in the complaint are true (even if doubtful in fact).
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 1964–65, 167 L.Ed.2d 929 (2007);
see also, ATSI Communications, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (“To
survive dismissal, the plaintiff must provide the grounds upon which his claim rests through factual
allegations sufficient ‘to raise a right to relief above the speculative level.’”) (quoting Bell Atl.
Corp. v. Twombly ) (footnote omitted). When applying this standard, a district court must accept
the allegations contained in the [pleading] as true and draw all reasonable inferences in favor of
the nonmoving party. Burnette v. Carothers, 192 F.3d 52, 56 (2d Cir.1999), cert. denied, 531 U.S.
1052, 121 S. Ct. 657 (2000). If, on a motion under Rule 12(b)(6), “matters outside the pleadings
are presented to and not excluded by the court, the motion must be treated as one for summary
judgment under Rule 56.” FRCP 12(d).
a. Summary Judgment
Applying these principles to the instant case, the Court finds that Xerox is entitled to
summary judgment. Preliminarily, the Court finds that Xerox’s factual assertions are supported by
the record, and that JoJoMonster has not raised any triable issue of fact. Accordingly, the issue is
whether, on such facts, Xerox is entitled to summary judgment on its claims (I-III) as a matter of
law. The Court answers that question in the affirmative.
Regarding the first and third causes of action, seeking judgment on the finance leases, a
lengthy discussion is unnecessary. Xerox has demonstrated that it is contractually entitled to
judgment, and JoJoMonster’s allegations, concerning the un-reliability of the leased equipment or
about allegedly false extra-contractual statements made about the equipment by Xerox, even if
they were supported by evidentiary proof in admissible form (which they are not), are not sufficient
to overcome the unambiguous finance leases’ “hell or high water clauses.” See, Xerox Corp. v. RP
Digital Servs., Inc., 232 F. Supp. 3d 321, 324 (W.D.N.Y. 2017) (“Defendants' assertions that Xerox
breached the Finance Lease by providing defective equipment, despite extra-contractual
assurances that the printer it was providing was fit for a particular purpose, are expressly waived
by the clear terms of the Finance Lease, which provides that the ‘obligation to make all payments,
and to pay any other amounts due or to become due, is absolute and unconditional, and not subject
to delay, reduction, set-off, defense, counterclaim or recoupment for any reason whatsoever,
irrespective of Xerox's performance of its obligations hereunder ... Xerox disclaims the implied
warrant[y of] fitness for a particular purpose.’ A contractual duty to make payments regardless of
the other party's performance, commonly known as a ‘hell or high water’ clause, is typically
enforceable.”); see also, Xerox Corp. v. Graphic Mgmt. Servs. Inc., 959 F. Supp. 2d 311, 318
(W.D.N.Y. 2013) (“[W]hether the Court looks to the ‘hell or high water clause’ or the fact that the
parties agreed that the March and April 2010 Lease Agreements were finance leases [under UCC
Article 2A], MHW was obligated to make all payments under the March and April 2010 Lease
Agreements regardless of Xerox's alleged breach. Therefore, Xerox is entitled to summary
judgement on its claim of non-payment under the leases against MHW.”).
Nor do JoJoMonster’s affirmative defenses present an obstacle to Xerox’s motion. In that
regard, the Court agrees with Xerox, at least with regard to the first-through-seventh affirmative
defenses, that they are mere “boilerplate” statements lacking any factual support. The eighth
affirmative defense, alleging that the finance leases were “unconscionable contracts of adhesion,”
attempts to provide some supporting detail, but also fails, as the allegations are entirely conclusory.
For example, the affirmative defense alleges that Xerox “used high-pressure tactics and
[unspecified] deceptive language,” and that there was “an inequality in bargaining power.”
However, it is well settled that “[f]or contracts entered into by two businesses in a commercial
setting, there is a presumption of conscionability . . . and unconscionability is rarely found.” In re
Residential Capital, LLC, 531 B.R. 25, 49 (Bankr. S.D.N.Y. 2015) (citation and internal quotation
marks omitted); see also, Cayuga Harvester, Inc. v. Allis-Chalmers Corp., 95 A.D.2d 5, 20, 465
N.Y.S.2d 606, 617 (4th Dept. 1983) (“In cases involving transactions of a commercial nature,
courts have rarely found unconscionability.”) (citations omitted). There is no indication that this
is one of the rare cases in which that presumption could be overcome.
The Court similarly finds that Xerox is entitled to summary judgment on the second cause
of action, for breach of the promissory note, as Xerox has demonstrated that JoJoMonster executed
the note but has not made the required payments.
The Court also agrees that JoJoMonster’s three counterclaims must be dismissed for failure
to state a claim. The first counterclaim alleges that Xerox breached the finance leases by failing
to maintain the leased equipment to JoJoMonster’s satisfaction, and/or by failing to keep the
equipment in “good working order.” However, Xerox has shown that as part of the modification
agreement, JoJoMonster expressly released Xerox from any liability for at least some of the events
upon which it bases its first counterclaim.4 Further, Xerox has shown that this counterclaim is
barred by express provisions of the finance leases themselves, which limit JoJoMonster’s remedy,
for any breach of the “Total Satisfaction Guarantee” and “Maintenance Services” provisions, to
having Xerox provide different equipment.5 JoJoMonster admits this fact at paragraph 158 of the
Answer: “In the event that Defendants were not totally satisfied with their leased printing
equipment, Xerox promised to either replace the equipment at Defendant’s request, or, at Xerox’s
option, replace it[.]”) (emphasis added). However, JoJoMonster does not allege that it requested
Xerox to provide such remedy.
The second counterclaim, for breach of express warranty, is duplicative of the first
counterclaim. Indeed, the second counterclaim alleges that the subject express warranties –
regarding “total satisfaction” and maintenance of the leased equipment in good working order –
See, Atkinson Aff., Ex. B, Modification Agreement at paragraphs 7(e) & 11.
See, e.g., 2010 Finance Lease at paragraphs 1 & 6.
are contained in paragraphs one and six of the finance leases, which are the same contractual
provisions upon which the first cause of action is based. Accordingly, the second counterclaim
similarly fails to state an actionable claim.
The third counterclaim, for breach of the implied covenant of good faith and fair dealing,
reiterates that Xerox failed to keep the leased equipment in “good working order” (again quoting
paragraph 6 of the finance leases) and thereby “deprived [JoJoMonster] of [its] right to receive the
fruits of and benefits under the Finance Leases.” The counterclaim is merely duplicative of the
first two counterclaims, and therefore also fails to state a claim. See, Hall v. EarthLink Network,
Inc., 396 F.3d 500, 508 (2d Cir. 2005) (Affirming dismissal of claim for implied covenant of good
faith and fair dealing, stating that, “If the allegations do not go beyond the statement of a mere
contract breach and, relying on the same alleged acts, simply seek the same damages or other relief
already claimed in a companion contract cause of action, they may be disregarded as superfluous
as no additional claim is actually stated.”) (citation omitted).
Xerox’s motion for summary judgment and to dismiss counterclaims [#15] is granted.
JoJoMonster’s counterclaims are dismissed with prejudice. Xerox is granted summary judgment
on Claims I-III in the amount of $135,896.44.
IT IS SO ORDERED.
Dated: Rochester, New York
September 6, 2017
/s/ Charles J. Siragusa
CHARLES J. SIRAGUSA
United States District Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?