VFS Leasing Co. v. J&L Trucking, Inc. et al

Filing 61

Opinion and Order signed by Judge James S. Gwin on 10/2/11. The Court, as set forth in this entry, denies VFS's motion for reconsideration. For similar reasons, the Court denies the parties' joint motion to vacate or alter the Court's 8/5/11 Order. (Related Docs. 58 , 60 ) (M,G)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
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VFS LEASING CO.,
:
:
Plaintiff, Counter-Defendant, :
Third-Party Defendant,
:
:
v.
:
:
J&L TRUCKING, INC., et al.,
:
:
Defendants, Third-Party
:
Plaintiffs, Counter-Claimants,:
:
v.
:
:
MACK TRUCKS, INC., et al.,
:
Third-Party Defendants.
:
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CASE NO. 1:09-CV-2942

OPINION & ORDER
[Resolving Doc. Nos. 58, 60]

JAMES S. GWIN, UNITED STATES DISTRICT JUDGE:
In this breach of contract and warranty case, Plaintiff VFS Leasing moves for reconsideration
of this Court’s Order of August 5, 2011, see [Doc. 53], which, among other things, denied VFS’s
motion for summary judgment on Defendant J&L Trucking, Inc.’s counterclaim for breach of
express warranty. In that Order, the Court concluded that a factual dispute precluded summary
judgment on J&L’s counterclaim. Specifically, the Court explained, a reasonable factfinder could
find that certain language in Section 1(a) of the lease agreement between VFS and J&L created an
express warranty “that the [leased] trucks would be ‘in good order and in conformance with any
applicable purchase order or supply contract.’” [Doc. 53 (quoting Doc. 36-1).] VFS, citing other

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Case No. 1:09-CV-2942
Gwin, J.
portions of the parties’ agreements, asks the Court to reconsider that decision.
As an initial matter, North Carolina law applies. See [Doc. 53.] In North Carolina, an
express warranty is created by “any affirmation of fact or promise made by the lessor to the lessee
which relates to the goods and becomes part of the basis of the bargain” or “any description of the
goods which is made part of the basis of the bargain.” N.C.G.S.A. §§ 25-2A-210(1)(a), 210(1)(b).
Whether an express warranty exists is a question of fact. Riley v. Ken Wilson Ford, Inc., 426 S.E.2d
717, 720-21 (N.C. Ct. App. 1993). J&L’s argument has always been that Section 1(a) of the lease
agreement contains an express warranty. That section provides:
Acceptance of Equipment by Lessee. Upon completion of delivery of all of the
Equipment described on a Schedule, Lessee shall inspect such Equipment and, if in
good order and in conformance with any applicable purchase order or supply
contract, Lessee will accept delivery of the Equipment on behalf of the Lessor, and
execute and deliver the applicable Schedule.
[Doc. 36-1.]
As the Court ruled previously, “[t]his language could arguably be an ‘affirmation of fact or
promise’ that the trucks would be ‘in good order and in conformance with any applicable purchase
order or supply contract.’” [Doc. 53.] So, “[i]f J&L indeed relied on such description when entering
the Lease Agreement with VFS, or if the description otherwise became part of the basis of the
bargain between J&L and VFS, the language could be an express warranty that VFS breached.” Id.
VFS persists in its resistance to this conclusion, pointing to language in the Schedule1/ that
it says tends to show that Section 1(a) of the lease agreement was not an affirmation of fact or
promise relating to the condition of the trucks, but instead was “nothing more than an instruction to

1/

The Schedule was a separate agreement, into which the “terms and conditions of the [lease] Agreement [were]
incorporated.” [Doc. 36-1.]

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Case No. 1:09-CV-2942
Gwin, J.
J&L to inspect the condition of the trucks before accepting delivery.” [Doc. 58.] Specifically, VFS
identifies Section 9 of the Schedule, which provides in part:
Lessee represents and warrants to Lessor that Lessee has: accepted delivery of and
inspected each item of Equipment; determined that each item of Equipment contains
all of the major components and accessories as agreed; each item of Equipment is in
good working order, repair, and condition, and that each item of Equipment is fit for
immediate and continued use and conforms to Lessee’s requirements without
exception.
[Doc. 36-1.]
As VFS sees it, “[w]hen Section 1(a) of the Master Lease and Section 9 of the Schedule are
read in conjunction with one another,” only one reasonable conclusion can follow: VFS “d[id] not
make any representations to J&L that could be construed by a trier of fact as creating an express
warranty.” [Doc. 58.] The Court continues to disagree.
VFS offers a permissible reading of Section 1(a) of the lease agreement. See [Doc. 53
(“Conversely, a reasonable fact finder might find the language [in Section 1(a)] should be construed
as simply an instruction to J&L to inspect and determine if the trucks are ‘in good order’ before
accepting the goods. If so, and such language was not made part of the basis of the bargain between
VFS and J&L, the language would not constitute an express warranty.”).] But that is not the only
permissible reading. And so while a reasonable factfinder might find that VFS is correct, i.e., that
Section 9 shows that the parties never understood Section 1(a) to be a warranty, that same factfinder
might instead find that VFS is incorrect, i.e., that Section 1(a) of the lease agreement contained a
warranty from VFS to J&L while Section 9 was merely an affirmation by J&L that the leased items
were in fact received in the condition that had been promised. Accordingly, reading Sections 1(a)
and (9) together does not resolve the factual dispute precluding summary judgment.

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Case No. 1:09-CV-2942
Gwin, J.
For these reasons, the Court DENIES VFS’s motion for reconsideration. See [Doc. 58.] For
similar reasons, the Court DENIES the parties’ joint motion to vacate or alter the Court’s August
5, 2011, Order. See [Doc. 60; Doc. 53.]
IT IS SO ORDERED.

s/
James S. Gwin
JAMES S. GWIN
UNITED STATES DISTRICT JUDGE

Dated: October 2, 2011

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