Tuesday, November 01, 2011, 3:16 PM

COA: Party Who Allegedly Made Warranties and Provided Maintenance on Equipment Not Liable to Equipment Lessee

Today the COA held that a lesee of equipment cannot bring claims against a party who provided maintence on that equipment and allegedly made warranties about the equipment, where that party was not mentioned in the equipment lease and did not actually supply the equipment. The case is Moore Printing, Inc. v. Automated Print Solutions, LLC.

Defendant APS performed a demonstration of the printer for Plaintiff Moore Printing and submitted a proposal for the lease and maintenance of the printer. Moore did not end up leasing the printer from APS, even though Moore's president signed the proposed lease that APS presented to Moore. Moore unltimately executed a different lease with Wells Fargo Financial Leasing, under which Wells Fargo would lease the printer to Moore and Network Data Systems would be the supplier of the printer. APS was not mentioned in the Wells Fargo lease agreement, and Moore entered into a separate maintenance agreement for the printer with APS. The lease between Wells Fargo and Moore stated that Moore “may be entitled to the promises and warranties (if any) provided to [Wells Fargo] by the Supplier,” and that Wells Fargo “transfer[red] to [Moore] all automatically transferable warranties, if any, made to [Wells Fargo] by the Supplier.”

Moore began having problems with the printer, and pursuant to the maintenance contract, APS attempted to resolve the problems, but was ultimately unable to do so to Moore's satisfaction. Moore sued APS for breach of contract, breach of fitness for a particular purpose, conversion, and unfair and deceptive trade practices. Moore also sought rescission of the lease agreement and quantum meruit, alleging that APS made certain warranties related to the printer.

The COA held that because the Wells Fargo lease was only signed by Moore's president and not APS, it was insufficient to form an enforceable lease between Moore and APS. The COA further held that the Wells lease did not establish privity of contract between Moore and APS. The Court noted that a lessee and a supplier/seller can be in privity of contract with the lessor, and the lessee could try to prove that the equipment seller’s representations and warranties made to the lessor were part of the inducement to enter into the lease. However, this is only true where the equipment lease directs the lessee to seek relief exclusively from the supplier/seller of the equipment and identifies the supplier/seller by name, and the supplier/seller is a party to the suit for breach of warranty. In this case, the Wells lease agreement specified that Network Data Systems was the supplier/seller of the printer, not APS, and APS was not mentioned anywhere in the Wells lease. It is unclear why, but Moore did not bring suit against Network Data Systems. Recission of the lease was also not proper because the parties to the lease agreement were Moore and Wells Fargo, and Wells was not a party to the suit.


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