Leasing News

If indeed bad facts make for bad law, then the cases arising as a result of the NorVergence debacle might have been expected to generate some terrible legal results. Fortunately for the leasing and finance industry, this has not invariably been the case to date. This article chronicles the various NorVergence-related attacks on some fundamental rights and protections assumed to be unassailable by the leasing industry lessor as well as some lessons learned while suffering through this legal assault.

As most readers of this publication are aware, NorVergence was a company that marketed a package of equipment and services to a great number of small business customers throughout the country. This "bundled" package was supposed to enable these customers to achieve substantial savings on telephone and Internet costs. The equipment purportedly necessary to achieve these savings was often financed by a lease document between NorVergence and these small business lessees. Many of these leases were then sold by NorVergence to a variety of leasing and finance companies that, in many cases, were quite large and well respected.

Unfortunately for all concerned, this equipment (a box referred to by NorVergence as "Merged Access Transport Intelligent Xchange," or "MATRIX") had little standalone value because the promised cost savings were to be derived primarily from NorVergence's ability to find lower cost Internet and telephone service providers than customers had been using. When NorVergence became unable to sustain the services and savings promised to these customers, it filed bankruptcy and ceased operating. By doing so, it left its customers without the promised services and, worse yet, with substantial remaining lease obligations for essentially worthless equipment.

As might be expected, after failing to receive the promised services and savings, many of these customers stopped making the lease payments despite the hell-or-high-water provisions in the leases and, in the case of leases that had been assigned to leasing and finance companies, despite the waiver-of-defenses provisions in those leases. After the plight of these many small business customers became public knowledge, the Federal Trade Commission (FTC), certain state attorneys general, attorneys involved in the NorVergence bankruptcy, and class action attorneys all brought legal actions against both NorVergence and its assignees.

Many of these actions sought to free customers from their remaining lease obligations. Certain of these actions alleged that the customers had been defrauded not only by NorVergence but also by various financing sources, because these assignees purportedly knew or should have known about the allegedly fraudulent scheme and worthless equipment. Among the punishments sought to be imposed against NorVergence and its assignees for perpetrating the alleged fraud were (1) the return of lease payments already received, (2) a prohibition on collecting lease payments remaining to be made, and (3) an assessment of punitive damages.

Sensing that the circumstances were not optimal for contesting all these claims, many equipment finance providers settled and decided not to pursue enforcement against these lessees, even though the lease documents seemed enforceable by their terms. However, a few financing providers did attempt to enforce their assigned leases, and these actions have resulted in interesting decisions on a number of different lease enforcement issues.

In the earliest stages of these actions, the NorVergence lease's so-called "floating" forum selection clause was often challenged by the lessees on a variety of grounds. The jury trial waiver, another procedural provision in the leases, was also challenged in the related litigation. And, of course, once such procedural matters were either decided or not raised, the substance of the assignees' claims was left to be decided.

In those cases, the courts were asked to consider whether lessees that may have been fraudulently induced to enter into these leases should be bound by their promises to pay the rentals still owing under these assigned leases. If the lessor was determined to have committed fraud when originating these leases, the lessees argued that this original fraud would also constitute a valid defense to a collection claim by the assignees, many of whom arguably were as duped by NorVergence as were the lessees.

The remainder of this article will review the progress of these legal issues though the courts thus far. It is a mixed bag of results, to be sure, but there are some hopeful developments. Although the related case law is still evolving, we will explain certain enforceability challenges, first procedural and then substantive, and mention some takeaways from these cases and other NorVergence related actions.

Many leases and other financing forms contain a "forum selection" provision. This clause purports to be a mutual agreement that any related litigation must be conducted in courts situated in a specified state, often in the lessor's home state. Some of these forms included modified versions of these provisions stipulating that the exclusive jurisdiction for related litigation would be either the lessor's home state or, if assigned, the assignee's home state.1 These floating forum selection clauses give the lessor or its assignee a "home court" advantage by affording it the flexibility and convenience of instituting litigation in its home state. Smaller lessors and assignees with a regional or national market might find the clause essential because enforcing leases outside of their home state might be impractical.

The NorVergence leases contained a floating forum selection clause requiring that litigation relating to the lease be brought only in the state "in which [NorVergence's] principal offices are located or, if [the] Lease is assigned by [NorVergence], the State in which the assignee's principal offices are located."2

Though a minority of courts holds otherwise, most courts have found that floating forum selection clauses such as those found in the NorVergence leases are valid and enforceable. In an opinion written by Judge Richard A. Posner, the U.S. Court of Appeals for the Seventh Circuit in IFC Credit v. Aliano Bros. General Contractors upheld floating forum selection clauses as enforceable under both federal and state law.3 The court held that under federal law, floating forum selection clauses are valid and enforceable unless procured by fraud or misconduct.4 Turning then to an analysis under Illinois law, the court found floating forum selection clauses enforceable unless, as under federal law, the clauses themselves are procured by fraud or misconduct or in cases marked by great disparity of bargaining power between the parties.5

A number of courts in various jurisdictions followed the reasoning of Aliano Brothers in upholding the validity and enforceability of floating forum selection clauses absent a showing that such provision was procured by fraud.6 Similarly, the Sixth Circuit, in Preferred Capital v. Associates in Urology, also enforced a floating forum selection clause, holding that under Ohio law, the following factors are determinative to the enforceability of a forum selection clause: (1) the commercial nature of the contract, (2) the absence of fraud or overreaching, and (3) whether enforcement would otherwise be unreasonable or unjust.7

However, a minority of courts have held floating forum selection clauses to be unenforceable because the floating nature of the selection meant that the lessee could not, at the time it entered into the lease, know or evaluate the risk of being subjected to the exclusive jurisdiction of the courts of some yet-to-be-determined state. Applying the Ohio three-pronged test set forth above, the Ohio Supreme Court in Preferred Capital Inc. v. Power Engineering Group Inc. found the floating forum selection clause to be against Ohio public policy because "even a careful reading of the clause by a signatory would not answer the questions of where he may be forced to defend or assert his contractual rights."8

The court found it important that NorVergence knew it would assign the leases immediately after execution but did not disclose this to lessees.9 The court concluded that, though floating forum selection clauses in commercial contracts are generally enforceable, where "one party to a contract containing a floating forum selection clause possesses undisclosed information of its intent to assign its interest in the contract almost immediately to a company in a foreign jurisdiction, the forum selection clause is unreasonable and against public policy absent a clear showing that the second party knowingly waived personal jurisdiction and assented to litigate in any forum." (The court failed to indicate what would constitute such "clear showing.")10

In earlier non-NorVergence related decisions, the courts in Copelco Capital Inc. v. Shapiro11 and AT&T Capital Leasing Services Inc. v. CJP Inc.12 also held that floating forum selection clauses similar to those found in NorVergence leases are unenforceable because these clauses do not provide the lessee notice of the specific forum in which litigation would be required. This line of reasoning directly contradicts the finding of the Aliano Bros. court with respect to the issue of notice, specifically, that "[t]here was no possibility of ... a [forum selection] dispute here, because the forum selection clause designates the state of suit unequivocally; it is the headquarters state of either NorVergence or, if the contract has been assigned, of the assignee."13

So, although some courts have held that NorVergence-like floating forum selection clauses are not enforceable, the majority of courts have upheld such provisions. In any event, lessors could consider modifications to these provisions to include an acknowledgment by the lessee that it is agreeing in advance to the forum of the ultimate assignee, even though it is not then presently determinable, so as to facilitate the funding of the purchase and leasing of the financed equipment. Those lessors that choose to delete the "floating" text from their forms will have some risk that a prospective assignee might insist on amending the forum provision of the lease so that the assignee's home state becomes the stipulated forum, and hope that the lessee is amenable to such a change.

Financing forms often include a provision in which both parties agree to waive a trial by jury in any litigation between them. Financing companies prefer that a dispute be decided on legal principles better understood by a judge, rather than by the laypeople on a jury who might get the law wrong-or allow their sympathies for local lessees or guarantors to influence their deliberations. Most courts throughout the country will enforce these provisions, but they could require a meaningful confirmation that both parties have agreed to waive this right.

The same court that had held a NorVergence lease's floating forum selection clause to be enforceable14 subsequently held that the lease's jury trial waiver clause was unenforceable because it was placed inconspicuously at the end of a paragraph titled "Applicable Law" and printed in the same font as most of the other provisions in the lease.15 The court did note that other judges in the same district had reached a contrary result with respect to the same form of lease.

In a more recent case, the Seventh Circuit had occasion to reverse a district court ruling that the jury trial waiver in a NorVergence lease (sought to be enforced by the plaintiff/assignee) was invalid for a number of different reasons.16 Arguably, the district court's decision might have stemmed from its sympathy for the lessee, given the allegations that the lessee had been the victim of a fraud. The circuit court, however, found no more reason-under state law (Illinois in this case)-to invalidate this jury trial waiver based on the lessee's fraud allegations than would be applicable to any number of other provisions in standard contracts that are routinely enforced.

The district court in the above-referenced NorVergence case deemed the jury trial waiver to be inconspicuous and therefore vulnerable. Drafters of financing documents often boldface or capitalize the text of provisions that must be "conspicuous" to be enforceable under applicable law or prudent practice. For example, certain warranty disclaimers included in a lease will be enforced only if "conspicuous,"17 and it is common practice to capitalize those disclaimers. Similarly, many financing forms highlight jury trial waivers to customers by holding or capitalizing the pertinent text. The referenced NorVergence case reminds us that it may be useful to include jury trial waivers and to make them conspicuous.

Leases and other financings are often assigned in connection with an outright sale of the related transaction to an assignee or by a collateral assignment to secure the funding by the lessor's assignee of the related equipment purchase and lease to the lessee. Under UCC 9-404, the assignee "stands in the shoes" of the assignor and is susceptible to the lessee/debtor's right to assert defenses that it might have against the original lessor/secured party.18

However, if the document contains a "waiver of defenses provision," UCC provides that assignees satisfying certain requirements may enforce the payment obligations,19 regardless of typical defenses that the lessee/debtor may have against the original lessor/secured party.20 In order for any assignee to succeed, it must have taken the assignment for value, in good faith, and without knowledge of defenses that would entitle the obligor to stop making payments under an ordinary contract.

Consider the implications of fraud allegations in the IFC Credit Corp. jury trial waiver case referenced above.21 After the district court judge in that case found the jury trial waiver to be unenforceable and sent the case to a jury, the U.S. district court responded to certain motions by the assignee and commented that an assignee's right to collect may be affected by a lessee's defenses based on fraud.22 While mentioning both fraud in the inducement and fraud in factum, the court was not entirely clear on the relevance of any distinction to be made between these two types of fraud.23 The jury denied the assignee's request for damages on the defaulted lease based on the lessee's defense of fraud in factum.

An example of fraud in factum is having an obligor sign a document without knowing, or having a reasonable opportunity to learn, what it is signing. (For example, the obligor signs a lease thinking it to be something entirely different, such as a request for sales literature.) As pointed out by the circuit court in the above-referenced IFC Credit Corp. case, this egregious type of fraud is one of the very few "real defenses" that would prevent enforcement even by a good faith, for value assignee satisfying all the requirements to be a holder in due course. The other real defenses include infancy, duress, lack of legal capacity, illegality of the transaction that would nullify the obligation of the obligor, and discharge of the obligor in insolvency proceedings.

Many of the NorVergence assignees attempting to enforce the collection of lease payments relied on waiver-of-defenses clauses when they encountered vigorous challenges to the enforceability of these clauses. A lessee's waiver of defenses will be enforced against it unless it can successfully raise real defenses, such as fraud in factum.

Some NorVergence assignees seem to have suffered from guilt by association. For example, an unpublished opinion by a Michigan appellate court suggested that because the assignee "stood in the shoes of NorVergence," and NorVergence fraudulently induced the lessee to enter into the lease, the lease was voidable by the lessee regardless of the actions of the assignee.24 This case did not mention whether the lease included a waiver-of-defenses provision or if the assignee would have been protected by the waiver. In another case, a U.S. district court appeared to make it easier for NorVergence lessees claiming fraud and/or fraudulent misrepresentation to proceed to trial without making clear the nature of, and possible assignee participation in, that fraud.25

Thankfully, some of the NorVergence courts have respected the established legal and industry standard protections on which funding sources often rely. In a rather brief decision in favor of a NorVergence assignee, an Iowa appellate court gave short shrift to the lessee's argument that the assignee's close relationship with NorVergence should bar the assignee from collecting on a lease tainted with NorVergence's purported fraudulent and unconscionable conduct. The court indicated-without much explanation-that the hell-or-high-water provisions in the lease cut off defenses of fraud and unconscionability.26

Bad facts also inspire well-intended, but sometimes commercially injurious, overreactions. Consider a recent case with a yet-to-be-determined outcome for assignees in which a Florida appellate court reversed a trial court's dismissal of a claim by the Florida attorney general against seven NorVergence assignees under the Florida Deceptive and Unfair Trade Practices Act.27 When dismissing the attorney general's claim under the act, the trial court (thankfully) focused on the legality of longrecognized provisions in the leases that obligate lessees to pay.28 However, the appellate court also indicated that various factual allegations concerning the possible overvaluing of the equipment and disparities in rental costs for the same equipment29 needed to be examined more closely to determine the possible culpability of assignees.

The Florida appellate court's holding is indicative of how the assignees' conduct may be scrutinized when determining whether it should rely on a waiver of defenses or other traditionally sound UCC and contract protections. The appellate court in that case also faulted the trial court for employing only the UCC definition of "consumer lease"-limited to a lease of goods to be used primarily for personal, family, or household purposes-rather than the broader definition of "consumer" in the Florida Deceptive and Unfair Trade Practices Act. This "creeping consumerism," should it become a trend, would be especially troublesome for financing parties.

Federal regulators in the FTC have also aggressively pursued at least one assignee, IFC Credit Corp., to prevent it from collecting from NorVergence lessees. (IFC's recent settlement with the FTC is discussed at the end of this article.) In Federal Trade Commission v. IFC Credit Corp., a magistrate judge granted IFC's motion to dismiss one count of the FTC's complaint seeking to deny enforceability of the floating forum selection clause found in the leases that IFC had acquired,30 but it denied IFC's motions on two other counts.31

At this very early stage in the lawsuit, the court appeared to be quite deferential to the FTC's arguments against IFC IFC argued that the lessees were small businesses and religious and other not-for-profit organizations and were not "consumers" under the Federal Trade Commission Act (FTCA). However, the court32 chose not to apply the UCC's more limited definition of "consumer" but instead defened to the agency's interpretation of the FTCA as including transactions involving goods used for other than personal, family, or household purposes. The court also listed many instances of alleged complicity by IFC in NorVergence's fraudulent scheme sufficient to wanant a trial.

Some of the statements made by the court indicate a lack of understanding of financing industry practice. For example, the court refers to IFC's purchase of leases "at a discount," perhaps implying that IFC knew it was purchasing questionable paper, when what IFC paid may have merely equaled the present value of an aggregate payment steam, computed using a reasonable discount rate of interest.

Additionally, the court surmised that including waiver-of-defense clauses in the leases, which were drafted as stand-alone equipment leases distinct from the related services, was indicative of a NorVergence "scheme." In any event, to the extent that an assignee can be proven to have been aware of or part of a deceptive and fraudulent scheme, the UCC would not permit such an assignee to take advantage of a waiver-of-defenses clause, whether or not the lessees are justifiably characterized as consumers.

Yet another example of how bad facts may result in bad law involves a Seventh Circuit NorVergence decision holding against an assignee with respect to a standard contract construction issue, unrelated to the UCC-based assignee protections. In IFC Credit Corp. v. Burton Industries Inc.,33 the lessee had signed both NorVergence's standard lease form and a "hardware application." The lease included provisions for hell-or-high-water rental obligations, a waiver of defenses in favor of assignees, and-of special relevance to this decision-a merger clause stating that the lease terms were the complete and exclusive statement of the agreement and that terms not contained in the lease would not be legally enforced. Despite the inclusion of these various protective provisions in the lease, the court relied instead on a condition in the hardware application providing that the lease was not binding until the equipment was installed.34

Although the equipment was delivered and the lessee signed a delivery and acceptance receipt, the court determined that the lease did not commence because the equipment was never installed, leaving the assignee with no legal right to collect.35 Whether or not the facts of this case are common to other NorVergence lease situations, this ruling should be of concern to any assignee because the holding suggests that a court may ignore a merger clause in a lease and consider the resolution of issues pertinent to the lease by looking to some other document executed simultaneously with the lease.

Defense counsel in some of the NorVergence cases relied on clever trial tactics and not just substantive legal defenses to escape remaining obligations to assignees of these leases. Some counsel argued that the assignees were barred by the preclusive effect of previous judgments against NorVergence awarded to various regulators such as the FTC and by attorneys general in Illinois and Massachusetts. Although the initial judgments had declared the leases to be unenforceable by NorVergence, three decisions (involving IFC Credit and certain others) have held that because the assignees were not parties to these suits, these judgments did not preclude the assignees from pursuing enforcement.36 These decisions suggest that leases that are otherwise unenforceable by an original lessor against lessees that successfully raise a fraud in the inducement defense may be enforceable by an assignee if it acted in good faith and without knowledge of the purported fraud.

Yet another tactic was used in a recent case to prevent an assignee from collecting assigned NorVergence lease payments against seven lessees that alleged fraud in the factum and fraud in the inducement as defenses to the assignee's collection actions. In that case brought by the assignee, but without including NorVergence as a party, the appellate court affirmed a trial court's dismissal of the assignee's actions after finding that the lessees' burden of proving the alleged fraud was too great to permit the suit to proceed. The basis for that holding was that the lessees' fraud allegations could be proven only if NorVergence was a party, and it had not been added as a party to the suit, and was prevented by its bankruptcy from joining in pending litigation against these lessees.37

The court might have been unsympathetic to the assignee because it continued to purchase leases from NorVergence after learning of numerous immediate complaints by other NorVergence lessees. Curiously, the court deemed NorVergence to have been an "indispensable party" (i.e., essential to the final adjudication of the related issues) even though it did not discuss the potential effect of the alleged fraud on the assignee's right to collect.38

Although fraud allegations can cause a sympathetic reaction by judges, juries, and governmental and other consumer advocates, distinctions regarding the type of fraud purportedly committed in connection with the assigned payment are critical in determining an assignee's right to collect. Consider, for example, the impact of this distinction in the Seventh Circuit's jury trial waiver decision discussed above.39 A lessee that was fraudulently induced to enter into a lease may engender a great deal of sympathy, but current UCC law concerning waivers of defenses clearly supports the enforceability of assigned leases if, when assigned, the assignee was acting in good faith and without knowledge of defenses that the lessee may have against the assignor.

Clearly, inespective of any statutory or contract rights, assignees that participate in fraudulent schemes, or have knowledge of the fraud, will not be able to collect unpaid rentals. If, however, the assignee satisfies all the requirements for enforcing a waiver of defenses under Section 9-403 of the Uniform Commercial Code,40 then the only defense based in fraud that should prevent the assignee from enforcing the lease would involve fraud in factum. Any lessee raising this defense in a typical lease financing will find it very difficult to prove to a judge or a jury that it had no idea what kind of document it was signing when it committed to lease and pay rent for its equipment.

The import of all of this to funding sources is that , although a bad lease originator can undermine the collectability of assigned lease payments, in most circumstances, unless involving the most egregious type of fraud or the assignee's own bad conduct, the "good guys" (i.e., responsible and honest assignees) should prevail.

Since the NorVergence debacle first developed, there has been considerable discussion within the leasing and finance industry as to what lessons may be learned from the related fallout. In hindsight, perhaps more due diligence should have been done to ensure that the vendor was intending to perform and was capable of performing the services that were essential to the value of the financed equipment. Although the UCC protections discussed in this article should still support the certainty of an assignee's right to payment, it may be prudent to consider the circumstances giving rise to the payment obligation.

However, the equipment finance industry has been, and will likely continue to be, victimized by fraudulent schemes. Better diligence in the funding process could reduce the likelihood that a funding source will be duped. Financing parties must continue to hope that the fundamental protections found in the UCC are not undermined by bad case law or "creeping consumerism" that leads to legislative or other governmental attacks on these protections.

This creeping consumerism might be the most dangerous legacy of the NorVergence cases. Based on understandable feelings of sympathy for defrauded small businesses, there has been considerable pressure to bypass existing law favoring good-faith assignees by expanding commercial law definitions of "consumer" to include such small businesses, and by ignoring previous precedents concerning forum selection and waiver-of-defenses clauses. In that regard, a recent settlement of NorVergence-related charges is especially noteworthy.

IFC, one of the most active NorVergence assignees, reached a settlement with the FTC and the attorneys general of several states covered by a settlement order issued on November 4, 2008, relating to financing arrangements having an aggregate balance of $250,000 or less.41 The settlement order enjoins IFC from misrepresenting that its customers have waived or are precluded from asserting any defenses, or that these customers are obligated to pay IFC under any other liability theory, including fraud or misrepresentation.42

Additionally, the settlement order precludes IFC from collecting on a finance contract when, based on information available to IFC at the time it acquired the contract, a "reasonable business person in the financing industry" would conclude that the contract materially misstated the consideration to be received by the customer or that the contract was procured by deception.43 In addition, under its settlement with the states' attorneys general, IFC must give NorVergence lessees the opportunity to enter into agreements with IFC that eliminate a substantial portion of what remains owing under such leases.44

Although this settlement should not have the same precedent implications as relevant case law, it may be instructive to financing providers that participate in this market. One unfortunate lesson to be learned from the forced settlement is that having the "law" on one's side when attempting to enforce a commercial transaction may not be enough when weighing the relative equities of the parties.

The takeaway from this is that financing parties may bear a greater risk of accurately determining the business realities giving rise to the assigned payment obligation. However, by imposing this due diligence requirement on financing parties, the courts and government agencies have undermined the clear provisions of the commercial law adopted by each of the states as well as the established case law supporting the enforcement of these statutes.

Furthermore, if such an analysis is required of financing providers, they may be increasingly more reluctant to provide necessary financing in an already illiquid market. Ultimately, this could prove to be more harmful to small businesses that need prompt and flexible financing of capital equipment acquisitions. Continued advocacy regarding these issues is essential to avoid further erosion of the long-standing statutory protections that are fundamental to the valued business purpose for which these statutes were enacted: access to capital by large and small businesses.

The authors would like to thank Erin S. Staton, an associate in the Washington, D. C, office of Vedder Price PC. , for her assistance with this article.

1. Peter R. Silverman and James H. O'Doherty, Float Like a Butterfly, Sting Like a Bee: The Lure of Floating Forum Selection Causes, 27-FALL Franchise L.J. 119 (Fall 2007).

6. These cases include Susquehanna Patriot Commercial Leasing v. Holpher Indus., 928 A.2d. 278 (Pa. Super. 2007) (also finding that a floating forum selection clause may be unenforceable if it seriously impairs a party's ability to pursue its cause of action) and Liberty Bank v. Best Litho Inc., 2007 WL 1201724 (Iowa App. April 25, 2007) (also finding that a floating forum selection clause is unenforceable when its enforcement would be unreasonable or unjust); StudebakerWorthington Leasing Corp. v. New Concepts Realty Inc., 16 Misc.3d. 1119(A) (N.Y.Dist.Ct. 2007); Popular Leasing USA Inc. v. Terra Excavating Inc., 2005 WL 1523950 (E.D.Mo. June 28, 2005); Sterling National Bank as Assignee of NorVergence Inc.v.Eas tern Shipping Worldwide Inc., 826N.Y.S.2d. (App . Div. 2006) (also noting that the sophistication of the parties to the contract supported the enforceability of the floating forum selection clause); and OFC Capital v. Colonial Distr�b. Inc., 648 S. E. 2d. 140 (Ga. App. 2007) (also noting that the forum selection clause was highlighted in bold and that the lessee's executive director had initialed the page of the lease containing that clause).

8. Preferred Capital Inc. v. Power Eng' g Group Inc., 860 N.E.2d. 741 (Ohio 2007).

10. Id. This decision forced the Sixth Circuit to come to a different conclusion concerning the enforceability of floating forum selection clauses under Ohio law than it had in Preferred Capital v. Associates in Urology referenced above. See Preferred Capital Inc. v. Sarasota Kennel Club Inc., 489 E3d 303 (6th Cir. 2007).

11. Copelo Capital v. Shapiro, 750 A. 2d. 773 (N.J. Super. 11. Copelco Capital Inc. v. Ct App. Div. 2000).

12. AT&T Capital Leasing Services Inc. v. CJP Inc., No. 97-1804, 1997 Mass. Super LEXIS 181 (Mass. Su per. Ct. 1997).

14. Popular Leasing USA Inc. v. Terra Excavating Inc., 2005 WL 1523950 (E.D.Mo. June 28, 2005).

15. Popular Leasing USA Inc. v. Terra Excavating Inc., 2005 WL 2468069 (E.D.Mo. Oct. 6, 2005).

16. IFC Credit Corp. v. United Bus. & Indus. Fed. Credit Union, 512 F.3d. 989 (7th Cir. 2008).

19. At least those contained in what the UCC defines to be nonconsumer transactions where the goods subject to the agreements are not being used primarily for personal, family, or household purposes.

21. IFC Credit Corp. v. United Bus. & Indus. Fed. Credit Union, 474 F.Supp.2d. 945 (N. D. 111. 2006).

24. Custom Data Solutions Inc. v. Preferred Capital Inc., 733 N.W2d. 102 (Mich. App. 2006).

25. IFC Credit Corp. v. Century Realty Funds Inc., 2006 WL 435695 (M.D.Fla. Feb. 21, 2006).

26. Liberty Bank, F.S.B. v. Diamond Paint and Supply Inc., 2006 WL 2691719 (Iowa App. Sept. 21, 2006).

27. State of Florida, Office of the Attorney General, Dep't of Legal Affairs v. Commerce Commercial Leasing, LLC, 946 So. 2d 1253 (Fla. App. 2007).

28. For example, hell-or-high-water, waiver of defenses, and disclaimers of warranties.

29. The "MATRIX" box turned out to be a relatively inexpensive router that seemingly did not justify the large - in some cases at least - amount of rentals being charged under the leases.

30. Such holding being consistent with the Seventh Circuit's decision in Aliano Bros, mentioned above.

34. As a contemporaneous written document whose admission into evidence did not violate Illinois's parole evidence rule.

36. See, e.g., IFC Credit Corp. v. Magnetic Technologies Ltd., 859 N. E. 2d 76 (111. App. 2006); IFC Credit Corp. v. Aliano Bros. Gen. Contractors Inc., 2006 WL 1843387 (N.D.Ill. June 28, 2006); and William Palumbo Ins. Agency Inc. v. Irwin Bus. Fin. Corp. and IFC Credit Corp., 21 Mass.L.Rptr. 121 (Mass. Super.

38. See also OFC Capital v. Schmidtlein Flee. Inc., 656 S. E. 2d 272 (Ga. App. 2008), in which the appellate court upheld the NorVergence lease's floating forum selection clause, but remanded to the trial court to determine whether or not NorVergence was an indispensable party.

39. IFC Credit Corp. v. United Bus. & Industrial Fed. Credit Union, 512 E3d 989.

40. With references to other sections of the UCC including the provisions of negotiable instruments law that specify which defenses can be asserted against a holder in due course.

41. Federal Trade Comm'n v. IFC Credit Corp., Settlement Agreement Order (Case No. 07 C 3155) (N.D.Ill. Nov. 4,

Robert W Ihne is an attorney with 25 years of experience in commercial financing, primarily in the areas of secured transactions and equipment leasing. That experience has included drafting, negotiating and providing advice related to direct transactions, syndications, vendor financing arrangements, and various forms of credit enhancements such as guaranties and letters of credit.

For more than 20 years he was employed by CIT Group Inc. In addition to the usual transactional work there, he bore primary responsibility for educating CITs attorneys and businesspeople concerning the implications of the revisions to Article 9 of the Uniform Commercial Code. He clerked for Hon. John J. Gibbons of the United States Court of Appeals for the Third Circuit. Mr. Ihne is a member of the American Law Institute and a fellow of the American College of Commercial Finance Lawyers. He has served on the ELEA legal committee and was a recipient of the ELFA Excellence in Leasing Award for 2006. He has published articles in this journal as well as The Secured Lender, Uniform Commercial Code Law Journal, ALI-ABA Business Law Course Materials Journal, UCC Bulletin, and Equipment Leasing Today. Mr. Ihne received his BA from Amherst College, Amherst, Mass.; a PhD from Columbia University Graduate School of Arts and Sciences, New York City; and a JD from Yale Law School, New Haven, Conn.

Edward K. Gross joined Vedder Price in Washington, D.C., in 2006 as a member of the equipment finance group. He co-chairs the firm's general equipment financing subgroup and its business aircraft subgroup. He represents bank-affiliated and large independent equipment financing companies in all aspects of equipment finance, and for more than 20 years this work has included documenting, structuring, negotiating, syndicating, and enforcing equipment finance transactions. In addition, he is an expert on syndication transactions, including large portfolio purchases, one-off sales and assignments, discounting, back-leveraging, and participation transactions. Mr. Gross writes for this and other finance journals and contributes to books published by the Practising Law Institute, and he has been a presenter at numerous seminars sponsored by ELFA, ALI-ABA, and various subcommittees of the American Bar Association. He earned a BA at the University of Maryland, College Park, and a JD at the University of Baltimore School of Law. In addition to serving on the editorial review board of this journal, Mr. Gross chairs the air, rail and marine subcommittee of the ELFA legal committee and is the 2008 recipient of the ELFA Distinguished Service Award.

Ihne, Robert W "Leasing Law After NorVergence". Journal of Equipment Lease Financing (Online), The. FindArticles.com. 15 Mar, 2010. http://findarticles.com/p/articles/mi_qa5416/is_200901/ai_n31428384/

Leasing Law After NorVergence

Journal of Equipment Lease Financing (Online), The, Winter 2009 by Ihne, Robert W,Gross, Edward K

Journal of Equipment Lease Financing (Online), The, Winter 2009
by Ihne, Robert W,Gross, Edward K