Leasing News is a web site that posts information, news, and entertainment for the commercial leasing and finance industry. The News Edition is updated Monday, Wednesday and Friday.
Wednesday, June 8, 2011
Barron’s---Quotes Kit Menkin on FASB
######## surrounding the article denotes it is a “press release” and was not written by Leasing News nor information verified, but from the source noted. When an article is signed by the writer, it is considered a “by line.” It reflects the opinion and research of the writer. It is considered “bias” as it is the writer’s viewpoint.
"Vendor Verification" hits Pay dirt on First Inspection
The day after Leasing News ran the story about Lease Police and RTR Service in the creation of a "Vendor Verification Program" that included a special questionnaire, report from Lease Police, and custom designed site inspection, they received their first request.
"The entire system and process worked great and Jim Merrilee’s inspector was at the vendor’s the next day,” Bernie Boettingheimer, CLP, reports. “Two hours before the inspector was due to arrive, the vendor was called and he was furious. He refused to be interviewed by the inspector when he arrived, but the inspector observed that the office was an executive suite and the vendor was a tenant who occupied a mere 200 square feet on the second floor in the executive suite.
“The vendor was visibly shaken that his very thin (but passable) veneer had been stripped clean by one physical visit by someone representing a leasing company. This was a new threat to those who continue to prey upon our industry."
"Meanwhile three other LeasePolice subscribers received transactions from this same vendor. LeasePolice was able to examine a number of invoices from this vendor, all showing multiples of clone computer servers with an average unit price of approximately $8500 each plus related soft and hard costs.
“Most unusual was an invoice for over $60,000 with four clone servers to a used car dealer up in the panhandle of Texas.
“This just demonstrates the power of a Vendor Inspection Report (a physical visit to the vendor) and Lease Police’s ability to scan industry-wide for a particular vendor's activity."
"Some of our most vivid memories in life are when we recollect ‘our first times.’ Your first kiss, first car, first job, and first commission check - these are all indelibly imprinted in our minds. It’s the little things in life that are important and each one of us collects these ‘firsts’ to review over and over again.
"I will remember this ‘first’ for some time and I hope that my four subscribers do likewise. It is truly a great day when the 'good guys' win one!"
Bernie Boettigheimer, CLP
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Balboa Capital: Court Bypasses Lessor's Forum Selection Clause
By Thomas E. McCurnin*
On May 31, 2011, the Indiana Court of Appeals refused to domesticate a foreign judgment obtained by an equipment lessor on the grounds of a claim of forgery.
Balboa Capital, as assignee of a lease, leased equipment to an Indiana lessor in 2006. Although briefs and decision did not specify, it appears the lease was a first payment default. Balboa sued the Lessee in California State Court in 2007 and obtained a default judgment, based largely on its “forum selection clause” whereby the Lessee agreed that Orange County would have exclusive jurisdiction over the matter. In 2008, Balboa sued in Indiana, seeking to domesticate its California Judgment.
In response to the suit to domesticate, the Lessee claimed, for the first time, that the lease was forged and his signature does not appear on the document.
Balboa then brought up the fact that the Lessee verified delivery of the equipment, submitted a driver’s license, and other typical underwriting documents. Although there were some collateral issues as to whether these documents were properly before the Court, the trial court ruled that the “forum selection” clause was invalid because the Lessor did not sign the document, and awarded the Lessee its attorney fees. Balboa appealed.
Court of Appeal Holding
On appeal, the Court of Appeal ruled that whether or not the Lessee signed the lease documents, and therefore consented to jurisdiction was a question of fact, and the Lessee’s judgment against Balboa was therefore reversed and remanded. This leaves the parties in the position of litigating the authenticity of the signatures on the Lease on remand before the trial court.
Lessons for the Lessor
Ultimately if the lease is forged, the “forum selection” clause probably goes out the window. No amount of paper can protect the lessor from those claims. Although not stated in the briefs and the opinion, it seemed apparent that this was a first payment default, or Balboa would have argued that the Lessor actually made payments on the Lease, essentially a very good estoppel argument.
I question whether Balboa knew or suspected a forgery when it sought its California Judgment, as it was apparently a first payment default. If a lessor knows, or suspects the lease is forged, it makes little sense to use the “forum selection” clause, as that action may get tossed out. It makes more sense to try to resolve the forgery issue before litigation, either by contact with the lessor or a handwriting expert prior to commencing the suit.
Furthermore, since this lease was assigned to Balboa, from Flex Lease, it would seem that with the alleged forgery, Balboa might have wanted to again resolve that issue and make claim on the assignor before going down this litigation path.
The bottom line is that with any first payment default, the deal is inherently suspect, either a vendor fraud or a forgery. These issues should be thoroughly sorted out before engaging expensive lawyers.
*Thomas E. McCurnin is a partner in the law firm of Barton, Klugman & Oetting of Los Angeles, and specializes in banking and financial services. He has litigated issues involving questioned documents and lease assignments for over 30 years. He can be reached at firstname.lastname@example.org
Equipment Leasing Services joins “Broker/Lessor” list
A - City Business License | B- State License | C - Certified Leasing Professional |D - State(s) sales/use tax license |E - Named as "lessor" on 50% or more of lease contract signed. |
Broker-Lessor “A” List:
May---"The List"---- Mergers, Acquisitions & Changes
ACC Capital, Midvale, Utah (05/11) No longer a member of NAELB http://leasingnews.org/archives/May2011/5_25.htm#acc_capital
Equipment Acquisition Resources, Palatine, IL. (05/11) No evidence that Player filed personal bankruptcy.
Newcourt (05/11) Newcourt’s Hudson Controversial Move Back into Leasing
SunBridge Capital, Mission, Kansas (05/11) Adrian Weber back as ClearWest Capital, Overland Park, Kansas (http://leasingnews.org/archives/May2011/5_11.htm#weber_back)
LEAF Financial, Philadelphia, PA (05/11) Trend continues down
Marlin Leasing, Mount Laurel, NJ (05/11) Evergreen still makes profit, but hiring more sale personnel brings profit down. http://leasingnews.org/archives/May2011/5_09.htm#marlin_profit
Five Point Capital, San Diego, CA (05/11) Bulletin Board Complaint (Evergreen Clause) http://leasingnews.org/archives/May2011/5_04.htm#fivepoint_bbc
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Leasing Association 2011 Conferences
The 50th Anniversary Convention promises to be "the largest meeting of the equipment leasing and finance sector---Whoever you need to see is likely to be there!"
ELFA is now accepting proposals from those interesting in making a presentation
To view Leasing Association Events-Meetings Open to All, please click here.
CLP Spotlight---"Bud" Callahan, CLP--- Jeff Elliott, CLP
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