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October 17, 1994

ALLAN E. NEWLANDS, individually and d.b.a. MATRIX MARKETING STRATEGISTS, Defendant (s).

The opinion of the court was delivered by: SMITH


 This motion requires the Court to decide the following questions: (1) is the Lease entered into by the parties a financing lease, so that the plaintiff's obligation was limited to financing defendant's equipment purchase, and so that defendant was obligated to look to the supplier of the equipment; (2) has defendant created a material issue of fact as to whether plaintiff represented to him that plaintiff and the supplier of the equipment were all "part of the same company" such that plaintiff acted fraudulently and in bad faith; (3) is the Lease unconscionable and unenforceable; and (4) is plaintiff entitled to the full amount of damages it claimed under the Lease?


 Plaintiff Siemens Credit Corporation ("Siemens Credit") has filed this motion for summary judgment against defendant Allan E. Newlands, individually and doing business as Matrix Marketing Strategists ("Matrix"). Plaintiff seeks to recover lease payments on which defendant has defaulted. The lease was for equipment which Siemens Credit acquired, at defendant's request, from Siemens Information Systems, Inc. ("SISI"), the manufacturer and supplier of the equipment. Siemens Credit acquired the equipment so that it could lease it back to defendant.


 Defendant prints brochures and materials for mass marketing. In need of advanced printing technology and machinery to satisfy his customers' needs, defendant, prior to March 22, 1991, conducted several meetings and discussions with sales representatives of SISI, an equipment manufacturer and supplier not a party to this action.

 Mr. Newlands discussed his company's specific needs with SISI's sales representatives, and he was assured by the representatives that the equipment which is the subject of this litigation would meet those needs. Newlands Decl. PP 2-3. Based on these assurances, he entered into an Equipment Purchase Agreement ("Purchase Agreement") and an Equipment Maintenance Agreement ("Maintenance Agreement") with SISI, on March 22, 1991, and an Equipment Purchase Contract Addendum with SISI, on March 29, 1991. Id. PP 4-5.

 Financing arrangements were also discussed during the course of the meetings with SISI's sales representatives. Mr. Newlands told the sales representatives that it was important to him that he "purchase or lease, and finance, the equipment through the same company, in order to avoid a situation where payments would have to be made to a lender for equipment that was defective, and having the lender claim that that was not the lender's problem." Id. P 10. Mr. Newlands, in other words, did not wish to be precluded from asserting defects in the equipment as a defense to making lease payments. Id. P 9.

 Mr. Newlands alleges that the sales representatives told him that the equipment could be leased, and that financing for the lease could be arranged through "our (Siemens) credit company." Id. P 6. These individuals represented to him that the manufacturer and lender were all part of the same company, and that the problem he was concerned about would not occur. Id. P 10. There are no allegations that any employee of Siemens Credit made any misrepresentations.


 Financing was ultimately arranged through plaintiff, Siemens Credit, a corporation organized and existing under the laws of the State of Delaware and qualified to transact business in the State of California. Joint Statement of Undisputed Facts, filed September 16, 1994, P 1.

 On May 13, 1991, plaintiff and defendant entered into a written Master Equipment Lease Agreement ("Master Agreement") and Leasing Schedule (subsequently modified by Contract Addendum Supplemental No. 1 dated October 15, 1991) (collectively "Schedule No. 1"). On June 26, 1992, the parties entered into a second Leasing Schedule ("Schedule No. 2") (The Master Agreement, Schedule No. 1 and Schedule No. 2 shall be collectively referred to as the "Lease"). On May 14, 1991, the parties also entered into a written Purchase Agreement Assignment (the "Assignment"), which assigned defendant's rights in the Purchase Agreement between defendant and SISI to plaintiff, so that plaintiff could purchase the equipment from SISI and lease it to defendant. Newlands Decl., Ex. D

 Under Paragraph 9(a) of the Master Agreement, the failure to make monthly rental payments constitutes default. Plaintiffs, therefore, repossessed the equipment from defendant in June of 1993, and re-leased it to Neodata, Inc. on a six-month lease at $ 8,500 per month, starting on December 1, 1993.

 Defendant claims that the equipment never worked properly and proved unsuitable and unable to perform the tasks which SISI's sales representatives had represented it would perform. The equipment was not capable of performing, due to both shortcomings in design, and defects in its workmanship. Newlands Decl. P 11. Due to the equipment's shortcomings, he was unable to fulfill his production commitments, resulting in significant loss of income and an inability to make the payments under the Lease. Id. P 12.

 Under Paragraph 9(b) of the Master Agreement, plaintiffs are entitled to all past due Lease payments and all future Lease payments discounted at 6% per annum. The balance due for rental payments under the Lease is $ 206,154.86. Joint Statement P 13. The Lease also provides that upon defendant's default, it is entitled to its attorneys' fees and prejudgment interest on the Lease balance. Plaintiff claims attorneys' fees in the amount of $ 17,209.08, and prejudgment interest in the amount of $ 22,382.72. Additionally, although the Lease does not require plaintiff to re-sell or re-lease the equipment, plaintiff originally proposed giving defendant a credit in the amount of $ 25,500.00 for payments received from Neodata. This brings the total damages claimed by plaintiffs to $ 220,246.66. Id. PP 13, 15-16.


 Defendant does not dispute that he ceased making payments under the Lease. Instead, defendant opposes plaintiff's motion for summary judgment on the grounds that (1) plaintiff "breached the Equipment Purchase Agreement," in that the equipment was not free from defects in workmanship and materials as warranted; (2) that plaintiff breached oral and express warranties of suitability and fitness; (3) that plaintiff acted in bad faith and fraudulently in representing to defendant that plaintiff and SISI (or its successor in interest, Siemens Nixdorf (hereinafter, "Nixdorf") were all "part of the same company" and defendant was falsely led to believe he was purchasing and leasing the equipment from the same company; and (4) that the Lease Agreement was unconscionable and unenforceable because it is adhesive in nature, purports to eliminate breach of express or implied warranties as defenses to the obligation to make lease payments, and was secured through unequal bargaining, misrepresentation or fraud.

 Plaintiff, citing two Fifth Circuit cases and a Seventh Circuit case, argues that these are affirmative defenses and that Fed. R. Civ. P. Rule 8(c) requires an answering party to set forth affirmative defenses in its answer or consider them waived. While Rule 8(c) lists fraud as an affirmative defense, it is less clear whether defendant's other arguments are affirmative defenses, or whether they negate an element of plaintiff's prima facie case. See In re Rawson Food Service, Inc., 846 F.2d 1343, 1349 (11th Cir. 1988). The Court need not ...

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