Clark v. Leasecomm Corp.

12 Mass. L. Rptr. 267
CourtMassachusetts Superior Court
DecidedAugust 21, 2000
DocketNo. CA994177E
StatusPublished
Cited by3 cases

This text of 12 Mass. L. Rptr. 267 (Clark v. Leasecomm Corp.) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Clark v. Leasecomm Corp., 12 Mass. L. Rptr. 267 (Mass. Ct. App. 2000).

Opinion

Fabricant, J.

INTRODUCTION

This class action challenges the. practice of the defendant Leasecomm Corporation (“Leasecomm”) in bringing suits for breach of its equipment leasing contracts in Massachusetts District Courts, pursuant to forum selection clauses in its lease agreements, under circumstances in which Massachusetts courts would not otherwise have jurisdiction over the lessees. The plaintiffs have also named Leasecomm’s parent corporation, Microfinancial, Inc., based on a theory of agency. Presently before the Court are motions to dismiss filed by both defendants on a list of procedural and substantive grounds. For the reasons that will be explained, Leasecomm’s motion will be allowed in part and denied in part, and Microfinancial’s motion will be allowed.

[268]*268BACKGROUND

The complaint3 alleges as follows. Defendant Leasecomm is a Massachusetts Corporation and is a wholly owned subsidiary of defendant Microfinancial, Inc., also a Massachusetts Corporation. Leasecomm is in the business of “microticket” leasing; that is, it leases items of business equipment4 with relatively low value, usually less than $5,000. Its typical customer, according to the complaint, is “a small businessperson or an individual attempting to start a small business.”

Leasecomm operates through independent vendors who market the equipment to the customers and retain sole responsibility for delivering the leased property, furnishing any information or warranties, and providing any service or support. Leasecomm provides the vendors with standard form applications and lease contracts. Typically, “the vendor inserts the lease terms into the Agreement, has the customer sign the Agreement and application, and forwards these documents along with the customer’s down payment to Leasecomm.” Leasecomm signs the agreement, returns a copy to the lessee, and begins collecting monthly payments.

Leasecomm’s standard form leasing agreement is headed, at the top of the front page in large capital letters, “Non Cancellable Equipment Lease Agreement.” There follow the terms of the lease, including identification of the lessee and the equipment, and the amount and number of payments. About two thirds of the way down the front page appears the following language, in bold face type, underlined:

The parties hereby agree that this agreement is made in, governed by, to be performed in, and shall be construed in accordance with the laws of the Commonwealth of Massachusetts. They further consent and submit to the jurisdiction of the Courts of the Commonwealth of Massachusetts and expressly agree to such forum for the bringing of any suit, action or other proceeding arising out of their obligations hereunder and expressly waive any objection to venue in any such Courts and waive any right to a trial by jury so that trial shall be by and only to the Court. It is further agreed and understood that the corporate headquarters of Leasecomm Corporation is located within the venue of the District Court Department of the trial Court, within Middlesex County.5

About one inch below this provision is a signature block for the lessee. Below that appears a personal guaranty with another signature block for an individual guarantor.

The complaint further alleges that Leasecomm has sued thousands of its customers in Massachusetts pursuant to the forum selection clause in its lease agreements, although “few customers reside or have a place of business in Massachusetts or any other New England state at the time of signing the lease agreement or at the time of being sued by Leasecomm in Massachusetts.” Such use of the forum selection clauses, according to the complaint, is not fair or reasonable, because “class members are individuals and small businesses for whom litigating in a distant forum is prohibitively costly, inconvenient, and time-consuming, particularly in view of the relatively small amounts at issue.” Further, the clauses “are not negotiable,” “Leasecomm’s bargaining power and financial resources far exceed those of class members,” and “class members have a number of meritorious defenses to the claims asserted against them by Leasecomm,” some of which require witnesses who are beyond the subpoena power of Massachusetts courts. Some class members also have third-party claims against vendors, which should be litigated together with Leasecomm’s claims, and cannot be raised in Massachusetts. In addition, “Leasecomm is well positioned to litigate in the home states of the lessees /guarantors, since it is already represented throughout the country by hundreds of attorneys who routinely domesticate Massachusetts judgments and pursue collections activities on behalf of Leasecomm.”

The complaint further alleges that Leasecomm’s conduct under the forum selection clause of its leases’ is unfair and deceptive, in that “it has the purpose and effect of preventing class members from defending lawsuits brought against them.” In support of this assertion, the complaint alleges that Leasecomm’s policy and practice is to enter into agreements only with lessees “at substantial distances from eastern Massachusetts,” to do so only “where the value of the property, and hence the cost of the lease, is relatively low, usually not more than $5,000,” and to accept “nearly all applicants, regardless of the lessee’s credit history and ability to pay.” These alleged facts, the complaint concludes, indicate that “Leasecomm’s primary motivation is its ability to collect on a defaulted lease, as opposed to the lessee’s ability to perform the lease.”

The named plaintiffs are five individuals and the corporations through which two of them operate businesses. The individual plaintiffs live, respectively, in Louisiana, California, Florida, Iowa, and Oregon. The two corporate plaintiffs are organized, respectively, under the laws of California and Oregon. Each of the individuals operates, or at the time in issue did operate or was attempting to start, a business employing three or fewer employees. Each plaintiff entered into a lease agreement with Leasecomm, with each individual executing the agreement both as business operator and as personal guarantor.6 Each thereafter stopped making payments under the lease agreement, in some cases after purporting to terminate it and attempting to return the equipment, due to dissatisfaction with the equipment or for other reasons. Each then became a defendant in an action brought by Leasecomm in a Massachusetts District Court to collect the remaining amount due under the lease agreement.

[269]*269The named plaintiffs in this action fall into three categories, based on the status of the proceedings in the actions brought by Leasecomm against them. The first category consists of defendants in suits brought by Leasecomm that are presently pending. The members of this group are Larry A. Clark (“Clark”), Elizabeth Landfield (“Landfield”), Alegre Auto Sales, Inc. (“Alegre"), a California corporation through which Landfield and her husband operate their business, and Emma J. Gamble (“Gamble”).

Leasecomm sued Clark in the small claims division of the Waltham District Court on or about February 26, 1999.7 The attorney who represents the plaintiffs in this action appeared for Clark, obtained transfer of the case from the small claims session to the regular civil docket, and then answered the complaint on August 25, 1999.8

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Newton v. LVNV Funding, LLC
33 Mass. L. Rptr. 100 (Massachusetts Superior Court, 2015)
Karapanos v. Pappas
28 Mass. L. Rptr. 527 (Massachusetts Superior Court, 2011)
Grant v. Leasecomm Corp.
14 Mass. L. Rptr. 225 (Massachusetts Superior Court, 2001)

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Bluebook (online)
12 Mass. L. Rptr. 267, Counsel Stack Legal Research, https://law.counselstack.com/opinion/clark-v-leasecomm-corp-masssuperct-2000.