Costner Consulting Co. v. U.S. Bancorp

960 N.E.2d 1005, 195 Ohio App. 3d 477
CourtOhio Court of Appeals
DecidedAugust 4, 2011
DocketNo. 10AP-947
StatusPublished
Cited by47 cases

This text of 960 N.E.2d 1005 (Costner Consulting Co. v. U.S. Bancorp) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Costner Consulting Co. v. U.S. Bancorp, 960 N.E.2d 1005, 195 Ohio App. 3d 477 (Ohio Ct. App. 2011).

Opinion

French, Judge.

{¶ 1} Plaintiff-appellant, Costner Consulting Company (“Costner”), appeals the Franklin County Court of Common Pleas’ summary judgment in favor of defendant-appellee, U.S. Bancorp Business Equipment Finance Group (“US Bancorp”), on Costner’s claims to collect on an account and for breach of contract. For the following reasons, we reverse that judgment.

{¶ 2} In its complaint, Costner alleged that it was formerly known as Digital Imaging Systems Company (“DISC”), a vendor/supplier in the business of selling and servicing office equipment, including copiers, and that it is entitled to pursue this action for monies allegedly owed to DISC by US Bancorp. Costner’s complaint asserted claims on account and for breach of an express or implied contract. Costner’s claims arise out of a finance lease executed by Toshiba Financial Services (“Toshiba”) and Organized Living, Inc. (“Organized Living”). The lease documents include a value lease agreement, executed on July 13, 2004, and a lease supplement, signed by Organized Living on December 22, 2004, and by Toshiba on February 4, 2005 (collectively, the “lease”). A copy of the lease, which relates to certain identified copying equipment, is attached to Costner’s complaint.

{¶ 3} R.C. 1310.01(A)(7) defines a “finance lease” in accordance with UCC 2A-103. The official comment to R.C. 1310.01(A)(7) quotes the UCC to explain as follows:

[479]*479A finance lease is the product of a three party transaction. The supplier manufactures or supplies the goods pursuant to the lessee’s specification, perhaps even pursuant to a purchase order, sales agreement or lease agreement between the supplier and the lessee. After the prospective finance lease is negotiated, a purchase order, sales agreement, or lease agreement is entered into by the lessor (as buyer or prime lessee) or an existing order, agreement or lease is assigned by the lessee to the lessor, and the lessor and the lessee then enter into a lease or sublease of the goods.

In a finance lease, the lessor does not select, manufacture, or supply the goods, but acquires the goods in connection with the lease. R.C. 1310.01(A)(7). The lease here identifies Toshiba as the lessor, Organized Living as the customerfiessee, and DISC as the supplier. It is undisputed that Toshiba assigned the lease to US Bancorp.

{¶ 4} In simple terms, Toshiba agreed to provide equipment, services, and supplies to Organized Living in exchange for Organized Living’s monthly lease payments. The lease permitted Toshiba to assign its service and supply obligations, and DISC performed those obligations on behalf of Toshiba and billed US Bancorp for payment. The lease also entitled Organized Living to a specified number of black-and-white and color copies per month and established per-copy rates for overages, i.e., copies in excess of the specified monthly number. Toshiba and/or US Bancorp billed Organized Living for the monthly lease payments, plus any applicable amount for overages, as determined by meter readings conducted by DISC.

{¶ 5} With respect to DISC’S relationship with Toshiba and/or US Bancorp, Costner alleged as follows:

[Toshiba], as a lessor * * *, engaged dealers/suppliers (such as DISC) to provide labor, parts, drums, developer, toner, supplies (other than paper), etc. (hereinafter referred to as “goods and services”) for the * * * copiers that it leased to its customers, and the dealers/suppliers would bill [Toshiba] directly. This arrangement was the arrangement and agreement entered into between DISC and [Toshiba], and pursuant to that agreement DISC provided Organized Living, as lessee under the [Lease], with goods and services in Franklin County, Ohio on the account of, and pursuant to the agreement of, [Toshiba].

An affidavit by Costner’s president, William Costner, states that DISC and Toshiba agreed that DISC would provide supplies, service calls, and preventative maintenance to which Organized Living was entitled under the lease, and that DISC would make readings to determine Organized Living’s overages. DISC billed US Bancorp for the amount of Organized Living’s overages and a flat rate for DISC’S maintenance services. Mr. Costner states that DISC’S right to payment was not contingent upon US Bancorp’s being paid by Organized Living. [480]*480Costner alleged that US Bancorp has refused to pay invoices submitted by Costner, totaling $34,989.45.

{¶ 6} In April and May 2008, Costner and US Bancorp filed cross-motions for summary judgment. Based on Mr. Costner’s affidavit, Costner argued that DISC provided maintenance and meter-reading services to Organized Living, which Toshiba and/or US Bancorp was required to provide under the lease; that Costner billed US Bancorp directly for those services; that US Bancorp failed to pay Costner’s invoices; and that Costner’s right to payment was not contingent upon US Bancorp’s receipt of payment from Organized Living. Costner thus argued that there was no genuine issue of material fact as to US Bancorp’s liability and that Costner was entitled to judgment as a matter of law.

{¶ 7} In response to Costner’s motion, and in support of its own motion for summary judgment, US Bancorp argued that a written vendor agreement governed DISC’S rights and obligations vis-á-vis US Bancorp and that the vendor agreement required US Bancorp to pay DISC only after receiving payment from Organized Living, which filed for bankruptcy in 2005. US Bancorp filed a copy of the purported vendor agreement as an attachment to the affidavit of Melanie Pedersen, its customer service collection manager. Although signed by Mr. Costner on behalf of DISC, the vendor agreement is not signed by US Bancorp. The vendor agreement states, “As payment for the subcontracted service and supplies, the service, supply and meter portion of each monthly payment will be remitted to [DISC] on a weekly basis upon receipt.” (Emphasis added.) Thus, US Bancorp argued that it was under no obligation to pay DISC’S outstanding invoices because it has not received payment from Organized Living on US Bancorp’s corresponding invoices.

{¶ 8} On August 28, 2008, the trial court issued a decision denying Costner’s motion for summary judgment and granting US Bancorp’s motion for summary judgment. The trial court concluded that the vendor agreement controlled the relationship between DISC and US Bancorp and that the vendor agreement required US Bancorp to pay DISC only if, and when, it received payment from Organized Living. On September 2, 2010, the trial court denied a motion for reconsideration and rejected Costner’s argument that the vendor agreement was unenforceable because it was not signed by a US Bancorp representative. The trial court found that Mr. Costner’s signature, coupled with the parties’ performance, established mutual assent to the terms of the vendor agreement. Also on September 2, 2010, the trial court entered final judgment, incorporating its August 28, 2008 summary-judgment decision.

{¶ 9} Costner filed a timely notice of appeal and presently asserts the following assignment of error:

[481]*481The trial court committed prejudicial error in granting summary judgment for [US Bancorp] because there was a genuine issue of material fact and [US Bancorp] was not entitled to summary judgment as a matter of law.

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Bluebook (online)
960 N.E.2d 1005, 195 Ohio App. 3d 477, Counsel Stack Legal Research, https://law.counselstack.com/opinion/costner-consulting-co-v-us-bancorp-ohioctapp-2011.