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LEASING SERV. CORP. v. GRAHAM

October 22, 1986

LEASING SERVICE CORPORATION, Plaintiff,
v.
DAVID GRAHAM, Defendant



The opinion of the court was delivered by: LEISURE

LEISURE, District Judge :

This action for breach of contract is brought by Leasing Service Corporation ("LSC"), a New York corporation, against David Graham ("Graham"), a citizen of the State of Texas. Subject matter jurisdiction is based on diversity of citizenship, 28 U.S.C. § 1332. LSC has moved for summary judgment to uphold a deficiency of $524,995.43 arising from Graham's alleged default under the terms of three lease agreements.

 In response to plaintiff's motion, Graham attacks particular lease provisions as unconscionable, and argues that the leases violate Texas usury statutes. In addition, Graham raises sixteen affirmative defenses; he also contends that venue would more appropriately lie in Texas, where the defendant resides and where the lease agreements were executed.

 Since a genuine issue of material fact exists with respect to the computation of damages, this action is not appropriate for summary judgment. See Fed. R. Civ. P. 56(c). It can, however, be partially adjudicated, particularly with respect to liability, pursuant to Fed. R. Civ. P. 56(c) and (d).

 FACTUAL BACKGROUND

 Graham is the sole proprietor of a crane business, doing business as Pyramid Crane Service. Graham executed three separate crane lease agreements with three Texas equipment companies on April 2, 1980, September 30, 1980, and January 22, 1982. Each was signed directly under the title DAVID GRAHAM DBA PYRAMID CRANE SERVICE.

 Shortly after each lease was executed, it was assigned to LSC. Each lease was a standardized. LSC "EQUIPMENT LEASE AGREEMENT". Each lease contained the phrase: "Lessee further acknowledges notice of the intended assignment of this lease to either Credit Alliance Corporation or Leasing Service Corporation." Thus, Graham had notice of the proposed assignment to LSC at the time he signed the leases.

 All three leases were negotiated through an LSC representative, Pat Miller. In each lease the words "No purchase option available hereunder, no renewal option available hereunder" appeared clearly typed, not printed, in the upper right hand portion of the front side of the contract, directly under the line entitled "BALANCE OF RENT." Despite this clear designation, and the fact that the rental payments due under the three were to total over $1 million, defendant claims that he did not read any of the contracts, each of which consisted of densely spaced writing on both sides of one page. Graham contends that Pat Miller misrepresented to him the leases as purchase agreements.

 On October 23, 1980, Graham did obtain purchase options for the two cranes he was leasing at that time; he later signed a purchase option for the third crane. The purchase price specified in each purchase option was one month's additional rent, a total of $15,224.75 for all three cranes. Each purchase option was to become effective at the end of the lease term, provided that there had been no default thereunder.

 On June 13, 1983, defendant, who was experiencing financial difficulty, signed identical extension agreements on two of the lease agreements. These read in part:

 In order to induce you to agree to the foregoing extension, and in consideration of your so doing, the undersigned warrants that the above indebtedness is a valid, binding and existing obligation of the undersigned [Graham], due and payable without any defense, counterclaim or offset whatsoever, and promises and agrees to pay said indebtedness to your order according to the terms set forth above . . . and in the event of a default in the payment of any installment or interest when due, the entire unpaid balance shall, at your option immediately become due and payable and you may enforce your rights and remedies under the Lien Instrument and/or Notes as if this extension had not been granted.

 Graham defaulted successively on the three agreements on September 15, September 22, and October 1, 1983, respectively. LSC repossessed the cranes and scheduled a public sale for December Graham was notified according to the terms of the lease agreements. The sale was advertised in three publications, one of which, The Contractors Hot Line, has over 50,000 subscribers.

 LSC, the only bidder at the sale, alleges that it bid $180,000 for the three cranes. Graham, who was also present, alleges that LSC bid $200,000. If Graham is correct, then LSC's deficiency calculation is necessarily overstated by at least $20,000.

 DISCUSSION

 As a threshold matter, the Court notes that a genuine dispute of fact regarding plaintiff's computation of damages precludes summary judgment on that issue. Fed. R. Civ. P. 56(c). Nonetheless, "[a] summary J interlocutory in character, may be rendered on the issue of liability alone although there is a genuine issue as to the amount of damages.": Id. When there is a controversy as to damages, but not as to liability, the procedure to be followed is that specified in Fed. R. Civ. P. 56(d). 10A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure, § 2736, at 447 (1983).

 Fed. R. Civ. P. 56(d) states that:

 [i]f on motion under this rule judgment is not rendered upon the whole case or for all the relief asked and a trial is necessary, the court . . . . shall thereupon make an order specifying the facts that appear without substantial controversy, including the extent which the amount of damages or other relief not in controversy... .

 Because this a pre-trial adjudication rather than a final order, "the trial court retains jurisdiction to modify the order at any time prior to the entry of a final judgment." 10A C. Wright, supra, § 2737 at 463-4; see Dyal v. Union Bag-Camp Paper Corp., 263 F.2d 387, 395 (5th Cir. 1959). The right of either party to a jury trial on those issues that remain in dispute will not be affected. See 10A C. Wright, supra, § 2736 at 452. *fn1"

 The District Court is empowered to specify in the pre-trial order any amount of damages which is not in controversy. 10A C. Wright, supra, § 2737, at 454-5; see Sloane v. Land, 16 F.R.D. 242 (S.D.N.Y. 1954); McDonald v. Batopilas Mining Co., 8 F.R.D. 226 (E.D.N.Y. 1948). The court may also grant partial summary judgment on an affirmative defense that poses no genuine issue of fact. See First National City Bank v. Kline, ...


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