Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
North Central Plastics, Inc., et al.,
defendants and third-party plaintiffs,
PlastiCycle Industries, Inc.,
File No. C196601036
Joseph W. Lawver, George R. Serdar, Messerli & Kramer P.A., 1800 Fifth Street Towers, 150 South Fifth Street, Minneapolis, MN 55402 (for respondent Minnwest Bank Luverne)
John H. Bray, Clure, Eaton, Butler, Michelson, Ferguson & Munger, P.A., 222 West Superior Street, Suite 200, Duluth, MN 55802 (for appellants)
David M. Weiby, Weiby, Maki, Durst, Ledin & Bick, S.C., 1109 Tower Avenue, Superior, WI 54880 (for third-party defendant PlastiCycle)
Stephen P. Watters, 2000 Metropolitan Centre, 333 South Seventh Street, Minneapolis, MN 55402 (for third-party defendant RGF)
Considered and decided by Amundson, Presiding Judge, Huspeni, Judge, and Kalitowski, Judge.
Appellants argue the district court erred in granting respondent's motion for summary judgment contending there are genuine issues of material fact regarding whether: (1) the agreement was a finance lease or a sale with a security interest; (2) appellants properly revoked acceptance of the goods; (3) there were applicable express warranties; and (4) appellants' signature was obtained in violation of good faith. Appellants further claim this case was not ripe for summary judgment. We affirm.
"On an appeal from summary judgment, we ask two questions: (1) whether there are any genuine issues of material fact and (2) whether the lower courts erred in their application of the law." State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). "A material fact is one of such a nature as will affect the result or outcome of the case depending on its resolution." Zappa v. Fahey, 310 Minn. 555, 556, 245 N.W.2d 258, 259-60 (1976).
Appellants contend the district court erred in determining the transaction in question was a finance lease as a matter of law. We disagree. The district court properly concluded that the transaction met the definition of a finance lease in Minn. Stat. § 336.2A-103, subd. 1(g) (1996). In addition, we disagree with appellants' argument that whether the agreement is a finance lease or a sale with a security interest controls the outcome of the case. Even if the statutory provisions applicable to finance leases do not apply, we conclude that appellants have no claim for compensation from respondent. The agreement itself expressly disclaimed any warranties. Further, appellants explicitly agreed to make the required payments regardless of the condition of the equipment and to look to others than respondent for compensation for defects:
WARRANTIES. Lessee agrees that it has selected each item of Equipment based upon its own judgment and disclaims any reliance upon any statements or representations made by Lessor. LESSOR MAKES NO WARRANTY WITH RESPECT TO THE EQUIPMENT, EXPRESS OR IMPLIED, AND LESSOR SPECIFICALLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE AND ANY LIABILITY FOR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OF OR THE INABILITY TO USE THE EQUIPMENT. Lessee agrees to make the rental and other payments required hereunder without regard to the condition of the Equipment and to look only to persons other than Lessor such as the manufactured [sic], vendor or carrier thereof should any item of Equipment for any reason be defective. So long as no Event of Default has occurred and is continuing, Lessor agrees, to the extent they are assignable, to assign to Lessee, without any recourse to Lessor, any warranty received by Lessor. SUPPLIER IS NOT AN AGENT OF LESSOR, AND LESSEE SHALL HAVE NO RIGHT TO RELY ON STATEMENTS OR REPRESEN-TATIONS MADE BY SUPPLIER. Lessor assumes no responsibility for the installation, adjusting, or servicing of the Equipment.
Because the characterization of the agreement does not affect the outcome of the case, it is not a material fact that prevents the grant of summary judgment. Finally, as the district court found, there is no evidence of express warranties by respondent that would be relevant to the agreement. Thus, we conclude the signed agreement is enforceable.
Appellants also claim summary judgment was inappropriate because there are facts in dispute concerning defenses to their failure to make the required payments. First, they claim that Minnwest Bank's predecessor, Midwest Leasing, violated its duty of good faith. Appellants allege Mr. Borash was rushed into signing the documents, did not have time to read them, and did not see the reverse side of the agreement. Even if true, these allegations do not to rise to the level of dishonesty required to violate the good faith mandate. Minn. Stat. §§ 336.1-201(19), 203 (1996). There is no evidence that Mr. Borash requested time to review the documents, that he was forced to sign them, or that Midwest Leasing knew that he did not read the back of the agreement.
Although there is no meeting of the minds when a contract signed by the parties is not read or understood, that party nonetheless "is bound in case the other party had no reason to know that he did not read or understand" the contract.
State Bank of Hamburg v. Stoeckmann, 417 N.W.2d 113, 118 (Minn. App. 1987), review denied (Minn. Feb. 17, 1988), (quoting 1 Corbin on Contracts § 107, p. 479 (1963)) (alteration in original). Further, the front of the agreement indicated that it was continued on the back, and it is Mr. Borash's duty to read the contract:
One is under a duty to learn, or know, the contents of a written contract before he signs it, and is under a duty to determine the obligations which he undertakes by the execution of a written agreement. If, without being the victim of fraud, undue influence, or mistake, or otherwise prevented, a person fails to read the contract or otherwise to learn its contents, he signs it at his own risk, or peril; he cannot be heard to say that the instrument signed does not express the real contract, or that the provisions are contrary to his intentions or understanding.
17 C.J.S. Contracts § 137(b) (1963). Thus, because Mr. Borash did not fulfill his duty, he does not have a valid defense against signing the disclaimer provision.
Appellants also assert that they raised an issue of fact concerning whether they properly revoked acceptance of the goods. We disagree. In order to show revocation was proper, appellants would need to present evidence that either respondent induced their acceptance (as required by the finance lease provisions in Minn. Stat. § 336.2A-517(1)(b) (1996)) or that the acceptance was induced by the difficulty of discovery of nonconformity (as required by the sales provisions of Minn. Stat. § 336.2-608(1)(b) (1996)). Appellants have presented no evidence to raise a fact issue on either of these claims.
Finally, appellants contend summary judgment was improper because they needed more time for discovery. We disagree. If a party needs more discovery to oppose a summary judgment motion, the district court has the discretion to allow a continuance when the party files an affidavit making such a request. Minn. R. Civ. P. 56.06. Appellants did not present an affidavit or request to the district court. If there has been no attempt to comply with the rule, the summary judgment motion must be decided on the pleadings, affidavits, and depositions before the court. Vosbeck v. Lerdall, 245 Minn. 164, 167-68, 72 N.W.2d 371, 374 (1955).
We conclude that based on the evidence before it, the district court did not err in granting respondent's motion for summary judgment.