Case Title: ALL-STATE LEASING v TOP HAT LOUNGE

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1982-02-25T00:00:00Z

Document:
No. 81-391 IN THE SUPREME COURTCF THE STATE OF MONTANA 1981 ALL-STATES LEASING COMPANY, A Montana Corporation, Plaintiff and Respondent, TOP HAT LOUNGE, INC., A Montana Corporation and HARRY BOSKOVICH, Defendants and Appellants. Appeal from: District Court of the Fourth Judicial District, In and for the County of Missoula Honorable Jack L. Green, Judge presiding. Counsel of Record: For Appellants: Hood & Sherwood, Missoula, Montana For Respondent: Milodragovich, Dale & Dye, Missoula, Montana Donald S. Smith, Great Falls, Montana Submitted on briefs: December 3, 1981 Decided: FEO 2 S m Mr. J u s t i c e Gene B. Daly d e l i v e r e d t h e Opinion of t h e Court. T h i s is an appeal from a summary judgment e n t e r e d by t h e D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , Missoula County, a g a i n s t Top Hat Lounge, Inc., and Harry Boskovich f o r $9,032.92 i n d e l i n q u e n t l e a s e payments. A p p e l l a n t , Top Hat Lounge, I n c . (Top H a t ) , and respondent A l l - S t a t e s Leasing, I n c . ( A l l - S t a t e s ) , a r e cor- p o r a t i o n s organized and e x i s t i n g under t h e laws of t h e S t a t e o f Montana and a u t h o r i z e d t o do b u s i n e s s h e r e . O n o r about January 22, 1975, A l l - S t a t e s and Top Hat e n t e r e d i n t o a l e a s e agreement f o r an automated l i q u o r - d i s p e n s i n g system. Under t h i s agreement, Top Hat agreed t o pay $134 per month f o r s i x t y months. Harry Boskovich, a s an i n d i v i d u a l , g u a r a n t e e d Top H a t ' s payments on t h e l e a s e . I n a purchase o r d e r , Top Hat requested A l l - S t a t e s t o purchase t h e 1 iquor-dispensing systern from a t h i r d p a r t y s u p p l i e r , C & C S a l e s . A f t e r purchasing t h e system from t h e s u p p l i e r , A l l - S t a t e s l e a s e d t h e system t o Top Hat. O n t h e back of t h e l e a s e agreement a r e twenty-three s e p a r a t e paragraphs s t a t i n g t h e r i g h t s and o b l i g a t i o n s o f t h e p a r t i e s . The p r i n t of t h e s e c l a u s e s is t h e s ~ n a l l e s t p r i n t on t h e agreement. The heading f o r each paragraph is l a r g e r bold-face p r i n t . Under t h i s agreement, A l l - S t a t e s a s l e s s o r d i s c l a i m e d a l l w a r r a n t i e s ; Top Hat a s l e s s e e waived t h e r i g h t s of j u r y t r i a l , c o u n t e r c l a i m and o f f s e t , and personal s e r v i c e . On J a n u a r y 20, 1 9 7 5 , when t h e l i q u o r - d i s p e n s i n g systeri~ was i n s t a l l e d , Boskovich, a s a r e p r e s e n t a t i v e of Top Hat, signed a "completion c e r t i f i c a t e " which s t a t e d t h a t t h e system was i n proper c o n d i t i o n and i n f u l l compliance w i t h t h e terrns and specifications o f t h e c o n t r a c t . Top Hat h a s n o t made any payments on t h e l i q u o r - d i s p e n s i n g s y s t e m s i n c e J u n e 1 0 , 1976. A l l - S t a t e s e v e n t u a l l y r e p o s s e s s e d t h e s y s t e m and s o l d i t f o r $100. On May 3 , 1 9 7 9 , A l l - S t a t e s began t h i s a c t i o n a g a i n s t Top Hat and Boskovich f o r payments owed t o it under t h e l e a s e a g r e e m e n t . A l l - S t a t e s s e n t Top Hat and Boskovich a r e q u e s t f o r a d m i s s i o n s on September 5 , 1979. N e i t h e r Top Hat n o r Boskovich made a n a t t e m p t t o answer t h i s r e q u e s t f o r a d m i s s i o n s u n t i l December 1, 1980. On December 1 5 , 1 9 8 0 , a h e a r i n g was h e l d on A l l - S t a t e s ' [notion f o r summary judgment. A f t e r c o n c l u d i n g t h a t under R u l e 3 6 , M.R.Civ.P., t h e f a c t s i n t h e r e q u e s t f o r a d m i s s i o n s must b e deemed t r u e , t h e D i s t r i c t C o u r t g r a n t e d A l l - S t a t e s ' m o t i o n f o r summary judgment. The f o l l o w i n g f a c t s were deemed t r u e by t h e D i s t r i c t C o u r t : 1. H a r r y Boskovich, a s a n i n d i v i d u a l , g u a r a n t e e d Top H a t ' s o b l i g a t i o n s t o r e s p o n d e n t . 2. The s u p p l i e r o f t h e e q u i p m e n t , C & C S a l e s , a c t e d a s t h e a p p e l l a n t s ' a g e n t i n p r o p o s i n g t h e l e a s i n g t r a n s - a c t i o n t o r e s p o n d e n t . 3 . A p p e l l a n t s s e l e c t e d b o t h t h e equipment and t h e s u p p l i e r of t h e e q u i p m e n t . 4. Respondent o r d e r e d t h e e q u i p m e n t a t t h e r e q u e s t of t h e a p p e l l a n t s . 5. P u r s u a n t t o p a r a g r a p h two on page o n e o f t h e l e a s e a g r e e m e n t , a p p e l l a n t s a g r e e d t h a t no o r a l a g r e e m e n t , g u a r a n t e e , p r o m i s e , c o n d i t i o n , r e p r e s e n t a t i o n o r w a r r a n t y s h a l l b e b i n d i n g . 6. Pursuant t o paragraph f o u r of t h e l e a s e agree- ment, respondent d i s c l a i m e d e x p r e s s o r implied w a r r a n t i e s of m e r c h a n t a b i l i t y , f i t n e s s , q u a l i t y , d e s i g n , c o n d i t i o n , capa- c i t y , f i t n e s s f o r any p a r t i c u l a r purpose, and s u i t a b i l i t y of performance of t h e equipment o r t h e m a t e r i a l o r workmanship t h e r e o f and l e a s e d t h e equipment " a s is." 7. A p p e l l a n t s , pursuant t o paragraph four of t h e l e a s e agreement, agreed t h a t t h e respondent was n o t t o be o b l i g a t e d t o i n s t a l l , e r e c t , t e s t , a d j u s t , s e r v i c e o r r e p a i r t h e equipment and t h a t any i n s t a l l a t i o n o r e r e c t i o n of t h e equipment o r p r o p e r t y l e a s e d was t o be a t t h e s o l e d i s c r e - t i o n and under t h e c o n t r o l of t h e a p p e l l a n t s . 8. Pursuant t o paragraph f i v e of t h e l e a s e agree- ment, t n e respondent g r a n t e d and a s s i g n e d t o t h e a p p e l l a n t s t h e r i g h t t o e n f o r c e a l l w a r r a n t i e s , agreements r e p r e s e n t a - t i o n s , i f any, made by t h e s u p p l i e r t o t h e respondent. 9. Pursuant t o paragraph f i v e of t h e l e a s e agree- ment, a p p e l l a n t s agreed t h a t no d e f e c t o r u n f i t n e s s of t h e equipment would r e l i e v e t h e o b l i g a t i o n t o pay r e n t o r any o t h e r o b l i g a t i o n s due under t h e terms of t h e l e a s e agree- ment. 10. Pursuant t o paragraph s i x of t h e l e a s e agree- ment, a p p e l l a n t s agreed t o i n s p e c t t h e p r o p e r t y w i t h i n f o r t y - e i g h t hours of t h e i r r e c e i p t t h e r e o f , and u n l e s s w i t h i n such period gave n o t i c e t o t h e respondent s p e c i f y i n g any d e f e c t s i n t h e p r o p e r t y r e c e i v e d , t h e p r o p e r t y would c o n c l u s i v e l y be deemed accepted by t h e a p p e l l a n t s . The D i s t r i c t Court concluded a s a m a t t e r of law t h a t while t h e l e a s e agreement had an unconscionable p r o v i s i o n providing f o r waiver of j u r y t r i a l and c o u n t e r c l a i m s , t h e a g r e e ~ n e n t was n o t u n c o n s c i o n a b l e w i t h o u t t h i s p r o v i s i o n . The D i s t r i c t C o u r t t h e r e f o r e h e l d t h a t t h e a g r e e m e n t was e n t i t l e d t o f u l l e n f o r c e m e n t o n c e t h e u n c o n s c i o n a b l e p r o v i s i o n s were s t r i c k e n . A p p e l l a n t s r a i s e o n l y two i s s u e s f o r review: (1) whether t h e summary judgment was improper s i n c e g e n u i n e i s s u e s o f m a t e r i a l f a c t a r e still p r e s e n t i n t h e r e c o r d ; and ( 2 ) w h e t h e r t h e l e a s e a g r e e m e n t is u n c o n s c i o n a b l e . Under Rule 56 (c) , M.R.Civ.P., summary judgment is p r o p e r o n l y i f t h e r e c o r d d i s c l o s e s no g e n u i n e i s s u e s o f i n a t e r i a l f a c t . The i n i t i a l b u r d e n is on t h e p a r t y moving f o r summary judgment t o show t h a t no g e n u i n e i s s u e s o f i n a t e r i a l f a c t e x i s t . Once t h e moving p a r t y h a s m e t its b u r d e n , t h e p a r t y o p p o s i n g t h e m o t i o n must come f o r w a r d w i t h s u b s t a n t i a l e v i d e n c e r a i s i n g a g e n u i n e i s s u e o f m a t e r i a l f a c t . Rumph v. D a l e Edwards, I n c . ( 1 9 7 9 ) , - Mont. - I 6 8 0 P.2d 1 6 3 , 36 St.Rep. 1822; H a r l a n d v. Anderson ( 1 9 7 6 ) , 1G9 Mont. 447, 548 P.2d 613. H e r e , a l l i s s u e s o f m a t e r i a l f a c t were r e s o l v e d by t h e f a c t s deemed a d m i t t e d a s t r u e by t h e D i s t r i c t C o u r t . A p p e l l a n t s h a v e , a t no time, a r g u e d t h a t t h e D i s t r i c t C o u r t e r r e d b y deeming s u c h f a c t s a s t r u e . I n s t e a d o f making t h i s a r g u m e n t , a p p e l l a n t s c l a i m t h a t two q u e s t i o n s o f m a t e r i a l f a c t still e x i s t : (1) w h e t h e r Top Hat e f f e c t i v e l y waived a n y w a r r a n t i e s ; and ( 2 ) w h e t h e r Boskovich s i g n e d t h e c o m p l e t i o n c e r t i f i c a t e a s p a r t o f an o b l i g a t i o n under t h e l e a s e a g r e e - ment . I n F i n d i n g o f F a c t No. 1 2 , t h e D i s t r i c t C o u r t found t h a t under t h e l e a s e a g r e e m e n t A l l - S t a t e s had d i s c l a i m e d a l l e x p r e s s o r i m p l i e d w a r r a n t i e s . T h i s f i n d i n g is s u p p o r t e d by a f a c t deemed a s t r u e by t h e D i s t r i c t Court. I n its r e q u e s t f o r admissions, A l l - S t a t e s had requested a p p e l l a n t s t o admit A l l - S t a t e s had d i s c l a i m e d a l l w a r r a n t i e s . B e c a u s e a p p e l l a n t s f a i l e d t o answer t h i s r e q u e s t f o r admissions i n a t i m e l y manner, t h e D i s t r i c t Court deemed it admitted under Rule 36 ( a ) , M.R.Civ.P. Under Rule 36 ( a ) , M.R.Civ .P., a m a t t e r is deemed ad- m i t t e d i f t h e r e q u e s t f o r admissions is n o t answered w i t h i n t h i r t y days a f t e r s e r v i c e of t h e r e q u e s t . I n Morast v. Auble ( 1 9 7 4 ) , 164 Mont. 188, 519 P.2d 157, t h e c e n t r a l and c o n t r o l l i n g f a c t u a l i s s u e s of t h e c a s e were deemed admitted f o r f a i l u r e t o make a t i m e l y r e p l y under Rule 3 6 ( a ) . More- o v e r , i n Morast we a l s o s t a t e d t h a t "admissions o b t a i n e d by t h e use of Rule 36 may show t h a t t h e r e is no genuine i s s u e a s t o any m a t e r i a l f a c t and j u s t i f y t h e e n t r y of a summary judgment under Rule 56." Morast, 519 P.2d a t 160, q u o t i n g 8 Wright & M i l l e r , Federal P r a c t i c e and Procedure: C i v i l $2264. See a l s o , S t a t e of North Dakota v. Newberger ( 1 9 8 0 ) , Mont. , 613 P.2d 1882, 37 St.Rep. 1119. - A p p e l l a n t s cannot now argue t h a t t h e d i s c l a i m e r of w a r r a n t i e s is s t i l l i n i s s u e when i t was r e s o l v e d under t h e f a c t s deemed admitted. S i n c e t h e s i g n i n g of t h e completion c e r t i f i c a t e goes t o t h e i s s u e of waiver of w a r r a n t i e s , it a l s o is resolved by t h e admitted f a c t s , o r a t l e a s t , i n l i g h t of t h e f a c t s a d m i t t e d , cannot be c o n s i d e r e d m a t e r i a l . A p p e l l a n t s have come forward with no evidence, by a f f i d a v i t o r o t h e r w i s e , t o r a i s e an i s s u e of m a t e r i a l f a c t . W e m u s t t h e r e f o r e a g r e e with t h e D i s t r i c t Court t h a t a summary judgment was proper. A p p e l l a n t s c i t e no a u t h o r i t y f o r t h e i r c o n t e n t i o n t h a t t h e l e a s e is unconscionable. They merely c l a i m t h a t a more o p p r e s s i v e l e a s e is hard t o imagine. Such an argument, unsupported by any a u t h o r i t y , must f a i l . A p p e l l a n t s c i t e o n l y s e c t i o n 30-2-302, MCA, which is modeled a f t e r t h e same p r o v i s i o n i n t h e Uniforra Commercial Code (UCC) , t o s u p p o r t t h e i r argument t h a t t h e l e a s e is unconscionable. S e c t i o n 30-2-302, MCA, p r o v i d e s : "(1) I f t h e c o u r t a s a m a t t e r of law f i n d s t h e c o n t r a c t o r any c l a u s e of t h e c o n t r a c t t o have been unconscionable a t t h e time it was made t h e c o u r t may r e f u s e t o e n f o r c e t h e c o n t r a c t , o r it may e n f o r c e t h e remainder of t h e c o n t r a c t w i t h o u t t h e u n c o n s c i o n a b l e c l a u s e , o r it may so l i m i t t h e a p p l i c a t i o n of any unconscionable c l a u s e a s t o avoid any unconscionable r e s u l t . " W e a g r e e with a p p e l l a n t s t h a t t h i s s t a t u t e should g u i d e t h i s Court i n determining u n c o n s c i o n a b i l i t y . While A r t i c l e 2 of t h e UCC a p p l i e s d i r e c t l y t o s a l e s , we a g r e e with t h e m a j o r i t y of c o u r t s t h a t A r t i c l e 2 c a n , a t l e a s t by analogy, be a p p l i e d t o l e a s e t r a n s a c t i o n s . See, e.g., A l l - S t a t e s Leasing Company v. Bass ( 1 9 7 5 ) , 96 Idaho 873, 538 I n t h e o f f i c i a l comment t o s e c t i o n 2-302 of t h e UCC, a b a s i c t e s t f o r u n c o n s c i o n a b i l i t y is suggested: ". . . whether, i n l i g h t of t h e g e n e r a l com- m e r c i a l background and t h e commercial needs of t h e p a r t i c u l a r t r a d e o r c a s e , t h e c l a u s e s involved a r e so one-sided a s t o be uncon- s c i o n a b l e under t h e c i r c u m s t a n c e s e x i s t i n g a t t h e time of t h e making of t h e c o n t r a c t . . . The p r i n c i p l e i s o n e o f t h e p r e v e n t i o n - o f o p p r e s s i o n and u n f a i r s u r p r i s e . " Here, under t h e f a c t s deemed a d m i t t e d , a p p e l l a n t s s e l e c t e d b o t h t h e e q u i p m e n t and t h e s u p p l i e r o f t h e equipment and n o t i f i e d respondent of t h e i r d e s i r e t o make t h i s t r a n s a c t i o n . The a d m i t t e d f a c t s s u g g e s t n e i t h e r o p p r e s s i o n nor u n f a i r s u r p r i s e . A l t h o u g h c o u r t s h a v e r e a d i l y a p p l i e d t h e d o c t r i n e o f u n c o n s c i o n a b i l i t y t o c o n t r a c t s between c o n s u m e r s and s k i l l e d b u s i n e s s n ~ e n , t h e y a r e r e l u c t a n t t o r e w r i t e t h e t e r m s o f a c o n t r a c t between b u s i n e s s m e n t h e m s e l v e s . Compare, W a l t e r E. Heller & Company, I n c . v . C o n v a l e s c e n t Home of t h e F i r s t Church of D e l i v e r a n c e ( 1 9 7 7 ) , 49 I l l . A p p . 3 d 213, 8 I11.Dec. 8 2 3 , 3 6 5 N.E.2d 1 2 8 5 , w i t h W i l l i a m s v . Walker-Thomas F u r n i t u r e Co. (D.C. C i r . 1 9 6 5 ) , 350 F.2d 445. When, a s h e r e , a l l p r o v i s i o n s were a g r e e d t o by b u s i n e s s m e n , none o f t h e s u r r o u n d i n g c i r c u m s t a n c e s s u g g e s t o p p r e s s i o n o f a p p e l l a n t s ' freedom t o s e l e c t a n o t h e r l e s s o r , and n o t h i n g on t h e r e c o r d s u g g e s t s d i s p a r i t y o f b a r g a i n i n g power, t h e l e a s e c a n n o t b e c o n s i d e r e d u n c o n s c i o n a b l e , The D i s t r i c t C o u r t ' s summary judgment is a f f i r m e d . / . - / / 4 ' . . )i , i , , J u s t i c e W e c o n c u r : C h i e f J u s t i c e