apparent i. introduction - leasing...

In re Brican America LLC Equipment Lease Litigation, Slip Copy (2013)

2013 WL 3967920Only the Westlaw citation is currently

available.United States District Court,

S.D. Florida.

In re BRICAN AMERICA LLCEQUIPMENT LEASE LITIGATION.

No. 10–md–02183–PAS. | Aug. 1, 2013.

Opinion

OMNIBUS ORDER ON CROSS–MOTIONSFOR SUMMARY JUDGMENT ON THE

“JUGULAR” ISSUE

PATRICIA A. SEITZ, District Judge.

*1 This matter is before the Court on Plaintiffs'Motion for Summary Judgment Against NCMICFinance Corporation and PSFS 3 Corporation onthe “Jugular Issue” [DE–337], the WigdorPlaintiffs' Supplement to Blauzvern Plaintiffs'Motion for Summary Judgment as to the“Jugular” Issues [DE–339], and DefendantsNCMIC Finance Corporation and PSFS 3Corporation's Motion for Summary Judgment on“Jugular” Issue [DE–341].1 The central issueconcerns the interaction of two agreements (amarketing agreement and a financing agreement)completed in connection with the purchase andfinancing of a media display system and thelegal significance of NCMIC's knowledge of a“Cancellation” clause in the marketingagreement.2

The Court has reviewed the cross-motions, therespective responses [DE–335, 350, 352], replies[DE–363, 364365], counsel's oral argument[DE–379], and the record. Because (1) the“Cancellation” clause in Versions 5–8 of themarketing agreement can be reconciled with thehell or high water clause in the financingagreements; (2) there is an issue of fact as toNCMIC's knowledge of the “Cancellation”clause in Versions 1–4 of the marketingagreement; and (3) there is an issue of factregarding whether Brican's sales representativesacted as NCMIC's apparent agents in theirpresentation of the marketing agreements,Plaintiffs and Wigdor Plaintiffs' motions aredenied, and NCMIC's motion is granted in partand denied in part.

I. IntroductionThis multidistrict litigation consists of fourcases: (1) Peter M. Blauzvern DDS PC, et al. v.Brican America, Inc., et al., C.A., Case No.10–20782; (2) Vijay Patel, et al. v. NCMICFinance Corp., et al., Case No. 10–22959; (3)Vijay Patel et al v. NCMIC Finance Corporationet al., Case No. 11–20462; and (4) StevenWigdor O.D., PA, et al. v. NCMIC FinanceCorp., et al, Case No. 10–21608. These caseswere consolidated for pretrial purposes. SeePretrial Order [DE–25].

In each of these actions, Plaintiffs allege thatthey were victimized by a scheme in which theyagreed to purchase a flat screen television, acomputer, and software (the “Display System”),3

used to display advertising in each Plaintiff'soffice. Between 2005 and 2009, Plaintiffspurchased the Display Systems from Brican,LLC or Brican, Inc. and financed the purchasethrough an installment sales or loan agreement

GOSSETT & GOSSETT, P.A. 4700 Sheridan Street, Building I, Hollywood, Florida 33021 • (954) 983-2828 • Fax (954) 983-2850

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labeled as a financing lease (the “FinancingAgreement”).4 Plaintiffs claim that Bricanrepresented that Plaintiffs could purchase thesystems for effectively no cost. According toPlaintiffs, Brican proposed that it—or acompany related to Brican known as Viso LasikMedspas, LLC—would pay Plaintiffs, under asimultaneously-executed marketing agreement(the “Marketing Agreement”), a sum of moneyto offset the monthly lease payments Plaintiffshad to pay under Financing Agreements foradvertising the services offered either by Bricanor Viso Lasik on the Display Systems.

*2 In 2005, Brican entered into a VendorAgreement with NCMIC (doing business asProfessional Solutions Financial Services(“PSFS”)). As a result of this agreement,NCMIC became the lessor under the FinancingAgreement in return for making a lump sumpayment of approximately $22,000 to Brican foreach Financing Agreement.5 Some Plaintiffssigned Financing Agreements, formatted in asingle-column style, in which Brican, Inc. wasidentified as the initial lessor (“one-column”Financing Agreements) and NCMIC became thelessor through an assignment.6 Other Plaintiffssigned agreements formatted in a three-columnstyle directly with PSFS (“three-column”Financing Agreements). In these agreements,PSFS was identified as the lessor. As a result,NCMIC ultimately wound up being the lessorfor the vast majority of the FinancingAgreements.7

Both the three-column and the one-columnforms of the Financing Agreement include a“hell or high water” clause generally providingthat the Plaintiffs' obligation to pay isnon-cancellable. Each of the MarketingAgreements , however, contains a

clause—labeled “Cancellation”—whichgenerally provides that if Brican (or, in laterversions of the agreement, Viso Lasik) fails topay the amounts due for advertising services, acustomer may be relieved of its obligationsunder the Financing Agreement. The “jugular”issue concerns what effect, if any, arises fromthe interplay between these two provisions.

II. Undisputed Material Facts8

A. The Participants

Plaintiffs are either individual dentists oroptometrists, or the business entities underwhich these individuals operated. StipulatedFacts [DE–224], ¶ 1. Brican, Inc., a Floridacorporation, was formed on July 30, 2004 byLaurent Goldstein and Jean–Francois (“Jeff”)Vincens. Id., ¶ 13. Vincens, Goldstein, and athird individual, Jacques Lemacon, were thethree initial stockholders in Brican, Inc. and itssister corporations, each of which were alsoincorporated in Florida. Id., ¶ 14. These includedBrican, LLC; Brican Financial Services, LLC;and JJR Investments, LLC. JJR Investments inturn was a part owner of Viso Lasik Medspas,LLC, Viso Lasik Medspas of Charlotte, LLC,and Viso Lasik Medspas of San Antonio, LLC.Id., ¶ 32.

Defendant NCMIC Finance Corporation is a partof NCMIC Group, Inc ., an Iowa holdingcompany consisting of six businesses providingmalpractice, personal, and business insurance;equipment loans; merchant processing; businesscredit cards; and other forms of financing.9

NCMIC Insurance Company, NCMIC Group'sflagship company, was formed in 1945 asNational Chiropractic Mutual InsuranceCompany. See Ex. 2 to Declaration of Ronald P.

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Gossett [DE 223–1, at 7]. According to theNCMIC Group's website, NCMIC InsuranceCompany “insures more than 50% of doctors ofchiropractic and chiropractic colleges anduniversities” across the United States, and islicensed in all fifty states.10 NCMIC FinanceCorporation was created to provide a paymentplan for NCMIC Insurance Company'spolicyholders. See Ex. 3 to Deposition of PatrickMcNerney [DE 218–15, at 10]. Beginning in themid–1990s, NCMIC expanded this business toinclude “equipment financing, business creditcards, and other financing needs of health careprofessionals.” Id.

*3 About July 16, 2005, Brican, Inc. andNCMIC entered into a Vendor Agreement. Id.,¶ 86. Fred Scott, NCMIC's BusinessDevelopment Manger, signed the VendorAgreement on NCMIC's behalf. StipulatedFacts, ¶ 87. Pursuant this agreement, NCMICwas to receive gross income of approximately$6,000 per lease. Id., ¶ 90. Throughout itsrelationship with Brican, NCMIC issued orobtained a total of 1,672 leases. Id., ¶ 91. Thetotal gross income to be received by NCMICfrom the 1,672 leases was approximately$10,032,000. Id., ¶ 92.

Brican, Inc. served as either vendor—or, later inits relationship with its customers, lessor—of theDisplay System. Id., ¶¶ 16, 93. For the vastmajority of sales in which Brican, Inc. was thelessor, Brican, LLC's primary role was to serveas vendor of the Display System. At the timeBrican began to sell the Display Systems as partof its partnership with NCMIC, it was theexclusive vendor of the systems, and NCMIC,doing business as PSFS, was the lessor. Thisarrangement continued until around October orNovember, 2008, when Brican, Inc. became the

lessor of the Display System and then assignedthe Financing Agreements to NCMIC after theywere executed.

B. The AgreementsThe resolution of the “jugular” issue lies in theterms of the two agreements. Thus, this sectionbegins with a summary of the relevant terms ofthe eight versions of the Marketing Agreement,particularly the provisions relating to thepurchase of advertising and the “Cancellation”clause. Next is a description of the sevenmaterial provisions of the FinancingAgreements, namely, the Prologue; Paragraphs1, 2, 10, 12; the Unconditional Guarantee clause;and the “No Agent” clause in the one-columnFinancing Agreement. The last subsectionsummarizes the interplay between the Financingand Marketing Agreements.

1. Marketing AgreementsThere were at least eight versions of theMarketing Agreement.11 Each version containsa promise by either Brican, Inc. or Brican, LLCto purchase a portion of advertising space fromthe buyer of the Display System. The agreementsprovide as follows:

Versions 1–3: Purchase of Advertising:Brican shall purchase from the Client $5,800worth of advertising space for each year thatthis agreement remains in effect. The purchaseof Advertising space hereunder may be madeby Brican or any other entity in which Bricanowns shares of voting stock.12

Version 4: Purchase of Advertising: BricanAmerica Inc. shall purchase from the Client$5800 worth of advertising space for each year

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that this agreement remains in effect. Thepurchase of Advertising space hereunder maybe made by Brican or any other entity in whichBrican owns shares of voting stock as long asthe Client is current regarding payments to theleasing institution financing the ExhibeoConcept.

Versions 5, 7: Purchase of Advertising:Brican America LLC (Brican), on behalf ofVISO LASIK MEDSPAS LLC, [s]hallpurchase advertising space from the Clientin accordance with the terms of thisAgreement for each year that this Agreementremains in effect. The purchase of theadvertising space hereunder may be made byBrican or any other entity in which Brican isrelated by ownership.

*4 Version 6: Purchase of Advertising:Brican America Inc., on behalf of VISOLASIK MEDSPAS, LLC, shall purchaseadvertising space from the Client inaccordance with the terms of this Agreementfor each year that this Agreement remains ineffect. The purchased advertising spacehereunder may be made by Brican or anyother entity in which Brican owns shares ofvoting stock.

Version 8: Purchase of Advertising: BricanAmerica LLC (Brican), on behalf of VISOLASIK MEDSPAS LLC, will purchaseadvertising time on the Client's ExhibeoConcept, in accordance with the terms ofthis Agreement, for each year that thisAgreement is in effect. The purchase of theadvertising hereunder may be made byBrican or any other entity in which Brican isrelated by ownership.13

[DE 342–4, at 3, 5, 8, 11, 13, 15, 17, 19](emphasis in original).

Each version of the Advertising Agreementincludes slight variations in the wording of the“Cancellation” clause, as set forth below:

Version 1: Cancellation: IF BRICAN FAILST O H O N O R I T S F I N A N C I A LCOMMITMENT PURSUANT TO THISAGREEMENT, THEN ALL RELATEDAGREEMENTS CAN BE CANCELLED BYTHE CLIENT.

Version 2: Cancellation: If Brican fails tohonor its financial commitment pursuant tothis agreement, then all related agreements canbe cancelled by the Client, and Brican will, onclient's demand, buy back the leaseagreement.14

Version 3: Cancellation: If Brican fails tohonor its financial commitment pursuant tothis agreement, then all related agreements canbe cancelled and Brican will buy back therelated lease agreement.

Version 4: Cancellation: If the advertisedVISO LASIK MEDSPAS fails to honor itsfinancial commitment pursuant to thisagreement, then all related agreements canbe cancelled and Brican will buy back therelated lease agreement.

Version 5, 7: Cancellation: If VISO LASIKMEDSPAS fails to honor its commitmentrelating to the advertising fees and if the

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Client requests it, Brican will repurchase theClient's lease agreement in regard to theExhibeo Concept.

Version 6: Cancellation: If VISO LASIKMEDSPAS fails to honor its commitmentrelating to the advertising fees, the Clientmay request that Brican repurchase theClient's lease agreement in regard to theExhibeo Concept.

Version 8: Cancellation: If Viso LasikMedspas fails to honor its commitmentrelating to the advertising fees, and if theClient requests it, Brican will assumeassignment of the Client's lease agreementsin regard to the Exhibeo Concept.

[See DE 342–4] (emphasis in original).

2. The Financing Agreements

Both the one-column and the three-columnFinancing Agreements contain various termsgermane to the Parties' cross-motions.15 First,there are two places, the Preamble andParagraph 1, that refer to the non-cancellation ofthe agreement. These terms, commonly knownas “hell or high water” clauses, state:

By signing this Agreement: (i) you acknowledgethat you have read and understand the terms andconditions on the front and back of thisagreement, (ii)You agree that this Agreement isa fixed term financing agreement that youcannot terminate or cancel ... you have anunconditional obligation to make all payments

due under this agreement, and you cannotwithhold, set-off or reduce such payments forany reason, even for defects of failures in theequipment.

* * *

*5 1. LEASE AGREEMENT AND FEES: ...This Lease is NON–CANCELLABLE FORTHE ENTIRE LEASE TERM. YOUUNDERSTAND THAT WE ARE BUYINGTHE EQUIPMENT BASED ON YOURUNCONDITIONAL ACCEPTANCE OF THEEQUIPMENT AND YOUR PROMISE TO PAYU.S. UNDER THE TERMS OF THE LEASE,WITHOUT SET–OFFS, EVEN IF THEEQUIPMENT DOES NOT WORK PROPERLYOR IS DAMAGED FOR ANY REASONINCLUDING REASONS THAT ARE NOTYOUR FAULT.16

[DE 342–2, at 2; DE 342–3, at 2].

Similarly, both the three-column and theone-column financing agreements containprovisions disclaiming any warranties for thefaulty performance of the Display System:

2. NO WARRANTY: We are leasingthe Equipment to You AS IS. We donot manufacture the Equipment andare not related to the Vendor. Youselected the Equipment and theVendor, based on Your ownjudgment. You may contact theVendor for a statement of thewarranties, if any, that the Vendor ormanufacturer is providing. Wehereby assign to You the warranties

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given to Us, if any. WE MAKE NOWARRANTIES, EXPRESS ORI M P L I E D , I N C L U D I N GW A R R A N T I E S O FMERCHANTABI LI TY ORFITNESS FOR A PARTICULARPURPOSE, IN CONNECTIONWITH THIS LEASE. You agree tosettle any dispute You may haveregarding performance of theEquipment directly with themanufacturer or Vendor.17

[DE 342–2, at 2].

Further, the Financing Agreementscontain the following provision regardingthe assignment of the leases, as well asintegration and unconditional guarantyprovisions as set forth below:

10. ASSIGNMENT: ... We may sell,assign or transfer the Lease and Ourrights in the Equipment without notice toYou or consent by You. You agree that ifWe sell, assign or transfer the Lease thenew owner will not be subject to anyclaim, defense or set-off that You assertagainst Us or any other party.

* * *

12. MISCELLANEOUS: You agree thatthis Lease is the entire agreementbetween You and Us regarding the leaseof the Equipment, and supersedes anypurchase order You issue. Any changemust be in writing and signed by each

party....

UNCONDITIONAL GUARANTY

The undersigned unconditionallyguarantees that the Lessee will timelyperform all obligations under thisAgreement. The undersigned also waivesany notification if the Lessee is in defaultand consents to any extensions ormodifications granted to the Lessee. Inthe event of default, the undersigned willimmediately pay all sums due under theterms of this Agreement withoutrequiring Lessor to proceed againstLessee, any other party or the Equipment.The undersigned consents to personaljurisdiction, venue, choice of law, andjury trail [sic] waiver as stated in the“Governing Law, Consent to Jurisdictionand Venue of Litigation” paragraphabove and agrees to pay all costs endexpenses, including attorney's fees,incurred by Lessor related to thisguaranty. This guarantee is joint andseveral.[DE 342–2, at 3; DE 342–3, at 3].Finally, in addition to the aboveprovisions, the one-column lease alsocontains a “No Agent” clause whichprovides:

*6 15. NO AGENT: YOU AGREET H A T T H E V E N D O R ,MANUFACTURER, SALESPERSON, EMPLOYEE ORAGENT OF THE VENDOR ORMANUFACTURER IS NOT OUR

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AGENT AND HAS NOAUTHORITY TO SPEAK FORU.S. OR TO BIND U.S. IN ANYMANNER. IT IS FURTHERUNDERSTOOD THAT WE ARENOT THEIR AGENT.

Id., at 3.

C. Interplay of the FinancingAgreements and the MarketingAgreementsIn preparation for the hearing on theParties' cross-motions for summaryjudgment, the Court requested that theParties prepare a summary explainingwhen the particular versions of theMarketing and Financing Agreementswere used throughout the vendor-basedrelationship between Brican and NCMIC.See October 11, 2012 Order [DE–373].This information is essential tounderstanding the interplay betweenthese agreements and the legalsignificance, if any, of this interplay. SeeDefendants' Summary in Response toEndorsed Order [DE–377]; Plaintiffs'Notice of Compliance with EndorsedOrder [DE–376].

The Parties' summaries, taken togetherwith the Statement of Material Facts andsupporting documents, establish thefollowing:

• The first transaction involving aBrican entity as vendor and NCMIC aslessor took place on or aroundJuly–August, 2005. See [DE 376–1].

• NCMIC used the three-columnfinancing agreement almost exclusivelyfrom July–August, 2005 until the endof October, 2008, at which time itbegan to rely, apparently with only afew exceptions, on the one-columnform of the agreement. See [DE 376–1;DE 377–1].

• Versions 1, 2, and 3 of the MarketingAgreement were executed inconnection with 42 sales beginning onJune, 2006 and ending on or aboutDecember, 2006. See [DE 376–2].

• According to Plaintiffs' summary,Versions 1–3 of the MarketingAgreement were used exclusively insales involving the three-column leaseagreements.Id. This information is notcontradicted by NCMIC's summary.See [DE–377–2].

• Version 4 of the MarketingAgreement was used with more than360 NCMIC-financed sales.18 NCMIC'ssummary indicates that the one-columnagreement was used in about forty ofthese sales. See [DE 377–2].

• Versions 5–8 of the MarketingAgreement were used, with only a fewexceptions, in sales involving theone-column lease agreement. See [DE377–2]. These transactions accountedfor 908 sales. See [DE 376–2].

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• Based on Plaintiffs' records, fromthe beginning of NCMIC'srelationship with Brican on August,2005 thru June, 2006 when theMarket ing Agreement wasimplemented, NCMIC financed 35Display Systems. From July toDecember 2006, NCMIC financed 65Display Systems. See [DE 376–1]

• NCMIC financed 183 DisplaySystems in 2007. See id.

• In 2008, NCMIC financed 789Display Systems. See id. The averagenumber of units financed increasedsubstantially beginning in May 2008.From January to April 2008, NCMICfinanced an average of 18 units permonth. From May to December 2008,this average increased to 90 units permonth. See id.

*7 • In 2009, NCMIC financed anadditional 682 Display Systemsbefore cutting off funding inmid-April 2009. See id.

D. Facts Relevant to NCMIC'sAlleged Knowledge of the MarketingAgreements

1. The Fred Scott Letter and Brican's“Return Policy”Fred Scott began working as NCMIC'ssales representative on July 8, 2004.

Deposition of Fred Scott (“Scott Dep.”)[DE 223–20], 9:12. Scott was primarilyresponsible for developing the businessrelationship between Brican and NCMIC.Id., 27–30. Jean–Francois Vincenstestified that around May or June 2006,he and Scott discussed the use ofMarketing Agreements as an incentivefor customers to purchase the DisplaySystem. Deposition of Jean–FrancoisVincens (“Vincens Dep.”) [DE 223–27],Vol. II, at 150:5–20. Vincens furthertestified that Scott gave Bricanpermission to use the MarketingAgreements. Id., 153:20–24.

In an email dated June 19, 2006 fromScott to William Artino, NCMIC's VicePresident and Manager of the EquipmentLeasing Division, Scott wrote:

This email represents our agreement withBrican America to support the ReturnGuarantee conditions as discussed.

This agreement will remain betweenBrican America and the customer. Thisagreement will not be connected withProfessional Solutions Financial Servicesand not written into the Lease Agreementunder Terms & Conditions.

In the event that a customer chooses toreturn the Brican System, Brican'sobligation to unwind the lease would beas follows:

At 6 Months the principle (sic ) balanceremaining, plus $1000 would be due toPSFS.

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At 12 Months the principle (sic ) balanceremaining, plus $1750 would be due toPSFS.

Any Returns under 6 months would beprorated.

June 19, 2006 E-mail from F. Scott to B.Artino [DE 223–23, at 1]. On the sameday, Scott sent a second email with thesubject heading “BRICAN RETURNPOLICY AGREEMENT” to RaymondBriscoe19 and Vincens attaching a letter(the “Scott Letter”) with PSFS's logo atthe header and Scott's name in thesignature block, and stating in relevantpart:

Professional Solutions Financial Servicesis pleased to provide these terms tosupport Brican America's return policy.This letter represents the understandingthat the payoff Professional Solutionswill give Brican in the event of acancellation by their customer. Thisprogram may be cancelled or suspendedat any time.

If the Lease Agreement is terminated bythe customer due to Brican's returnpolicy, we will credit all amountscollected toward our funded amount.Brican agrees to reimburse the remainderof the funded amount plus $1000 if theagreement terminates in the first 6months. If the agreement terminates in

months 7 though 12, the same formulaapplies except that the amount in additionto original funding will be $1,750....

This agreement is between BricanAmerica and Professional Solutions andis not intended to pass to the customer fordirect pay off from the customer in theevent Brican cannot perform. This ismerely a preferred payoff available onlyto Brican and not to be included in anyagreement between the customer andPSFS....

*8 [DE 223–23, at 3]. The Scott Letter isunsigned. Id. Briscoe responded: “Fred:This is great for the file. Thanks for yourquick turnaround on this matter. Have agreat week.” Id., at 4.

According to Vincens, the “return policy”in the Scott Letter referred to thecancellation clause in the MarketingAgreement. Vincens Dep., Vol. II, at158:2–11. Vincens testified that Brican'sbusiness with NCMIC from June 19,2006 to April 19, 2009 was completed inreliance on the Scott letter. Id., at165:21–24. In the same deposition,Vincens testified that the language of theMarketing Agreement20 was changed toadd the words “and Brican will buy backthe related lease agreement” in order tomake it clearer to potential customers thatif the advertising payments stopped, thelease obligations would continue. Id., at278:25; 279: 1–5. Vincens also testifiedthat he instructed his salesmen, in thecourse of their sales presentations, to tellpotential customers that they could not“simply stop paying the lease” if themarketing payments stopped. Id., at

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279:6–13. According to Vincens, Bricandid this because it “didn't want thecustomer to be under the impression thathe could cancel the lease,” and did notwant “to give the impression thatProfessional Solutions was going toaccept to cancel the lease.” Id., at279:15–20.

Vincens also testified that Brican issueda general warranty with all of theequipment that protected the customer inthe event the equipment stopped working.Id., at 273:22–25; 274:1. Additionally,there is a document in the record, entitled“Money Back Guarantee,” which states,in relevant part:

1. This return policy applies only to theGalleryDoc version of the ExhibeoProducts purchased from BricanAmerica, LLC.

2. If you decide you don't want to keepthe Exhibeo Product subject toPurchase Order # ________, simplynotify us of your request and return theproduct at your expense. If the returnedproduct is received complete andundamaged, we will process a credit forthe full amount paid for the returneditem, less initial and return shipping, orwe will repurchase your lease fromyour financial institution. Thisguarantee supersedes any inconsistentprovisions contained in your BricanAmerica Purchase Order.

[DE 230–9]. This document is unsigned.It is unclear from the record if Brican

implemented this or any other writtenreturn policy with its customers.

2. The Todd Cook Email–July 2008Todd Cook became NCMIC's VicePresident and General Manager ofEquipment Finance on March 1, 2007.Pls.' SOF [DE 338–1], ¶ 100. In thiscapacity, Cook was responsible forcertain aspects of the relationship withBrican. Stipulated Facts, ¶ 99.

At some point around July 2008, DanielDel Castillo, a dentist who purchased theDisplay System, called Jean Thompson,a NCMIC employee working underCook. Deposition of Daniel Del Castillo(“Castillo Dep.”) [DE 344–11], at24:16–20. Del Castillo called to discusshis concerns regarding a Ponzi schemeinvolving Recomm International, acompany Raymond Briscoe and Vincensfounded in the early 1990s. Id., at25:1–13. Del Castillo also sent an emailto Thompson with the subject line “FW:Recomm–Brican.” Stipulated Facts, ¶101. The email included three newspaperarticles appearing in the Tampa Tribunein February, March and April, 1996, anda document with the heading “Warning:Possible Scam to Dentists.” Id.

*9 The newspaper articles summarizedvarious lawsuits against Recommalleging, generally, that Recomm hadperpetrated a Ponzi scheme involving thesale of message boards to smallbusinesses. See [DE 223–29, at 3]. Aspart of these transactions, Recomm's

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customers would pay a finance companyabout $300 a month to lease the messageboards. Id. “In return, Recomm was topay the equivalent of $270 a month” toits customers “from revenues raised fromadvertisements run on the signs.” Id.Because these revenues nevermaterialized, however, Recomm fundedits advertising rebate obligations with themoney it received from the financingcompany for new customers. Id. At somepoint in 1994, Briscoe and Vincens soldtheir interest in Recomm and left thecompany. Id. By mid–1995, Recommstopped making the advertisingpayments, even as the financing companycontinued to demand the payments fromRecomm's customers. Id. On January 31,1996, Recomm filed for bankruptcy. Id.According to the Tribune articles, at thetime of the bankruptcy Recomm “owedabout 12,000 creditors more than $220million,” and was the subject of about 60lawsuits throughout the United States. Id.

On July 23, 2008, Thompson forwardedDel Castillo's email to Cook, who in turnforwarded it to Jacques Lemacon atBrican. Email from T. Cook to J.Lemacon [DE 223–11, at]. Lemaconresponded that the materials were fromHarold Meredith, a Brican “competitorwho is mad at us.” Id., at 2. In the sameemail, Lemacon also stated that:

1. The newspaper articles had been a“screen of smoke” created byRecomm's owners as a way to justifythe company's bankruptcy;

2. Brican had marketing agreementswith “some dentists in order to

advertise VISO LASIK centers.” Theuse of these marketing agreements had“nothing to do with a scam.”

3. NCMIC was welcome to visit VisoLasik's locations in Wellington,Charlotte, or San Antonio, “to verifythe reality of the venture.”

Id., at 2. Attached to this email was aPowerpoint presentation titled “AStrategic Alliance,” apparently preparedby Brican as a sales tool for potentialcustomers. See [DE 223–11, at 3–32].The presentation includes informationregarding the advertising payments fromViso Lasik to the doctors. Id., at 27.However, it does not provide informationregarding what happens if Viso Lasikstops making the payments, nor does itprovide information on the customer'sright to cancel the lease if Viso Lasikdoes not meet its obligation to pay. Seeid.

E. November 2008 Meeting in MiamiIn November, 2008, several NCMICemployees, including Cook andThompson, traveled to Brican's offices inMiami, Florida for a series of meetings.Deposition of Todd Cook [DE 223–4](“Cook Dep.”), at 93:5–17.21 Accordingto Cook, the trip was for general duediligence purposes, and included a visitto a Viso Lasik Medspa location inWellington, Florida. Id., at 99:7–16.Cook testified that, during these visits, heunderstood that Viso Lasik was the same

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entity that was being advertised on theDisplay Systems. Id., at 99:17–22. Cookfurther testified that it was hisunderstanding that the MarketingAgreement was offered only to thosecustomers “within the area of the VisoLasik centers.” Id., at 100:4–10.22

F. Cook Provides Feedback on the“Cancellation” Provision*10 On November 25, 2008, Cook sentan email to Maureen Ryan, a Bricanemployee, with proposed changes to theMarketing Agreement's Cancellationprovision. See Email from T. Cook to M.Ryan [DE 223–10]. The originallanguage of the provision, as it appears inthe email, reads as follows:

Cancellation: If VISO LASIKMEDSPAS fails to honor itscommitments relating to the advertisingfees, the Client may request that Bricanrepurchase the Client's lease agreement inregarding to (sic) the Exhibeo Concept.23

Id., at 2. After Cook's changes, the clauseread as follows:

Cancellation: If VISO LASIKMEDSPAS fails to honor itscommitments relating to the advertisingfees, the Client may request that Bricanrepurchase the Exhibeo Concept. Uponacceptance by Brican of the Client'srequest, Brican agrees to refund to thetitle/lien holder the outstanding balancedue. Brican does not assume or relieveany obligation, financial or otherwise,that the Client has entered into withregard to the Exhibeo Concept.

Id., at 2.

Of the eight versions of the MarketingAgreement, none contains languagesimilar to that proposed by Cook in 2008.Thus, it appears that Brican did notimplement Cook's suggestions in any ofthe Marketing Agreements withPlaintiffs. The record is silent as towhether Cook followed up with Bricanregarding these suggestions.

G. NCMIC Terminates the FinancingProgramGregory Cole, NCMIC's president andCook's supervisor, testified that on orabout April 13, 2009 he received ananonymous phone message “regarding aproblem with a vendor relationship.”Affidavit of Gregory Cole (“Cole Aff.”)[DE 342–1], ¶ 13. Cole later learned thatthe caller was a Brican salesman namedJames Adams. Id. According to Cole,Adams informed him “of Brican'sbusiness model, including the fact thatBrican and Viso Lasik had entered intoMarketing Agreements with virtually allof Brican's customers.” Id.

On April 15, 2009, NCMIC stoppedfunding the Brican leases. Id . Thefollowing week, Cole, Cook, and severalother NCMIC employees returned toMiami for a second meeting with Brican.Cole Aff., ¶ 13; Cook Dep., at111:12–19. According to Cook, duringthis meeting NCMIC was told that: (1)Brican had used the Marketing

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Agreements in connection with all salesfinanced by NCMIC; and (2) Brican wasfunding Viso Lasik to cover theadvertising payments. Id., at 111:12–25;112:1. By the time of the April 2009meeting, NCMIC also knew that Bricanhad an ownership interest in Viso Lasik.Id., at 112:6–9.

III. Summary Judgment StandardSummary judgment is appropriate when“the pleadings ... show that there is nogenuine issue as to any material fact andthat the moving party is entitled to ajudgment as a matter of law.” Andersonv. Liberty Lobby, Inc., 477 U.S. 242, 247,106 S.Ct. 2505, 91 L.Ed.2d 202 (1986);HCA Health Servs. of Ga., Inc. v.Employers Health Ins. Co., 240 F.3d 982,991 (11th Cir.2001). Once the movingparty demonstrates the absence of agenuine issue of material fact, thenon-moving party must “come forwardwith ‘specific facts showing that there isa genuine issue for trial.’ “ MatsushitaElec. Indus. Co. v. Zenith Radio Corp.,475 U.S. 574, 587, 106 S.Ct. 1348, 89L.Ed.2d 538 (1986) (quotingFed.R.Civ.P. 56(e)). The Court must viewthe record and all factual inferencestherefrom in the light most favorable tothe non-moving party and decide whether“ ‘the evidence presents a sufficientdisagreement to require submission to ajury or whether it is so one-sided that oneparty must prevail as a matter of law.’ “Allen v. Tyson Foods, Inc., 121 F.3d 642,646 (11th Cir.1997) (quoting Anderson,477 U.S. at 251–52)).

*11 In opposing a motion for summary

judgment, the non-moving party may notrely solely the pleadings, but must showby affidavits, depositions, answers tointerrogatories, and admissions thatspecific facts exist demonstrating agenuine issue for trial. See Fed.R.Civ.P.56(c), (e); see also Celotex Corp. v.Catrett, 477 U.S. 317, 324, 106 S.Ct.2548, 91 L.Ed.2d 265 (1986). A mere“scintilla” of evidence supporting theopposing party's position will not suffice;instead, there must be a sufficientshowing that the jury could reasonablyfind for that party. Anderson, 477 U.S. at252; see also Walker v. Darby, 911 F.2d1573, 1577 (11th Cir.1990).

IV. Analysis

A. Threshold Issues

1. Plaintiffs' Representations ThatThis is a “Paper Case”On May 18, 2011, at the StatusConference at which all the Parties'counsel were present, Plaintiffs' counselstated that Plaintiffs' claims “are notpremised on oral representations at all butwritten misrepresentations which areidentified in the [First AmendedCommon] Complaint.” [DE–193], at42:24–25; 43:1–2.24 Based on theserepresentations, the Court requiredPlaintiffs to amend their statement ofLegal Claims and Elements. See May 20,2011 Order [DE–192].25

Plaintiffs' Amended Statement of LegalClaims and Elements [DE–196] containsan admission that the “basis for claims tomisrepresentations made in the First

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http://www.westlaw.com/Link/Document/FullText?findType=Y&serNum=2001114001&pubNum=506&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=DocumentItem&contextData=(sc.Search)#co_pp_sp_506_991







http://www.westlaw.com/Link/Document/FullText?findType=L&pubNum=1004365&cite=USFRCPR56&originatingDoc=I5992f821fd9311e2a160cacff148223f&refType=LQ&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=DocumentItem&contextData=(sc.Search)















Amended Common Complaint (FACC)are based upon written documents,specifically the Equipment LeaseApplication and Agreement signed byevery Plaintiff, and the MarketingAgreement also signed by them as part ofthe singular transaction to acquire theExhibeo information display system anda stream of marketing and advertisingfees to pay for said system(s).” Pls.' Am.Stmt. of Leg. Cls., at 11 (emphasissupplied). Specifically, Plaintiffs point tothe following four variations of theMarketing Agreement's “Cancellation”provision:

Cancellation: If Brican fails to honor itsfinancial commitment pursuant to thisagreement, then all related agreementscan be cancelled and Brican will buyback the related lease agreement.

Cancellation: If Brican fails to honor itsfinancial commitment pursuant to thisagreement, then all related agreementscan be cancelled by the Client.

Cancellation: If the advertised VisoLasik Medspas fails to honor itscommitment relating to the advertisingfees, the Client may request that Bricanrepurchase the Client's lease agreement inregard to the Exhibeo Concept.

Cancellation: If Viso Lasik Medspasfails to honor its commitment relating tothe advertising fees, and if the Clientrequests it, Brican will assumeassignment of the Client's leaseagreement in regard to the ExhibeoConcept.

Id., at 12.

On May 29, 2013, Plaintiffs elaboratedfurther on this issue:

Plaintiffs are not repudiating theirprior stipulation that this is a “papercase,” but rather, are explaining tothe [C]ourt the proper application ofthe parol evidence rule to interpretthe [Marketing Agreements and theFinancing Agreements], and tor e c o n c i l e t h e s e e mi n g l ycontradic tory cance l la t ionprovisions-the financing contract(non-cancellable) and theadvertising agreement (leasecancellable if advertising fees notpaid).

*12 Reply to NCMIC's Resp. To Pls.'Notice of Compliance [DE 411–1], at 1.Plaintiffs also reiterated their positionthat

[T]his is a paper case concerning theconflict between the two documentspresented to the doctors in one salesprogram where one document saysit's cancellable, the other documentsays it is not. And when themarketing fees were not paidtriggering the ability to cancel thedocuments, the doctors attempted tocancel and NCMIC says it's notcancellable.

Id., at 3–4.

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Florida law26 is clear that “[t]he parolevidence rule bars claims arising out ofprior extrinsic agreements, oral orwritten, which vary, alter, or modify theterms of a clear, unambiguous, and fullyintegrated document.” Ali R.Ghahramani, M.D., P.A. v. Pablo A.Guzman, M.D., P.A., 768 So.2d 535, 537(Fla. 4th DCA 2000). Thus, “[u]nless anambiguity exists because contractualterms cannot be reconciled, a court neednot (and should not) look to extrinsicsources to determine the parties' intent.”Harris v. School Bd. of Duval County,921 So.2d 725, 733 (Fla. 1st DCA 2006)(citations omitted).27

Based on Plaintiffs' statements andrepresentations to the Court, the questionof whether the Court may consider theoral representations of Brican's salesrepresentatives in connection with thesales to individual Plaintiffs only comesinto play if the terms of the relevantagreements cannot be reconciled as amatter of law. Thus, to the extent theseterms are found to be mutually consistent,the Court will focus its analysis on theterms of the Marketing Agreements.

2. The Parol Evidence Rule Does NotPreclude the Introduction of OtherExtrinsic Evidence.Plaintiffs' stipulation that this is a papercase, however, does not resolve the issueof whether the Court may consider otherevidence extrinsic to the FinancingAgreements in ruling on the pending

motions. Plaintiffs urge the Court toconsider the following evidence (1) theMarketing Agreements; (2) the ScottLetter; (3) the emails between JeanThompson and Dr. Del Castillo regardingthe Recomm matter; (4) other evidenceregarding Recomm, including the TampaTribune articles; (5) evidence regardingBrican's Powerpoint presentation to thedoctors explaining the Marketingagreements; (6) communications betweenNCMIC and Brican with suggestedchanges to the Marketing Agreement's“Cancellation” provision; and (7)evidence of communications with Adamsregarding Brican's fraud.

NCMIC opposes the introduction of thisevidence on the grounds that it isextrinsic to the financing agreements andthus barred by the parol evidence rule.However, this evidence is not beingoffered to alter or amend the leaseagreement's hell or high-water clause, butrather to establish that NCMIC knew orshould have known that the MarketingAgreement provided that the Plaintiffscould terminate their leases in the eventthey stopped receiving the advertisingpayments. Further, the “jugular” issuewhich the Court identified for the Partiesrelates to what NCMIC knew about theMarketing Agreement's “Cancellation”provision and what legal effect, if any,this knowledge has on NCMIC'sresponsibilities in this matter. Obviously,it would be impossible for the Court toresolve this issue without resorting toevidence extrinsic to the FinancingAgreements. As such, this evidence is notbarred by the parol evidence rule, and theCourt will consider it in ruling on the

15









instant motions.

B. The “Cancellation” Clause inVersions 5–8 of the MarketingAgreement can be Reconciled withthe Hell or High Water Clause.*13 Plaintiffs' grounds for relief can bedistilled to the following statement:despite the existence of the apparentlyironclad hell and high water clause,NCMIC knew that Brican was executingMarketing Agreements with its customersthat expressly allowed them to cancel theFinancing Agreement if Viso Lasikstopped making monthly advertisingpayments. See Pls.' Mot., at 9. Plaintiffscontend that because the hell and highwater clause cannot be reconciled witht h e M a r k e t i n g A g r e e m e n t s“Cancellation” provision, it is notenforceable.

In response, NCMIC argues that the hellor high water clauses and the“Cancellation” clause can be harmonizedsuch that the advertisement agreement's“Cancellation” provision does not resultin a cancellation of Plaintiffs' obligationsunder the lease agreements. NCMICpoints specifically to versions 5–8 of theMarketing Agreements. These versionsprovide, in relevant part:

Version 5, 7: Cancellation: If VISOLASIK MEDSPAS fails to honor itscommitment relating to the advertisingfees and if the Client requests it, Bricanwill repurchase the Client's leaseagreement in regard to the ExhibeoConcept.

Version 6: Cancellation: If VISOLASIK MEDSPAS fails to honor itscommitment relating to the advertisingfees, the Client may request that Bricanrepurchase the Client's lease agreementin regard to the Exhibeo Concept.

Version 8: Cancellation: If Viso LasikMedspas fails to honor its commitmentrelating to the advertising fees, and ifthe Client requests it, Brican willassume assignment of the Client's leaseagreements in regard to the ExhibeoConcept.

According to Plaintiffs, NCMIC financed908 sales in conjunction with versions5–8 of the Marketing Agreement. See[DE 376–2]. With few exceptions, theone-column Financing Agreement wasused in these transactions. See [DE376–1]. Brican began using theone-column Financing Agreements inNovember, 2008. Id. It appears that morethan half of the leases NCMIC financedwere completed between this date andApril, 2009. Id.

The non-cancellation clauses in both thethree-column and the one-column leasesare found in the Preamble and Paragraph1 of both versions of the leases. Throughthese provisions, each Plaintiff agreedthat its obligation to pay wasunconditional and non-cancellable. See,e.g., Three–Column Lease, [DE 342–2],¶ 1 ( “ T h i s L e a s e i sNON–CANCELLABLE FOR THEENTIRE LEASE TERM. YOU

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UNDERSTAND THAT WE AREBUYING THE EQUIPMENT BASEDON YOUR UNCONDITIONALACCEPTANCE OF THE EQUIPMENTAND YOUR PROMISE TO PAY U.S.UNDER THE TERMS OF THE LEASE....”) (emphasis in original).

Viewing the undisputed facts in the lightmost favorable to Plaintiffs, the“Cancellation” clauses in versions 5–8 ofthe Marketing Agreement have no effecton the enforceability of the hell or highwater clauses in the FinancingAgreements. By their own terms, theseclauses do not allow for the cancellationof the financing agreements, but merelyprovide that (1) if Viso Lasik Medspasfails to make its advertising payments,and (2) if a client requests it, then Bricanpromises to assume the client'sobligations in the financing agreements.28

In fact, Version 6 of the MarketingAgreement does not include a promise byBrican to assume any of the client'sobligations, but states only that “theClient may request that Brican repurchasethe Client's lease agreement in regard tothe Exhibeo Concept.” There is nothingin the agreements, however, that requiresBrican to accept this request.

*14 That fact that the clause at issue isentitled “Cancellation” does not by itselfgive rise to a question of fact as towhether the hell or high water clause inthe leases can be reconciled with the“Cancellation” provision. Florida law isclear that “the headings or subheadingsof a document do not dictate the meaningof the entire agreement, especially where

the literal language of the heading iscontrary to the agreement's overallscheme.” Hinely v. Florida MotorcycleTraining, Inc., 70 So.3d 620, 624 (Fla.1st DCA 2011)29; see also U.S. v. R.F.Ball Const. Co., 355 U.S. 587, 593, 78S.Ct. 442, 2 L.Ed.2d 510 (1958)(Whittaker, J., dissenting) (“Substance,not form or labels, controls the nature andeffect of legal instruments.”).

Plaintiffs also contend that the“underlying reality” of the transactions atissue “is that the cancellation provisionwas placed in the advertising ormarketing agreements by Brican, with theexpress authority of NCMIC, to informthe customers that if the advertising feeswere not received by them, they wouldno longer be responsible for making thelease payments.” Pls.' Resp., at 10.However, the unambiguous terms ofVersion 6 of the Marketing Agreementbelie this assertion because theCancellation provision states only that acustomer “may request” that Bricanrepurchase the Lease Agreement, butdoes not require Brican to do so if thecustomer makes such a request.Similarly, as to Versions 5, 7, and 8, theclauses contain no indication whatsoevergiving rise to a client's right to cancel thefinancing agreement. Quite to thecontrary, as NCMIC points out, at bestthey only provide a promise by Brican to“repurchase” or “assume assignment” ofthe agreements.

Here, the “Cancellation” provisions inversion 5–8 of the Marketing Agreementare not inconsistent with the Financing

17









Agreement's hell or high water clause soas to nullify the Financing Agreementsexecuted in conjunction with theseversions of the Marketing Agreement.Thus, because these terms can bereconciled, Plaintiffs have failed toestablish a genuine issue of material factprecluding summary judgment inNCMIC's favor. Therefore, NCMIC'smotion for summary judgment is grantedas to the transactions involving Versions5–8 of the Marketing Agreements.

C. There is an Issue of Material FactRegarding NCMIC's Knowledge ofthe Extent of Brican's Use of Versions1–4 of the Marketing Agreement andthe “Cancellation” Clause in theseAgreements.The analysis of the “Cancellation” clausein Versions 1–4 of the MarketingAgreement produces a different outcomefrom the analysis of Versions 5–8. This isbecause, in the case of Versions 1–4, theagreement's language is ambiguous as towhether the Financing Agreements couldbe cancelled.30 Thus, a determination of(1) when NCMIC learned about the“Cancellation” clause in these MarketingAgreements, and (2) what actionsNCMIC took as a result of thisknowledge, is relevant to the issue of theParties' intent in entering theseagreements,31 and, more specifically,whether NCMIC intended to create anexception to the hell or high water clause.

*15 On the present record, there is agenuine issue of material fact regardingthese factual questions. First, Vincens'testimony that Fred Scott knew about the

Marketing Agreements as early as June2006—and authorized Brican to use theagreements-is at odds with the June 19,2006 email from Scott to Artino and theFred Scott letter. These documents makeno reference to advertising and/ormarketing payments, but state only thatNCMIC's proposed preferred repaymentplan is being offered to support Brican's“Return Guarantee” or “return policy.”Further, Vincens' testimony on this issueis contradictory. He testified that Bricansold the Display Systems in reliance onNCMIC's representation in the ScottLetter that it would receive a preferredpayoff if a customer cancelled theFinancing Agreement, but also stated, inthe same deposition, that Bricanexpressly instructed its sales staff toinform all customers that the agreementscould not be cancelled even if theadvertising payments stopped. Theseinconsistent statements present issues offact to be resolved by the jury.

Second, the fact that NCMIC becameaware of the allegations against Recommdescribed in the Tampa Tribune articlesdoes not by itself irrefutably establish thatit was aware of the interplay of theMarketing and Financing Agreementsand—more specifically—of theMarketing Agreement's “Cancellation”clause. While there is evidencesupporting the argument that NCMICshould have done more to investigateBrican's activities after learning aboutRecomm, there is nothing in the Tribunearticles or the Powerpoint presentationattached to the July 23, 2008 e-mail fromLemacon to Cook, indicating that Bricanwas informing its customers that the

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Financing Agreements could be cancelledunder certain circumstances. Similarly,Lemacon's explanation that theMarketing Agreements were beingimplemented with “some dentists,” andthat NCMIC was welcome to visit a VisoLasik Medspa, is consistent withNCMIC's allegation that it believed thatBrican was offering the agreements onlyto those customers located in the vicinityof the Viso Lasik Medspas, and not, aswould become clear later, to allcustomers.

The same is true of the events followingthe November 2008 meeting betweenNCMIC and Brican in Miami. Althoughit is undisputed that Cook knew aboutand suggested a modification to the“Cancellation” clause, as explained inSection IV.B., this version of theMarketing Agreement (Version 6) can bereconciled with the hell and high waterclause. Moreover, Cook's suggestedchanges are not a clear indication thatNCMIC interpreted the original clause toallow Plaintiffs a right to cancel theFinancing Agreements. Rather, themodification could be interpreted asCook's attempt to clarify (1) that Brican'soffer to the customer was to repurchasethe Display System, not the financingagreement; and (2) that the customer'sobligations under the FinancingAgreement would continue even afterBrican agreed to purchase the DisplaySystem. Because the evidence issusceptible to multiple reasonableinferences, the Court cannot decide thisissue as a matter of law.

D. There is an Issue of Fact as toWhether Brican's SalesRepresentatives Acted as NCMIC'sApparent Agents in TheirPresentation of the MarketingAgreements.*16 Plaintiffs assert that Brican acted asNCMIC's agent such that Brican's actionsshould be attributed to NCMIC. Plaintiffsargue that NCMIC's status as Brican'sagent is legally significant for thefollowing reasons. First, by giving Bricanauthority to tell Plaintiffs that theFinancing Agreement were cancellable ifthe advertising fees were not paid,NCMIC effectively modified theFinancing Agreements and created anexception to the hell or high water clause.See Pls.' Mot., at 16–19. Second, asBrican's principal, NCMIC is estoppedfrom enforcing the hell or high waterclause where Brican represented to itscustomers—both in writing (through theMarketing Agreements) and orally as partof the sales presentations-that theFinancing Agreements could be cancelledunder specified circumstances. SeeWigdor Pls. Motion, at 7. Third, Plaintiffsargue that, as a matter of law, Brican'sfraud can be attributed to NCMIC as itsprincipal, even though Brican may haveacted in a manner adverse to NCMIC'sinterests. Id., at 9. Fourth, Plaintiffscontend that a determination as toBrican's agency is essential because “theexistence of that agency makes NCMICand Brican the equivalent of a singleparty” for purposes of determiningwhether the Marketing and FinancingAgreements should be interpreted as asingle document. Id., at 10.

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NCMIC urges the Court to rejectPlaintiff's agency theory on severalgrounds. As a threshold matter, NCMICargues that Plaintiffs failed to properlyplead agency in violation of Federal Ruleof Civil Procedure 8(a)(2). See alsoMolinos Valle Del Cibao, C. Por A. v.Lama, 633 F.3d 1330, 1351–52 (11thCir.2011) (refusing to consider aplaintiff's agency theory because it wasnever pled in the complaint and plaintiff“did not raise an agency theory in any ofits court filings up until trial.”).

Here, agency was properly pled pursuantto Federal Rule of Civil Procedure 8. TheBlauzvern Complaint alleges that “theparties agreed that [Brican America, Inc.and Brican America, LLC], would beagents for NCMIC” based on variousspecific agreements between NCMIC andBrican, Inc. and/or Brican, LLC,including:

(1) that NCMIC ... would supply anequipment financing form which wouldbe printed with the logo of BricanAmerica, LLC, prominently displayedon the top of the page;

(2) that sales agents sent by [Brican]would be the only interface betweenthe potential customer and NCMIC;

(3) that the sales agents would gatherthe information as directed by NCMIC,and ... would transmit it to NCMIC fora credit decision;

(4) that the sales agents would

complete the equipment financingagreements;

(5) [that the sales agents] would answerall questions which the customer mighthave about the financing agreements;

(6) [that the sales agents] would obtainthe signature of the direct contractobligor and a personal guarantor on theagreements; and

(7) [that the sales agents] wouldtransmit the information to NCMIC.

*17 Blauzvern Compl., ¶¶ 113–114.Similarly, Paragraph 109 of the FirstAmended Common Complaint assertsthat the sales agents who presented theViso Lasik system to the relevantcustomers “would be agents for NCMICand Brican.” FACC, ¶ 110. Theseallegations are sufficient to satisfy theFederal Rule's pleading requirements.

1. Three-column FinancingAgreementsThe next issue is whether Plaintiffs haveestablished sufficient facts for theiragency theory as to the three-columnagreements, in which NCMIC was thelessor and Brican, Inc. was the vendor.Plaintiffs contend that an express agencyexists between Brican, Inc. and NCMICbased on the “Partnering for Success”document [DE 344–46] and the GeneralVendor Agreement [DE 223–22].

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According to the Wigdor Plaintiffs, anexpress agency between Brican, Inc. andNCMIC also exists based on the “conductassociated with Brican's marketing effortsand of Brican's sales personnel in themarketing of the equipment.” WigdorPls.' Mot., at 7.

NCMIC responds that there is noevidence of an express or implied actualagency between Brican, Inc. and itself.Under Iowa law, “[a]gency ... resultsfrom [the] (1) manifestation of consent byone person, the principal, that another,the agent, shall act on the former's behalfand subject to the former's control and,(2) consent by the latter to so act.” SoultsFarms, Inc. v. Schafer, 797 N.W.2d 92,100 (Iowa, 2011). Thus, “[a]n agencyrelationship exists where an agent hasactual (express or implied) authority orapparent authority to act on behalf of aprincipal.” C & J Vantage Leasing Co. v.Wolfe, 795 N.W.2d 65, 79 (Iowa, 2011)(citation omitted).

Actual authority exists “if the principalhas either expressly or by implicationgranted the agent the authority to act onthe principal's behalf.” Schafer, 797N.W.2d at 102. Actual authority iscomposed of either “express” or“implied” authority. Id. Express authorityexists where there is direct evidence theprincipal granted authority to the agent toact on its behalf. Id. Where circumstantialevidence proves the agent's authority,such authority is implied. Id.

The record does not support a finding of

either express or implied actual authorityfor Brican, Inc.'s employees to act onNCMIC's behalf. The undated“Partnering for Success” documentappears to be only a business proposal. Itis not enforceable against either NCMICor Brican, Inc. because the documentstates that it “is not intended to, and doesnot, create a legally binding commitmentor obligation on the part of either party.”[DE 344–46, at 5]. Moreover, thedocument is not executed. Id. Similarly,the Vendor Agreement does not establishan agency relationship. This documentcontains no manifestation of consent byeither NCMIC or Brican, Inc. to act aseither agent or principal, or anyindication that NCMIC granted Brican,Inc. authority to act on its behalf inconnection with the financingtransactions. Finally, there is no evidenceon the record that NCMIC or Brican, Inc.made representations that eitherconferred authority on the other party toact on its behalf, or created a relationshipgiving rise to this implied relationship.Therefore, as a matter of law, it isundisputed that no express or impliedagency relationship existed betweenNCMIC and Brican, Inc.

*18 However, there is an issue of factregarding whether NCMIC acted asBrican Inc.'s apparent agent. “Apparentauthority is authority the principal hasknowingly permitted or held the agentout as possessing.” Wolfe, 795 N.W.2d at79 (internal quotations and citationomitted). The focus is on the principal'sactions and communications to the thirdparty, not the agent's. Id. The lease andsale program established between Brican,

21












Inc. and NCMIC was vendor-based, andpursuant to the Vendor Agreement,Brican, Inc. relied on NCMIC forfinancing. The Parties do not dispute thatthe customers dealt exclusively withBrican's sales representatives during thetransactions at issue. The three-columnagreements—which lists PSFS as thelessor—and the one—columnagreements—listing Brican, Inc. as thelessor and Brican, LLC as the vendor,and which were ultimately assigned toNCMIC both feature Brican's logoprominently at the top of the page.According to the established procedurebetween NCMIC and Brican, Inc., leaseapplications were forwarded to NCMICfor approval. Furthermore, NCMIC'sd/b/a name, Professional SolutionsFinancial Services, appears in each of thelease agreements under the “lessor” field,an indication that NCMIC allowedBrican's representatives to holdthemselves out as PSFS's agents.

The aforementioned facts constitutesufficient circumstantial evidence tocreate a genuine issue of material factthat NCMIC knowingly permitted and/orheld out Brican, Inc. as possessingauthority to negotiate the terms of theFinancing Agreement as well as preparethe paperwork used to execute theagreement. Although a fact-finder mayconclude that NCMIC did not permit orhold out Brican, Inc. as its agent, agenuine issue of material fact exists.

2. One-column Financing AgreementsNCMIC opposes Plaintiffs' agency theoryon the grounds that the one-column

version of the Financing Agreementexpressly disclaims an agencyrelationship. NCMIC points to theagreement's “No Agent” clause, whichprovides:

YOU AGREE THAT THE VENDOR,M A N U F A C T U R E R , S A L E SPERSON, EMPLOYEE OR AGENTO F T H E V E N D O R O RMANUFACTURER IS NOT OURAGENT AND HAS NO AUTHORITYTO SPEAK FOR U.S. OR TO BINDU.S. IN ANY MANNER. IT ISFURTHER UNDERSTOOD THATWE ARE NOT THEIR AGENT.

[DE 342–3, at 3]. This clause, however,does not apply to NCMIC becauseBrican, Inc., not NCMIC, was theoriginal lessor under the one-columnagreement lease. In fact, the agreementitself defines “We”, “Us”, and “Our” asused in the lease to mean Brican, Inc. Id.,at 2. As the assignee of the leaseagreement, NCMIC could certainly raisethe No Agent clause to argue that thevendor (Brican, LLC) and Brican, Inc.did not have an agency relationship.However, this is quite different fromNCMIC's position that it, as the assigneeof the lease, did not have an agencyrelationship due to this provision. See,e.g., Colonial Pacific Leasing Corp. v.McNatt, 268 Ga. 265, 486 S.E.2d 804,808 (Ga.1997) (holding that anequipment lessees' acknowledgment in afinance lease that the employees of anequipment supplier were not the agents ofa finance lessor was not necessarilyconclusive as to the nonexistence of anagency relationship).

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*19 As with the three-column financingagreements, the record does not supportan express agency between Brican andNCMIC in connection with theone-column agreements. Both Plaintiffsand Wigdor Plaintiffs argue that theGeneral Vendor Agreement [DE–339]created an express agency relationshipbetween the two entities. A finding ofexpress agency under Florida lawrequires: (1) an acknowledgment by theprincipal that the agent will act for it; (2)the agent's acceptance of the undertaking;and (3) control by the principal over theaction of the agent. Reynolds American,Inc. v. Gero, 56 So.3d 117, 119 (Fla. 3dDCA 2011) (internal citations omitted).Plaintiffs acknowledge that the writtenagreements between NCMIC and Bricando not include any agreement that Bricanwill act as NCMIC's agent. See Pl.'s Mot.,at 18. Similarly, the “Partnering ForSuccess” document [DE 344–46] doesnot evidence a mutual agreementbetween NCMIC and Brican to establishan agency relationship. Therefore, noexpress agency has been established.32

There is also an issue of fact, however, asto whether an apparent agency existedbetween Brican, Inc. as lessor andBrican, LLC as vendor of the DisplaySystem.33 In Florida, apparent authorityexists

[W]here a principal allows or causesothers to believe the agent possesses suchauthority, as where the principal

knowingly permits the agent to assumesuch authority or where the principal byactions or words holds the agent out aspossessing it. The doctrine rests on thepremise that one who allows another toserve as his agent must bear the losswhich results to a third party from thatparty's dealings in reliance on that agent'ssupposed authority. But ... the doctrinerests on appearances created by theprincipal and not by agents who ofteningeniously create an appearance ofauthority by their own acts.Jackson Hewitt, Inc. v. Kaman, 100So.3d 19, 2011 WL 3962886, *9 (Fla. 2dDCA 2011).The one-column agreements show a logofor Brican, Inc. directly below the“lessor” field. In all cases, Brican, LLC islisted as the vendor. For mosttransactions, the Brican entity identifiedin the Marketing Agreements is alsoBrican, LLC. Based on a review of therecord, it is unclear whether therepresentatives who presented Plaintiffswith the relevant documents inconnection with the purchase of theDisplay System were employed byBrican, Inc. or Brican, LLC. Thus, thereis an issue of fact as to who acted as theprincipal in connection with theone-column leases, precluding summaryjudgment.

E. Plaintiffs' Estoppel byAcquiescence Argument FailsPlaintiffs assert that “[t]he creation byNCMIC of the program to support BricanAmerica's return policy was a freelyvoluntary act on behalf of NCMIC whichrecognizes the ability of Plaintiffs to

23









cancel the financing contracts.” Pls.'Mot., at 20. Plaintiffs contend that, as aresult, “NCMIC is estopped to enforcethe cancelled agreements.” Id.

*20 Plaintiffs' argument fails under bothFlorida and Iowa law. In Florida, theelements of estoppel are: (1) the partyagainst whom estoppel is sought musthave made a representation about amaterial fact that is contrary to a positionit later asserts; (2) the party claimingestoppel must have relied on thatrepresentation; and (3) the party seekingestoppel must have changed his positionto his detriment based on therepresentation and his reliance on it.Goodwin v. Blu Murray Ins. Agency, Inc.,939 So.2d 1098, 1103 (Fla. 5th DCA,2006) (citations omitted). “Estoppel restson the premise that the party asserting theestoppel has acted in reliance upon theprior inconsistent conduct.” Id.

Here, the record is devoid of factsshowing detrimental reliance to establishestoppel. Plaintiffs do not allege that theyreceived the Fred Scott letter. Arguably,only Brican, as the sole recipient of theletter, would have relied on its content byrepresenting to its customers that theFinancing Agreements could becancelled. There is no evidence, however,that Plaintiffs even saw the letter in thecourse of their relationship with Brican.As such, there can be no equitableestoppel.

The same analysis applies to thoseagreements governed by Iowa law. Iowa

law provides that “[e]stoppel byacquiescence applies when (1) a party hasfull knowledge of his rights and thematerial facts; (2) remains inactive for aconsiderable time; and (3) acts in amanner that leads the other party tobelieve the act [now complained of] hasbeen approved.” Markey v. Carney, 705N.W.2d 13, 21 (Iowa, 2005). Plaintiffs donot allege, and the record does not show,that Plaintiffs knew of the Scott Letter orof NCMIC's discussions regardingBrican's “return policy.” Plaintiffs'assertion that NCMIC created a programto support this policy is insufficient toshow that it acted in a manner that wouldlead Plaintiffs to believe that theFinancing Agreements could be cancelledbecause there is no evidence thatPlaintiffs knew of this program. Thus, theequitable estoppel claim fails.

V. ConclusionBased on the foregoing, Defendants areentitled to a summary judgmentestablishing that, for the approximately900 transactions involving Versions 5–8of the Marketing Agreement, the“Cancellation” provision does notinvalidate the hell or high water clausesin the Financing Agreements. However,as to the remaining transactions involvingVersions 1–4 of the MarketingAgreement-which number approximately400–there remains an issue of factregarding Defendants' knowledge ofBrican's implementation of the“Cancellation” provision. An issue of factalso remains as to whether Brican actedas NCMIC's apparent agent in thepresentation of the MarketingAgreements to Plaintiffs, which could

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potentially have an impact on all of theFinancing Agreements. These factualissues, if resolved in Plaintiffs' favor,would support Plaintiffs' argumentsregarding the enforceability of the helland high water clause in the FinancingAgreements.34 Accordingly, it is

*21 ORDERED that

1. Plaintiffs' Motion for SummaryJudgment Against NCMIC FinanceCorporation and PSFS 3 Corporation onthe “Jugular Issue” [DE–337] isDENIED.

2. Wigdor Plaintiffs' Supplement toBlauzvern Plaintiffs' Motion forSummary Judgment as to the “Jugular”Issues [DE–339] is DENIED.

3. Defendants NCMIC FinanceCorporation and PSFS 3 Corporation'sMotion for Summary Judgment on“Jugular” Issue [DE–341] is GRANTEDin part and DENIED in part.

4. The Parties shall confer and submit ajoint report on a proposed mechanism forresolving the issues remaining in thiscase pursuant to this Order. This reportmust be submitted on or before August30, 2013.

5. A status conference in this matter ishereby scheduled for September 13,2013 at 10:00 a.m. Plaintiffs' Motion for

Status Conference [DE–399] is DENIEDas MOOT.

DONE AND ORDERED.

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Footnotes

1 Defendants Brican America, Inc. (“Brican, Inc.”) and Brican America, LLC (“Brican, LLC”)are not parties to these motions. The Court refers to these entities collectively as “Brican.”Similarly, for purposes of this Order the Court refers to NCMIC Finance Corporation and PSFS3 collectively as “NCMIC.”

2 In a Notice to All Parties Concerning Status Conference dated March 21, 2012 [DE279], theCourt identified the “jugular” issue of this case as “involving the interplay of the financing andmarketing agreements, and more specifically, NCMIC's knowledge of the cancellationprovision in the marketing agreements.” [DE–279]. Thereafter, in an Order denying thePlaintiffs' Motion for Class Certification [DE–226], the Court emphasized that “[r]esolvingwhether NCMIC had knowledge in 2006 that the Brican business model allowed Lessees tocancel the financing agreements with no further liability could be a case dispositive issue.”

3 Brican refers to the Display System alternatively as the “MediaDoc” system, the “BricanInformation Center,” or the “Exhibeo Concept.”

4 The Financing Agreements were either in a single-column or a three-column format. Thethree-column format was used primarily between July, 2005 and October 2008, and theone-column lease was used primarily between November, 2008 and April, 2009.

5 On March 30, 2010, NCMIC formed Defendant PSFS 3, a wholly-owned subsidiary ofNCMIC, and transferred all of the three-column Financing Agreements to this subsidiary. Thethree-column lease contains a forum selection clause which requires that, in the event the leaseis assigned, proper venue will lie in the state where the assignee's corporate headquarters islocated in this case, Iowa. See [DE 342–2, at 3]. Six weeks earlier, on February 10, 2010,NCMIC had resolved its lawsuit against Brican in the federal district court for the SouthernDistrict of Florida. See NCMIC Finance Corp. v. Brican America, Inc., Case No.1:09–cv–21192–PCH. By assigning the agreements to PSFS 3, NCMIC sought to avoid issuesregarding proper venue and proceeded to file individual lawsuits in Iowa seeking to enforcethese Financing Agreements.

6 A variation of the one-column Agreement shows Brican Financial, LLC as the lessor andBrican, LLC as the vendor. See [DE 223–32]. However, it is uncertain on the present recordhow many of these agreements were executed.

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7 At some point, Brican Inc. began to assign some of the Financing Agreements to BricanFinancial Services, a Florida corporation. Defendants do not contest venue for transactionsinvolving agreements assigned to Brican Financial Services and the Court need not addressproper venue for the small number of Plaintiffs who executed a Financing Agreement that wastransferred to this entity. Only six of the Wigdor plaintiffs entered a Financing Agreement thatwas assigned to Brican Financial Services.

8 Deciphering the facts in this case is akin to solving a Rubik's cube. As such, due to the myriadof factual issues in this case, the Court will only address those background facts bearingdirectly on the issues raised in the motions.

9 See NCMIC Group, Inc., http:// www.ncmicgroup.com/AboutNCMIC/Default.aspx (last visitedJul. 29, 2013).

10 NCMIC Group, Inc., htt p:// www.ncmicgroup.com/AboutNCMIC/Companies.aspx (lastaccessed Jul. 29, 2013).

11 NCMIC filed representative copies of each of the eight versions as Exhibit 4 in support of itsmotion for summary judgment. [See DE 342–4]. Plaintiffs identify only seven distinct versionsof the agreement, coded A–G. [See DE 376–2]. Other than minor formatting changes, NCMIC'sversions 5 and 7 appear to have identical language. Compare Ver. 5 [DE 342–4 at 13], withVer. 7 [DE 342–4 at 17]. For the sake of consistency, the Court will adopt NCMIC'snumeration system in differentiating between the versions of the agreement.

12 In these versions of the Advertising Agreement, “Brican” is expressly identified as BricanAmerica, Inc.

13 Versions 5, 7, and 8 of the Advertising Agreement included several alterations and additionsnot present in other versions. First, these agreements state that Viso Lasik Medspas will providecertain incentives to the purchasers of the Exhibeo systems in exchange for their agreement toprovide advertising space. These include: complimentary Viso Lasik Medspa gift cards for thedoctor's patients, membership in the “Viso network,” and preferred rates on Lasik procedures.

14 The portion shown in italics is handwritten.

15 Any differences in the wording of these provisions between the three-column and theone-column lease are noted in the text. In addition, the relevant provisions are set out in thesame formatting as the Financing Agreements.

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16 Although the effect is the same, the wording of the hell or high water clause in the onecolumnagreement is slightly different, and reads as follows:This Lease is NON–CANCELLABLE FOR THE ENTIRE LEASE TERM. YOUUNDERSTAND THAT WE ARE BUYING THE EQUIPMENT BASED ON YOURPROMISE TO PAY U.S. UNDER THE TERMS OF THE LEASE, WITHOUT SET–OFFS,EVEN IF THE EQUIPMENT DOES NOT WORK PROPERLY OR IS DAMAGED FORANY REASON INCLUDING REASONS THAT ARE NOT YOUR FAULT.[DE 342–3, at 2].

17 The wording of Paragraph 2 of the one-column agreement is slightly different from thethree-column version, and reads as follows:NO WARRANTY: We are leasing the Equipment to You AS IS and with ALL FAULTS. Wedo not manufacture the Equipment. You selected the Equipment and the Vendor, based onYour own judgment. You may contact the Vendor for a statement of the warranties, if any, thatthe Vendor or manufacturer is providing. We hereby assign to You the warranties given to Us,if any. WE MAKE NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDINGWARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULARPURPOSE, IN CONNECTION WITH THIS LEASE, OR THE EQUIPMENT. You agreeto settle any dispute You may have regarding performance of the Equipment directly with themanufacturer or Vendor.[DE 342–3, at 2].

18 Plaintiffs' summary indicates that Version 4 was used in 366 transactions. See [DE 376–2].However, NCMIC's submissions show 377 sales. See [DE 377–2].

19 Vincens testified that Briscoe owned a third of Brican, Inc. “for a short period of time” and alsoowned 33% of Brican, LLC at the time of its inception. See Vincens Dep., at 42:4–8. Briscoesold his interests in Brican, LLC and Brican, Inc. and resigned as managing member of Brican,LLC on or around June 29, 2007. Id., at 61:1–12. According to Vincens, Briscoe continuedworking for Brican as a consultant after this date. Id., at 63:10–18.

20 This testimony pertained to Deposition Exhibit 38 [DE 223–31], which is a copy of a signedMarketing Agreement dated July 10, 2006. The language of this specific agreement matchesVersion 3 of the Marketing Agreement. See supra, at 7.

21 NCMIC financed 471 Display System sales from July, 2008 when it received Del Castillo'semail—through November, 2008. See [DE 376–1].

22 According to Brican, the three Viso Lasik centers were located in Wellington, Florida, inCharlotte, North Carolina, and in San Antonio, Texas.

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23 This language corresponds to Version 6 of the Marketing Agreement.

24 See also id., at 43:3–8 (“THE COURT: So what you are saying is you are agreeing it is a papercase? MR. GOSSETT: Yes, ma‘am. THE COURT: So you are also agreeing that what wasinvolved in the sales presentation is really not relevant to your case? MR. GOSSETT: Yes,ma‘am.”).

25 The Order states, in pertinent part:Plaintiffs stipulated that the allegations of the First Amended Common Complaint ... are notpremised on oral representations. In other words, this is a “paper case,” not an oral case or evena hybrid case (written misrepresentations coupled with oral misrepresentations). The Court willhold Plaintiffs to these stipulations.Id., at 1.

26 The law applicable to the Financing Agreements is determined by their respective choice of lawprovisions. The one-column agreements contain a choice of law provision requiring that alldisputes in connection with the agreements be resolved in accordance with Florida law. Thethree-column agreements, on the other hand, provides that the law of the state where NCMICis incorporated (i.e. Iowa law) applies. The Parties do not dispute this issue.

27 Iowa law is consistent with this principle. See Iowa Fuel & Minerals, Inc. v. Iowa State Bd. ofRegents, 471 N.W.2d 859, 862 (Iowa 1991) (“It is the cardinal principle of contractconstruction that the parties' intent controls; and except in cases of ambiguity, this isdetermined by what the contract itself says.”).

28 Although the Marketing Agreements are hardly a model of clarity as to what Brican LLC'spromise to “repurchase” or “assume assignment” of the leases encompassed—e.g., for the vastmajority of the transactions Brican, LLC never owned the leases and to “assume assignment”suggests that Brican, LLC would become the obligee under the leases—there is no ambiguityin these versions of the Marketing Agreement to suggest that the obligations under theFinancing Agreements could be cancelled.

29 Iowa law is in accord with this principle. See Greenberg v. Alter Co., 255 Iowa 899, 124N.W.2d 438, 441 (Iowa, 1963) (“In interpreting a contract words should be given their plainordinary meaning and interpreted in the context in which used. The entire contract is to beconsidered to determine the meaning of each part. A clause or sentence is not assumed to haveno effect when it can have reasonable intendment.”)

30 See, e.g., Marketing Agreement, Version 4 [DE 342–4, at 11] (“... all related agreements canbe cancelled....”).

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31 According to Plaintiffs, approximately 408 NCMIC-financed transactions involved Versions1–4 of the Marketing Agreement.

32 Plaintiffs' argument that an actual agency exists because “neither party made an effort to avoid”or disclaim the agency relationship is unconvincing. An express agency requires an expressdelegation of authority, and “a failure to deny an agency relationship” is not sufficient tosupport a claim for agency. Koens v. Royal Caribbean Cruises, Ltd., 114 F.Supp.2d 1215, at* 1222 (S.D.Fla. Mar. 25, 2011).

33 The question of whether an agency relationship existed between the Brican entities is relevantto the “jugular” issue because Brican, Inc. assigned the one-column agreements to NCMIC. Acopy of the lease assignment states that the lessor (i.e. Brican, Inc.) “warrants the Lease anddocuments related in any way to the Lease are genuine, enforceable and constitutes (sic ) theentire agreement with respect to the lease” of the Display Systems. [DE 223–34, at 5](emphasis supplied). A jury finding that an agency relationship existed between the Bricanentities, coupled with the express terms of the assignment, would support Plaintiffs' argumentthat the Marketing and Financing Agreements constituted a single transaction, thus potentiallyaffecting the enforceability of the hell or high water clauses.

34 The conclusions of law set forth in this Order are limited to the “jugular” issue directly beforethe Court, namely, the interplay between the Marketing Agreement's “Cancellation” clause andthe hell and high water clause in the Financing Agreement. Thus, this Order does not decidePlaintiffs' fraud-based claims against NCMIC, which are not based on the interpretation of thecontractual terms and, as such, fall outside the scope of the “jugular” issue. See Plaintiffs'Amended Statement of Legal Claims and Elements [DE–196].

End of Document © 2013 Thomson Reuters. No claim to original U.S.Government Works.

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