Two decisions were announced this week that will require equipment lessors to review the structure of future lease agreements. Both decisions were levied against Wells Fargo Financial Leasing Inc.
In the first case, Bradstreet Personnel Group, Inc. v. Wells Fargo Financial Leasing, Inc., plaintiffs were lessees of office equipment including photocopiers and high-speed duplicators. Plaintiffs claimed they were victims of unconscionable business practices due to the defendant’s practice of “evergreening” equipment leases (automatically renewing leases because lessee fails to provide timely notice of intent to either purchase equipment or return it to lessor). As a result, plaintiffs claimed they suffered economic injuries by paying for unwanted extensions of their leases, or by purchasing the leased equipment at inflated prices.
The second case, N.Y. Career Guidance Svcs., Inc. v. Wells Fargo Financial Leasing, Inc., was brought by a serially delinquent lessee of office equipment who complained they were repeatedly charged an unconscionable penalty on its late payments. Plaintiff claimed that the lease terms regarding late payment penalties were ambiguous and the fees which were being assessed were actually impermissible penalties.