## Facts

- Perkins Rowe Associates, Inc. (Perkins Rowe) developed a large mixed-use residential, retail, and commercial complex in Louisiana.
- Perkins Rowe financed the development with a mortgage loan from KeyBank, which KeyBank properly recorded.
- Perkins Rowe entered into a master lease with Cisco Corporation under which Cisco would provide a comprehensive security and operations system for the complex, controlling security, fire safety, lighting, music, and other functions from a centralized location.
- The system consisted of multiple units installed at locations throughout the complex; units were bolted to the floor and connected by wiring run through walls, ceilings, and underground between buildings.
- Cisco assigned its rights in the lease to De Lage Landen Financial Services, Inc. (De Lage), a finance lessor/assignee that funded and provided the equipment, software, and related services for the project.
- Under the lease structure, De Lage claimed a security interest in the leased system and asserted that Perkins Rowe’s payment obligations were not subject to setoff or defenses based on Cisco’s or contractors’ performance.
- Perkins Rowe defaulted, and De Lage sued to recover nearly $1.5 million allegedly due under the lease and to enforce related guaranty obligations.
- Perkins Rowe responded with counterclaims, contending that delays and failures in performance harmed its ability to lease and sell space in the complex and contributed to its inability to pay.
- After De Lage filed suit, KeyBank intervened and asserted that the installed system was a component part of the mortgaged immovable and therefore part of KeyBank’s mortgage collateral.
- De Lage moved for summary judgment against Perkins Rowe (and guarantors) based on the lease and guaranties, arguing that Perkins Rowe’s counterclaims and defenses were barred by the contract terms and that no genuine dispute existed as to default and amounts due.

## Issues

1. Whether the master lease’s payment and risk-allocation terms barred Perkins Rowe from asserting counterclaims and defenses against De Lage based on alleged delays or nonperformance by Cisco and other project participants.
2. Whether De Lage established, as a matter of law, Perkins Rowe’s default and De Lage’s entitlement to recover amounts due under the lease.
3. Whether the guarantors were liable under their guaranty agreements for Perkins Rowe’s obligations.

## Decision

- The court granted De Lage’s motion for summary judgment.
- The court rejected Perkins Rowe’s counterclaims and defenses to payment to the extent they were foreclosed by the lease’s terms governing payment obligations and limits on asserting claims against the assignee/financing party.
- The court found no genuine issue of material fact as to Perkins Rowe’s breach and the guarantors’ liability under the guaranties, and entered judgment for De Lage on the lease and guaranty claims.

## Legal Principles

- Parties to an equipment finance lease may allocate performance risk to the lessee and make payment obligations enforceable independent of disputes about the supplier’s or installers’ performance, as reflected in “no setoff” and similar waiver terms.
- When a lease is assigned to a financing party, contractual provisions limiting defenses and counterclaims against the assignee can bar the lessee from reducing or avoiding payment based on allegations against the original supplier.
- A guaranty is an enforceable, separate promise; absent a valid defense, a guarantor may be held liable upon proof of the underlying default and the guaranty’s terms.
- Summary judgment is appropriate when the moving party shows there is no genuine dispute of material fact and it is entitled to judgment as a matter of law on the contract and guaranty obligations.

## Conclusion

In De Lage Landen Financial Services, Inc. v. Perkins Rowe Associates, Inc., the court enforced the assigned master lease and guaranties on summary judgment, holding that Perkins Rowe’s performance-based counterclaims and defenses could not defeat De Lage’s right to recover amounts due under the lease and that the guarantors were liable for the default.


De Lage Landen Financial Services, Inc. v. Perkins Rowe Associates, Inc., 2011 WL 1337381 (2011)