## Facts

- GDR Investments, Inc., d/b/a Pinnacle Exxon (GDR), operated a gas-station business and entered a five-year commercial lease for an automated teller machine (ATM) to be placed on its premises.
- Information Leasing Corporation (ILC) financed the ATM lease through a vendor-based program; the vendor, JRA 222, Inc., d/b/a Credit Card Center (CCC), solicited customers, arranged placement, serviced the ATMs, and paid lessees commissions tied to ATM use.
- GDR’s owner, Avtar S. Arora, signed the lease on behalf of GDR and also executed a personal guaranty of GDR’s obligations.
- The lease contained prominent noncancellation language and a “hell-or-high-water” clause stating the lease was noncancelable and binding, disclaiming warranties (express and implied), stating the equipment was leased “as is,” and stating GDR could not revoke acceptance.
- The lease also stated GDR (not ILC) selected the equipment and the vendor, and that ILC was not responsible for equipment failure, the vendor’s acts, or service and repairs.
- Shortly after the ATM was delivered, CCC went bankrupt and stopped providing service and support.
- Arora decided GDR did not want the ATM and attempted to cancel the lease; GDR later went out of business.
- The ATM was placed in a warehouse and was later repossessed by ILC.
- ILC sued GDR and Arora for amounts due under the lease (about $15,877.37).
- After a bench trial, the trial court entered judgment for GDR and Arora, finding ILC had not complied with its obligations, that GDR had properly canceled, or alternatively that ILC failed to mitigate damages by not retrieving the ATM after being notified it was unwanted.
- ILC appealed, arguing the trial court used the wrong legal analysis for a commercial finance lease governed by Ohio’s UCC provisions.

## Issues

1. Whether the trial court erred by treating the dispute as ordinary contract nonperformance and cancellation, instead of analyzing the lease under Ohio’s UCC finance-lease framework and the lease’s noncancelable payment provisions.
2. Whether, if the transaction was a finance lease, GDR’s post-delivery obligations became irrevocable and independent upon acceptance of the ATM, despite CCC’s bankruptcy and service failure.
3. On remand, what factual and legal questions must be addressed under the UCC framework, including acceptance, any available defenses (such as unconscionability), any consent by ILC to cancellation or modification, and any mitigation arguments.

## Decision

- The Court of Appeals reversed the judgment for GDR and Arora and remanded for further proceedings.
- The court held the trial court applied the wrong approach by attributing CCC’s service failure to ILC and allowing cancellation without using the UCC finance-lease analysis.
- The court directed the trial court to evaluate the parties’ rights and defenses using the governing finance-lease rules, including whether and when acceptance occurred and whether any recognized defenses or modification/consent applied.

## Legal Principles

- A commercial lease that fits the UCC definition of a finance lease is analyzed under UCC Article 2A (as enacted in Ohio), which separates the financing lessor’s role from the supplier/vendor’s role.
- In a finance lease, once the lessee accepts the goods, the lessee’s promises to pay generally become irrevocable and independent (“hell-or-high-water”), meaning supplier failure or defective performance ordinarily does not excuse rent obligations to the lessor.
- Contract terms stating the equipment is leased “as is,” disclaiming warranties, and placing responsibility for vendor selection, service, and equipment performance on the lessee are consistent with finance-lease risk allocation.
- The “hell-or-high-water” effect depends on acceptance under the UCC; questions about the lessee’s opportunity to inspect and whether acceptance occurred remain legally significant.
- Even in a finance lease, certain defenses may be available under the UCC (including unconscionability or other recognized grounds), but they must be analyzed within the statutory structure rather than as a general right to cancel for supplier nonperformance.
- A lessor’s consent to cancellation or modification, if proved, can affect enforcement despite boilerplate noncancellation language; the trial court must make findings under the correct legal rules.
- Mitigation issues must be considered in light of the statutory independence of the rent obligation after acceptance and the remedies provided for default and repossession.

## Conclusion

The appellate court reversed because the trial court let GDR and its guarantor avoid liability by treating the vendor’s bankruptcy and service failure as ILC’s breach and as grounds for cancellation, without applying Ohio’s UCC finance-lease rules and the lease’s noncancelable payment terms; the case was remanded to determine acceptance and any valid UCC-based defenses, consent to cancellation or modification, and related damage questions under the proper framework.


Information Leasing Corporation v. GDR Investments, Inc., d/b/a/ Pinnacle Exxon, 152 Ohio App .3d 260, 787 N.E.2d 652 (2003)