Case Law Summaries

CIT Communications Finance Corporation v. Lacher & Lovell-Taylor

• Opinion Date: February 27, 2003
• Business Law
• E-Mail

CONTRACTS; LEASES; ASSIGNMENT—An assignment does not work a novation and payments to a seller or lessor under an assigned contract should not be held hostage to a dispute between the assignor and its assignee.

A law firm leased telephone equipment pursuant to a finance lease. It then merged with another law firm and a dispute between the two firms ensued. The telephone equipment itself was not transferred from the lessee’s old premises. Payments were halted. It appears that the principal dispute was between the two merging law firms and that the law firm named as the lessee took the position that the leasing company “should be held captive to the dispute between [the two fighting law firms], and that payments to [the leasing company] could not occur until liability as between [the two law firms] was resolved.” The leasing company pointed out that the contract was not assignable and sought summary judgment against the named lessee. The lower court agreed with the leasing company. On appeal, the Appellate Division characterized the law firm’s appeal as an objection “to [the lower court’s] practical and legally sustainable conclusion that the [original named lessee was] liable on the contract with [the leasing company] and the most that [it] possessed was a claim for indemnification against [the other law firm], not a defense against [the leasing company].” The Appellate Division agreed with the lower court that the leasing company should not be held hostage to the resolution of the dispute between the two merging law firms.

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