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TRAILWAYS FIN. & ACCEPTANCE CORP. v. EURO-FLO TOUR

October 18, 1983

TRAILWAYS FINANCE AND ACCEPTANCE CORPORATION, Plaintiff,
v.
EURO-FLO TOURS, INC., Defendant-Third Party Plaintiff, v. TRAILWAYS OF NEW ENGLAND, INC., and AMERICAN BUSLINES, INC., Third Party Defendants


Stern, District Judge.


The opinion of the court was delivered by: STERN

This is an action for breach of three contracts concerning the sale of three buses "as is." Plaintiff and third-party defendants have moved for summary judgment and dismissal of defendant's counterclaims and third-party complaint based on what they consider to be unambiguous contract terms. Because we find that the plain meaning of the contracts supports no other result, the motions will be granted.

I.

 In early 1982, Europe Lucas, president of Euro-Flo Tours, Inc. ("Euro-Flo"), contacted Trailways, Inc. in order to purchase used buses. After telephone discussions with Frank Millet, director of used bus sales for Trailways, Inc., Lucas travelled to Hoboken, New Jersey, the site where the buses were located, in order to inspect the buses and sign the contracts. According to Lucas, he was allowed to look at the buses in the Hoboken garage, but he was not allowed to drive the buses on test runs. Lucas Aff. para. 3. Lucas also claims that the person in charge represented that the buses, in their present condition, satisfied New Jersey regulations regarding the transportation of school children and adults. Id. In March, April, and June of 1982, Lucas signed three contracts which set forth the conditions of sale for three buses.

 The three contracts at issue in this suit are, for the most part, identical. The first contract was entered into between Euro-Flo and Trailways of New England, Inc., a wholly-owned subsidiary of Trailways, Inc., for the sale of a 1970 Silver Eagle Motor Coach, Serial Number 8328. The contract was signed by Lucas, on behalf of Euro-Flo, on March 26, 1982; it was subsequently forwarded to Trailways of New England in Dallas, Texas, whose vice president signed the contract on April 8, 1982. The total price of the bus was $79,579.68, to be paid in the following installments: an initial payment of $11,263.68, due on June 24, 1982, to be followed by 47 monthly installments of $1,298.25 beginning on August 1, 1982 and continuing through July 1, 1986. Under an acceleration provision, the seller or any assignee retained the right upon failure of the purchaser to make any payment to declare all amounts to be immediately due and payable. Contract, para. 8. In addition, the contract provided that the seller reserved a security interest in the property. Id. at P E. The contract further provided that any question of validity, construction, enforcement, or interpretation would be governed by the substantive law of Texas, id. at P 16, and the subsequent assignee would be entitled to all of the rights and remedies of the initial seller. Id. at P 11. In addition, the contract included in bold-face capitalized letters above the signature lines the following notice to the purchaser:

 
PURCHASER ACKNOWLEDGES AND AGREES THAT THIS CONTRACT SHALL BE ASSIGNED BY SELLER TO TRAILWAYS FINANCE AND ACCEPTANCE CORPORATION ("ASSIGNEE") AND FURTHER AGREES THAT THIS CONTRACT SHALL NOT BE BINDING OR EFFECTIVE UNTIL SO ACCEPTED BY ASSIGNEE AT DALLAS, DALLAS COUNTY, TEXAS.

 The contract was assigned by Trailways of New England to Trailways Finance and Acceptance Corp. ("Trailways Finance"), a sister corporation of Trailways, Inc., on April 8, 1982, by an assignment provision located on the contract below the signature lines. Euro-Flo was notified of the assignment by letter dated April 7, 1982. Joyce Aff., Ex. D.

 An express term and condition of the contract was that no warranties of any sort attached to the sale of the used bus. Prominently displayed in bold type, the "as is" provision of the contract stated:

 
The Property consists of one or more used motor vehicles and is being sold to Purchaser hereunder "AS IS," WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED. No warranties, express or implied, including without limitation any implied warranty of merchantability and any implied warranty of fitness for a particular purpose, representations, promises, or statements have been made with regard to the Property of Seller or shall be claimed by Purchaser unless endorsed hereon in writing. Purchaser will bear the entire expense of repairing or correcting any defects that presently exist or that may occur in such vehicles.

 Contract, para. 10. Moreover, an additional provision made clear that the contract constituted the final agreement between the parties:

 
This contract supersedes all agreements and communications, oral or written (including, but not limited to, any purchase order heretofore or hereafter issued by Purchaser), between Purchaser and Seller, and may not be modified, or terminated (except as hereinafter provided) except by a writing executed by Purchaser and Seller or its assignee.

 Id. at P 17. Finally, above the signature line, in bold print, the contract stated: "NOTICE TO PURCHASER: DO NOT SIGN THIS CONTRACT BEFORE YOU READ IT . . . ."

 Trailways Finance, the assignee of all three contracts, claims that it received one payment of $5,500 toward the first bus, and that it has received nothing more on any of the three buses. According to Larry Joyce, the person in charge of the Credit Department of Trailways Finance, he visited Lucas on August 10, 1982, to discuss the delinquent payments on the three buses. Joyce claims that at that visit, Lucas promised that the payments would be forthcoming as soon as he received payment on one of his own accounts. Joyce Aff., para. 13. Between July 29, 1982 and October 25, 1982, several checks were sent by Lucas to Trailways Finance, but Lucas subsequently asked that they not be cashed due to insufficient funds on the part of Euro-Flo. Id. at PP 15-17. After waiting to cash these checks, Trailways Finance finally presented them for payment on November 5, 1982. Id. at P 18. Trailways Finance wrote Euro-Flo on November 23, 1982, again advising the latter of its delinquency; almost immediately upon the sending of this letter the Euro-Flo checks were returned for insufficient funds. Id. at PP 19-20. Another letter was sent by Trailways Finance on November 29, 1982, informing Euro-Flo of the returned checks, to which Lucas responded by letter of December 10, 1982, seeking a further extension of time to make payments. Id. at PP 21-22. When no payments were received, Trailways Finance notified Euro-Flo on January 21, 1983 that it was in default on all three contracts, and that if all back installments were not paid, with interest, by January 31, 1983, the remaining amounts due under the contracts would be accelerated as of February 1, 1983, and would become due and payable without further notice. Id. at P 24. Euro-Flo neither made payments nor returned ...


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