Marks & Associates, P.C. 
October 2019
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We are really (and I mean REALLY) happy to announce that, effective January 1, we will change the name of the firm to Marks & Evans, P.C. Emails and physical address will stay the same.
This change recognizes the growth of Matt's practice, and is arguably overdue. It feels very good to get away from the image of a solo practitioner or one partner and a bunch of associates, which has not been the case for a long time.
To celebrate the improvement, and because we cannot resist the temptation to make a socio-political comment with the assistance of the federal government (through a modest tax deduction) we have a new official M&E t-shirt.
and BAD
The shirt shows a tearful Lincoln and Washington with the inscription "A HOUSE DIVIDED AGAINST ITSELF...." For those of you historically challenged (that didn't come out right): Lincoln decried such a "house" because it "cannot stand".
Lincoln's USA was divided because of the economic, social and moral differences between north and south. Ours is divided along different, but it feels like only slightly less contentious, lines. Face it, if this piece opened with a tirade against Mr. Trump, you would, if a Trump supporter, have stopped reading. If it opened in support of Mr. Trump, the reverse would be true. We have come to ask first "whose side are you on?" and not "what do you think?"
There is no second question; we never seem to want to hear "WHY?" Who needs to talk, listen, think or (gasp) negotiate? We can find people telling us we are and always were right with the press of a button.   Fox or  CNN Breitbart or the  Times ?
What has happened to us? We are not in a time of crisis - a depression, a major social upheaval, a war that is killing thousands of draftees. Almost none of the people who stopped talking and started yelling at each other are starving. Yes, some had and have good reason to be upset about their jobs or gun control or whatever, but most of us are doing much better than anyone, anywhere, any time in history.
There are good  political reasons to argue. But politics is either a means to find a mutually-acceptable middle ground or pure, unadulterated evil masked as principle. Read to what George Washington said in his farewell address:

"However [political parties] may now and then answer popular ends, they are likely in the course of time and things, to become potent engines, by which cunning, ambitious, and unprincipled men will be enabled to subvert the power of the people and to usurp for themselves the reins of government, destroying afterwards the very engines which have lifted them to unjust dominion."

and (hopefully) MORE GOOD
So, we will be giving out t-shirts at the NEFA Funding Symposium in Atlanta and we may have a few when we go to DC late in October to see friends attending the ELFA Annual Convention. (Email us if you can spare a little time).
If you'd like one, send us an email and your size and (while supplies last) we will get you one. (Please order one at a time. we do have a limited supply).
The back of the (light grey, black and red) shirt includes our new logo and also the words "TALK - LISTEN - THINK."
Please do.

According to ELFAONLINE.ORG, here is the breakdown:

New York and Rhode Island all have laws requiring lessors in commercial leases of personal property (equipment) to give NOTICE to their lessees that a lease will automatically renew:

Certain provisions of leases of personal property inoperative unless notice thereof given to lessee. No provision of a lease of any personal property which states that the term thereof shall be deemed renewed for a specified additional period unless the lessee gives notice to the lessor of his intention to release the property at the expiration of such term, shall be operative unless the lessor, at least fifteen days and not more than thirty days previous to the time specified for the furnishing of such notice to him, shall give to the lessee written notice, served personally or by mail, calling the attention of the lessee to the existence of such provision in the lease . NY General Obligations, Article 5, Title 9, Sections 5-901

... every lessor of personal property under a written lease containing an automatic lease renewal shall give written notice to the lessee not more than ninety (90) nor less than forty-five (45) days prior to the expiration of the lease term. The notice shall state the date upon which the lease term will expire and shall advise the lessee that the lease will be automatically renewed unless the lessee gives written notice to the contrary . RI Title 6: Commercial Law Section 6-13-14
Louisiana requires the Lease to contain conspicuous disclosure of automatic renewal provisions:

Any person, firm, or corporation engaged in commerce that sells, leases, or offers to sell or lease, any products or services to a consumer pursuant to a contract, when the contract automatically renews unless the consumer cancels the contract, shall disclose clearly and conspicuously how to cancel the contract in the initial contract, contract offer, or with delivery of products or services. Louisiana Revised Statutes 9:2716 (don't be fooled by the use of "consumer" - it applies to business lessees)

Wisconsin requires both:

...if a business contract that is entered into, modified, or renewed after May 1, 2011, provides that the contract will be automatically renewed or extended for an additional period unless the customer declines renewal or extension, and the duration of the additional period is more than one month, the seller shall do one of the following:

1. At the time the customer enters into the contract, present to the customer a copy of a form including the disclosures required under par. (b) and obtain the customer's signature on the form.

2. Include the disclosures required under par. (b) in the contract in a conspicuous manner and obtain the customer's initials on the contract on a page on which a disclosure appears.

(b) A disclosure required under par. (a) shall contain all of the following:

1. A statement that the contract will be renewed or extended unless the customer declines renewal or extension.

2. A statement indicating the duration of the additional contract period that would result from an automatic renewal or extension period.

3. A statement indicating whether an increase in charges to the customer will apply upon an automatic renewal or extension.

4. A description of action the customer must take to decline renewal or extension.

5. The date of the deadline for the customer to decline renewal or extension.

(c) If a seller fails to comply with par. (a), an automatic renewal or extension provision in the contract is not enforceable, and the contract terminates at the end of the current contract term.

(d) Paragraph (a) does not apply to a contract in effect on May 1, 2011, or to subsequent renewals of such a contract.

(3) Notice required. If a business contract that has an initial term of more than one year provides that the contract will be automatically renewed or extended for an additional term of more than one year, unless the customer declines renewal or extension, and the deadline for the customer to decline renewal or extension of the contract is more than 60 days after May 1, 2011, the provision is not enforceable against the customer and the contract will terminate at the end of the current contract term unless the seller provides to the customer, at least 15 days but not more than 60 days before the deadline for the customer to decline renewal or extension, a written notice containing all of the following:

(a) A statement that the contract will be renewed or extended unless the customer declines renewal or extension.

(b) The deadline for the customer to decline renewal or extension.

(c) A description of any increase in charges to the customer that will apply after renewal or extension.

(d) A description of action that the customer must take to decline extension or renewal. Wisconsin Statutes 134.49:


Okay, pretend you are a judge. The borrower walks in with this claim: He signed an Equipment Finance Agreement (or maybe a loan agreement or even a $1-out "lease") that stated the "Equipment Cost" was $100,000. It did not list the rate. It showed his payments.
He thought he was getting a great deal because he got online and found a way to estimate his rate...or because he compared his payments to another deal he had for a similarly-priced piece of equipment, or whatever.
He WAS getting a great deal because the vendor "bought down" the rate by reducing the purchase price from the $100,000 list price to...$90,000. The problem is, he claims he was misled. If he had known the $90,000 price was available, he would have used his bank line or...something.
There are a lot of variations. Maybe the vendor is telling the lessor/lender that no one else is getting that reduced price and he wouldn't sell it to the customer for cash at that price. Maybe that is true...maybe. What if the $100,000 is shown as "Amount Financed"?
We prefer to just say "Equipment List Price" but is that enough? Does it hurt to include a statement, maybe below the price quote, or maybe elsewhere in the document that the Equipment Cost (or List Price) may not represent the actual amount financed or that it may be reduced by vendor discounts or other cost reductions?
By the way, the California disclosure laws will go in effect when the Department of Business Oversight adopts final regulations, which will take a while. At present, we are aware only of a law in New Hampshire that appears to require disclosures not found on most equipment finance forms:
N.H. Rev. Stat. §399-B2: Disclosure of Finance Charges Any person engaged in the business of extending credit shall furnish to each person to whom such credit is extended, concurrently with the consummation of the transaction or agreement to extend credit, a clear statement in writing setting forth the finance charges, expressed in dollars, rate of interest, or monthly rate of charge, or a combination thereof, to be borne by such person in connection with such extension of credit as originally scheduled.

There is a lot to talk about here, but not that many of you (we think) are affected by TPD. It may be of more interest to the lawyers and, as always, your feedback is welcome. We have not researched this matter in great depth, but this is what we know (and think) from recent research and a bit of thought:
A while ago a very good lawyer in a state with tough usury laws told us to "just add a time price differential clause" and not worry about usury. TPD is an exception to interest rate limitations in several states (so far as we know, only where statutorily enacted, but that is not to say it might not work in court in any state). Under the TPD doctrine, a finance charge paid for the purchase of good from a vendor is not "interest." It is an addition to the purchase price paid for a financed sale, as opposed to a lower list price for a cash sale.
The elements of TPD are sometimes set out in statutes and otherwise by judges and run like this:  
  1. The buyer is offered a cash price for the goods by the vendor.
  2. The buyer is offered a second, higher price if it wants to pay over time.
  3. The buyer, knowing that it is paying more, chooses the higher price and agrees to pay it in installments.
  4. The portion of each payment attributable to amortization of that higher price is Time Price Differential, not interest. 
All good, right? It is generally required, or at least highly advisable, that the retail installment sale document under which the buyer will pay the purchase price (including TPD) recite that the buyer has been offered and chose as above.
What is wrong with just adding this into your EFA or buck-out Lease? Well.....what did we say about buyer and vendor? What happens if you just add the clause in your loan document?

1.  If the document is generated and signed by the vendor, then TPD would seem legitimate. Therefore, TPD would seem OK if the vendor signs up the customer and assigns the RISC (retail installment sale contract - there are many initials used like ISC, RSC, etc., but we like this one because we are inherently nasty about these things).

BUT that means the lender/lessor is buying a RISC and in several states (Florida) the vendor must be LICENSED to buy RISCs.  RISCY Business.  
2.  If the vendor merely refers the customer to the lender/lessor, and the contract is between lender (enough with the "lender/lessor", y'all know what I mean) this doesn't seem very different in substance.

BUT is this any different from a situation where the customer simply approaches the lender and asks to borrow money to purchase equipment from a vendor with whom the lender does not have a program in place? In other words, traditional non-vendor equipment finance?
3.  Well, so what? Why not recite that the customer could have bought for a lower price if it paid cash? It's true! If we add the total loan payments and compare them to the list price....

BUT are we putting the lender into the "stream of commerce"? Isn't the lender getting one step closer to being a vendor, more-or-less admitting that it is either in the position of the vendor for TPD purposes or is actually buying the equipment for cash and in a  twinkling of a legal eye (I forget what case that came from) selling it to the borrower/buyer.

SO WHAT? Products liability, sales tax questions, language in the EFA or Lease about not being a seller, UCC merchant status....

AND the question of whether it works anyway. For this one, we have a case that struck terror in the hearts of many and was, in fact, a good example of putting all your usury-exemption eggs in one TPD basket (sorry, that was really bad): Kinerd v. Colonial Leasing Co., 800 S.W.2d 187 (Tex. 1990). No Oregon choice of law, no usury savings clause, just a reliance on a TPD clause that the court chewed up and spat out.
We aren't saying don't do it or it never works. We are saying the toughest thing we ever say to our friends. Think about it.

400 Century Park South
Suite 100
Birmingham, AL 35226
(205) 251-8301

Direct Mail To: 
P.O. Box 11386
Birmingham, AL 35202
Barry S. Marks   
Direct:  205.251.8303 │
Matthew D. Evans   
Direct:  205.251.8302  │

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