On July 8, 2013, Ohio’s 5th District Court of Appeals issued an opinion that will be of interest to commercial equipment lessors in Ohio.  This case concerns the commercial lease of a beverage caddy and the status of the “middle man” lessee when the vendor undergoes bankruptcy.

Elms Country Club, the lessee (“Elms”), believed that the agreement constituted a “zero-net-lease” so that the vendor would pay lessee the monthly payments, which lessee would then pay to the bank. The vendor (“Royal Links”) made only four of the anticipated sixty payments.  Elms made no further payments and retained possession of the caddy because the lessor never repossessed the caddy.

The lessor, a commercial bank, sued for breach of the equipment lease and Elms filed a third party complaint against Royal Links which filed a bankruptcy action. After relief from the bankruptcy stay, some years later, the lessor filed a motion for summary judgment which was granted.…