LML - Response to Statement of Undisputed Facts 952006

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

REYNA CAPITAL CORPORATION ) an Ohio Corporation, ) ) Plaintiff, ) ) v. ) ) Case No. 03 C 6396 LML TECHNOLOGIES, INC., ) formerly known as, ) MAGISTRATE JUDGE VALDEZ LEASE MARKETING, LTD., ) an Illinois Corporation, ) ) Defendant. )

LML TECHNOLOGIES’ RULE 56.3 RESPONSE TO PLAINTIFF’S RULE 56.1 STATEMENT OF MATERIAL FACTS

Pursuant to Local Rule 56.1, Defendant LML Technologies, Inc., formerly known

as Lease Marketing, Ltd. (“LML”), by its attorneys Edward X. Clinton and Edward X.

Clinton, Jr., respectfully submits the following responses to Plaintiff Reyna’s statement

of material facts.

RESPONSES TO THE PARTIES AND THE LAWSUIT

Reyna Statement 1. Plaintiff Reyna is an Ohio Corporation having its principal

place of business in Dayton, Ohio. (Plaintiff’s Amended Complaint at Law, a copy of

which is attached hereto as Exhibit A, ¶ 1).1

Response: Admit.

Reyna Statement 2. Defendant, LML Technologies, Inc., was an Illinois

Corporation having its principal place of business in Downers Grove, Illinois.

1 LML’s references to exhibits identified by letter are references to the exhibits Reyna submitted in support of its motion. LML’s references to exhibits identified by a number are references to exhibits submitted in response to the Motion by LML.

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(Defendant’s Answer to Plaintiff’s Amended Complaint, a copy of which is attached

hereto as Exhibit B, ¶ 2).

Response: Admit.

Reyna Statement 3. Jurisdiction is proper in this Court pursuant to diversity of

citizenship jurisdiction, 28 U.S.C.A. §1332, as this is an action between citizens of

different states and corporations who are incorporated and or have their principal places

of business in different states, and the amount in controversy exceeds $75,000, exclusive

of interest and costs. (Plaintiff’s Amended Complaint (Exhibit A), ¶ 3).

Response: Admit.

Reyna Statement 4. Jurisdiction is also proper pursuant to the jurisdiction

selection and waiver provision of the agreement entered into between the parties, as more

fully set forth in the agreement which is attached to this Amended Complaint. (Plaintiff’s

Amended Complaint (Exhibit A), ¶ 4).

Response: Admit.

Reyna Statement 5. Venue is proper in this court pursuant to 28 U.S.C.A. §

1391, as a substantial part of the events or omissions giving rise to the claim occurred

within this judicial district. (Plaintiff’s Amended Complaint (Exhibit A), ¶ 5).

Response: Admit.

Reyna Statement 6. Venue is also proper in this district pursuant to the venue

selection and waiver provision of the agreement entered into between the parties, as more

fully set forth in the agreement which is attached to this Amended Complaint. (Plaintiff’s

Amended Complaint (Exhibit A), ¶ 6).

Response: Admit.

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RESPONSES TO BACKGROUND

Reyna Statement 7. Reyna, a wholly owned subsidiary of the Reynolds and

Reynolds Company, was and is in the business of providing capital financing for entities

in the automotive software business, including LML. (Plaintiff’s Amended Complaint

(Exhibit A), ¶ 7).

Response: Admit.

Reyna Statement 8. LML was in the business of selling, leasing and distributing

certain software products to automotive dealers. (Plaintiff’s Amended Complaint (Exhibit

A), ¶ 7).

Response: Admit.

Reyna Statement 9. In 2000 and before, LML desired to obtain financing for its

operations from Reyna and other financing sources. (Plaintiff’s Amended Complaint

(Exhibit A), ¶ 7).

Response: Admit in part. LML denies that it sought financing from Reyna prior

to entering into the Seller Private Label Master Agreement in February 20, 2000. The

Record contains no evidence that LML sought financing from Reyna prior to that date.

Reyna Statement 10. On February 20, 2000, Reyna and LML entered into a

contract entitled “Seller Private Label Master Agreement,” hereafter referred to as “the

Agreement.” (Plaintiff’s Amended Complaint (Exhibit A), ¶ 8, ex. a).

Response: Admit.

Reyna Statement 11. The Agreement provided a method for LML to obtain

needed financing assistance for LML to assist LML in maintaining its operations. In

exchange, the Agreement would entitle Reyna to receive assignments of LML’s rights

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under the Underlying Leases. If all went well, Reyna would receive payments pursuant

to the terms of the Underlying Leases. (Plaintiff’s Amended Complaint (Exhibit A), ¶ 9).

Response: LML admits that Reyna offered financing to it under the Agreement

whereby LML would assign certain leases to Reyna to entitle Reyna to a specific number

of payments. LML did not assign to Reyna the rights to its software or its software code.

See Exhibit A; page 1. LML denies any additional statements in this paragraph.

Objection: Reyna disclosed on August 18, 2006 that four leases listed in its

complaint are not “Underlying Leases” in that they were purchased from a third party and

not from LML. For these four leases, Galloway Buick, Duncan Mitsubishi, Gjovik

Chevy Olds and Johnson Ford, LML made no representations to Reyna of any kind.

Reyna’s attorneys, Timothy Nickels and John Arranz, have admitted this. These four

leases were apparently purchased by Reyna from a third party. These leases were not

purchased under the Master Agreement. Accordingly, LML made no representations or

warranties of any kind. Reyna’s Amended Complaint is false. Further, Reyna has not

disclosed contemporaneous records of its transaction with the third party.

Reyna Statement 12. Under the Agreement, LML made representations and

commitments concerning certain lease agreements, contracts and instruments between

LML and certain automotive distributors and dealers (hereafter referred to as “the

Underlying Leases”). (Plaintiff’s Amended Complaint (Exhibit A), ¶ 9).

Response: Except as set forth in the objection to ¶11, LML admits that it made

certain representations concerning the equipment lease agreements as set forth in the

Agreement but denies that it breached any representations. Representations are effective

only as of the date of the assignment to Reyna. (See Exhibit A to Exhibit A).

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Objection: LML incorporates its objection set forth in Response to ¶11.

Reyna Statement 13. Reyna agreed to purchase the right, title and interest in the

Underlying Leases from LML at certain agreed upon prices. (Plaintiff’s Amended

Complaint (Exhibit A), ¶ 9).

Response: Except as set forth in the objection to Response 11, the alleged

statement of fact is denied. This misstates the Master Agreement. The text of the Master

Agreement details the process by which Reyna was to purchase a computer license from

LML.

Objection: LML incorporates its objection set forth in Response 11.

Reyna Statement 14. LML made certain representations and agreed to take

certain actions with respect to the Underlying Leases, including those representations as

set forth in Paragraphs 4 and 5 of the Agreement. (Plaintiff’s Amended Complaint

(Exhibit A), ¶ 10).

Response: Except as set forth in the objection to Response 11, LML admits that

paragraphs 4 and 5 of the Agreement contain certain representations. LML denies that it

breached the Agreement.


Reyna Statement 15. The Agreement contained the following clause related to

LML’s duty to deliver a functional system, as described in the Underlying Lease, to

certain automobile dealerships:

4b. The Lease and all signatures thereon are genuine if procured by [LML]. The Lease has been duly authorized and executed by the Lessee, if completed in accordance with information provided by [Reyna] by [LML]. The Lease correctly sets forth the rentals or installment payments which [LML] indicated to [Reyna] as applicable to the Equipment. The Equipment is fully and correctly described in

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the Lease and has been delivered to the Lessee at the location or locations set forth therein, and accepted by the Lessee for all purposes of the Lease. The Lease constitutes the valid and binding obligation of the Lessee.

(Plaintiff’s Amended Complaint (Exhibit A, ex. A, § 4(f))).

Response: Except as set forth in the objection to Response 11, LML admits only

that the Master Agreement contained ¶4b and that LML was only responsible for the

obligations in ¶4b denies that it breached such provision and denies that the alleged

statement of fact of Reyna is true. Representations were only made for the specific date

the lease was assigned to Reyna.


Reyna Statement 16. Under the Agreement, LML also warranted that no

automobile dealership would have a defense to preventing payment:

4g. The Lessee has and shall have no defense, offset or counterclaim as to the enforcement of the Lease arising out of the conduct of [LML], and without limiting the generality of the foregoing, [LML] is not in default in any of [LML’s] obligations to the Lessee, except as previously disclosed to [Reyna].

(Plaintiff’s Amended Complaint (Exhibit A, ex. A, § 4(g))).

Response: LML denies that “under the Agreement, LML also warranted that no

automobile dealership would have a defense preventing payment.” LML admits that the

Agreement contained ¶4g, but denies that it breached this provision of the Agreement.

Representations were only made for the specific date the lease was assigned to Reyna.


Reyna Statement 17. LML also warranted that it did not know any reason why

Reyna could not collect under the Agreement:

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4h. LML does not know of any fact which indicates the uncollectibility of the Lease.

(Plaintiff’s Amended Complaint (Exhibit A, ex. A, § 4(h))).

Response: LML denies that “LML also warranted that it did not know any reason

why Reyna could not collect under the Agreement.” LML admits that the Agreement

contained ¶4h, but denies that it breached this provision of the Agreement.



Reyna Statement 18. Title to all equipment vested to Reyna:

4k. If the transaction is an equipment lease, title to the Equipment has vested in [Reyna] free and clear of any liens of persons claiming by, through or under [LML], and if the transaction is a financing, such title has vested in the Lessee.

(Plaintiff’s Amended Complaint (Exhibit A, ex. A, § 4(k))).

Response: LML denies that “title to all equipment vested to Reyna.” LML

admits that the Agreement contained ¶4k, but denies that it breached this provision. LML

notes that title to the software code remained with LML. (See Exhibit A)



Reyna Statement 19. LML warranted that it would provide adequate service to

the dealerships related to the services and products leased:

5a. At the request of [Reyna] or the Lessee, provide at commercially reasonable prices, full, complete and adequate service for the relevant Equipment in conformity with standard trade practices.

(Plaintiff’s Amended Complaint (Exhibit A, ex. A, § 5(a))).

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Response: LML denies that “LML warranted that it would provide adequate

service to the dealerships related to the services and products leased.” LML admits that

the Master Agreement contained, ¶5a, but denies that it breached this provision of the

Agreement.


Reyna Statement 20. LML warranted that it would take all necessary actions to

perfect the rights under the Agreement:

5b. Take such action as is necessary or as [Reyna] may reasonably request to evidence and perfect this Agreement and [Reyna’s] rights contemplated hereby.

(Plaintiff’s Amended Complaint (Exhibit A, ex. A, § 5(b))).

Response: LML denies that “LML warranted that it would take all necessary

actions to perfect rights under the Agreement.” LML admits that the Agreement

contained, ¶5b, but denies that it breached this provision of the Agreement.


Reyna Statement 21. LML agreed that it would not repossess any equipment

without first obtaining the consent of Reyna:

5d. Not repossess any Equipment or accept redelivery of any Equipment from a Lessee without the prior consent of [Reyna].

(Plaintiff’s Amended Complaint (Exhibit A, ex. A, § 5(d))).

Response: LML denies that “LML agreed that it would not repossess any

equipment without first obtaining the consent of Reyna.” LML admits that the

Agreement contained ¶5d, but denies that it breached this provision of the Agreement.


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Reyna Statement 22. Lastly, LML warranted that it would indemnify Reyna

from any liability related to the functionality of the Equipment:

5f. Provide all manufacturer’s warranties with regard to the Equipment to the Lessee, and indemnify [Reyna] from any liability as to the functionality of the Equipment.

(Plaintiff’s Amended Complaint (Exhibit A, ex. A, § 5(f))).

Response: LML denies that “LML warranted that it would indemnify Reyna

from any liability related to the functionality of the Equipment.” LML admits that the

Agreement contained ¶5d, but denies that it breached this provision of the Agreement.


Reyna Statement 23. After entering into the Agreement, Reyna was notified by

several automobile dealerships that problems had arisen related to the functionality of the

LML software, poor customer service for LML, and various other issues related to the

use of LML products. (Plaintiff’s Amended Complaint (Exhibit A) ¶ 11).

Response: Denied. There is no support in the record for this statement, which is

merely an allegation in the complaint. No details or specific instances of any such breach

by LML were provided by Reyna in this Statement of Undisputed Facts. There are no

citations to the record contained in this paragraph so LML is unable to respond to these

claims and therefore denies them.

LML’S RESPONSES TO REYNA’S BRIEF SUMMARY OF PURPORTEDLY UNCONTRADICTED VARIOUS DEALERSHIP COMPLAINTS

GENERAL OBJECTION: Reyna’s statements of purportedly uncontradicted

various dealership complaints constitute gross misstatements of the record and of witness

testimony. On many occasions, the witness’s cited by Reyna for a particular proposition

of “undisputed fact” gave testimony that flatly contradicts Reyna’s statements in its

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Statement of Undisputed Facts. On other occasions the witness’ admitted that he or she

lacked any personal knowledge of the Lease Link System, representations allegedly made

by LML, the dealers computer system or why either system ceased to function. See e.g.,

Depositions of Aurelio Rivera, Jeff Johnson, Bill Brundidge, Kurt Montelto, Stephen

Ferrara, Xavier Brizar, Robert Valenti. Even worse, Reyna has attempted to use these

purported “Uncontradicted Dealership Complaints” to rewrite LML’s agreements with

the dealers to impose additional unwritten obligations on LML that LML did not agree to

accept and was not compensated for. For example, Reyna has claimed that several

dealers’computers would not interface with Lease Link, even though the dealers did not

purchase an interface from LML. For these reasons, it has required an in depth review of

the witness testimony.

SECOND GENERAL OBJECTION: The Record is incomplete. Reyna failed

to attach to its motion any of the Underlying Leases. Thus, from the record as it now

stands, the Court could not determine whether or not LML breached the Master

Agreement without reviewing the equipment lease with the customer.

Reyna Statement 24: Aurelio Rivera of Beach Automotive in Miami stated that

LML promised that LML would deliver its customer management software (GuestTrack).

After a long history of unsuccessful attempts to install the proper software, Beach never

received the products it was promised and refused to pay for a nonfunctioning system.

(Aurelio Rivera’s deposition, October 7, 2005, a portion of the transcript is attached

hereto as Exhibit C, pp. 9, 46-57).

Response: The alleged factual statements in Paragraph 24 are not supported by

the record, are untrue and are denied:

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(a) Reyna references “a long history of unsatisfactory attempts to install

proper software.”

Response: Denied. The witness did not give such testimony and the statement is

disputed. Reyna failed to lay a foundation that the witness was a computer expert (Rule

701). Thus, the witness could not offer expert testimony or lay opinion on computers

because he had no technical knowledge.

(b) Beach never received the product it was promised.

Response: Denied. The witness gave no such testimony and the statement is

otherwise false. Beach agreed that it did receive the system that it was promised on

multiple occasions. Reyna failed to lay a foundation that the witness was a computer

expert (Rule 701). Thus, the witness could not offer expert testimony or lay opinion on

computers because he had no technical knowledge.

(c) The dealer refused to pay for a non-functioning system.

Response: Denied. The witness did not give such testimony. The record shows

that the dealer accepted and used the system.

The transcript shows that Mr. Rivera does not have relevant personal knowledge

and could not testify on any of the issues in this dispute between Reyna and the

dealership.

Q: Are you familiar with the program known as Lease Link? A: I have heard the name, yes. Q: Was that one of the programs that was installed? A: I don’t know. Q: Are you familiar with a program called Finance Wizard or Wizard? A: I probably heard the name, automotive Lingo. Q: Do you remember if that program was installed on the computers? A: (no verbal response). Q: You don’t know? A: No, I don’t know (Exhibit C, page 10) (emphasis supplied).

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… Q: Sir, did you ever use the software? A: No. (Exhibit C, p. 13) (emphasis supplied). … Regarding the Guest Track program, Mr. Rivera’s deposition testimony shows

complete lack of knowledge as well:

Q: Was any form of the program ever installed at the dealership? A: I don’t recall. (Exhibit C, page 11) (emphasis supplied). Q: Who would know whether the software was ever used? Who would know

that? A: The sales management of that period would have much better knowledge

of any specifics. (Exhibit C, p. 14) Q: After the system was installed, did you attend any training on how to use

the LML system? A: I didn’t. Q: Did anyone at Beach Automotive attend any training class? A: I don’t know. Q: Am I correct that you did not acquire the software to assist the dealership

in leasing cars? A: We did very, very limited leasing at that location. Q: Does that dealership do any car leasing? A: Very limited. Dodge is not a lease-bound product. (Exhibit C, p. 16)

(emphasis supplied). Q: Did LML at any time install the customer software at the dealership? A: I don’t recall. (Exhibit C, p. 21) (emphasis supplied). Q: Did you send anyone form the dealership to the training class? A: I don’t recall. (Exhibit C, p. 22) Q: Was the hardware fully installed? A: I don’t know. Q: Was it inspected and tested by the dealership? A: I don’t know. Q: Was the LML system operating to the satisfaction of the leasing customer

on July 3, 2002. A: I don’t know. (Exhibit C, p. 23)

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Q: Was it your understanding, sir, that the Guest Track software would enable the dealership to track when vehicles needed to be serviced?

A: I don’t recall the specifics of the actual capabilities of the software at this present moment.

Q: Was it your understanding the software would work and help the dealership maintain a relationship with the customer that had purchased the vehicle?

A: Again, I don’t remember the specifics of what Guest Track did or didn’t do. It was a long time ago. (Exhibit C, p. 61)

… Q: I’m going to read a sentence to you. I’m going to ask if you agree or

disagree with it. It’s on January 1, 2003 from Paul Carr. “I have not heard back from this store accepting our offer of GT-3 install. Could not reach anyone again today.”

Do you agree or disagree with that? A: I don’t recall that. What date was that? (Exhibit C, p. 63)

Q: January of 2003. I’m going to read another sentence to you. March 7, 2003 from Paul Carr. “Finally caught up with GSM Carlos. He said he had gone cold on our products waiting for GT-3. I explained that we had been trying for a couple of months to get a date to install it. He said he had not responded due to the reason noted.” Do you have any knowledge about that statement?

A: I don’t recall that. (Exhibit C, p. 63)

Q: Do you know if the general sales manager, Carlos Escar, was responsive when LML asked him if they could visit the dealership and install the Guest Track software?

A: Again, I don’t recall that particular specific period of time. (Exhibit C, p. 63).

Paul Carr, LML’s representative, disputed the dealer’s claims and testified that

the dealer would not allow LML to install Guest Track:

Q: Okay. Now lets look here to January 17, 2003. It’s on the next page, “Tried to see Carlos today. He was N/A.” Does that mean not available? A: Yes. Q: “Called him also eight times to see if GT3 install on 1/29. Will keep on him tomorrow.” And it has your name here. That’s you note? A: Yes. Q: As of this time to your knowledge had the dealer fallen behind on his payment?

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A: Yes, I was notified of that. Q: And did you, in fact, call the dealer eight times to attempt to install the Guest Track 3 product? A: If I said I did eight times, I did. Q: And did you hear back from Carlos on the 17th of January 2003? A: I could not recall. Q: Okay. A: The dealer was always very difficult to reach...... (Exhibit 15 at 23).

…

Q: Now, lets turn here to January 28th, 2003, you have another note here, “Please note, in case I have not heard back from this store accepting our offer of GT3 install, could not reach anyone again today. Advised M. Hart and when he goes in for LL training next week he will F/U as will I.” Who did you try to reach when you called the dealer on January 24th, 2003? A: Without specifically recalling my contacts, there were Carlos Escar and Aurelio Rivera. Q: Okay. A: No one else in the store would have been able to talk about installing a new product or service. (Exhibit 15 at 24-25) …

Q: There’s a note here typed in February 23rd, “Finally spoke with Aurelio. I explained we needed a date to install GT3 and we’ve been trying to do so for months. I told him he was four payments down and we need to address that next week latest. He said he would speak to Carlos and call me. Like so many times before he said he knew there had been an issue with our system but needed to see what they were from Carlos. Ball is in their court again.” Did he give you an installation date? Mr. Arranz: Objection. Form. Are you talking about Aurelio or Carlos? By Mr. Clinton: Q: Aurelio? A: Aurelio, he would get back to me and call me, but that had been mentioned many times before. Q: And when you use the word issues in quotes, what do you mean? A: That was his word. Q: And to your knowledge did he describe what he meant by issues? A: No. He wanted to talk with Carlos and understand the issues more or what he deemed issues. Q: And you see the word months? A: Well, as you can see from the previous notes, we’ve been trying to install the Guest Track 3 since whenever it was I first asked him, late October. (Exhibit 15 at 27-28) (emphasis supplied).

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…

Q: “He said he has been very busy with the move to the store and has had a big turnover.” A: Yes. Q: And by “he” you mean Carlos? A: Yes. Q: When he said turnover, was he referring to employee turnover? A: Yes. Q: “He said he had stopped paying for the reason noted as well.” A: “I told him we could get a credit on those payments and lets get GT3 installed and going. He said he just doesn’t want it at all now. I explained we had an agreement in place and we had to find a solution. He said he appreciated all my efforts, that I had been very attentive to the situation, but it seemed I could never get any answer or help from ‘the powers that be’, his words.” Q: Did Mr. Escar give you permission to install GT3 on that day? A: No. Q: Did he ever -- did the dealer ever give you permission to install GT3? A: No. (Exhibit 15 at. 29-30) (emphasis supplied). …

Q: Okay. And then it looks like here at the next note, June 5, 2003, it’s from May 21, 2003, the call date, “No contact from Aurelio again next week. Tried several times, left word. He needs to call me so I can see which way he’s going.” Did you ever hear back from Aurelio? A: Unless I have other notes that stated I did, I would say no. Q: Okay. And did he ever give you a date to install the Guest Track product? A: No. (Exhibit 15 at 36)

…

Q: Okay. To your knowledge was -- did the dealer ever allow LML to install the Guest Track product when it moved to its new location in 2002? A: To my knowledge no. (Exhibit 15 at 37).

The dealership signed a Delivery and Acceptance Agreement which contradicts

any claim that the dealership did not accept the LML System. (See Exhibit 27). In this

Delivery and Acceptance Agreement, the dealership admitted that it received all of the

products that it had requested, that it had examined and accepted the products and that

they were all in proper working order. (See Exhibit 27). This was a full and complete

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waiver by the dealership of any claim that the products were not installed or did not

work. LML relied upon these statements. (Ex. 24).

When the LML system was initially installed at the dealership, the dealership

agreed to wait to receive a later version of the Guest Track Program, Guest Track 3.

(Exhibit 1 at 111). After the dealership moved, the dealership would not allow LML to

install the program or to have access to the LML system. (Exhibit 1 at 111). The

dealership had no issues with Lease Link or Wizard. (Exhibit 1 at 113). Paul Carr, LML

employee, made numerous attempts to get access to the system to install the Guest Track

3 software, but the dealer would not give him access to the system. (Exhibit 1 at 112-

116). Michael Hart and Ed Romero of LML also tried to gain access to the LML System

to install Guest Track 3. (Exhibit 1 at 115). Karen Dillon also visited the dealership

twice to attempt to obtain an installation date (Exhibit 1 at 120-21). Mr. Rivera never

returned her calls (Exhibit 1 at 120-21).

The LML System was initially installed at the dealership’s old location. The

dealership explained to LML that it was purchasing a new computer network for its new

location and LML agreed to reinstall the programs at the new location, when the

dealership completed its move in October 2002. What is most important here is that the

dealer could not have used the Guest Track program at its old location where it had old

computers that were not on a computer network.

Q: And what was the issue with Guest Track? A: The Guest Track system was meant to be installed on a number of terminals. If they were financing a car, the Wizard could help them structure that part of the deal. I recall that they did not have a network system computer at this time and we were going to try to install it on one PC, which would not be exactly as described to the dealer as what they need. That’s what I remember, we’re talking almost four years. (Paul Carr’s deposition, Exhibit 15 at 19)

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Q: Earlier you testified with regard to the attempt to install Guest Track that there -- the computers you said were not networked at the dealer and that posed a problem; is that correct? A: You know, again, without remembering the specifics as to how many they had -- the Guest Track modular part of the suite -- if I recall correctly, included five Guest Track licenses and that’s just off of memory. And I remember that at Beach Automotive they never had more than two computers operating at the old location. (Exhibit 15 at 50) (emphasis supplied).

The Beach dealership accepted the LML System for all purposes and used the

system. (Exhibit 27) The dealership made substantial use of the LML system as shown

below:

Q: Do you have any reason to doubt that LeaseLink and Wizard were functioning on their system? Mr. Arranz: Objection, form. A: No, I have no doubt. I mean, I have no reason to doubt. By Mr. Clinton: Q: And why is that? A: LeaseLink and Wizard were robust working production. Q: Did anyone from the dealer ever complain about LeaseLink? A: Not to my knowledge. Q: How about Wizard? A: Not that I can recall. We had some very good users in that store, very good operators of the system. (Exhibit 15 at 25-26) (Emphasis supplied). …

Q: And you say, “I explained we had been supporting LL, and had done so as recently as two weeks ago.” What do you mean by supporting LL? A: The Lease Link was operating and they must had a little problem with Lease Link. And two weeks ago we helped them with something. (Exhibit 15 at 29)

…

A: .....However, Vince stated, “I walked him through reactivating.” It’s quite clear they’re using LeaseLink. That was the part that I didn’t understand with them. They would stop paying but still use a lot of the products. (Exhibit 15 at 31) (emphasis supplied).

After the reinstallation of the system at its new location, this dealership repeatedly

refused LML access to the system to check the system to see that it was operating

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properly. (Exhibit 1 at 120-21); (See Exhibit 15 at 25-37.) The dealership still has the

LML System. (See Exhibit 24). The fact that the dealership would not allow LML to

access the system and refused to produce the system in response to LML’s subpoena is

further support for LML’s position that Reyna’s position is completely baseless. (Ex.

24).

The Equipment lease (Ex. 31) demonstrates that the dealership has no claim

against LML. The Equipment lease, (Exhibit 31), between LML and Beach provides that:

6. Acceptance of Equipment. Customer agrees to inspect the Equipment within three (3) business days after set up and installation thereof. If LML does not receive written notice from Customer of any defects or objections to the Equipment within five (5) business days after set up and installation thereof, it shall be conclusively presumed that Customer has fully inspected and accepted the Equipment, that it is in good working order and in full compliance with the Agreement.

Beach failed to furnish notice of any defects within five (5) days as provided by

paragraph 6 as stated above.

(b) THIS IS A NON-CANCELABLE AGREEMENT SUBJECT TO THE TERMS ON THE REVERSE SIDE HEREOF, WHICH ARE INCLUDED IN THIS AGREEMENT BY REFERENCE.

The effort of Beach to cancel the Sales Desk Agreement was a nullity. (emphasis in

original).

Beach, by failing to pay Reyna, violated paragraph 8 of the Equipment lease.

“Customer agrees that its obligations under this Agreement, including without

limitigation, the obligation to make all payments hereunder, are irrevocable and shall not

abate for any reason whatsoever (including any alleged claims against LML) and shall

continue in full force and effect regardless of the inability of Customer to use the System

or any part thereof for any reason whatsoever.” Exhibit 31 at ¶ 8.

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Beach by its own act violated the following provisions paragraph 4 of the LML

Software License and paragraph 15 of the Equipment lease:

LML shall not be obligated to correct, cure, or otherwise remedy any nonconformity or defect in the Licensed Programs (or any other breach with respect to the condition or operation of the Licensed Programs) if (1) the Licensed Programs are not properly installed in a suitable operating environment, which the Customer has the obligation to provide and maintain (2) the Equipment and Licensed Programs are not properly maintained and operated under normal conditions by qualified personnel, (3) the Licensed Programs have been misused, modified without LML’s consent or damaged, (4) Customer has not notified LML promptly upon discovery of the pertinent nonconformity or defect (or other breach); or (5) Customer has not incorporated or applied all appropriate modifications, updates or enhancements to the Licensed Programs provided to it by LML. (emphasis in original). In sum, this purported statement of fact fails for four reasons: (a) Mr. Rivera had

no personal knowledge about the LML System and did not use the system; (b) the

purported fact is disputed by LML and by the Dealer in its signed Delivery and

Acceptance Agreement; (c) the dealer did not make any written complaint to LML within

6 business days after installation that there was any problem with the system; (d) Reyna

failed to lay a foundation that the witness was a computer expert (Rule 701) (e) the

dealership’s claims are barred by the equipment lease and software agreement; (f) the

dealership used the system and obtained benefits from it; (g) Reyna’s claims are

inconsistent with its success in collecting from the dealership which paid Reyna $8,000 to

settle all claims against the dealership; (h) Reyna’s claims are barred by the Election of

Remedies doctrine.

Reyna Statement 25. Blue Ridge Mazda suffered so many computer failures

related to the LML products, including non-responsiveness from the LML server, that

Blue Ridge was forced to retain its own technicians to address the problems. These

failures were magnified by LML’s poor customer service. (Teri Burton’s deposition,

19

February 18, 2004, a portion of the transcript is attached hereto as Exhibit D, pp. 31-46,

ex. 14).

Response: LML disputes all of the statements in this paragraph. First, the witness

had no personal knowledge of any dealings between LML and the dealership and the

witness never used the LML software. The witness, Teri Burton, was a bookkeeper for

the dealership and was a low-lever employee with no decision making responsibility.

(Exhibit D page 5). Although there is some testimony concerning computer issues

affecting the dealership’s computer network, there is no competent testimony in the

record that LML caused the problems with the dealership’s computer network. The

witness lacked personal knowledge of how the LML system operated, whether it

operated, or what may or may not have caused it to not operate. (Exhibit D). Second,

Reyna failed to lay a foundation that the witness was a computer expert (F.R. E. 701).

Thus, the witness could not offer expert testimony or lay opinion on computers because

she had no technical knowledge. The witness lacked the expertise to testify as to the

cause of a particular computer failure, “crash” or issue. Ms. Burton was not competent to

testify to any such facts. See Rule F.R.E. 701. Third, Reyna’s proposed statement of fact

is disputed by Karen Dillon, Brett Warner and other testimony in the record.

Reyna’s lawyer elicited the following admissions from Ms. Burton:

Q: And that’s right. I did want to know that because what I’d like to know is how much their [dealership management] decision process how much of that they shared with you in terms of what their discussions were with LML. A: Well. Robbie would come up and tell me. Oh we’re going to go ahead and go with this Lease Marketing because they’ve got Guest Track now. They’ve got Wizard now, so they’ve got everything that we wanted and we had a relationship Clinton: Objection. Hearsay. A: with them. Q: Go ahead.

20

A: It’s not hearsay. It was told to me. (Exhibit D page 15). All of the witness’ testimony concerning what LML promised is inadmissible hearsay. …

Q: What did Wizard do in that process? A: I cannot tell you. Q: Don’t know. Okay. All right. (Exhibit D, pg. 17). …

The witness, however, admitted that the LML software was installed on the

dealership’s computers. Exhibit D page 25. This is a very important admission.

…

The witness unequivocally admitted that the Lease Link system worked. Reyna’s

lawyer elicited this testimony:

Q: Okay Lease Link always worked – A: uh-huh Q: --exactly as— Q: -- it should? A: Yes. There were never any problems with Lease Link ever reported to

me. (Exhibit D at 31). …

The witness claimed that certain “crashes” of its computer system occurred, but

was unable to pin point the cause of those problems.

Q: When you say the system didn’t work – A: The Guest Track – Q: -- still Lease Link was running? A: Right. Q: Guest Track and Wizard were still not working. And every time the

technicians tried to make it work there was a system crash? A: We would have system crashes. Every single time? I’m not there over the

weekend. I don’t know a lot yes. (Exhibit D at 37). …

Q: Okay, So from July approximately 2001 forward you never tried to get the Wizard or Guest Track system working again?

A: I can’t say that. Q: Okay. You don’t know?

21

A: I have no knowledge. (Exhibit D. Page 39). ….

Cross-examination further demonstrated the fact that Ms. Burton had no relevant

knowledge and could not testify as to the cause of a computer problem on a computer

network.

Q: That’s really not responsive to my question. I’m sorry, but, I mean, are you aware of it because you personally used the systems or because someone told you that it caused a problem?

A: I did not . . . I don’t work in sales. I did not use Guest Track or Wizard . The managers who worked in sales told me Guest Track and Wizard were still not up and functional. I am aware there was a problem because it would knock our computer system out. (Exhibit D, pp. 74-75)

Q: Do you consider yourself an expert in computers?… A: No. (Exhibit D, p. 76)

Q: -- and how they work? Did you personally investigate any of the issues with Guest Track or the Wizard software?

A: No. (Exhibit D, p. 76) … Q: Is it fair to say that Blue Ridge Mazda, Blue Ridge Imports, Inc.,

has little use for leasing software? A: It is fair to say that, but we offer -- we wrote in our letter that we

were willing to keep the same software, the Lease Link software, get ride of Wizard, get rid of Guest Track, go back to our original agreement. (Exhibit D, p. 79)

Q: I understand that, and I appreciate your comments and I respect

what you’re saying, ma’am. To your knowledge has anyone from Lease Link visited Blue Ridge Imports since July, 2001.

A: I don’t know when the technicians stopped visiting Blue Ridge Mazda.

Q: Okay. Is it possible that the technicians visited Blue Ridge Mazda in 2002?

A: I don’t believe so? Q: To your knowledge have the technicians visited Blue Ridge Mazda

in 2003?

22

A: No.2

Q: To your knowledge have they visited Blue Ridge Mazda in 2004. A: No. Q: Okay. To your knowledge did Blue Ridge Mazda make any phone

calls to the LML 1-800 number in 2002? A: For technical services? Q: Yes. A: No. (Exhibit D, pp. 79-80).

The Blue Ridge dealership accepted the LML System and used the system

and made no attempt to return it. Ms. Burton admitted that the dealership

continued to use the LML System long after the dealership discontinued making

monthly payments to Reyna Capital and stated that she did not have any problem

with the dealership continuing to use the LML System without paying for it. See

Exhibit D pages 80-84.

Q: Do you feel it’s appropriate to use the Lease Link software but not pay for it?...

A: I think it’s appropriate. (Exhibit D, p. 84).

Third, LML witnesses disputed all of the claimed contentions of the dealership.

The dealership, in particular the dealership employee Rob Kanoff, used the LML System.

(Exhibit 1 at 125-132). As to the dealership’s complaint that there were issues with the

LML System, Dillon testified that the dealership’s computer network was infected by a

virus, which destroyed the LML server. As a result LML installed a new server. (Exhibit

1 at 134). The dealership should have known that it needed antivirus software to protect

its computer network. (Exhibit 1 at 135). Other issues arose because the computers on

the dealership’s network all had different operating systems. (Exhibit 1 at 142-43).

Battista, LML’s former Chief Operating Officer, also disputed the Blue Ridge

claims that LML caused the virus contamination at Blue Ridge. “The Ebola Virus claim, 2 The Case Report shows numerous visits by the LML technicians to Blue Ridge in 2002, 2003 and 2004. (Ex. 36 and 36.1).

23

every update that Lease Link did was completely tested and scrubbed prior to going down

to ensure the update did not contain a virus that went to this dealership. The dealership

may have had a virus. In fact, they did not receive it as a Wizard update or Lease Link

update.” (Exhibit 21 at 83).

Brett Warner, the LML Field Support Representative, disputed all of the

dealership’s claims. (Exhibit 102). LML installed a server at the dealership. (Exhibit

102 at 12); (Ex. 36 and 36.1).. PCs with LML software sat on the desks of Rob Kanoff

and Marty Reed, two employees of Blue Ridge. (Exhibit 102 at 12-13). Warner trained

Marty Reed and Jeff Phi, another dealership employee. (Exhibit 102 at 19). The LML

system was successfully installed and was in proper working order. (Exhibit 102 at 23-

24). The total downtime was three days. (Exhibit 102 at 82).

On August 14, 2001, Rob Kanoff of the dealership told Warner and Dana Flyte

that “everything was running fine.” He agreed to act as a reference for LML. (Exhibit

102 at 27).

On October 11, 2001, Warner found that the LML server had viruses on it and

had to be replaced. (Exhibit 102 at 30). The Nimda virus had destroyed the server.

(Exhibit 102 at 31) (Ex. 36 and 36.1). The virus did not come from LML. (Exhibit 102

at 31). Instead, employees of the dealership inadvertenly downloaded it. (Exhibit 102 at

31). As a result, Warner ordered a new server from Downers Grove and installed the new

server at the dealership. (Exhibit 102 at 33). He reinstalled Lease Link. (Exhibit 102 at

34). Jeff Phi and Marty Reed continued to use Lease Link. (Exhibit 102 at 34-36).

24

After the LML server was reinstalled, the dealership removed Guest Track from

its pcs. (Exhibit 102 at 38). Guest Track was installed on the server and was available at

the dealership. (Exhibit 102 at 37).

The dealership was using Lease Link in November 2002, (Exhibit 102 at 41),

January 2003, (Exhibit 102 at 43), July 28, 2003 (Exhibit 102 at 44). Mr. Phi of the

dealership told Warner that Lease Link was “working great.” (Exhibit 102 at 44). Mr.

Phi was still using the system on July 28, 2003 (Exhibit 102 at 44). No one ever told

Brett Warner that Wizard was not installed. (Exhibit 102 at 75). No one ever told him

that Guest Track was not installed (Exhibit 102 at 76). Warner disputed the dealership’s

letter stating that Guest Track and Wizard did not work. (Exhibit 102 at 80-81). Indeed,

he insisted that both programs were installed on the LML server and available to the

dealership at all times – before and after the virus problem. (Exhibit 102 at 84-85). The

dealership would not let him reinstall the programs on the dealership’s pcs. (Exhibit 102

at 82).

The Equipment lease, Exhibit 34, between LML and Blue Ridge provides that:

6. Acceptance of Equipment. Customer agrees to inspect the Equipment within three (3) business days after set up and installation thereof. If LML does not receive written notice from Customer of any defects or objections to the Equipment within five (5) business days after set up and installation thereof, it shall be conclusively presumed that Customer has fully inspected and accepted the Equipment, that it is in good working order and in full compliance with the Agreement. Blue Ridge failed to furnish notice of any defects within five (5) days as provided

by paragraph 6 as stated above.

(b) THIS IS A NON-CANCELABLE AGREEMENT SUBJECT TO THE TERMS ON THE REVERSE SIDE HEREOF, WHICH ARE INCLUDED IN THIS AGREEMENT BY REFERENCE. (emphasis in original)

25

The effort of Blue Ridge to cancel the Equipment lease and Software Agreement was a

nullity.

Blue Ridge, by failing to pay Reyna, violated paragraph 8 of the Equipment lease.





or any part thereof for any reason whatsoever.” Exhibit 34 ¶ 8.

Blue Ridge by its own actions – allowing viruses to infect and damage its

computers and the LML Server - violated the following provisions paragraph 4 of the

LML Software License and paragraph 15 of the Equipment lease (Ex. 34):

LML shall not be obligated to correct, cure, or otherwise remedy any nonconformity or defect in the Licensed Programs (or any other breach with respect to the condition or operation of the Licensed Programs) if (1) the Licensed Programs are not properly installed in a suitable operating environment, which the Customer has the obligation to provide and maintain (2) the Equipment and Licensed Programs are not properly maintained and operated under normal conditions by qualified personnel, (3) the Licensed Programs have been misused, modified without LML’s consent or damaged, (4) Customer has not notified LML promptly upon discovery of the pertinent nonconformity or defect (or other breach); or (5) Customer has not incorporated or applied all appropriate modifications, updates or enhancements to the Licensed Programs provided to it by LML.

The dealershp breached the suitability provision by failing to allowing its system and the

LML system to become infected with computer viruses. Thus, the dealer’s claims are

barred by the Equipment lease and the Software Agreement. Additionally, the dealer’s

claims about the Wizard product are barred by the End User License Agreement.

(Exhibit 28 Paragraph 6(b), 6(c)). Paragraph 7 of the Wizard EULA provides “ANY

26

AND ALL HARDWARE, SOFTWARE AND SERVICES PROVIDED PURSUANT

TO THIS AGREEMENT ARE SUPPLIED BY OR THROUGH FINANCE

WIZARD ‘AS IS.’ WFS MAKES NO WARRANTY OR REPRESENTATION,

EITHER EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR A

PARTICULAR PURPOSE, DESIGN, CONDITION, QUALITY, CAPACITY,

MATERIAL OR WORKMANSHIP AS TO ANY HARDWARE, SOFTWARE OR

SERVICE PROVIDED HEREUNDER.” (Exhibit 28) (Emphasis in Original) See

also LICENSEE OBLIGATIONS Par. 9(b) (licensee must maintain a dedicated phone

line to download updates), 9(d) (licensee must subscribe to an industry program

providing correct wholesale values of cars); Par. 10(b) (2) (“Licensee understands that

computer systems, like all mechanical devices are subject to breakdown and agrees that

lack of system availability (downtime) shall not constitute a breach of the agreement.”).

(Exhibit 28); (Exhibit 29). Blue Ridge’s claims are barred by these Agreements, so

Reyna has no claim either. Fixing the server was the customer’s problem. (Ex. 34 at ¶7).

Reyna Statement 26. Buz Post Motors in Texas advised LML for months about

the failure of LML’s software to integrate with the already existing software at the

dealership. This cost the dealership valuable time and money. (Tom Iwanski’s

deposition, September 9, 2005, a portion of the transcript is attached hereto as Exhibit E,

pp. 30-49).

Response: This purported statement of uncontested facts is disputed for a number

of reasons. First, Mr. Iwanski had no personal knowledge of the LML System, the

dealership’s computers or the alleged “failure to integrate.” Mr. Iwanski was not present

when the LeaseLink system was purchased. He had no personal knowledge of any

27

representations by LML about the system or the so-called “interface.” Reyna failed to

lay a foundation that the witness was a computer expert (Rule 701). Thus, the witness

could not offer expert testimony or lay opinion on computers because he had no technical

knowledge.

Second, the claim is baseless in that the Agreement assigned to Reyna contained

no provision requiring an interface. The interface was a separate agreement between

LML and the dealer which required the dealer to make a monthly payment to LML for

the interface. The interface agreement was not assigned to Reyna. (Exhibit 24). Reyna

lacks standing to make any interface claim based on the Private Seller Master Agreement

or the Buz Post Agreement, neither of which provides that the dealer was to have an

interface of any kind. Reyna is not a party to the interface agreement. (Ex. 103).

The dealer entered into a separate interface agreement with LML to provide an

interface months after the Equipment lease was signed. (Ex. 103). The dealer breached

that agreement by failing to install the proper equipment so that the interface could be

installed.

Fourth, the dealer failed to take the necessary steps to enable its system to receive

the Reynolds & Reynolds interface, which delayed the installation of the interface. This

was a breach of the interface agreement. (Exhibit 103). LML employee Steve Flook

disputed Iwanski’s claims that the system did not work:

A. The Witness Lacked Relevant Personal Knowledge And Had No

Computer Experience.

The testimony illustrates that the witness had no relevant personal knowledge of

any purported breach by LML.

28

Mr. Iwanski cannot testify as to the supposed failures of LML’s software to

integrate with the already existing software at Buz Post Motors because he never even

used the equipment and hence would not know if it integrated or not. His statements are

based completely on inadmissible hearsay and are therefore not admissible evidence.

Q: Did you use the LML system? A: Me personally? Q: Yes. A: No. Q: Did—who—who at the dealership did use the system? A: Sales managers and our lease department. Q: And did—what did they do with the system? What did the use it for? A: To lease vehicles to individuals. Q: Now, did—so your knowledge of the—of the problem of the interfacing, that comes from what your employees told you? A: Correct. Q: Okay. And the—the issue with the—the other issues with the bank tax credits, that’s from what your employees told you? A: Correct. (Exhibit E, pp. 72-73). Mr. Iwanski was not present when LML made its sales presentation. (Exhibit E at

15-16.) Instead, someone named Van Griffith of the dealer was present and signed the

LeaseLink Agreement. See id. Mr. Iwanski has no personal knowledge of what LML

promised or did not promise to the dealer before the Agreement was signed. (Exhibit E

at 16-17.) Mr. Iwanski’s testimony about the “representations made about Lease Link”

came from his conversation with Mr. Griffith not from LML itself. (Exhibit E at 20).

Mr. Iwanski’s testimony about what Mr. Griffith told him that LML said is inadmissible

hearsay as Mr. Griffith was not deposed and did not document his conversations with

LML. (Exhibit E at 21). Mr. Iwanski was not present when the Lease Link Agreement

was signed. (Exhibit E at 22).

Second, the Agreement between LML and the dealer was for LeaseLink only.

The Lease Link system was installed, worked properly, and was accepted by the

29

customer. (Exhibit 17 at 17-18 and 95-96, Ex. 24, Ex. 4 at 267-68). The LML systems

were initially unable to update because the dealer had not installed phone lines for the

LML Systems. (Exhibit 17 at 19). LML’s Richard Lunn, a field support representative,

trained numerous Buz Post employees on how to use the Lease Link System and

scheduled others for training seminars in Chicago. (Exhibit 17 at 19-20; 96-97). Upon

installation, Lunn told the Buz Post dealer that it needed to install phone lines for the

computers so they could download updates each day. (Exhibit 17 at 21; Exhibit 17 at 25-

26). Lunn continued to train dealer employees “every time [he] was in the store.”

(Exhibit 17 at 22); (Exhibit 17 at 58).

Numerous Buz Post employees used Lease Link successfully. (Exhibit 17 at 26-

28, naming “Tony Cerza,” “Rodney,” Exhibit 17 at 44 – “John Annas”; Exhibit 17 at 65

“Gary”; Exhibit 17 at 66 “Tim Lovett;” Exhibit 17 at 80 “John Annas” Exhibit 17 at 99-

100). Lunn visited the dealership once a week in the period after installation because the

dealership’s employees had so many questions. (Exhibit 17 at 36).

Third, the dealer breached the interface agreement (Ex. 103) by refusing to let

LML install it. (Exhibit 1 at 172). The dealer’s IT person kept putting LML off.

(Exhibit 1 at 172); (Exhibit 17 at 31-34); (Exhibit 17 at 35); (Exhibit 17 at 39). Lunn

testified that no interface could be installed until Reynolds and Reynolds had been

installed by the dealer on the Lease Link systems. (Exhibit 17 at 30-31); (Exhibit 17 at

117-18). After the Buz Post IT person completed necessary work on the computers to

allow them to receive the interface, the interface was installed and accepted by the dealer.

(Exhibit 1 at 174-75; 177-178); (Exhibit 17 at 40-41); (Exhibit 17 at 74-76). Buz Post

30

later replaced all of its computers so the interface had to be completely reinstalled.

(Exhibit 17 at 52-53). The interface worked upon reinstallation. (Exhibit 17 at 82).

There is evidence that the dealer simply preferred another leasing product. Such a

preference is not a defense to payment under the Equipment Lease. The leasing manager

at the dealer, John Annas, did not like LML because of the way Lease Link handled a

certain fee and he chose a competitor’s system. (Exhibit 1 at 176); (Exhibit 17 at 45);

(Exhibit 17 at 78-79); (Ex. 4 at 267-68). Many dealer employees used the Lease Link

system successfully. (Exhibit 1 at 178).

Steve Flook directly contradicts Iwanski’s statement.

A: To my understanding, what he was asking me in there was kind of like, you know, “I shouldn’t be billed for this because it’s not working.” But quite frankly --what I was trying to tell him was, you know, it was working. You know, we might have had -- you know, like any other software -- shoot, ADP -- your main system goes down occasionally. Q: (By Mr. Clinton) Okay. A: But there’s no reason not to -- to pay. But he came back to me saying that -- that -- I guess that he had talked to Todd or something -- which Todd also told me, because I called him, that nothing was said about him not paying his bill or anything. Q: And I told him, “That’s not normal procedure. Everybody pays their bills.” (Exhibit 18 at 27-28).

The dealer stopped paying because it preferred the product of a competitor,

Cybercalc, not because the product wasn’t working. Flook testified:

Q: And then it -- it attaches an e-mail from you to Karen Dillon dated September 1, 2003; is that correct? A: Uh-huh -- yes, sir. Q: Sorry. “This account continued not utilize LL and had brought in CyberCalc. I met with the comptroller, and he wanted out of the agreement. They had a leasing department, and it was run, at that time, by a gentleman by the name of John Annas. John said he was not going to use LL no matter what. “We had explained to them that this was not a matter of the product not working correctly but that the personnel were not using it at all. We tried to train them on numerous visits by Richard and myself with no luck.”

31

Did you attempt to train the people at the dealership? A: Uh-huh. Q: And-- Mr. Arranz: Is that “yes”? Mr. Clinton: Oh, yeah. Q: (By Mr. Clinton) And did -- when did Mr. Annas tell you that he was not going to use LL no matter what? A: It was during one of the visits that I was there. He was just -- you know, he was becoming a CyberCalc -- he wanted CyberCalc. That was it. He felt that that was the better product. But as I indicated to him, it wasn’t a matter of that. It was a matter of the product’s -- what our products would do, and our product did everything it was asked to do. (Exhibit 18 at 48-49) (emphasis supplied).

Battista disputed the dealer’s claims that the Lease Link program would not interface

based on his own work with the interface and his knowledge that the interface worked.

(Exhibit 21 at 78). Jim Penikas, the Director of Plaintff, did not know whether or not

LML promised Buz Post that its program would “interface” with the Buz Post DMS

system. (Exhibit 23 at 229-30).

Additionally, even if Buz Post is correct that the Lease Link program did not

interface, that would not excuse Buz Post from making full payment under the Equipment

lease and Software Agreement (Ex. 37) because those are two separate agreements. (Ex.

103, 116). Buz Post did not make its payments to LML for the interface. (Ex. 116; Ex.

24)).

Paragraph 6 States:

Acceptance of Equipment. Customer agrees to inspect the Equipment within three (3) business days after set up installation thereof. If LML does not receive written notice from Customer of any defects or objections to the Equipment within five (5) business days after set up installation thereof, it shall be conclusively presumed that Customer has fully inspected and accepted the Equipment, that it is in good working order and in full compliance with the Agreement. THIS IS A NON-CANCELLABLE AGREEMENT SUBJECT TO THE TERMS ON THE REVERSE SIDE HEREOF WHICH ARE INCLUDED IN THIS AGREEMENT BY REFERENCE. (Emphasis in Original).

32

Paragraph 8 of the Equipment lease states in part:

Customer agrees that its obligations under this Agreement, including without limitation, the obligation to make all payments hereunder, are irrevocable and shall not abate for any reason whatsoever (including any alleged claims against LML) and shall continue in full force and effect regardless of any inability of Customer to use Equipment or Licensed Programs or any part thereof for any reason whatsoever.

The dealer gave no notice of cancellation.

Buz Post by its own actions violated the following provisions paragraph 4 of the

LML Software License and paragraph 15 of the Equipment lease:


The dealershp breached the suitability provision by failing to operate the system and keep

it updated and by failing to report any defects to LML promptly. (Ex. 37 and 39). Thus,

the dealer’s claims are barred by the Equipment lease and the Software Agreement

Reyna Statement 27: Personnel from LML made promises to employees at

Dodgeland of Florence and Ford of Alexandria, two separate leases, related to

improvements that would allow the LML software to properly integrate with the already

existing software at the dealership. Despite these promises, the LML software never

integrated properly and LML never delivered functional software to the dealerships.

33

(Brian Higgins’ deposition, June 2, 2005, a portion of the transcript is attached hereto as

Exhibit F, pp. 17-35).

Response: Reyna’s purported uncontroverted fact is denied by Reyna’s own

witness. LML made no promise to this dealer that the system would “integrate properly.”

LML told the dealer that there could be not integration or interface. Additionally, the

witness’ testimony flatly contradicts Reyna’s claims in this paragraph as shown below.

After the initial installation, this dealer was offered an interface by LML but refused to

pay for it, so LML declined to install the interface. Reyna’s claim that the computer

would not interface is frivolous. Reyna’s purported claim that LML “never delivered

functional software to the dealership” is contradicted by the witness’ testimony and by

the testimony of Randy Grimes, another dealership employee whose deposition was also

taken.

Objection: Reyna failed to lay a foundation that the witness was a computer

expert (Rule 701). Thus, the witness could not offer expert testimony or lay opinion on


Objection: Reyna’s claims of what some LML person said to the dealer before

the equipment lease was signed are inadmissible parol evidence under Illinois law. The

equipment lease was a completely integrated contract. Paragraph 15 of the Equipment

lease states: “This Rental Agreement constitutes the entire agreement between the

parties. No supplier or agent thereof is authorized to bind Rentor or to waive or modify

any term hereof. No waiver by Rentor of any provision shall constitute a waiver of any

other matter.” (See Exhibit 49)

A. Reyna’s Claim That The Software Never Integrated Properly Is Completely Baseless as the LML Agreement Contains No Such

34

Promise and LML Employees Repeatedly Disclosed that the Lease Link Program Would Not Interface Or Integrate With the Dealer’s ADP System.

First, Mr. Higgins testified that the LML representatives made a presentation to

the dealer and were upfront in explaining to the dealer that no interface was possible

because the dealer had an ADP DMS system – not a Reynolds and Reynolds DMS

system.

A: It was – Lease Link was presented to me as an easier way to work deals as a sales manager, and what it was going to do is if we put the actual numbers in this computer, that it would give us the best and the lowest payment out there depending on which bank and which rates were current at that time. (Exhibit F at 15).

This testimony states the capabilities and functions of Lease Link correctly.

Mr. Higgins did not sign the contract or make the decision to sign the LeaseLink

Agreement. Exhibit F at 16 and Exhibit F at 21 Lines 17 and 18.

Mr. Higgins testifed that the Lease Link representatives fully disclosed to the

dealer that the Lease Link product would not interface with their DMS system – before

the agreement was signed. Reyna’s lawyer elicited the following testimony which flatly

contradicts Reyna’s purported undisputed fact:

Q: Do you remember what concerns – I don’t know if you said concerns, but what questions or conerns you discussed with the LML representative? A: Me personally, I’m only speaking for myself. Q: Of course. A: -- is that they represented – my problem was that it wasn’t integrated with our current system. Q: What was your current system at the time? A: ADP. Q: And what did the LML representative say as to that concern? A: Well, my concern was that it wasn’t integrated in the fact that I could not just put in my stock number, it would then retrieve the sticker price and my cost figures and then I could actually work the deal at Lease Link to figure out what my grosses were and what have you. What I would have to do is use Lease Link and then go ahead and put it in my ADP system. Therefore, when I sold the

35

car, I would have to transfer it to our finance department. So to me it was double the work. (Exhibit F at 17).

…

The Witness: The fact that it wasn’t going to be integrated at the time we signed up, that was my biggest concern. (Exhibit F at 20). The witness expressed this concern to LML “prior to entering into the contract” but the dealership still entered into the contract with LML. Exhibit F at 34-35.

Mr. Higgins was well-aware that the reason that there was no interface or

integration was that the dealer used the ADP DMS system, not the Reynolds and

Reynolds DMS system. Exhibit F at 36 Lines 1-12. Mr. Grimes was also well aware that

the Lease Link program would not interface with an ADP DMS system. (Ex. 9 at 16-17).

Q: Okay, So Mr. Barnes stated that the Lease Link software would not integrate with the Champion ADP software? A: Correct. Mr. Grimes admitted that he was not present when LML made its sales

presentation to the dealer. Exhibit 9 at 12; Exhibit 9 at 27 (“I wasn’t there when the

contract was entered.”). Mr. Grimes returned to the dealer long after the Lease Link

software was installed. Exhibit 9 at 12.

Mr. Grimes testified that an LML representative, Jamie Powers, met with him an

offered him a new LML product which would interface with the ADP DMS System, but

the dealer did not purchase it. Exhibit 9 at 25-26 (“The new Lease Link software would

integrate with our ADP system.”). This confirms that the dealer simply did not want to

pay the extra cost of the interface and, indeed, refused to pay that cost. Mark Simmons

testified that to obtain the interface the dealer was required to purchase a modification for

its system from ADP and that the dealer refused to purchase the modification. (Ex. 4 at

309-310); (Ex. 51 and 57).

36

B. Reyna’s Claim That LML Never Delivered Functional Software To The Dealership Is Inconsistent With Substantial Evidence In The Record That Numerous Dealership Employees Used The Lease Link System.

Second, Mr. Higgins testified that the system was used, was accepted by the

dealer and was functional. Under questioning by Reyna’s lawyer, Mr. Higgins testified

that both he and Bill Green and Rob Green used the system. Exhibit F at 19. Mr.

Grimes, the general manager of both Dodgeland of Florence and Ford of Alexandria

testified that in August 2001, “some managers used it, some didn’t.” Exhibit 9 at 12.

This contradicts the claim that LML never delivered a functional system to the dealer.

Third, Mr. Higgins, Bill Green and Rob Cook along with another dealer employee

attended an LML training seminar and learned how to use Lease Link. Exhibit F at 25-

28. Mr. Higgins admitted that the Lease Link system worked but it “was too much work”

for him. Exhibit F at 31 Line 9. See also Grimes Deposition - Exhibit 9 at 12 (Randy

Reed used the software at the Ford Store – Bill Green used the Lease Link system at the

Dodge Store.)

Jamie Powers – former LML employee and former employee of the Dodgeland

dealer – disputed Reyna’s claim that the Lease Link systems at the dealers did not

function. See Exhibit 10 – Deposition of Jamie Powers at 25 (testifying that he

frequently used Lease Link at the Dodgeland of Florence store and testifying that Bill

Green one of the dealer’s managers “was a big fan of Lease Link.”); (see also Exhibit 10

at 47-48). Jamie Powers testified that Doug Wilson, the Finance Manager of the Dodge

Store used Lease Link. (Exhibit 10 at 28) Powers disputed Reyna’s contention that

Lease Link does not work. (Exhibit 10 at 34). Powers testified that no one at the

Dodgeland dealer ever complained that the Lease Link system did not work.

37

Powers also testified that the Dodgeland dealer did not purchase an interface

(Exhibit 10 at 51). If they had purchased an interface, they would have had to several

more pieces of paper. (Exhibit 10 at 51). He testified that any dealer who wanted to

purchase the interface would have to sign an agreement. (Exhibit 10 at 48). Powers

testified that the interface was a separate charge that the dealer had to pay. (Exhibit 10 at

52).

Powers also testified that when he worked for LML he trained all of the managers

of the Dodge store. (Exhibit 10 at 61). Moreover, Powers testified that he met with

Grimes when the Dodge store fell behind in its payments to Reyna and offered to have

Lease Link 6.0 and Finance Wizard installed at the store. The upgraded version of the

programs would interface with the dealership’s ADP DMS system. (Exhibit 10 at 61)

Grimes declined to purchase the interface and told Powers to sue the dealership for the

past due balance. (Exhibit 10 at 62).

Later in the deposition, Mr. Higgins testified that he did not know if the system

worked because he never used it. Exhibit F at 32 Line 19 -20. (“I wouldn’t know

because I didn’t use it.”) That is an admission that the witness lacked personal knowledge

as to whether the Lease Link system worked or did not work. When Mr. Higgins wanted

to use Lease Link “ he usually went to Bill Green, because he understood the system

better than I did.” Exhibit F at 43 Line 21-23. Powers testified that LML met its

obligations to the Dodge store to install a working Lease Link system and testified that

the store used the system. (Exhibit 10 at 64).

Fourth, Mr. Higgins testified that Bill Green used the Lease Link software

“successfully.” (Exhibit F at 33). Mr. Higgins testified that Sean Cheek used Lease

38

Link. (Exhibit F at 43). Mr. Higgins testified that Todd Robinson and Pete Prichant,

former dealership employees, “could have” used Lease Link. (Exhibit F at 57-58).

LML’s documents show that both men did use the Lease Link system. (Ex. 24, 51 and

57). Mr. Grimes admitted that two dealership employees, Randy Reed and Bill Green,

taught him personally how to use Lease Link. (Exhibit 9 at 28). This indicates that the

Lease Link system was functioning just fine. Mr. Grimes admitted that LML

representative, Jamie Powers, “conducted some training sessions in the showrooms” for

dealership employees. (Exhibit 9 at 34). Currently, Mr. Higgins does not use any leasing

software but instead computes all car leases by hand. (Exhibit F at 52.Lines 19-24).

Finally, Reyna failed to lay a foundation that either Mr. Grimes or Mr. Higgins

was a computer expert (Rule 701). Thus, neither one could offer expert testimony or lay

opinion on computers because he had no technical knowledge.

Dodgeland breached the Equipment Lease and Software Agreement by failing to

make payments to Reyna and by failing to Notify LML of any problems within 3

business days. (Exhibit 49 or 55). The Equipment lease states:

RENTOR HEREBY DOES NOT MAKE AND DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE RENTED PROPERTY, INCLUDING, BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. RENTEE HAS MADE THE SELECTION OF THE RENTED PROPERTY BASED ON ITS OWN JUDGMENT, AND EXPRESSLY DISCLAIMS ANY RELIANCE UPON ANY STATEMENTS OR REPRESENTATIONS MADE BY THE RENTOR. RENTEE SHALL INSPECT THE EQUIPMENT WITHIN THREE (3) BUSINESS DAYS AFTER SET UP AND INSTALLATION THEREOF TO THE RENTEE. UNLESS WITHIN SAID PERIOD THE RENTEE GIVES NOTICE TO THE RENTOR AS PROVIDED IN PARAGRAPH 17 OF THIS AGREEMENT, SPECIFYING ANY DEFECTS IN OR OTHER PROPER OBJECTIONS TO THE EQUIPMENT, IT SHALL BE CONCLUSIVELY PRESUMED THAT RENTEE HAS FULLY INSPECTED AND ACCEPTED THE EQUIPMENT, THAT THE EQUIPMENT IS IN PROPER WORKING

39

ORDER, THAT THE EQUIPMENT IS IN FULL COMPLIANCE WITH THE TERMS OF THIS AGREEMENT AND IN GOOD CONDITION AND REPAIR, NOTWITHSTANDING ANY PROVISION OF THIS RENTAL AGREEMENT TO THE CONTRARY, AFTER ACCEPTANCE OF EACH SUCH ITEM OF EQUIPMENT BY RENTEE AND RECEIPT OF THE MANUFACTURER’S WARRANTY BY RENTEE, IF ANY, RENTEE AGREES TO SETTLE ANY AND ALL CLAIMS DIRECTLY WITH THE MANUFACTURER AND WILL NOT ASSERT ANY SUCH CLAIMS AGAINST RENTOR OR RENTOR’S ASSIGNEE, IF ANY. IN NO EVENT SHALL RENTEE HAVE ANY RIGHT OF SET-OFF,WITHHOLD ANY RENT OR ANY OTHER PAYMENT DUE HEREUNDER OR BE RELIEVED OF ANY OBLIGATIONS, SUCH PAYMENS AND OBLIGATIONS BEING ABSOLUTE AND UNCONDITIONAL. (Emphasis in original).

This provision, alone, bars all of the dealership’s claims. (Exhibit 49 or 55).

Reyna Statement 28. LML’s system failed to provide accurate residual lease

rates at Duncan Mitsubishi. Duncan never received the system it was promised from

LML. (William Brundige’s deposition, December 28, 2005, a portion of the transcript is

attached hereto as Exhibit G, pp. 73-74).

Response: Denied. The proposed witness, William Brundidge, lacked personal

knowledge of any of the alleged facts and testifed as such. Moreover, Reyna’s proposed

statement of fact completely misstates the record and is a complete distortion of the

witness’ testimony. Third, LML’s business records and the deposition of Greg Beckett

demonstrate that the Lease Link System was functioning correctly, but it was not used by

the dealership.

Cross examination revealed that the witness has no knowledge concerning

computers.

Q: Do you consider yourself an expert in computers? A: No. Q: Or computer programming, that kind of stuff? A: No. (Exhibit G at 6).

40

Brundidge never saw anyone use the Lease Link system at the Duncan Mitsubishi

store. Exhibit G at 38.

Brundidge testifed that he had management oversight responsibilities at many of

the dealerships owned by Gary Duncan, but that he lacked personal knowledge about the

Duncan Mitsubishi dealership. He had limited oversight responsibilities concerning the

Duncan Mitsubishi dealership during the period from July 2001 to February 2002.

(Exhibit G at 10). Brundidge had never seen the equipment lease. (Exhibit G at 13).

Brundidge was not present when the equipment lease was signed. (Exhibit G at 13). Or

when the equipment was installed at the Mitsubishi store. (Exhibit G at 59). Prior to July

2001, Brundidge did not visit the Mitsubishi store “with any regularity.” (Exhibit G at

35). He had no knowledge whether or not Lease Link trained the Mitsubishi employees

on how to use the system. (Exhibit G at 60). Brundidge never used the Lease Link

system at the Mitsubishi store. (Exhibit G at 66).

Brundidge never sent a letter cancelling the Lease Link agreement for the Duncan

Mitsubishi store. (Exhibit G at 46).

Brundidge allowed Duncan employees to continue using the LeaseLink system

long after Duncan stopped paying Reyna for the system. (Exhibit G at 58).

Q: It is correct that you don’t remember specifically telling anyone “Stop using Lease Link at the Mitsubishi Store? Is that a fair statement? A: Are you talking about the software or the hardware? Q: The hardware. Well. You told them to unplug the software now? A: No. Q: I’m correct when you say – A: I never told anyone to stop using the software portion. (Exhibit G at 58).

41

Brundidge then improperly attempted to provide testimony concerning the

LeaseLink systems installed at other Duncan stores – Duncan Honda, Duncan Jeep,

Duncan Hyunda, Duncan Acura, etc. (See Exhibit G).

The parties stipulated that the relevant store was the Duncan Mitsubishi store.

“Mr. Weaver: For the record, although there has been some discussion about other

Duncan corporations, stores and dealerships, counsel for Reyna and myself

understand that the store, which is in controversy among the parties, meaning the

parties to this lawsuit, is the Mitsubishi store.” Exhibit G at 22. Reyna’s counsel sat

silent when this stipulation was read into the record.

After entering into this Stipulation, Reyna’s counsel then improperly attempted to

get the witness to testify about other Duncan stores that have nothing to do with this

lawsuit. Brundidge was very clear that his claim that the Lease Link program did not

provide “accurate lease rates” related to the Duncan Jeep-Lincoln-Mercury Store.

(Exhibit G at 63).

The witness admitted that he had no personal knowledge of the Mitsubishi store

in clear terms. Reyna elicited these admissions:

Q: These problems with the lending institutions, were those problems at the Mitsubishi store? Weaver: Objection Foundation Hearsay. The Witness: It was a problem with all the stores. Q: Did you have personal knowledge that this was a problem with the Mitsubishi store? Weaver: Objection Foundation for personal knowledge. The Witness: I have no knowledge of the Mitsubishi store… (Exhibit G at 73).

Brundidge again admitted that he lacked personal knowledge of the Mitsubishi

store. (Exhibit G at 99).

42

In sum, Mr. Brundidge lacked personal knowledge as to the Lease Link system at

the Mitsubishi store and cannot competently testify about that system. The witness had

no knowledge entitling him to testify about computers or computer systems either. See

F.R.E. 701.

Reyna’s claim that the dealership did not receive a functional system is flatly

disputed by the testimony of Greg Beckett, LML field support representative. Beckett

testified that he visited the dealership on September 5, 2001. He examined the system

and noted that it had not been updated since August 22, 2001 because either it was

unplugged or the phone line was disconnected. (Exhibit 12 at 45-46). If the program

was not updated, it would not function properly. (Exhibit 12 at 46). Beckett completed

the update process and made sure the system was working properly (Exhibit 12 at 46-47).

Beckett encouraged the dealership to use the program. (Exhibit 12 at 48). He explained

to them that the system had to be connected to the internet for it to update. (Exhibit 12 at

48-49). Beckett worked deals with Dean Davis and Dick Ratcliffe. (Exhibit 12 at 49).

Beckett visited the dealership on October 12, 2001 and December 12, 2001 to

urge the dealership to use Lease Link, but he observed from his examination of the

system that it had not been used by the dealership since August 2001. (Exhibit 12 at 40-

53). Beckett did a training session with Dick Ratcliffe of the dealership on December 12,

2001. (Exhibit 12 at 53).

Beckett returned to the dealership on May 29, 2002 after the store had changed

from a Mitsubishi dealership to a Jeep dealership and again met with Dean Davis.

Beckett urged Davis to send dealership employees to Lease Link training. (Exhibit 12 at

55).

43

Beckett observed on September 17, 2002 that the Lease Link system had not been

updated for 111 days because it was either unplugged or the phone line modem was

removed. (Exhibit 12 at 57). Davis told Beckett that the dealership would never use the

system. (Exhibit 12 at 58).

On January 1, 2003, Beckett recorded his final meeting with Dean Davis of the

dealership who told him that the he was waiting for the contract to expire. (Exhibit 12 at

60). Beckett’s testimony demonstrates that Lease Link system worked, was accepted by

the customer for all purposes and that the customer simply did not wish to pay for it.

Karen Dillon testified that the Duncan dealership “didn’t keep the system updated

because they weren’t using it. Dean [Davis] said they had not been doing a lot of

leasing.” (Exhibit 1 at 196).

Duncan Mitsubishi breached the Equipment lease and Software Agreement by

failing to make payments to Reyna and by failing to Notify LML of any problems within

5 business days. (Exhibit 46). The Equipment lease states:

RENTOR HEREBY DOES NOT MAKE AND DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE RENTED PROPERTY, INCLUDING, BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. RENTEE HAS MADE THE SELECTION OF THE RENTED PROPERTY BASED ON ITS OWN JUDGMENT, AND EXPRESSLY DISCLAIMS ANY RELIANCE UPON ANY STATEMENTS OR REPRESENTATIONS MADE BY THE RENTOR. RENTEE SHALL INSPECT THE EQUIPMENT WITHIN THREE (3) BUSINESS DAYS AFTER SET UP AND INSTALLATION THEREOF TO THE RENTEE. UNLESS WITHIN SAID PERIOD THE RENTEE GIVES NOTICE TO THE RENTOR AS PROVIDED IN PARAGRAPH 17 OF THIS AGREEMENT, SPECIFYING ANY DEFECTS IN OR OTHER PROPER OBJECTIONS TO THE EQUIPMENT, IT SHALL BE CONCLUSIVELY PRESUMED THAT RENTEE HAS FULLY INSPECTED AND ACCEPTED THE EQUIPMENT, THAT THE EQUIPMENT IS IN PROPER WORKING ORDER, THAT THE EQUIPMENT IS IN FULL COMPLIANCE WITH THE TERMS OF THIS AGREEMENT AND IN GOOD CONDITIONA ND REPAIR,

44

NOTWITHSTANDING ANY PROVISION OF THIS RENTAL AGREEMENT TO THE CONTRARY, AFTER ACCEPTANCE OF EACH SUCH ITEM OF EQUIPMENT BY RENTEE AND RECEIPT OF THE MANUFACTURER’S WARRANTY BY RENTEE, IF ANY, RENTEE AGREES TO SETTLE ANY AND ALL CLAIMS DIRECTLY WITH THE MANUFACTURER AND WILL NOT ASSERT ANY SUCH CLAIMS AGAINST RENTOR OR RENTOR’S ASSIGNEE, IF ANY. IN NO EVENT SHALL RENTEE HAVE ANY RIGHT OF SET-OFF, WITHHOLD ANY RENT OR ANY OTHER PAYMENT DUE HEREUNDER OR BE RELIEVED OF ANY OBLIGATIONS, SUCH PAYMENS AND OBLIGATIONS BEING ABSOLUTE AND UNCONDITIONAL. (Emphasis in Original).

This provision, alone, bars all of the dealership’s claims. (Exhibit 46).

Reyna Statement 29. After repeated efforts made by the employees at

Farnsworth Chevrolet, the system that LML promised would interface smoothly with

other operating systems never functioned. (George Marble deposition, October 28, 2004,

a portion of the transcript is attached hereto as Exhibit H, pp. 31-37, ex. 3).

Response: Denied. First, the witness lacked personal knowledge concerning the

Lease Link System, the operation of computers, or the dealership’s computer system.

Reyna failed to lay a foundation that the witness was a computer expert (Rule 701).

Thus, the witness could not offer expert testimony or lay opinion on computers because

he had no technical knowledge. Second, the interface agreement between LML,

Reynolds & Reynolds and Farnsworth Chevrolet was a separate written agreement and

was not assigned to Reyna Capital. (Ex. 110, 24). Reyna Capital lacks standing to raise

any issue concerning the Farnsworth interface. Third, Farnsworth breached the interface

agreement by failing to provide an operating connection between the Farnsworth DMS

System and the Lease Link computer. Without such a connection, no interface could be

installed. (See Exhibit 24) (Ex. 110); (Ex. 54).

45

Mr. Marble testified that he had no role in fixing computers. Instead, that role

was assigned to another dealership employee and an outside contractor. (Exhibit H at

10). Mr. Marble testified that he was not “computer literate that much.” (Exhibit H at

21). Marble never used the Lease Link software. (Exhibit H at 56).

Marble testified that two dealership employees, Mike Mahoney and Bob

Romeiser, attended LML training classes. (Exhibit H at 23-24). Upon their return from

training, Mr. Mahoney provided Marble with a demonstration of how the Lease Link

System worked. (Exhibit H at 25). Marble testified: “I was happy with the training

because the people said the training was good. We were up and running October 1st

2000.” (Exhibit H at 33). After installation, the dealership began using the Lease Link

System. (Exhibit H at 26). The dealership ran deals through LeaseLink. (Exhibit H at

51 and 57-60) (Ex. 4 at 310-11).

Second, the witness testified as to certain statements made to him by LML

employees before the Lease Link system was installed.

Q: And did Mr. Acanfora make any representations to you as to how your already existing software and hardware would work with the leasing software? A: He stated that Reynolds was not a problem. (Exhibit H at 15).

Objection: This testimony about statements by LML to the dealership prior to the

entry into the License Agreement is inadmissible parol evidence. LML’s contracts were

fully integrated contracts. (See Exhibit 24) (Paragraph 20 states: “Customer agrees that

this Agreement is the complete and exclusive statement of the agreement between the

parties and that it supersedes all proposals or prior oral or written agreements and all

other communications between the parties relating to the subject matter thereof.”).

46

In sum, the witness lacked any personal knowledge concerning the LML System.

He based his comments on what other employees at the dealership told him about the

LML System. (Exhibit H at 54; Exhibit H at 33).

Finally, the Lease Link Agreement barred all of Farnsworth’s claims. (Exhibit

52). Paragraph 6 provides:

Customer agrees to inspect the Equipment within three (3) business days after set up and installation thereof. If LML does not receive written notice from Customer of any defects or objections to the Equipment within five (5) business days after set up and installation thereof, it shall be conclusively presumed that Customer has fully inspected and accepted the Equipment, that it is in good working order and full compliance with the Agreement. THIS IS A NON-CANCELLABLE AGREEMENT SUBJECT TO THE TERMS ON THE REVERSE SIDE HEREOF, WHICH ARE INCLUDED IN THIS AGREEMENT BY REFERENCE.

LML disclaimed all warranties. (Exhibit 52 ¶ 5) (Emphasis in Original).

Paragraph 8 provides that:

Customer agrees that its obligations under this Agreement, including without limitation, the obligation to make all payments hereunder, are irrevocable and shall not abate for any reason whatsoever (including any alleged claims against LML) and shall continue in full force and effect regardless of any inability of Customer to use the Equipment or Licensed Programs or any part thereof for any reason whatsoever. (Exhibit 52).

The equipment lease was not cancellable. Farnsworth was obligated to make all of its

payments to LML, even if Farnsworth contended that there was no interface. (Exhibit

52).

Reyna Statement 30. LML’s software caused system malfunctions and failed to

provide Galloway Buick with bank rate updates, which prevented Galloway from being

able to utilize a functional system. (Andrew Galloway’s deposition, December 8, 2005, a

portion of the transcript is attached hereto as Exhibit I, pp. 85-86).

47

Response: LML disputes all of these purported facts. First, the witness lacked

relevant personal knowledge concerning the Lease Link system or its manner of

operation. Second, the witness admitted that the LeaseLink system was in good working

order. Third, the dealership accepted the system for all purposes and used the system.

Fourth, Reyna failed to lay a foundation that the witness was a computer expert (Rule

701). Thus, the witness could not offer expert testimony or lay opinion on computers

because he had no technical knowledge. Fifth, the Equipment lease and Software

License barred all of the purported claims by this dealership. Sixth, the LML field

support representative disputed Mr. Galloway’s claims and insisted that Mr. Galloway

said that he was refusing to pay not because of any problem with the system but a lack of

leasing business.

First, Mr. Galloway had no expertise in computers.

Q: Are you a computer expert? A: I am not a computer expert. Q: Okay, You don’t hold yourself out to have specialized knowledge concerning the workings of software and that kind of thing? A: I’m just familiar with the Reynolds and Reynolds system. Q: Okay. A: Just from general use. Q: …But just so were clear, you do not consider or hold yourself out as an expert in any kind of IT or computer stuff? A: No. (Exhibit I at 15-16.) Second, the Witness Lacked Personal Knowledge about the LML System.

Q: And is it a fact, Mr. Galloway, that Mr. Wetheril met with you on July 6th, 2000, and had a training schedule faxed to your office so that other sales managers could get scheduled for training class; do you recall that one way or the other. A: I don’t recall. … A: It’s possible. I do—like I said, I do recall meeting with someone and actually had some—some training on site. Q: All right. I’m talking about the training off site.

48

A: I don’t recall if the faxes were made to us. Q: But I take it from your prior answer you don’t deny either— A: I’m not denying that it was done. Q: Okay. And then again on 12/19/2000 or about 12/19/2000, December 19th, did you meet again with Mr. Wetheril where he had a training schedule faxed to you so you could get some of your sales force to class; do you recall that? … A: I don’t recall. (Exhibit I, pp. 40-41) …

Q: You were aware, were you not, that the customer, being Galloway, was entitled to training to be conducted at one of LML’s training centers? A: Yes. Q: Okay. Do you recall that in about January of 2001 a Ted—Ted Wetheril was with you where the two of you actually worked on a used car lease using the Lease Link system? A: That I do recall. Q: Okay. And isn’t it a fact that you were kind of happy about that circumstance because I think the company made a pretty good profit on that particular lease; do you recall that one way or the other? Mr. Arranz: Objection to the form of the question, but go ahead. A: I don’t recall us actually doing a lease. I recall us, you know, going through the motions on a scenario of a lease. Q: Oh, I see. So this was going through the logistics that you would go through if there was a customer sitting there on the lease? A: Correct. Q: And you went through the system and the system— A: Showed possibilities. Q: Yeah. A: Right. Q: And essentially did what you anticipated it would do? A: Yes. (Exhibit I, pp. 42-43) (emphasis supplied).

Third, Mr. Galloway has no expertise in computers and could not provide any

opinion as to whether the LeaseLink system worked or did not work.

Q: ...As you sit here today, do you have an opinion with regards to the performance of the Lease Link software and hardware? Mr. Weaver: Objection. Calls for an opinion for which this man has no expertise. Mr. Arranz: Okay By Mr. Arranz:

49

Q: And, again, I understand, like you said at the outset, you’re not a computer expert. However, in your capacity as an employee at Galloway, do you have an opinion with regards to the Lease Link product? Mr. Weaver: Same objection. A: I—to me it was difficult to use. Q: Why was it difficult to use? Mr. Weaver: Same—continuing line of objections. A: I don’t think I was properly trained myself. Q: You personally? A: Me personally. (Exhibit I, pp. 83-84) Mr. Galloway never asked LML for more training. (Exhibit I at 86) (Exhibit 24).

Fourth, contrary to Reyna’s Statement Mr. Galloway provided no competent

testimony that there were any problems with Lease Link or that the System Would Not

Provide Bank Rate Updates. Reyna simply misstates the record.

Q: Do you recall anytime where you personally were unable to use the Lease Link product due to a product malfunction. If you know? Mr. Weaver: Objection. Calls for expertise that this man doesn’t have. Also, it’s a compound question. Q: Answer if you can. A: There was an update that was necessary to do each week. And I’m thinking it was online where you had to actually update the system personally. And I remember having difficulty getting it to do so. (Exhibit I at 85).

In sum, the claimed testimony does not exist in the record as cited by Reyna. The

witness does not mention the term “bank rate updates” and does not claim that there was

a defect. He says he had “difficulty,” which is not a claim that there was a defect. The

witness had no ability to testify that the LeaseLink program failed to provide bank

updates. See F.R.E. 701.

Fifth, Mr. Galloway admits that the system was functioning and the dealership

used the system.

50

Q: Did you inspect it at that time to see that it was up and running? A: At that time I don’t believe that I was solely responsible for that. I believe we had a finance manager that was involved, Paul Oxton, that was more in tune with that. Q: But the bottom line was— A: I saw it in operation. Q: Okay. And it was up and running? A: Yes. Q: Okay. And this was shortly—either at the time that it was installed or within days thereafter; is that a fair statement? A: Yes. (Exhibit I, p. 58) (emphasis supplied). The dealer admits that it accepted the system and that the system worked properly.

LML’s investigation disclosed that the dealer’s system worked and that there were no

technical issues. (Exhibit 2 at 295-297). There were no issues. The customer simply

chose not to use the product. (Ex. 4 at 304-05).

LML’s field support representative, Jeff Tysinger visited the Galloway dealership

on November 26, 2001 and determined that the Lease Link System was 40 updates

behind. (Exhibit 14 at 13). He spoke with Andrew Galloway: “Basically, I expressed my

concern to Andy about the system being 40 days behind and told him if they were

quoting any rates or anything off of that, that they would be using incorrect data. He just

– he told me that he didn’t remember leasing a car since they’d had the system, because

the only thing they carried were new Buicks. The only thing they carried on the pre-

owned side were pre-owned Buicks, and leasing the Buicks just didn’t have the best

programs around. As far as their customer base, I remember him saying that a majority

of their customers are elderly people in that area, and just not really receptive to leasing,

period.” (Exhibit 14 at 15). Tysinger updated the system and performed routine

maintenance. (Exhibit 14 at 16, 19).

51

On February 6, 2002, Tysinger returned to the dealership and found that the LML

system was not on. (Exhibit 14 at 20). Andrew Galloway would not let him have access

to the system to check to see if it was updated. (Exhibit 14 at 20). Mr. Galloway said

that he could not remember the last time he did a lease. (Exhibit 14 at 18). He also said

that Buick did not have good leasing programs to make them attractive. (Exhibit 14 at

21).

Tysinger made one final visit on April 30, 2002, (Exhibit 14 at 23). The

dealership never complained that the Lease Link system was not in proper working order.

(Exhibit 14 at 24). Galloway told him that the dealership was attempting to terminate the

contract for business reasons. (Exhibit 14 at 23-24). Galloway mentioned no problems

with updating or integration. (Exhibit 14 at 42-43). Galloway told Tysinger to take the

LML system with him, and Tysinger took that to mean that he was no longer welcome at

the dealership. (Exhibit 14 at 54).

Galloway breached the Equipment lease and Software Agreement by failing to


business days. (Exhibit 58). The Equipment lease states:

RENTOR HEREBY DOES NOT MAKE AND DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE RENTED PROPERTY, INCLUDING, BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. RENTEE HAS MADE THE SELECTION OF THE RENTED PROPERTY BASED ON ITS OWN JUDGMENT, AND EXPRESSLY DISCLAIMS ANY RELIANCE UPON ANY STATEMENTS OR REPRESENTATIONS MADE BY THE RENTOR. RENTEE SHALL INSPECT THE EQUIPMENT WITHIN THREE (3) BUSINESS DAYS AFTER SET UP AND INSTALLATION THEREOF TO THE RENTEE. UNLESS WITHIN SAID PERIOD THE RENTEE GIVES NOTICE TO THE RENTOR AS PROVIDED IN PARAGRAPH 17 OF THIS AGREEMENT, SPECIFYING ANY DEFECTS IN OR OTHER PROPER OBJECTIONS TO THE EQUIPMENT, IT SHALL BE CONCLUSIVELY

52

PRESUMED THAT RENTEE HAS FULLY INSPECTED AND ACCEPTED THE EQUIPMENT, THAT THE EQUIPMENT IS IN PROPER WORKING ORDER, THAT THE EQUIPMENT IS IN FULL COMPLIANCE WITH THE TERMS OF THIS AGREEMENT AND IN GOOD CONDITIONA ND REPAIR, NOTWITHSTANDING ANY PROVISION OF THIS RENTAL AGREEMENT TO THE CONTRARY, AFTER ACCEPTANCE OF EACH SUCH ITEM OF EQUIPMENT BY RENTEE AND RECEIPT OF THE MANUFACTURER’S WARRANTY BY RENTEE, IF ANY, RENTEE AGREES TO SETTLE ANY AND ALL CLAIMS DIRECTLY WITH THE MANUFACTURER AND WILL NOT ASSERT ANY SUCH CLAIMS AGAINST RENTOR OR RENTOR’S ASSIGNEE, IF ANY. IN NO EVENT SHALL RENTEE HAVE ANY RIGHT OF SET-OFF,WITHHOLD ANY RENT OR ANY OTHER PAYMENT DUE HEREUNDER OR BE RELIEVED OF ANY OBLIGATIONS, SUCH PAYMENS AND OBLIGATIONS BEING ABSOLUTE AND UNCONDITIONAL. (Emphasis in Original).

This provision, alone, bars all of the dealership’s claims. The lease was fully collectible.

(Exhibit 58). Reyna’s claim is without merit. The dealership’s refusal to allow LML to

examine the equipment is a violation of the Equipment lease and Software License

(Updates and Maintenance provisions) and bars the dealer’s claims. (Exhibit 58). The

dealership’s failure to pay Reyna for the Lease Link system was also a breach of the

Equipment lease. (Exhibit 58).

Reyna Statement 31. Denied. The hardware and software provided by LML to

Gilland, Inc. in Alabama was at many times inoperable as a result of a faulty computer

screen and keyboard. (Tim Gilland’s deposition, December 7, 2005, a portion of the

transcript is attached hereto as Exhibit J, pp. 89-92).

Response: This purported statement of fact is disputed for many reasons. First,

Mr. Gilland lacked personal knowledge concerning the operation of the LML System and

had no factual knowledge of computers. Mr. Gilland has no way of knowing if the

software provided by LML was sometimes inoperable since he wasn’t in direct use of the

system. He has no personal knowledge of the system and relies on hearsay to support his

53

conclusions. Second, LML’s customer service records indicate that Mr. Gilland and his

employees used and accepted the system and continued to use the system long after they

stopped paying Reyna. Third, LML’s customer service records indicate that Mr. Gilland

and his employees expressed nothing but happiness with the Lease Link product. There

was no complaint about a faulty computer screen. Had there been a faulty computer

screen, LML would have replaced it immediately pursuant to Company policy. Fourth,

when pressed for reasons as to why he was not paying Reyna, Gilland stated that he was

not receiving invoices. Reyna admitted that it failed to invoice Gilland for years.

First, Mr. Gilland had no personal knowledge concerning computers, their

operation or the LeaseLink system. See e.g., Rule 701.

Q: Would it be fair to say that you don’t hold yourself out as a computer expert? A: That would be fair. Q: Or a software expert or the workings of software programs? A: That would correct. (Exhibit J at 10).

…

A: As far as the actual dealing with the customer on a lease, I personally have never performed a lease all the way through with a customer myself. You know, I have had, you know, sales managers or F&I managers that would complete that task. Q: Okay. So I’m trying to eliminate blocks of questions to ask you here. Is it fair to say then that in the actual work of getting into the computer, working with the stuff and Lease Link with a customer, you were not actually involved in that; is that a fair statement? A: I’ve witnessed it, you know, or had dialog with the person doing it. Q: Right. But I’m trying to— A: As far as sitting down in front of the machine and entering the data and working a payment or the data that’s needed to, no. Q: Okay. A: But, you know, I have witnessed it and been, you know, dialog back and forth on, you know, what the ACD of their trade would be or what—you know, what payment range a customer is looking to be in or something like that. Q: Okay. Approximately how many times have you actually stood over someone’s shoulder when they were working with a customer to view the

54

operation of the Lease Link system? Are we talking on the—in the magnitude of one or two times or are we talking 20, 30 or— A: Probably 10 times, you know, watching the operation all the way through. Q: Okay. Did you ever get any training or get up to speed on actually doing that yourself? A: No. Q: Okay. So you wouldn’t really be they guy to ask whether the system was operating properly or not, would that be a fair statement? A: As far—the problems that we had or the concerns we had would be it not working at all. We didn’t really have it was maybe inoperable—you know, it wasn’t working correctly or not correctly— Q: That’s not a problem you had? A: No. I mean, it was either working or not working. You know, what I mean is, it wasn’t like a computer like a computer expert had to say well it’s not figuring this right or, you know, something like that, that was never an issue. It was just either inoperable or it wasn’t working. (Exhibit J, pp. 33-35) …

Mr. Gilland testified that he had no idea how Lease Link updated. (Exhibit J at

62-63).

A few pages later the witness admitted the Lease Link system worked just fine.

Q: Any problems with Lease Link while you were at the Eufala Store that you recall? A: While I was at the Eufala store, I’m not aware of any at the time. (Exhibit J, page 40).

Mr. Gilland never made any complaints to LML that the system was not working.

Q: Okay, To your knowledge, did you ever send any written gripes, complaints, to Lease Link or to anyone else about the Lease Link system? A: Gripes or complaints, no. Q: Okay, Did you ever, to your knowledge, send any emails complaining about the Lease Link system? A: No, sir. (Exhibit J at 46).

Reyna’s attorney demonstrated that the witness’ knowledge of purported

problems with the system was based upon hearsay.

55

Gilland testified that the screen of the computer was blurry. (Exhibit J at 90-91).

Reyna failed to lay an adequate foundation that this was a defect in the LML system.

(Exhibit J at 88-91 Weaver Foundation Objections and Hearsay Objections).

Q: Okay. Next you talked about the keys not operating. You personally, what did you observe with regards to the keys not operating? Mr. Weaver: Objection. I don’t think he’s testified that he observed the keys not operating. Mr. Arranz: Well, we’re going to let the deponent answer that. Mr. Weaver: I understand that, so that’s why I’m making my objection. Q: (By Mr. Arranz) Okay. Well, he hasn’t answered that, so please, what did you observe with regards to the keys not operating? A: That was during the time that Bill Wilks was using the system. And the way that our sales manager desk was located, I would spend a lot of time up there, not necessarily right next to the machine, but next to him and he expressed that to me. Q: Okay. And what did Bill express to you? Mr. Weaver: Objection hearsay. A: That the keyboard wasn’t working. It wouldn’t function. Q: Okay. He would type and nothing come up? A: Yeah. Q: Okay. Did you see Bill typing on the keyboard and nothing come up? A: No. Q: Okay. It was just your conversation with him? A: Yes. Q: Okay. Mr. Weaver: Same objection. (Exhibit J, pp. 91-93)

Again the questions and answers demonstrate the witness’ testimony was based

upon the statements that his employees made to him.

A: ...And, you know, he would complain that it didn’t do it again or it didn’t upload or it was not—my data is not up to speed because he had a concern that if his data wasn’t up to speed that the information would be incorrect. Mr. Weaver: Objection to hearsay. Q: I have a general operating question for you in your capacity at both the Eufala dealership and your dealership today. Would you say that your—you rely on your employees to present to you with information and thus allow you to make decisions on behalf of the dealership? A: Absolutely. (Exhibit J, pp. 94-95)

56

On cross-examination, the witness admitted that the system worked fine, but that

the dealership simply didn’t use it enough.

A: The time Theron was actually in charge or whatever, it was his territory, we really didn’t have a lot of concerns with this system. I mean, you know, we weren’t using it a lot, but that’s not the system’s fault. But we weren’t using it a lot, we weren’t really experiencing any problems..... (Exhibit J, p. 97) (emphasis supplied) Q: I think when you were describing some problems with the screen and keys, et cetera, you made the statement, why we were having these problems, I don’t know. And I think that goes along with your previous testimony about you not being a computer expert. You’re not the guy to ask whether you have an opinion as to whether these were virus related or some mechanical problems with the computer or something wrong with Lease Link or whatever, that’s outside of your area of expertise; is that a correct statement? Mr. Arranz: Can I object to form, foundation. And I believe the first portion misstated the deponent’s testimony obviously to let the record speak for itself but go ahead. Q: Is that correct? A. Yeah. Q: Okay. A: I was aware when it was not operable because my management told me. But I don’t know why. I don’t know. (Exhibit J, pp. 118-119).

Second, LML’s business records show that the Gilland LeaseLink System, was

accepted by the customer, used by the customer and several of its employees. (Ex. 24

and 63). The customer never reported any problems to LML with the computer screen.

Additionally, the Gilland dealership did not report any problems with the system to LML.

This purported fact is disputed. (See Exhibit 24). Indeed, the dealership still has the

Lease Link system. (Exhibit J at 101), (Exhibit 24). In sum, Reyna’s undisputed fact is

not supported by the witness’ testimony and is, in fact, disputed by the witness and

LML’s business records. (Ex. 24 and 63). Simmons testified that it appeared that the

dealership stopped leasing cars. (Ex. 4 at 298-301).

57

Most important of all, the Equipment lease and Software Agreement bar any

claims by this dealership. Gilland breached the Equipment lease and Software

Agreement by failing to make payments to Reyna and by failing to Notify LML of any

problems within 5 business days. (Exhibit 61). The Equipment lease states:

RENTOR HEREBY DOES NOT MAKE AND DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE RENTED PROPERTY, INCLUDING, BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. RENTEE HAS MADE THE SELECTION OF THE RENTED PROPERTY BASED ON ITS OWN JUDGMENT, AND EXPRESSLY DISCLAIMS ANY RELIANCE UPON ANY STATEMENTS OR REPRESENTATIONS MADE BY THE RENTOR. RENTEE SHALL INSPECT THE EQUIPMENT WITHIN THREE (3) BUSINESS DAYS AFTER SET UP AND INSTALLATION THEREOF TO THE RENTEE. UNLESS WITHIN SAID PERIOD THE RENTEE GIVES NOTICE TO THE RENTOR AS PROVIDED IN PARAGRAPH 17 OF THIS AGREEMENT, SPECIFYING ANY DEFECTS IN OR OTHER PROPER OBJECTIONS TO THE EQUIPMENT, IT SHALL BE CONCLUSIVELY PRESUMED THAT RENTEE HAS FULLY INSPECTED AND ACCEPTED THE EQUIPMENT, THAT THE EQUIPMENT IS IN PROPER WORKING ORDER, THAT THE EQUIPMENT IS IN FULL COMPLIANCE WITH THE TERMS OF THIS AGREEMENT AND IN GOOD CONDITIONA ND REPAIR, NOTWITHSTANDING ANY PROVISION OF THIS RENTAL AGREEMENT TO THE CONTRARY, AFTER ACCEPTANCE OF EACH SUCH ITEM OF EQUIPMENT BY RENTEE AND RECEIPT OF THE MANUFACTURER’S WARRANTY BY RENTEE, IF ANY, RENTEE AGREES TO SETTLE ANY AND ALL CLAIMS DIRECTLY WITH THE MANUFACTURER AND WILL NOT ASSERT ANY SUCH CLAIMS AGAINST RENTOR OR RENTOR’S ASSIGNEE, IF ANY. IN NO EVENT SHALL RENTEE HAVE ANY RIGHT OF SET-OFF, WITHHOLD ANY RENT OR ANY OTHER PAYMENT DUE HEREUNDER OR BE RELIEVED OF ANY OBLIGATIONS, SUCH PAYMENS AND OBLIGATIONS BEING ABSOLUTE AND UNCONDITIONAL.

(Exhibit 61 at ¶4 Emphasis in Original). This provision, alone, bars all of the

dealership’s claims. (Exhibit 61). The lease was fully collectible. Reyna’s claim is

without merit.

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Under the Agreement, the dealership accepted the responsibility of keeping the

equipment in good repair. (Exhibit 61 at ¶ 7; see also ¶4 disclaimer of all warranties).

Reyna Statement 32. Plagued by printer problems and a failure to integrate the

LML system, Gjovik Chevrolet in Sandwich, Illinois refused to pay as it was promised a

functional system that was never delivered. In addition, LML repossessed the system

before the end of the lease term without securing the approval of Reyna. (Susan Fiedler’s

deposition, February 13, 2004, a portion of the transcript is attached hereto as Exhibit K,

pp. 99-101).

Objection: LML restates its objection to Reyna paragraph 11. LML did not

assign this lease to Reyna under the Master Agreement. Therefore, Reyna cannot claim

that the Master Agreement was breached with respect to this lease.

Response: LML disputes all of the purported facts in this statement.

First, Ms. Fiedler acknowledged that the LML System was accepted by the

dealership and was used by the dealership. (See Exhibit K at 58 and 71); (See also

Exhibit 24 and 79). LML’s records show the system was installed and accepted by the

dealership for all purposes. (Ex. 24 and 81).

Second, Ms. Fiedler admitted that she had attempted to terminate the Lease Link

lease in her April 24, 2003 letter to LML and that the reason the dealership terminated

was that it had no use for the system because leasing business was minimal.

Third, Reyna failed to lay a foundation that the witness was a computer expert

(Rule 701). Thus, the witness could not offer expert testimony or lay opinion on

computers because she had no technical knowledge.

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Q: The second sentence of the letter indicates that you “no longer have use for the program”; why did you no longer have use for the program? Is it because what you’ve told us before, that the lease business was minimal? A: Yes. (Exhibit K, pp. 73-74)

Q: But you did indicate on April 24th that you wanted to terminate the lease immediately; didn’t you? A: Yes, I did. Q: To Lease Marketing? A: That is the way the letter reads. Yes. Q: Whatever your intent was, you communicated to them that you wanted to immediately cancel the lease; correct? A: That’s—yes. That is the way the letter reads. Q: And you also indicated to them that you had no longer any use for the system at that time; didn’t you? A: Yes, I did. Q: So—and you knew on April 24th of 2003 that you were obligated to make payments with regard t this lease through the lease term; didn’t you? A: Yes, I did. (Exhibit K, pp. 92-93) It is made evident by various statements in Fiedler’s deposition that the Gjovik

dealership used the LML system successfully for a long period of time. See also Exhibit

K at page 104: The witness admits that the failure to make payments to Reyna had

“nothing to do with failure of the products or bad maintenance or anything of the sort.”

Q: Do you know approximately how long Gjovik used the Lease Link hardware and software? A: Well, they took it out two months early, so I would say 34 months. (Exhibit K, p. 58)

Q: Now, at the time that you wrote this letter, had you made the payment, had the dealership made the payment for April of 2003 under the lease? A: I don’t know. I really don’t know. Q: Okay. A: There would have been no reason for us not to have made the payment. (Exhibit K, p. 71).

The witness acknowledged that it was the dealership’s fault and not LML’s fault

that there were problems printing.

A: I believe there was a point when we had printer problems. I believe we had an instance where the Lease Link software was not integrating

60

with other software that we had on the system. And, you know, that the PC was leased for Lease Link and any additional software that we had loaded onto it, if it conflicted, you know, that that was more or less our fault. Those are the only things I really recall. (Exhibit K, p. 100)

In any event, equipment problems were the dealership’s responsibility. Paragraph 9 of the

Equipment lease Provides:

RENTEE at its own cost and expense, shall keep all Rented Property in good repair, condition and working order, and shall furnish all parts, mechanisms, devices and servicing required thereof. In the event, through no fault of Rentee, the Rented Property is accidentally destroyed or accidentally so substantially damaged as to render said Equipment unusable, Rentor may, at its option, require the Rentee to replace the Rented Property, using whatever insurance proceeds are available. (Ex. 79).

Third, there was no testimony by the witness that the Lease Link System failed to

“interface” with the Gjovik computer system. The witness made no attempt to explain

what she meant by the term “we had an instance where the Lease Link software was not

integrating with other software that we had on the system.” Was it one minute? Was it

one hour? What was the alleged “failure to integrate?”

As Gjovik did not purchase an interface, this claim by Reyna misstates the record

and is disingenuous. (Exhibit 24). LML also objects to this claim because the dealership

did not purchase an interface or integration from LML. (See Exhibit 24). This is another

attempt by Reyna to impose duties and obligations on LML that LML did not agree to

and was not compensated for and that the dealer never requested or paid for.

Fourth, LML computer technician Paul Capenigro testified that the dealership’s

LeaseLink system was functioning and fully updated on March 27, 2003. (Exhibit 5 at

68-70).

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Fifth, Gjovik breached the Equipment lease and Software Agreement by failing to


business days. LML disclaimed all warranties. The Equipment lease states:

RENTOR HEREBY DOES NOT MAKE AND DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE RENTED PROPERTY, INCLUDING, BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. RENTEE HAS MADE THE SELECTION OF THE RENTED PROPERTY BASED ON ITS OWN JUDGMENT, AND EXPRESSLY DISCLAIMS ANY RELIANCE UPON ANY STATEMENTS OR REPRESENTATIONS MADE BY THE RENTOR. RENTEE SHALL INSPECT THE EQUIPMENT WITHIN THREE (3) BUSINESS DAYS AFTER SET UP AND INSTALLATION THEREOF TO THE RENTEE. UNLESS WITHIN SAID PERIOD THE RENTEE GIVES NOTICE TO THE RENTOR AS PROVIDED IN PARAGRAPH 17 OF THIS AGREEMENT, SPECIFYING ANY DEFECTS IN OR OTHER PROPER OBJECTIONS TO THE EQUIPMENT, IT SHALL BE CONCLUSIVELY PRESUMED THAT RENTEE HAS FULLY INSPECTED AND ACCEPTED THE EQUIPMENT, THAT THE EQUIPMENT IS IN PROPER WORKING ORDER, THAT THE EQUIPMENT IS IN FULL COMPLIANCE WITH THE TERMS OF THIS AGREEMENT AND IN GOOD CONDITION AND REPAIR, NOTWITHSTANDING ANY PROVISION OF THIS RENTAL AGREEMENT TO THE CONTRARY, AFTER ACCEPTANCE OF EACH SUCH ITEM OF EQUIPMENT BY RENTEE AND RECEIPT OF THE MANUFACTURER’S WARRANTY BY RENTEE, IF ANY, RENTEE AGREES TO SETTLE ANY AND ALL CLAIMS DIRECTLY WITH THE MANUFACTURER AND WILL NOT ASSERT ANY SUCH CLAIMS AGAINST RENTOR OR RENTOR’S ASSIGNEE, IF ANY. IN NO EVENT SHALL RENTEE HAVE ANY RIGHT OF SET-OFF, WITHHOLD ANY RENT OR ANY OTHER PAYMENT DUE HEREUNDER OR BE RELIEVED OF ANY OBLIGATIONS, SUCH PAYMENS AND OBLIGATIONS BEING ABSOLUTE AND UNCONDITIONAL. (Emphasis in Original).

This provision, alone, bars all of the dealership’s claims. (Exhibit 79). The lease was

fully collectible. Reyna’s claim is without merit. (Exhibit 79).

Reyna Statement 33. The LML software system in place at Haldeman Ford was

replaced on several occasions because it did not work. The lease rates and residuals

provided by the system were consistently inaccurate. (Paul Haldeman’s deposition,

62

March 6, 2006, a portion of the transcript is attached hereto as Exhibit L, pp. 122-124,

and ex.2).

First, Paul Haldeman admitted that the system was accepted by the dealership and

worked:

Q: And Exhibit 1 is his input? A: Scott worked with this system every day. Q: And you did not, correct? A: I told you that I didn’t. (Exhibit L, p. 45) Mr. Haldeman made it clear that he lacked personal knowledge concerning the

system or computers. On page 11, he stated “No, I’m not a computer expert.” (Exhibit L

at 11). The following colloquy demonstrates that the witness did not use the system and

was not familiar with it.

Q: As a matter of fact, am I correct that prior to my arriving at the deposition you had some conversations with Mr. Arranz where you indicated that Mr. Waters might be the person with the most information concerning this situation at your dealership? Mr. Arranz: Objection, form. The Witness: I indicated that Scott was familiar with the Lease Link system because he used it every day. So he was more hands on than I was. (Exhibit L, pp. 50-51). … Q: Let me give you the specific entry and see if this refreshes your recollection. If on January 18 or January 22 Tod Bower and Shane Ramaly met with Steve McPherson and said all was well, they had no problems, V6 was updating as well as the Wizard, do you recall were you present at any such meeting? A: I don’t recall that specific meeting. But I will tell you that at times the system did work. .... (Exhibit L, p. 86)

…

Q: Would it be a correct statement that you were having no problems with the system in 2002, October of 2002? A: Sir, the system went up and down on a daily basis. He may have said it on a day that it was working fine. Q: But you recall just a few minutes ago you testified that from June 2002 you stopped paying because the system, period, wasn’t working, because I had

63

previously asked you, oh, so you were not paying during a period of time when it was working sometimes and not working sometimes? Mr. Arranz: Objection.

The Witness: How can you pay for a system on a daily basis? Mr. Arranz: It misstates the deponent’s testimony. The Witness: The reliability of the system changed on a daily basis. (Exhibit L, pp. 89-90) The witness admitted that the Reynolds & Reynolds interface worked.

A: Well, it’s single entry. Once someone entered the lease information, consumer’s name, vehicle name, all of the empirical data, with the touch of a key to download to the Reynolds system and then become part of our accounting. Q: Did that ever take place with regard to the Lease Link system? A: Did it ever work? Q: Yeah. A: Sometimes. (Exhibit L, pp. 126-127) …

Q: No, no, no. I wasn’t asking when you started using. In November of 2003— A: We began repaying. Q: Repaying. And the system that you were using on that occassion was the 6.1—I’m sorry, the 6.0? A: Yes, that’s correct. Q: Okay. And you said that in November and thereafter until the termination of the agreement or your cessation of payment on the agreement it worked? A: That’s correct. Q: Because you wouldn’t have paid if it didn’t work, correct? Mr. Arranz: Objection, form. The Witness: That’s correct. (Exhibit L, p. 154)

A contributing factor to Haldeman Ford’s issues with the system was not the fault

of LML but had to do with multiple viruses that were found on the system. (Exhibit 24).

Haldeman’s failure to protect its computers from viruses was a breach of the Equipment

lease. (Exhibit 64). LML technicians personally observed the viruses on the Haldeman

computer system on several occasions. (Exhibit 24). LML’s case report shows that the

dealership used the system frequently during the entire time it was installed at the

dealership – and the system remains there to this day. (Exhibit 24; 66.1, 66.2).

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Paul Haldeman doesn’t have personal knowledge relating any of the purported

issues with the system. His statements that there were problems with the LML system

are based on what his employees told him and, therefore, are hearsay. Also, he lacked

any knowledge concerning computers and could not competently testify as to the cause of

any of the alleged problems. Some examples:

Q: ... Do you recall how soon after you entered into the second contract on behalf of Haldeman Kutztown there were some issues with the LML software? A: Almost immediately. Mr. Weaver: Objection, foundation. The Witness: Within the first 30 days. Q: What issues took place within the first 30 days? Mr. Weaver: Excuse me, could I have a continuing objection to all testimony by this witness concerning technological difficulties with the program? Mr. Arranz: That’s fine. Mr. Weaver: Based on lack of qualifications and firsthand knowledge. (Exhibit L, pp. 111-112) …. Q: Okay. And in your letter you state that the updates did not occur daily. How did you become aware the updates did not occur daily? Mr. Weaver: Objection, calls for hearsay. Q: If you recall. Mr. Weaver: Lack of foundation. The Witness: Yeah, I recall. The sales managers let me know that the system wasn’t working. ... (Exhibit L, p. 122) Q: Okay. And that information you learned from your sales managers? A: Sure. Mr. Weaver: Objection, hearsay. (Exhibit L, p. 123) Again, the witness had no personal knowledge of these problems or ability to

testify that there were problems with the LML computer system. Finally, Reyna failed to

lay a foundation that the witness was a computer expert (Rule 701). Thus, the witness

could not offer expert testimony or lay opinion on computers because he had no technical

knowledge. Additionally, LML resolved all of the dealer’s technical issues and the

65

dealer began paying Reyna. (Exhibit 2 at 291-92). The dealer promised to pay Reyna in

full. (Exhibit 2 at 292; Exhibit 24).

Additionally, Haldeman’s claims are barred by the Equipment lease and the

Software License. (Exhibit 64). Paragraph 6 provides:

Customer agrees to inspect the Equipment within three (3) business days after set up and installation thereof. If LML does not receive written notice from Customer of any defects or objections to the Equipment within five (5) business days after set up and installation thereof, it shall be conclusively presumed that Customer has fully inspected and accepted the Equipment, that it is in good working order and full compliance with the Agreement. THIS IS A NON-CANCELLABLE AGREEMENT SUBJECT TO THE TERMS ON THE REVERSE SIDE HEREOF, WHICH ARE INCLUDED IN THIS AGREEMENT BY REFERENCE. (Emphasis in Original).

LML disclaimed all warranties. (Exhibit 64 at ¶ 5) (Emphasis in original). (Exhibit 64 at

7 – equipment failures are responsibility of dealer).


Customer agrees that its obligations under this Agreement, including without limitation, the obligation to make all payments hereunder, are irrevocable and shall not abate for any reason whatsoever (including any alleged claims against LML) and shall continue in full force and effect regardless of any inability of Customer to use the Equipment or Licensed Programs or any part thereof for any reason whatsoever.

The Agreement bars any claim by the dealer. Finally, Haldeman breached the suitability

representation contained in the Equipment lease by allowing viruses to damage the

system and by failing to install a phone line that could connect to the internet so the

system could be update. (Exhibit 64 at ¶15); (Exhibit 24). Haldeman also breached the

Wizard agreement by failing to have a working phone line properly connected to the

LML System and by failing to maintain the system in a suitable environment. (Exhibit

28).

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Reyna Statement 34. Jeffrey Johnson of Johnson Family Ford testified that LML

not only failed to provide a functional product, but LML personnel repeatedly failed to

show up for service visits or would show up unannounced and fail to provide adequate

service and support. (Jeffrey Johnson’s deposition, a portion of the transcript is attached

hereto as Exhibit M, pp. 26-30).

Objection: LML restates its objection to Reyna paragraph 11.

Response: LML disputes all of the statements in this paragraph. First, Johnson

Family Ford had a functional LML product, which the dealership used on numerous

occasions. (Exhibit 24) (Exhibit 69 and 69.1). Second, Mr. Johnson had no personal

knowledge of computers, the Lease Link system, or the leasing business. Third, LML’s

records indicate that LML made numerous attempts to train the Johnson Ford employees

and management but that the dealership would not attend training or cooperate with

LML. (See Exhibit 24, 69 and 69.1). Additionally, Johnson himself admitted that one

of his employees, Kathy Grubb, attended the LML training seminar in Charlotte North

Carolina. (Exhibit M at 18-19). LML’s records show that Jeff Gilley, another employee,

attended the training seminar. (Ex. 69 and 69.1). Thus, again, the witness’ contradictory

testimony establishes that there is an issue of fact. Finally, Reyna failed to lay a

foundation that the witness was a computer expert (Rule 701). Thus, the witness could

not offer expert testimony or lay opinion on computers because he had no technical

knowledge.

First, Johnson admitted that the system functioned and was used by the

dealership. He also stated that he had no personal knowledge about how the system

functioned or how his employees utilized the system.

67

Q: Okay. Let me -- I will back track a little bit. Do you remember when the system -- when you started using the system and incorporating leases with customers into the system? A: We started to utilize the product immediately after we got it to the best of our ability. Q: What do you mean by the best of your ability? A: Well, it was a -- it was a fairly straightforward system except that the lack of knowledge of the people that we had at the dealership created problems in being able to take advantage of the capability that it was supposed to have. Q: Would you say it – that the lack of knowledge that created these problems was a problem since the beginning? A: It was a problem throughout the whole relationship. Yeah. We had a lot of instances where we were not able to take advantage of it because of -- Q: When you say “take advantage of it”, do you mea the system? A: To utilize the system. We were unable to utilize the system because of a lack of knowledge of how to operate or how to utilize the information that it provided. Q: Was it a lack of knowledge in addition to equipment failures and software failures or was it just a lack of knowledge of how to use the system? A: Well, I will tell you again, fellows. I mean, I personally am not the person who was responsible for this in this company other than the ultimate financial responsibility. Speculating or speaking to day-to-day issues with the product, I’m not the most knowledgeable about that stuff. I’m really not. I’m kind of speculating on things here after stating that I’m going to tell you the whole truth and nothing but the truth. (Exhibit M, pp. 23-24) (emphasis supplied).

LML’s customer service representative Greg Beckett made several visits to the

dealership in 2001. On August 2, 2001, he met with Johnson employee Mike Tyree who

Beckett described as a “good user of LeaseLink.” (Exhibit 12 at 14). Beckett also

checked the Lease Link system to make sure that it was operating – and it was operating

correctly. (Exhibit 12 at 15). This testimony completely debunks Reyna’s claim that

LML failed to deliver a functional system to the Johnson Ford dealership.

Mr. Johnson had no personal knowledge about whether there were issues with the

LML equipment because he did not use it. (Exhibit M at 42). Mr. Johnson could not

68

recall any of his numerous conversations with the LML field support representatives.

(Exhibit M at 50-59).

Q: What was the nature of the LML visits? Was it strictly for training or did they also address the concerns you has as to the equipment? A: I can’t – I don’t know about the equipment, whether there were issues with the equipment or not. ... (Exhibit M, p. 27).

Mr. Johnson expressed no unhappiness with the system, but, instead complained

that there was little leasing penetration. Reyna’s counsel elicited the following

testimony:

Q: Okay. Would you say that the – that LML and the system they sold you met your expectations? A: No. Q: In what way did they not meet your expectations? A: Well, the fundamental basis was that we did not -- we did not improve our level of activity in sales, in general, and in leasing in particular- as a result of the acquisition of the product. And I guess that’s the answer to why -- my fundamental reason of being dissatisfied with them. (Exhibit L, p. 28) (emphasis supplied).

The dealership was not dissatisfied with the LML product because LML failed to provide

a functional product, as Reyna asserts, but because their own employees weren’t able to

improve sales in the leasing department which is completely outside of LML’s realm.

This does not even begin to prove a breach by LML. Simply put – the failure to lease

cars is the dealer’s problem – not LML’s problem. (Exhibit 67).

Johnson claimed that the LML field support representatives were “very loose

about appointments” and that “appointments were frequently broken.” (Exhibit M. at

26). This “fact” is completely debunked by the testimony of Greg Beckett, LML

customer service person. It is also inconsistent with the Case Report, which shows

numerous efforts by LML and its employees to train the Johnson people.

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LML’s records show that the dealership made no such complaints to LML and

that it was the dealership’s employees who broke numerous appointments for training –

including breaking a training appointment to go golfing. (Exhibit 4 at 287); (Exhibit 24).

Beckett visited the dealership on August 2, 2001 and August 14, 2001. (Exhibit 12 at 14-

15). On August 14, 2001, Beckett met with Jeff Gilley, a dealership employee, who had

also attended the LML training seminar. Beckett testified that Gilley was a user of the

Lease Link system. (Exhibit 12 at 16-17). Beckett testified that he knew this because

Gilley asked about certain “defaults” in the LML system. (Exhibit 12 at 17). On August

27, 2001, Beckett again returned to the dealership and met with Jeff Gilley (Exhibit 12 at

19). Beckett did preventative maintenance on the computer. (Exhibit 12 at 19). On

September 18, 2001, Beckett met with Sharon Johnson (Exhibit 12 at 20-21). Beckett

visited the dealership again on October 9, 2001 and testified that the Lease Link system

was working properly that day. (Exhibit 12 at 22-25). There is no evidence in the record

that there were any problems with the Lease Link system.

Beckett again visited the dealership on November 21, 2001 when he noted that the

dealership was struggling with the sales process. (Exhibit 12 at 26). Beckett had

substantial experience selling cars (Exhibit 12 at 1-20). On November 26, 2001, Beckett

met with Jeff Johnson who told him that the dealership wanted out of the contract

because the system was not getting used. (Exhibit 12 at 29). Beckett used the Lease

Link system to personally demonstrate to Mr. Johnson the benefits of using Lease Link.

Beckett again encouraged the dealership to send employees to training. (Exhibit 12 at

30-31).

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On December 5, 2001, Beckett visited the dealership and encouraged Johnson to

send his new business manager to training. (Exhibit 12 at 32-33). He testified that the

system was in good working order. (Exhibit 12 at 33). Johnson never complained to

Beckett that LML had not done enough to train his employees. (Exhibit 12 at 33-34).

On April 12, 2002, Beckett again visited the dealership and urged Denise Webb to

go to training. (Exhibit 12 at 34-35).

On August 22, 2002, Beckett met with Johnson who told him that the LeaseLink

system had stopped working. Johnson, of course, would not show the system to Beckett.

(Exhibit 12 at 36). Johnson never requested a replacement computer. (Exhibit 12 at 38).

Johnson also claimed that the LML system broke down, but he did not allow

LML to examine the purportedly broken personal computer. (Exhibit M at 30) Johnson

admitted that he never told LML that the computer broke. (Exhibit M. at 30 Line 15-17)

The Johnson Agreement required Johnson to fix the computer. (See Exhibit 67 at ¶9).

The failure to fix the computer was a breach by Johnson Ford.

LML disputes any claims that it did not make adequate efforts to train the Johnson

Ford employees. (See Exhibit 2 at 276, 277, 279). LML field support representatives

made numerous visits to the dealership and successfully trained many Johnson

employees. The dealership stopped paying for business reasons. (See Exhibit 2; Exhibit

21); (Exhibit 24).

Battista also disputed Johnson’s claim that LML did not make sufficient efforts to

train Johnson employees. (Exhibit 21 at 87). Battista said: We offered free training at

our corporate facilities, we offered in dealership training with our account managers.

There was no issue of us not wanting to train the customers.” (Id.)

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Reyna employees stated that no lawsuit was filed against Johnson Ford, not

because of LML but because Johnson was a Reynolds & Reynolds Customer. (Ex. 100 at

47; Ex. 101 at 41).

Johnson breached the Equipment lease and Software Agreement by failing to


business days. LML disclaimed all warranties. The Equipment lease states:

RENTOR HEREBY DOES NOT MAKE AND DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE RENTED PROPERTY, INCLUDING, BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. RENTEE HAS MADE THE SELECTION OF THE RENTED PROPERTY BASED ON ITS OWN JUDGMENT, AND EXPRESSLY DISCLAIMS ANY RELIANCE UPON ANY STATEMENTS OR REPRESENTATIONS MADE BY THE RENTOR. RENTEE SHALL INSPECT THE EQUIPMENT WITHIN THREE (3) BUSINESS DAYS AFTER SET UP AND INSTALLATION THEREOF TO THE RENTEE. UNLESS WITHIN SAID PERIOD THE RENTEE GIVES NOTICE TO THE RENTOR AS PROVIDED IN PARAGRAPH 17 OF THIS AGREEMENT, SPECIFYING ANY DEFECTS IN OR OTHER PROPER OBJECTIONS TO THE EQUIPMENT, IT SHALL BE CONCLUSIVELY PRESUMED THAT RENTEE HAS FULLY INSPECTED AND ACCEPTED THE EQUIPMENT, THAT THE EQUIPMENT IS IN PROPER WORKING ORDER, THAT THE EQUIPMENT IS IN FULL COMPLIANCE WITH THE TERMS OF THIS AGREEMENT AND IN GOOD CONDITIONA ND REPAIR, NOTWITHSTANDING ANY PROVISION OF THIS RENTAL AGREEMENT TO THE CONTRARY, AFTER ACCEPTANCE OF EACH SUCH ITEM OF EQUIPMENT BY RENTEE AND RECEIPT OF THE MANUFACTURER’S WARRANTY BY RENTEE, IF ANY, RENTEE AGREES TO SETTLE ANY AND ALL CLAIMS DIRECTLY WITH THE MANUFACTURER AND WILL NOT ASSERT ANY SUCH CLAIMS AGAINST RENTOR OR RENTOR’S ASSIGNEE, IF ANY. IN NO EVENT SHALL RENTEE HAVE ANY RIGHT OF SET-OFF, WITHHOLD ANY RENT OR ANY OTHER PAYMENT DUE HEREUNDER OR BE RELIEVED OF ANY OBLIGATIONS, SUCH PAYMENS AND OBLIGATIONS BEING ABSOLUTE AND UNCONDITIONAL. (Emphasis in original).

This provision, alone, bars all of the dealership’s claims. The lease was fully collectible.

(Exhibit 67). Reyna’s claim is without merit. (Exhibit 67). Reyna employees admitted

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that they never looked at the Equipment Leases to see if the customer really had a defense

to payment. (Ex. 101 at 152).

Reyna Statement 35. Similarly, despite repeated attempts by the employees at

Maurice Sopp Chevrolet, the LML product never integrated with the pre-existing

software and never provided the accurate lending information that LML had promised it

would. (Stephen Ferrara’s deposition, October 26, 2004, a portion of the transcript is

attached hereto as Exhibit N, pp. 23-28, exhibits 3-5).

Response: LML disputes this purported fact for several reasons. First, LML

notes that there was no evidence that the witness was a computer expert or was

competent to diagnose computer problems. Second, LML records showed that the dealer

purchased the Finance Wizard Product, not Lease Link. Third, the dealership executed a

Delivery and Acceptance Agreement which constitutes its admission that the programs

were installed, accepted by the customer and worked properly. (See Exhibit 27). Fourth,

LML records showed that the LML System did integrate with the dealer’s DMS System,

which was made by UCS. (Exhibit 1 Karen Dillon Deposition March 3, 2005 at 34). The

problem was the dealer did not update or check the inventory. (Exhibit 1 at 34).

Moreover, the DMS system’s password changed every 30 days. The dealership failed to

change the password in the Wizard system so the Wizard system was unable to login to

the DMS system. (Exhibit 1 at 35) (Ex. 4 at 330-31). Fifth, LML’s records show that the

dealership was using the system long after it stopped paying Reyna, long after this suit

was filed and even during the very week that its witness, Mr. Ferrara, was deposed. (Ex.

24 and 93) Sixth, the dealership accepted the LML system, acknowledged that that there

were no problems with it and that that the Equipment Lease was fully collectible.

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(Exhibit 27). Seventh, Jim Penikas, the director of Reyna Capital agreed that Sopp did

not purchase an “interface.” (Exhibit 23 at 255-56).

The Sopp dealership used and accepted the LML product, and wouldn’t have

done so if the information was inaccurate, as Reyna asserts.

Q: Did Mr. Varella use the system? A: I presume he did. Q: Was the system used in 2003 to your knowledge? A: It appears that it was. (Exhibit N, p. 42) …

Q: So the only interaction you had with the Finance Wizard in 2003 was to run these tests? A: The interaction that we had was dealing with the people at LML trying to get it to work, trying to get the inventory to load; and once we felt that we had that working, I had a person on a weekly basis update the inventory. We thought we’d give it another try. Since we’re paying $2,000 a month for a system, I thought we’d at least see if it worked. That’s -- this stack of deals is from throughout 2003 when we were running deals through the Wizard and sending them off to banks. (Exhibit N, p. 45)

Finally, Reyna failed to lay a foundation that the witness was a computer expert

(Rule 701). Thus, the witness could not offer expert testimony or lay opinion on


Mr. Ferrara admitted that the dealership still had the LML System in its

possession on October 26, 2004. (Exhibit N at 15). He admitted that the LML System

was installed on the dealership’s network. (Exhibit N at 16). He admitted that the LML

System was installed. (Exhibit N. at 18). He admitted that LML trained his employees

on how to use the system. (Exhibit N. at 19). Dealership employees Luis Varella, John

Good and Omar Gamboa were trained to use the system. (Exhibit N. at 19). The

dealership used the system in 2002 and 2003. (Exhibit N. at 41-42). Mr. Varella and Mr.

Good used the system (Exhibit N. at 41-44). John Sopp used the system to access credit

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bureaus. (Exhibit N. at 43). Later the witness admits that the dealership’s inventory did

load into the system. (Exhibit N. at 44-45). This is a contradiction of his previous

statement that the system was not integrated.

The witness made no statement that the system was not integrated or that the

integration did not work. Instead, he states that the integration process was “difficult.”

(Exhibit N. at 23). Mr. Ferrara’s comments about what the LML salesperson told him

before the system was installed (Exhibit N. at 10-11; 25) are inadmissible parol evidence

under the Equipment lease. (Exhibit 91 ¶ 20; and ¶9 of the Software License).

Mr. Ferrara denied that the system was in use on the date of his deposition.

(Exhibit N. at 27). However that very week the dealership contacted LML to request a

new password for the system. (Exhibit 93 at 50); (Exhibit 24). This request for a

password can only demonstrate one thing - the dealership was using the system! (Exhibit

24).

LML’s field support representative, Dana Flyte, disputed Mr. Ferrara’s

statements. She stated that the dealership used a UCS DMS system. (Exhibit 6 at 71-74).

UCS had a policy of changing the password to its system every 30 days or so. (Exhibit 6

at 72-73). The UCS “interface” was the inventory download into Wizard. (Exhibit 6 at

72). That would let the Wizard program review the dealership’s vehicle inventory.

When the password of the UCS system changed, the dealership had to put the new

password into the Wizard program so the Wizard could access the inventory. The

dealership failed to do this consistently, which interrupted the inventory download.

(Exhibit 6 at 73, 85, 86) (Exhibit 24). As Ms. Flyte stated: “and it’s the dealership’s

responsibility to keep that updated and then update our program in order for it to work

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properly.” (Exhibit 6 at 73). The program would function without the inventory

download. (Exhibit 6 at 73) (Exhibit 24). The Sopp dealership also failed to “validate”

or check the inventory. (Exhibit 6 at 73). On July 8, 2003, the system was working

properly. (Exhibit 6 at 78). John Good and Able Guevarra of the dealership used the

program. (Exhibit 6 at 79). LML sent one of its trainers to the store to do training.

(Exhibit 6 at 81). Ms. Flyte noticed in September of 2003 that the dealership was not

validating the inventory each day. (Exhibit 6 at 82-83). Ms. Flyte and other LML

employees often did the inventory validation themselves. (Exhibit 6 at 86). The

dealership was using outdated old personal computers on its network, which interfered

with the functioning of the Wizard program. (Exhibit 6 at 91-92). Ms. Flyte told the

dealership to replace the personal computers with new ones. (Exhibit 6 at 91). Viruses

on the dealership’s computers also interfered with the system. (Exhibit 24).

Jim Penikas, the Director of Plaintiff, was surprised to learn that LML reported

that Sopp dealership was still using the system on November 9, 2004, two weeks after

Mr. Ferrara’s deposition:

Q: Do you have any information – does Reyna have any information that

would contradict the LML report of November 9, 2004, that the system was working?...

A: I don’t know. I can’t – it appears that we don’t have anything to

contradict that. (Exhibit 23 at 282-83). Penikas also agreed that the dealership’s evasive

behavior when contacted by the billing service was “unusual.” (Exhibit 23 at 284).

The Sopp dealership’s claims are barred by the Equipment lease and the Software

License. Paragraph 6 provides:

Customer agrees to inspect the Equipment within three (3) business days after set up and installation thereof. If LML does not receive written notice from

76

Customer of any defects or objections to the Equipment within five (5) business days after set up and installation thereof, it shall be conclusively presumed that Customer has fully inspected and accepted the Equipment, that it is in good working order and full compliance with the Agreement. THIS IS A NON-CANCELLABLE AGREEMENT SUBJECT TO THE TERMS ON THE REVERSE SIDE HEREOF, WHICH ARE INCLUDED IN THIS AGREEMENT BY REFERENCE.

LML disclaimed all warranties. (Exhibit 91 at ¶ 5) (Emphasis in original).


Customer agrees that its obligations under this Agreement, including without limitiation, the obligation to make all payments hereunder, are irrevocable and shall not abate for any reason whatsoever (including any alleged claims against LML) and shall continue in full force and effect regardless of any inability of Customer to use the Equipment or Licensed Programs or any part thereof for any reason whatsoever.

The Agreement bars any claim by the dealer. (Exhibit 91). Finally, Sopp breached the

suitability representation contained in the Equipment lease by allowing viruses to damage

the system and by failing to install a phone line that could connect to the internet so the

system could be update. (Exhibit 91 at ¶15); (Exhibit 24). Additionally, the Sopp

dealership’s claims are barred by the Wizard End User License Agreement and the

Delivery and Acceptance Agreement. (Exhibits 27 and 28).

Reyna Statement 36. Despite the fact that various personnel at Montell

Chevrolet, Montell Corporation, and Montell Chrysler (three separate underlying leases)

had participated in LML training, the LML product leased to the Montell group was

consistently not functional. LML promised the Montells during the initial negotiating

process that the system would work and be serviced, and these promises never were met.

(Kurt Montelto’s deposition, December 8, 2003, a portion of the transcript is attached

hereto as Exhibit O, pp. 20-31). Even Karen Dillon, executive vice-president of LML,

admitted that LML failed in its performance of the Montell leases. (Exhibit O, p. 25).

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Response: LML disputes all of the purported undisputed facts in this paragraph.

First, Kurt Montelto does not have any personal knowledge relating to the functionality

of the LML system. Second, Kurt Montelto was the general manager of the Montell

Pontiac store and had no involvement with the other stores and lacked personal

knowledge about the LML Systems installed in those stores. (Exhbit 16 at 14 – all three

stores were at different locations). Third, the witness admitted he knew nothing about

computers and, thus, cannot testify that the system worked or it did not. Fourth, all three

Montell dealerships signed Delivery and Acceptance agreements warranting that they

had accepted the LML system, tested the system, and that it worked as LML said it did.

(See Exhibit 27.) Fifth, LML employees Brade Greve and Paul Capenigro disputed all of

the statements in Mr. Montelto’s deposition. (See Exhibits 5 and 16). Sixth, the

dealership’s documents show that they were well aware that their computer system was

out of date and needed to be replaced. (Ex. 109).

Reyna’s lawyer elicited the following admission that Mr. Montell knew nothing

about computers or the LML System:

Q: Now, was it, as far as you understand, a hardware problem or a software problem? A: I don’t know. I wouldn’t – That’s probably a better question to ask Dave Aps. (Exhibit O, p. 22)

Mr. Montelto learned about the alleged problems with the system by talking to his

employees.

A: ...so my brothers and I got our opinion or input was from the approximately 60 people that reported to us in some fashion so we were gathering all of our opinion from all the salespeople on a daily basis as well as all the managers on a daily basis. (Exhibit O, p. 30-31)

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This testimony is inadmissible hearsay. Again, the witness lacked personal knowledge

and relied on hearsay statements by his employees.

Q: When you say the system went down every week, what does that entail? A: I don’t know. I really don’t know. We would get almost violent complaints from our management probably after six months or sooner. ....(Exhibit O, p. 34) … On cross-examination, Montelto admitted that he is not a computer expert.

Q: You’re not in a position to describe the technical issues that arose with The Wizard and the Lease Link for the other LML software, isn’t that correct? A: Correct. (Exhibit O, p. 57)

Mr. Montelto admitted that the LML rendered extensive service to the

dealerships. Mr. Montelto admitted that he had no idea what the problems were with the

LML system.

Q: Is it that it worked and then they wouldn’t service it, or is it that at the point it was installed, the computer just never was operable? A: I would probably say there were certain functions. It didn’t just not come on. It wasn’t 100 percent malfunctional, ... Q: I guess what I’m trying to figure out is was this continuous process with LML people to try to make this thing work, or did they just stop coming out? A: They would come out. (Exhibit O, p. 20).

Mr. Montelto also testifed that he was an employee of Montell Chrysler. He was

not employed by Montell Chevrolet or Montell Corporation (Pontiac Store). Exhibit O at

8-9). He never used any of the LML products. (Exhbit O at 38). His information about

the LML products at the other stores came from talking to his brothers. (Exhibit O at 43-

44) (hearsay).

The documents produced by Mr. Montelto at the deposition are also inconsistent

with his testimony that the LML System was not installed and did not work. First,

Montelto Exhibit 6, shows that Ms. Dillon disputed the Montell’s claims when she met

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with them. According to them, she said “we have about 3,500 customers and 800 have

the Wizard. We know the product works…” Dillon also told them their computers were

out of date. (Ex. 109 - Montelto Deposition Exhibit 6). Other documents produced by

the Montells are flatly inconsistent with Kurt Montelto’s desposition testimony. For

example, Montell Exhibit 7 states that someone “spoke with John Mack this afternoon

and he stated that Wizard and Guest Track are ok on his machines, but that he cannot

print because he needs Word 2000 on his computer.” (Ex. 109). Montell Exhbit 8 states

that all the LML products at both the Chevrolet and Pontiac stores were “up and running”

on October 17, 2002. (Ex. 109). The Montells also received Paul Capenigro’s report on

the issues with their networks and computers. Montell Deposition Exhibit 17. (Ex. 109).

Montell Exhibit 10 shows that on October 18, 2002, the dealerships’ computer

consultant, Bob Rossi, told them that many of their computers were old and out of date

and needed to be replaced. (Ex. 109).

LML’s field support representative Paul Capenigro disputed all of the statements

of Mr. Montell. He testified that he had extensive training in the hardware and software

aspects of computers as well as training on how to use, install and repair LeaseLink

systems. (Exhibit 5 at 5, 6, 9, 10, 12, 13, 15, 74-83.) Brad Greve had the same training

as Capenigro. (Exhibit 16 at 8-9). Greve’s job was to install hardware at dealerships.

(Exhibit 16 at 9). He was present at the installations at all three dealerships. (Exhibit 16

at 12-13).

Mr. Capenigro testified that the LML System was installed on the Montell

dealerships’ computer network. (Exhibit 5 at 18). The LML System included the Guest

Track and Wizard products. (Exhibit 5 at 17). Mr. Capenigro testified that the LML

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Systems were installed at all three Montell dealerships and that they worked as intended.

Exhibit 5 at 27, 35, 41, 42, 43, 44, 52, 53, 56, 63-64, 99-100. All three dealerships had

employees who used the LML System. (Exhibit 5 at 103). Greve testified that John

Mack at the Chrysler store used all three LML products. (Exhibit 16 at 15).

Mr. Capenigro also noted that all three Montell dealerships did not meet their

obligations under the agreements with LML because the dealerships’ computers did not

work (Exhibit 5 at 17), were unplugged by the Montells (Exhibit 5 at 17, 23, 24, 41)

(Exhibit 16 at 36) or did not meet the minimum requirements to run the LeaseLink

software (Exhibit 5 at 17, 33), or had old operating systems that were not suitable for the

modern LML software (Exhibit 5 at 18-20, 32-33) or attempted to modify the LML

System by changing the user login (Exhibit 5 at 25). Capenigro also noted that during the

same time LML was attempting to build a relationship with the dealership, the

dealerships were involved in an extensive effort to rebuild their entire computer system.

That effort required LML to install its programs multiple times. (Exhibit 5 at 17-20, 27,

41-42). The dealership’s computer consultants also damaged the LML System (Exhibit 5

at 28-29) (Exhibit 21 at 36) (Ex. 4 at 280-84 – these were network issues and LML had

no control over the dealership’s computer network).

Greve also testified that the Montell computer network was not ready for the

LML installation. Before the LML products could be fully utilized, the dealerships had

to connect their own computers to each other. (Exhibit 16 at 16). Without a connection

to the network, the individual pcs would not have access to the LML software. (Exhibit

16 at 17). Despite these challenges, Greve successfully installed Guest Track on all of

the personal computers at the Chrysler dealership. (Exhibit 16 at 18). Greve installed the

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program on Kurt Montell’s computer. (Exhibit 16 at 21). Two salespeople used the

program but the rest of the dealership’s management did not use the program. (Exhibit 16

at 22). Greve physically checked all of the individual personal computers each time he

went to the dealership. (Exhibit 21 at 23). He provided the LML training schedule to

Montell employees on several occasions. (Exhibit 21 at 24).

On August 16, 2002, Greve reinstalled the LML server at the Chevrolet store and

found that the LML programs were functioning correctly. Wizard was able to download

daily updates. (Exhibit 21 at 27-28). Again, he checked all the individual personal

computers connected to the server to see that they were functioning correctly. (Exhibit

16 at 28). On July 31, 2002, Greve met with Darrin Montell and urged him to get phone

lines for the LML server. (Exhibit 16 at 30-32). It was the dealership’s job to make sure

the LML servers were connected to a phone line. (Exhibit 16 at 30). The Wizard could

not function correctly without a phone line because it needed to download blue book

values of the inventory. (Exhibit 16 at 31).

Greve explained that on November 4, 2002, Darrin Montell complained that the

LML products did not work. Greve found out that Darrin was using the incorrect

password. (Exhibit 16 at 37-39). Greve completed new user training with Darrin

Montell. (Exhibit 16 at 39). LML sent in professional trainers to the Montell dealerships

to train the employees. (Exhibit 16 at 40). Dan Lavergne and Rob Rogala of the

dealership used the LML system. (Exhibit 16 at 34-42).

Greve handled the installation at the Montell Pontiac store as well on or about

October 4, 2001. (Exhibit 16 at 45). After installation, the programs worked properly.

He urged the Montells to set up a phone line that was dedicated to the LML server at the

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Pontiac store so that it could download the Wizard updates each day. (Exhibit 16 at 47-

49). Greve did basic training with John Mack. (Exhibit 16 at 50).

Six weeks later, the Montells asked Greve to move the LML server to another

office inside the Pontiac store. He did so but again found that there was no phone line for

the server. (Exhibit 16 at 52). In December 2001, the dealership was infected by a virus

and deleted the Wizard product. (Exhibit 16 at 53) Again, LML reinstalled the Wizard.

(Exhibit 16 at 54). On February 6, 2002, Greve replaced a broken modem in one of the

Montell’s computers. (Exhibit 16 at 56). He noted that the Wizard program was

operating correctly in that it was downloading the dealership’s vehicle inventory.

(Exhibit 16 at 57). On July 11, 2002, Greve checked the Wizard and found that it was

properly communicating with Credco, an outside credit bureau. (Exhibit 16 at 60). On

August 6, 2002, Greve trained three new salespeople how to use Guest Track. (Exhibit

16 at 61-63).

Mr. Capenigro explained that he and other LML employees told the Montell

brothers about the issues with their computer system, but the brothers were unable to do

anything about it. (Exhibit 5 at 32) (Exhibit 16 at 58) (Exhibit 16 at 61 (computer did not

have enough memory to run Guest Track) (Exhibit 16 at 98-99).

Mr. Capenigro testified that he personally trained Montell employees and that

LML brought in trainers to train Montell employees (Exhibit 5 at 36-37).

Mr. Capenigro flatly disputed Mr. Montell’s statement that the LML System

never worked:

Q: So if Mr. Montell said that the LML software never worked, would that be

an accurate statement?

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A: That would be incorrect. (Exhibit 5 at 41).

Mr. Capenigro concluded that the Montells did not do their part to make the LML

System work (Exhibit 5 at 34-35) (Ex. 24).

Jim Penikas, the director of Reyna Capital, testified that he did not know whether

the LML system installed at Montell Chevrolet worked or did not work. (Exhibit 23 at

258). Reyna did no testing or investigation to determine whether or not the LML System

at the Montell dealership worked or it did not. (Exhibit 23 at 270).

The Montell Equipment leases and Software Licenses bar all the claims of the

Montells. (Exhibit 70; Exhibit 73; Exhibit 76). The dealers’ claims are barred by the

Equipment lease and the Software License. Paragraph 6 provides:


LML disclaimed all warranties. (Exhibit 70, 73 and 76 at ¶ 5) (Emphasis in Original).



The Agreement bars any claim by the dealer. (Exhibit 70, 73 and 76) Finally, the

Montells breached the suitability representation contained in the Equipment lease by

damaging the LML systems, uninstalling the LML systems, by failing to use personal

84

computers that met LML’s specifications. (Exhibit 70, 73 and 76 at ¶15). All three

Montell dealerships signed Delivery and Acceptance Agreements, certifying that the

systems were installed, worked and were accepted by the dealership. (Exhibit 27). All

three dealers made use of the systems, sent numerous people to training and benefitted

from the systems. (Ex. 24).

Reyna Statement 37. The LML product installed at Nemet Motors caused a

crashing of Nemet’s hard drive and failures related to updating bank rates. (Sharon

McAvoy’s deposition, February 8, 2006, a portion of the transcript is attached hereto as

Exhibit P, pp. 53-60).

Response: Denied. First, the witness did not use the LML product herself and

therefore draws her opinions on heresay. Second, the witness lacked any qualifications to

testify about the cause of certain hard drive failures and other computer issues. F.R.E.

701. However, based upon her statements, it is clear that the LML product was used at

Nemet Motors “hundreds” of times. (Exhibit P at 22). Additionally, LML disputes the

witness’ statements in their entirety.

Ms. McAvoy is a secretary to the owner of the dealership. (Exhibit P at 4). She

is a high school graduate. (Exhibit P at 7). The witness has taken no course in

technology or the computer field (Exhibit P. at 8). The witness does not consider herself

“an expert in computers.” (Exhibit P at 8). Reyna made no attempt to lay a foundation

that the witness had the ability or experience to testify about computers. The witness

lacked sufficient competency to testify as to whether the LML programs worked or did

not work.

85

Ms. McAvoy admitted that the LML System was used and operated at the

dealership for a month before the dealership signed up with LML. (Exhibit P at 19). The

agreement was signed in February 2001. (Exhibit P at 23-24). The Nemet dealership

purchased three Lease Link systems – one for its Chevrolet store, one for used cars and

one for the Nemet showroom. (Exhibit P at 21). Dealership employees used the Lease

Link System “hundreds” of times. (Exhibit P at 22). However, the witness never used

the Lease Link system. (Exhibit P at 21-22)

In the fall of 2003, many leasing companies refused to lease cars in New York

due to certain court rulings holding leasing companies vicariously liable (Exhibit P at 25-

26-27). As a result the dealership kept one Lease Link System because it had less need

for Lease Link. (Exhibit P at 25, 27). The other two Lease Link systems were replaced

by Wizard Systems at the request of the dealer. (Exhibit P. at 25). LML sent people out

to train several dealership employees on how to use the Wizard program. (Exhibit P at

49, 53).

The witness confirmed that the dealership continued to use Lease Link after

receiving the Wizard Program. (Exhibit P. at 28).

Q: Did you find in 2001 prior to this new law taking effect, the vicarious liability law, did you find here at Nemet that you are using the system more for used cars or for new purchases? A: It would be new cars. Q: Would you also use Lease Link for new cars? A: Since we don’t do a used car leasing business, no. Q: That was constant through 2001 until the present? A: Yes. (Exhibit P, p. 28).

The witness testified that the dealership encountered issues with the Wizard

program. (Exhibit P. at 30). On cross-examination, the witness admitted that the Wizard

issues were caused by a problem with the dealership’s internet connection. (Exhibit P at

86

46-47) (“We had all of these issues of no internet activity”). The dealer is responsible for

maintaining an internet connection – not LML. This is a breach of the Wizard End User

License Agreement. (Exhibit 28). The witness testified that the Wizard program did not

work for 2 or 3 months in 2003. (Exhibit P. at 59).

In September 2003, the Reynolds & Reynolds internet connection was repaired

and all issues with the Wizard were resolved. (Exhibit P. at 47). The witness also

admitted that it was possible that there were issues with the dealership’s phone lines that

contributed to the problem. (Exhibit P at 45); (Exhibit 28). Once again, if there is no

internet connection, the Wizard won’t update. (Exhibit 24).

Nemet’s claims are barred by the Equipment lease and the Software License.

Paragraph 6 provides:

Customer agrees to inspect the Equipment within three (3) business days after set up and installation thereof. If LML does not receive written notice from Customer of any defects or objections to the Equipment within five (5) business days after set up and installation thereof, it shall be conclusively presumed that Customer has fully inspected and accepted the Equipment, that it is in good working order and full compliance with the Agreement. THIS IS A NON-CANCELLABLE AGREEMENT SUBJECT TO THE TERMS ON THE REVERSE SIDE HEREOF, WHICH ARE INCLUDED IN THIS AGREEMENT BY REFERENCE. (Emphasis in Original).

LML disclaimed all warranties. (Exhibit 94 at ¶ 5).



The Agreement bars any claim by the dealer. (Exhibit 94). The Wizard End User

License Agreement also bars the claims of Nemet. (Exhibit 28).

87

Reyna Statement 38. The Pioneer dealership in Phoenix, Arizona never received

a functioning LML system. LML failed to install all hardware and software to provide a

functioning LeaseLink system. (Xavier Brizar’s deposition, February 28, 2006, a portion

of the transcript is attached hereto as Exhibit Q, pp. 73-80).

Response: This alleged fact is denied. First, the witness lacked the competency

and qualifications to testify about computer related issues. Second, LML disputes the

witness’ statements that there was a breach of any of its obligations. Third, the witness

himself gave contradictory and confusing testimony, which creates issues of disputed fact

all by themselves. (Compare Exhibit Q at 97-98 with Exhibit Q at 75). Fourth, the

statement is inconsistent with the record, which shows unequivocally that the dealership

had a functioning Lease Link system at all relevant times. (Exhibit Q at 97-98). Fifth,

the dealership signed a Delivery and Acceptance Agreement acknowledging that it

received the system, accepted it, used it, and it worked. (Exhibit 27).

Mr. Brizar testified that he was the community relations person for the dealership.

(Exhibit Q at 9). He also was involved with general operations of the dealership (Exhibit

9) and handled IT for the dealership. He had a high school education (Exhibit Q at 14).

He had no training in computers (Exhibit Q at 18). He did not attend Lease Link training.

(Exhibit Q at 64-65). He did not use the LML system. (Exhibit Q at 96).

When his deposition is read properly, it is clear that the witness actually supports

LML’s theory of the case in every particular.

Mr. Brizar admitted that LML provided training to all of the dealers’ employees

who used its products. (Exhibit Q at 40). The witness admitted that the dealership’s

corporate parent, UAG, blocked LML from installing the interface. Next, the witness

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admitted that in order to install Lease Link version 6.0 on its network the dealership was

required to purchase new personal computers with Windows operating systems. The

term “green screens” refers to old DOS based computers that were used by automobile

dealerships and which could not run Version 6.0. Third, the witness admitted that LML

delivered Version 6.0 to the dealership, but that LML had to wait until the green screens

and UAG had gotten those computers running.

Q: By Mr. Weaver: Right. And the fact is that after this second agreement, which is Exhibit 2, went into place, there was a problem getting the interface between the Reynolds and Reynolds and Lease Link? A: Yes. Q: And for whatever reason, and I’m not criticizing it, but for whatever reason those passwords or authorities were not given by UAG. Is that a fair statement, after the second agreement went into place? A: Yes. Q: Is that correct. A. That’s correct. Q: Okay. Also, after this newer upgraded version came into play, the second agreement of the Lease Link, there was an issue regarding the capacity of the old hardware or computers that were physically on your plant at Pioneer to accept newer versions. Is that a fair statement? Mr. Arranz: Object to the form. The Witness: Yes, and it was not just that. It was also to meet the UAG standards to be on our network. Q: By Mr. Weaver: Right. Okay. And at some point in time Lease Link people were out there saying, hey, we’re getting a green screen; we need new computers. Do you recall that or were you involved with that? A: Yes, I was involved with that. .... (Exhibit Q, pp. 44-45) (emphasis supplied). …

Q: Okay. So even though you had, per your testimony, the computers in the physical plant in April, May, June of 2002, you couldn’t really get the Lease Link up and working on them because UAG had not yet come in and done the drop? A: Exactly. Q: Okay. A: One of the things is that that dealership was running on ports, not off sessions. If you are running off sessions- if you are running off the Reynolds sessions system, that wouldn’t have been a problem. That wouldn’t have

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been an issue. Since we were running on an older Reynolds system with ports, that caused the problem. (Exhibit Q, pp. 56-57) (Emphasis Supplied).

In other words, the DMS system was too old to have an interface anyway. (Ex. Q at 81-

82). The witness also admitted that the LML System sat dormant at Pioneer for three or

four months waiting for Pioneer and UAG to complete their work on the new computers.

(Exhibit Q at 81-82).

Q: Without going into all these entries, would it be fair to say that there were also some problems, especially early on, with phone lines, and you guys were having to use fax lines, et cetera? Would that be a fair statement? A: Yes.

Mr. Arranz: Object to form. Q: By Mr. Weaver: Even though the 6.0 version , the new version, was involved in the second agreement, we have discussed the issue with the new computer, et cetera—you recall that testimony; correct?

A: Correct. Q: The 4.5, the previous system, was still in place at Pioneer Ford, was it not? A: Yes. Q: Okay. So essentially even if you didn’t use the 6.0—strike that. And that 4.5 system was a system that you had been paying for all along; is that correct? A: Uh-uh. Q: Is that a “yes”? A: Yes. Q: And along with the new 6.0 version you also got the Wizard finance; correct? A: Correct. Q: And I think your prior testimony in response to Mr. Arranz’s question was that that worked fine; correct? A: Just the Wizard. Q: The Wizard worked fine; correct? A: Yes. (Exhibit Q, pp. 97-98).

Once again, the witness contradicts Reyna’s purported statement of undisputed fact and

sides with LML! He states that the dealership did have a Lease Link system in place at

all times. Brizar admitted that the LML equipment lease could not be cancelled. (Exhibit

Q at 48-49). Brizar admitted that Dana Flyte would stop by the dealership “once a week,

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every other two weeks.” (Exhibit Q at 55). Greg Boulden and Ken Spaulding of the

dealership attended LML training. (Exhibit Q at 65). Danny Thomas of the dealership

also attended LML training (Exhibit Q at 67). Seven more dealership employees,

including Ken Spaulding, were trained in August 2002. (Exhibit Q at 100). Brizar

admitted that the interface saved time when it was used by the dealership. (Exhibit Q at

96).

UAG, not the witness, had control over the computer network and the installation

of the new computers. (Exhibit Q at 56). UAG authorized the dealership to sign the

equipment lease. (Exhibit Q at 58). It took UAG several months to approve the purchase

of the LML system and that delayed the signing of the equipment lease. (Exhibit Q at 58)

(Exhibit 6 at 57-58). There is no question, however, that the LML system was installed

on July 18, 2002 at the dealership. (See Exhibit 27; Exhibit 24; Exhibit 84).

Karen Dillon testified that there were no issues with the Pioneer System. The

dealer simply wanted to get out of the obligation to cut costs. (Exhibit 1 at 204-06), (Ex.

4 at 275 – there were no issues at all). LML installed the Lease Link System at Pioneer

and those systems worked. (Exhibit 1 at 206). The dealership wanted to transfer the

system to another UAG store. (Exhibit 1 at 209-10) (Exhibit Q at 89). Pioneer

employees were trained by LML. (Exhibit 6 at 31). Battista also testified that Pioneer

said there were no issues with the system. Pioneer simply had buyer’s remorse and did

not want to pay for the system. (Exhbit 21 at 52).

Dana Flyte’s testimony is a mirror image of Brizar’s in most respects. She

testified that initially the dealership had problems with phone lines for the computers.

(Exhibit 6 at 30-33). UAG would not allow LML to access the dealer’s network to install

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the interface. (Exhibit 6 at 34-36) (Exhibit 6 at 46-49; 52-53) (Exhibit 6 at 60-61)

(Compare Exhibit Q at 44-45).

The Reyna claim that the dealership never received a functioning Lease Link

system is disputed – by LML (Exhibit 1 at 206) and by the dealership itself (Exhibit Q at

97-98)! Dana Flyte testified that the dealership always had a working 4.5 Lease Link

system on premises while it was waiting for the installation of Version 6.0. (Exhibit 6 at

58). The two programs have identical information. (Exhibit 24).

Philip Battista testified that the Pioneer dealership did not have any issues with

the LML system, it simply did not want to pay for it. (Exhibit 21 at 52-53). “They told

us point blank, we’re going back and tell Reyna we’re not paying, it had nothing to do

with the software.” (Exhibit 21 at 52); (Ex. 4 at 275).

Jim Penikas, the director of Reyna Capital, testified that he could not answer

whether or not LML breached the Equipment Lease with Pioneer. (Exhibit 22 at 205).

The Equipment leases and Software Licenses bar all the claims of Pioneer. The

dealers’ claims are barred by the Equipment lease and the Software License. Paragraph 6

provides:


LML disclaimed all warranties. (Exhibit 82 ¶ 5) (emphasis in original).


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Customer agrees that its obligations under this Agreement, including without limitation, the obligation to make all payments hereunder, are irrevocable and shall not abate for any reason whatsoever (including any alleged claims against LML) and shall continue in full force and effect regardless of any inability of Customer to use the Equipment or Licensed Programs or any part thereof for any reason whatsoever.

(Exhibit 82). The Agreement bars any claim by the dealer. The dealer’s failure to have

its pcs in the proper condition to receive the LML system was another breach of the

Equipment lease. (Exhibit 82 – suitability provision). The dealership also breached the

interface agreement by failing to give LML access to the passwords of the DMS system.

(Ex. 83).

Reyna Statement 39. The purported fact is denied. The system provided to

Lexus of Westminster, a/k/a RRL Corp., was so slow that employees could not use it. In

addition, there was an LML server problem related to the failure of the monitor to

function properly. (John Endsley’s deposition, October 25, 2004, a portion of the

transcript is attached hereto as Exhibit R, pp. 25-31).

Response: The record demonstrates that (a) Mr. Endsley’s testimony is

inadmissible because he lacked relevant personal knowledge of the matters he claimed to

testify about; and (b) that the dealership used and accepted the LML system; (c) the

dealership’s monitor ghosting problem was due to its own faulty equipment – which

LML urged the dealership to repair. Moreover, Mr. Endley’s testimony is completely

disputed by the testimony of Darren Forman and Robert Brewer of LML. His testimony

is also inconsistent with the business records of LML, which show that the dealership

employees were trained, used the system, accepted the system and kept the system, even

though they claim they sent it back to LML. (Ex. 24, 87, Ex. 4 at 297-298).

Many of Endsley’s statements are also based upon hearsay.

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Q: Do you know what happened at this conference in Las Vegas? A: No. I absolutely do not. (Exhibit R, p. 13) Q: Nobody from Lease Link came up to instruct you as to how to use the – A: No. I never personally used it. Q: Okay. After the installation, which it’s fair to say occurred somewhere around April, 2001, did the system work as you had expected early on? A: No, it never worked as expected to. (Exhibit R, p. 23)

Q: How did you become aware of what you were to expect from Lease Link? Who told you that? A: Kevin. Q: Kevin told you that? A: Uh-uh. Q: Okay. When did you sign the lease? A: It looks like April 1, 2001. Mr. Lewis: Actually, the document indicates that it’s effective April 1, and the best you could do is on or about. Mr. Arranz: Sure. Q: Do you know when RRL began using the LML hardware and software, how soon afterwards? A: Probably right around that time, around April. (Exhibit R, p. 20) This is plain hearsay. Q: Okay. Jumping back to the performance of Lease Link hardware and software, you had said you had begun to have problems the day after the hardware and software were installed. A: Yes. Q: Could you expand on that? What kind of problems did you have? A: Since I never personally used the system, I’m only going by what they guys who used it are telling me. (Exhibit R, p. 27) Again, this is hearsay and the witness lacks personal knowledge and has no expertise in

computers.

The Lease Link system was used and accepted by the dealership.

Q: During the time that the Lease Link system was here, were any leases printed out of the system? Was it used at all?

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A: Well, the system doesn’t print out leases. All it does is give us information as to where to place the contract. Q: Okay. Was it used? A: Yes. I would think it probably was. (Exhibit R, p. 50).

… The dealership used and accepted the Lease Link System as Mr. Endsley

admitted:

Q: Who was the person who used the system on a day-to-day basis most? A: Kevin Wolfe, John Oh, and our other two sales managers. (Exhibit R, p. 61) John Endsley has no first hand knowledge about the ghosting problems and relies

on hearsay:

Q: Okay. Why don’t we break that down? First you were just reading from a document. What was that document? A: Just notes I made by asking questions to John Oh. Q: When did you discuss this with Mr. Oh? A: Last week. Q: Why did you discuss it with Mr. Oh then? A: To refresh my memory because I never used the system. (Exhibit R, p. 28) John Endsley has no personal knowledge as to the reported slowness of the LML

system and bases his testimony on what his coworkers told him.

Q: Had Lease Link at any time presented to you or any of your employees or agents that the hardware or software that would be provided from Lease Link would be fast? A: Yes. They said it would be faster and better than it was when they saw it in Las Vegas. When we saw it—I say “we” Kevin and John Oh saw it in Las Vegas. It was most adequate and that’s why they made the decision to change. (Exhibit R, pp. 29-30)

The dealership brought on many problems themselves, which is demonstrated in

Endsley’s deposition.

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Q: To your knowledge, when the LML people came here, their service people, some of the people you mentioned, did they make any complaint or charge or assertion that some of the problems were due to the dealership’s hardware? A: Yes, I believe they did. Q: What was the sum and substance of their charge to your knowledge? A: Just that the—I guess the type of computer we had wasn’t up to what they thought was their standards. (Exhibit R, p. 51) (emphasis supplied). LML’s investigation of the issues raised by the RRL dealership disclosed no technical

issues with the LML System. The display issue arose because the dealer used an out of

date video card in its computers. (Exhibit 2 at 304-305, 307; Deposition Exhibit 28).

When LML replaced the video card the issue disappeared. (Exhibit 2 at 307). The dealer

did not dispute LML’s conclusions about the video card. (Exhibit 2 at 309). LML found

no support for the dealer’s statement that the LML system was not installed. (Exhibit 2 at

311).

Robert Brewer, LML field support representative, disputed all of Endsley’s claims

about the display problem. Mr. Brewer has been studying to obtain his A+ certificate in

computer hardware for many years. (Exhibit 13 at 7). Brewer participated in the

installation of the LML system. (Exhibit 13 at 31-33). The system was fully installed

and connected to the internet. (Exhibit 13 at 31-34). Brewer noted that the dealership

scheduled several of its employees for LML’s training seminar. (Exhibit 13 at 34).

Johnny Oh and Kevin Wolfe, among others, of the dealership used the Lease Link

system. (Exhibit 13 at 36-37). The dealership was the only dealership that ever

experienced the display issue. (Exhibit 13 at 40). Brewer resolved the problem by

upgrading the video card used by the dealership’s computers. (Exhibit 13 at 42-44; 52-

53). In November 2001, Brewer visited the dealership and found that the system was

disconnected, in the spare parts room, and was 120 updates behind. (Exhibit 13 at 49).

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Brewer even showed the LML Case Report to Endsley. (Exhibit 13 at 85-86; 97). The

LML equipment was not removed from the dealership or accepted by LML. (Exhibit 13

at 54-55).

The Equipment lease demonstrates that the dealership has no claim against LML.

The Equipment lease, Exhibit 87, between LML and RRL provides that:

6. Acceptance of Equipment. Customer agrees to inspect the Equipment within three (3) business days after set up and installation thereof. If LML does not receive written notice from Customer of any defects or objections to the Equipment within five (5) business days after set up and installation thereof, it shall be conclusively presumed that Customer has fully inspected and accepted the Equipment, that it is in good working order and in full compliance with the Agreement.

RRL failed to furnish notice of any defects within five (5) days as provided by

paragraph 6 as stated above.

(b) THIS IS A NON-CANCELABLE AGREEMENT SUBJECT TO THE TERMS ON THE REVERSE SIDE HEREOF, WHICH ARE INCLUDED IN THIS AGREEMENT BY REFERENCE.

The effort of RRL to cancel the Sales Desk Agreement was a nullity.

RRL, by failing to pay Reyna, violated paragraph 8 of the Equipment lease.





or any part thereof for any reason whatsoever.” (Exhibit 85 at ¶ 8).

RRL by its own act (installing Lease Link on unsuitable machines) violated the

following provisions paragraph 4 of the LML Software License and paragraph 15 of the

Equipment lease:

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(Exhibit 85 at ¶4).

Reyna Statement 40. Bob Valenti Chevrolet in Mystic, Connecticut never

received the system it was promised in that the LML system at the dealership never

integrated with the already existing software at the dealership. (Bob Valenti’s deposition,

September 20, 2005, a portion of the transcript is attached hereto as Exhibit S, pp. 42-47).

Response: LML disputes this statement on several grounds. First, Mr. Valenti

lacked relevant personal knowledge of the LeaseLink software or the “interface.” Second,

Mr. Valenti had no experience or training in computers. Third, the interface agreement

between LML the dealership and Reynolds & Reynolds was not financed by Reyna.

Reyna lacks standing to raise this issue in this litigation because it was not a party to the

interface agreement. The interface was a separate agreement that required the Valenti

dealership to pay a fee each month to both LML and Reynolds & Reynolds. The

dealership defaulted on the agreement by failing to pay LML. Fourth, Mr. Valenti

admitted that he did not pay the separate monthly fee for the interface. Thus, the

dealership breached the agreement and had no right to complain about an interface

problem. Fifth, LML’s records and customer service technicians reported that the

interface at the Valenti dealership was functional and worked properly. Sixth, the Valenti

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dealership reported no significant problems with the Lease Link system and quit paying

because they felt it was not providing a return on their investment. (Exhibit 1 at 152).

First, Rob Valenti admitted that he has no computer training. (Exhibit 8 at 67).

Reyna made no attempt to lay a foundation that he could testify about computers.

Second, Mr. Valenti could not remember whether or not he had ever used Lease

Link. He could not recall ever using the Reynolds & Reynolds interface. (Exhibit 8 at

58). Mr. Valenti signed the Lease Link Guaranty Agreement, but did not recall ever

making a claim under that Agreement. (Exhibit 8 at 62). Valenti admitted that his

testimony that there was a problem with the interface was based on what his employees

told him. (Exhibit 8 at 76-77). One interface problem reported to LML by the

dealership “turned out to be nothing more than a password clarification.” (Exhibit 1 at

155). Another issue that arose was resolved when the Valenti employee called the LML

800 number. The LML technician resolved the issue (Exhibit 1 at 157).

Third, Mr. Valenti admitted that the dealership used the system and accepted it for

all purposes. According to Valenti, three of his top managers ran deals through the Lease

Link system, including Ken Valillencourt, Dennis Perry and Tom Quirk. (Exhibit 8 at

58-59). Valenti also admitted that Jim Rondeau of the dealership also used the system

“frequently.” (Exhibit 8 at 62 and 86). Valenti admitted that the Lease Link system was

installed on the dealership’s computer network. (Exhibit 8 at 66). Finally, the Valenti

notice of cancellation was to be effective on August 31, 2002, more than two years after

the equipment lease was signed. (Exhibit 8 at 68).

LML’s field support representative Greg Beckett visited the dealership on July 17,

2001 and met with Jim Rondeau. (Exhibit 12 at 40). Beckett, based on his experience

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and training, described Rondeau as a “good user.” (Exhibit 12 at 40). Rondeau made no

complaints about the Lease Link system or the interface. (Exhibit 12 at 41). Beckett also

visited the dealership on August 15, 2001 and met with Bruce Morrow, the general

manager. (Exhibit 12 at 42-43). Beckett checked the system and the system was

working properly. (Exhibit 12 at 43). He also told Morrow how to use the system to

access certain General Motors programs. (Exhibit 12 at 42-43). Based on his training

and experience, Beckett noted no problems with the system. (Exhibit 12 at 43).

Fourth, Mr. Valenti admitted that the interface agreement was a separate written

contract with LML and that, under the interface contract, “’Lease Marketing has a one-

time fee of $250, and a monthly maintenance charge of $25.” (Exhibit 8 at 64-65) (Ex.

111, 112, 118, 119). Mr. Valenti admitted that the dealership did not pay LML for the

interface. (Exhibit 8 at 72-73-74-75). The dealership defaulted on the interface

agreement by February 6, 2001, long before it attempted to cancel the Lease Link

Agreement. (Exhibit 8 at 72-74). He also admitted that he was visited by Bill Lathrop

of LML on September 6, 2002 and admitted that he spoke with Lathrop and that he

would not allow Lathrop access to the LML System to check to see if there were any

problems with it. (Exhibit 8 at 80-81) (Ex. 42).

Fifth, Valenti admitted that the people LML sent in to the dealership to train his

employees “are good people” and “they would do training and stuff.” (Exhibit 8 at 83).

He may have complimented them on their work. (Exhibit 8 at 83). Valenti admitted that

he sent at least two of his employees to LML’s regional training, including Bruce

Morrow and “Anglo.” (Exhibit 8 at 85).

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Sixth, Valenti admitted that he told LML’s people that the system was not getting

enough use because of changes in the leasing market and certain incentives offered by

General Motors. (Exhibit 8 at 87).

In sum, Mr. Valenti lacked personal knowledge of the so-called “interface” issue

but he admitted that the dealership did not pay for the interface and that constitutes a

breach of the interface agreement. More importantly, he was not a computer expert and

could not testify that there were problems with the Lease Link system. Valenti admitted

that numerous Valenti employees used the Lease Link system frequently. This is an

admission that the dealership accepted the system for all purposes and was required to

pay for it. Most of all, Mr. Valenti’s self-contradictory testimony and admissions

demonstrate all by themselves that there are substantial issues of fact as to whether LML

breached the Valenti agreement.

The Equipment leases and Software Licenses bar all the claims of the dealership.

(Exhibit 40). The dealers’ claims are barred by the Equipment lease and the Software

License. Paragraph 6 provides:


LML disclaimed all warranties. (Exhibit 40 at ¶ 5) (emphasis in original).


Customer agrees that its obligations under this Agreement, including without limitiation, the obligation to make all payments hereunder, are irrevocable and

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shall not abate for any reason whatsoever (including any alleged claims against LML) and shall continue in full force and effect regardless of any inability of Customer to use the Equipment or Licensed Programs or any part thereof for any reason whatsoever.

The Agreement bars any claim by the dealer, particularly in view of the fact that the

dealer did not make payments to LML for the interface or to Reyna for the equipment

lease.

RESPONSES TO LACK OF RESPONSE TO DEALERSHIP COMPLAINTS

Reyna Statement 41 After learning about LML’s equipment and service failures

at these various dealerships, Reyna made several requests to LML to buy back the leases

at issue in this case. (LML employee Larry Border’s deposition, October 17, 2005, a

portion of the transcript is attached hereto as Exhibit T, pp. 228-229, exhibit 14).

Response: This alleged fact is denied because it is a misstatement of the record.

Mr. Penikas wrote to Larry Border on two occasions to request that LML repurchase

leases. The letters were sent on September 24, 2002 and January 20, 2003. In those

letters, Reyna requested that LML repurchase certain leases, Blue Ridge Imports, Buz

Post Pontiac, RRL Corporation, Farnsworth, Montell Chevrolet, Montell Chrysler,

Montell Corporation, Bob Valenti, Competition Chevy Olds and Pioneer Ford. See

Exhibit 104. Reyna made no request that LML repurchase any of the other leases listed

in the Amended Complaint. See Exhibit 24.

Reyna Statement 42. At the time of the requests, and to this date, LML failed to

buy back the Underlying Leases, despite the fact that said action is required under the

terms of the Agreement. (Border’s deposition, Exhibit T, pp. 228-229).

Response: This “fact” is disputed as it is a flat contradiction of the testimony of

Larry Border. LML denied that it was required to buy back the leases. See Border

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Deposition at 228-232. In the pages indicated, Mr. Border states that LML had no

obligation to buy back the leases. See Border Deposition at 230.

Q: Do you know why LML didn’t buy back the leases pursuant to the Agreement? A: I don’t recall specifically what was said or related to Reyna but I believe that LML’s belief was that we had provided the products that were contracted for and that based on that we were not in default and did not need to buy them back. Exhibit T at 230 (emphasis supplied).

Reyna Statement 43. This alleged fact is denied. The parties also met in person

prior to the litigation; at that time Reyna reiterated its demand for LML to repurchase the

leases. (James Penikas’ deposition, September 12, 2005, a portion of the transcript is

attached hereto as Exhibit U, pp.15-19).

Response: This is a misstatment of the record and an effort to use a settlement

conference between the parties as evidence in the litigation and it is improper. LML

admits that Reyna requested that LML buy back certain leases, but Reyna did not request

that LML buy back all of the Underlying Leases – only a portion of them. Mr. Penikas

wrote to Larry Border on two occasions to request that LML repurchase leases. The

letters were sent on September 24, 2002 and January 20, 2003. In those letters, Reyna

requested that LML repurchase certain leases, Blue Ridge Imports, Buz Post Pontiac,

RRL Corporation, Farnsworth, Montell Chevrolet, Montell Chrysler, Montell

Corporation, Bob Valenti, Competition Chevy Olds and Pioneer Ford. (See Exhibit 104).

Reyna made no request that LML repurchase any of the other leases listed in the

Amended Complaint. (See Exhibit 24)

Moreover, four of the leases at issue, Duncan Mitsubishi, Galloway Buick, Gjovik

Chevy Olds and Johnson Ford were sold by LML to First Sierra Financial. According to

Reyna’s counsel, Reyna purchased these four leases directly from First Sierra. (Reyna

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has not produced the agreement between Reyna and First Sierra). LML made no

representations to Reyna concerning these leases and thus could not “repurchase” them

from Reyna Capital in any event. These leases are not properly part of this case.

RESPONSES TO EVIDENCE THAT REYNA COMPLIED WITH THE AGREEMENT

Reyna Statement 44. Pursuant to the Agreement, Reyna was to provide the following:

3. [Reyna] will assume all of [LML’s] duties thereunder and relieve, indemnify and hold [LML] harmless from any responsibilities and liabilities thereunder except for the responsibilities set forth in paragraph 5 of this Agreement. (emphasis added).

8. [Reyna] shall provide to [LML] delinquency reports by the 10th of

each month itemizing all delinquency of the portfolio of leases as of the previous month-end.

12(f). The parties irrevocably consent and agree that any legal action, suit

or proceeding arising out of or in any manner in connection with this Agreement may be instituted or brought in the courts of the State of Illinois, in DuPage County.

(Plaintiff’s Amended Complaint (Exhibit A, ex. A, §§ 3, 8, and 12)). Response: LML admits that this paragraph recites some, but not all, of the

relevant provisions of the Agreement and it is therefore denied.

Reyna Statement 45. The only dealers identified in this case who brought legal action against LML are Blue Ridge and Competition Chevrolet. (Defendant’s Counterclaim, a copy of which is attached hereto as Exhibit V, ¶¶ 23-24). Response: LML further states that Reyna breached the Master Agreement and

the Equipment leases and Software Licenses for each dealership by filing the cases in

Missouri (Blue Ridge) and Oregon (Competition). Denied. Thomas Nemet also filed a

lawsuit against LML.

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Reyna Statement 46. In these two cases, the allegations against LML by the

dealers stated that LML failed to provide functional equipment and service. (See Burton

deposition, (Exhibit D, pp. 31-40)).

Response: Again, this is a gross misstatment of the record and is denied. The

statement is denied as to Competition Chevrolet – LML notes that Reyna cites no source

for its statement that LML failed to provide functional equipment to Competition

Chevrolet. Reyna withdrew its claims as to Competition Chevrolet, Wagner Waldrop and

Shepherd Motors. As to Blue Ridge, the statement is also denied. Ms. Burton admitted

that its own equipment was used and, therefore, the LML equipment could not have been

to blame. Thus, this statement is denied as to Blue Ridge as well. See Burton deposition

(Exhibit D page 25):

A: No. my understanding was that we would provide the computer….

A: We would have the computers as they requested. As I stated before, they

provided the computers on our initial agreement when we had Lease Link, but when we

went into this new agreement with them we had to provide our own computers. (Exhibit

D. page 25).

Reyna Statement 47. These dealers’ allegations against LML relate to

responsibilities of LML set forth in paragraph 5 of the Agreement. (Plaintiff’s Amended

Complaint (Exhibit A, ex. A, § 5)).

Response: LML denies this statement and denies that it failed to perform any

obligations to the dealers.

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Reyna Statement 48. According to Larry Border, LML’s former finance

manager, Reyna forwarded to LML on a monthly basis the delinquency reports required

under the Agreement. (Border deposition, Exhibit T, pp. 137-139).

Response: This statement is denied as that portion of the Border transcript was

not included in the Reyna Motion. Reyna only included the second session of the Border

deposition. Furthermore, the statement is not relevant because it does not refer to the fact

that the reports were not sent on a timely basis to LML.

Reyna Statement 49. Judy Owen of Reyna confirmed that Reyna provided LML

with the monthly reports, even after initiation of this suit. (Judy Owen’s deposition,

Exhibit W, p. 29).

Response: LML admits that Ms. Owen so testified. However, many of Reyna’s

breaches of this provision occurred after the Owen deposition was completed. Ms. Owen

was also incorrect. At times Reyna failed to tender the statements on a timely basis.

(Exhibit 24) (Ex. 23 at 418).

Reyna Statement 50. In addition, the Agreement provided that Reyna, as the

funding source, would provide LML with a significant amount of cash financing.

(Plaintiff’s Amended Complaint, (Exhibit A, ¶9)). Reyna complied with this requirement

years ago.

Response: This statement is denied as it misstates the terms of the Agreement,

which provided Reyna with complete discretion as to whether it would purchase an

equipment lease. Additionally, this face is irrelevant to LML’s counterclaim.

Reyna Statement 51. Also, pursuant to Section 3 of the Agreement:

3. Upon acceptance of a Lease, [Reyna] will assume all of [LML’s] duties thereunder and relieve, indemnify and hold [LML] harmless

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from any responsibilities and liabilities thereunder except for those responsibilities explicitly set forth in paragraph 5 of this Agreement.

(Plaintiff’s Amended Complaint (Exhibit A, ex. A, §3)) (emphasis added).

Response: LML admits that the agreement contains such a provision, but denies

that it breached that provision of the Agreement.

RESPONSE TO LML’S COUNTERCLAIM

Reyna Statement 52. In its counterclaim, LML alleges (1) Reyna failed to

provide LML with delinquency reports; (2) failed to provide LML with lease payoff

amounts; (3) failed to obtain contract payment amounts without obtaining the contract

value from LML; (4) accepted payouts from certain dealerships without first obtaining

the payment amounts from LML; (5) filed collection lawsuits in jurisdictions other than

DuPage County, Illinois; (6) failed to indemnify LML for defense costs related to LML’s

own breaches; and (7) failed to protect the property interests of LML. (Defendant’s

Counterclaim (Exhibit U)).

Response: Denied. This misstates LML’s counterclaim.

Respectfully submitted,

LML TECHNOLOGIES, INC.,

By: /s/ Edward X. Clinton, Jr.

Edward X. Clinton Edward X. Clinton, Jr. The Law Offices of Edward X. Clinton, P.C. 19 South LaSalle Street, Suite 1300 Chicago, Illinois 60603 312-357-1515 Fax 312-201-0737

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CERTIFICATE OF SERVICE Edward X. Clinton, Jr., an attorney, hereby certifies that he caused one copy of the foregoing Notice of Filing Of LML Technologies, Inc.’s Response To Reyna Capital’s Statement of Undisputed Facts to be served on the following party by CM/ECF and U.S. mail on this 5th day of September 2006: Timothy Nickels, Esq. John Arranz, Esq. Swanson Martin & Bell One IBM Plaza, Suite 2900 Chicago, Illinois 60611 /s/Edward X. Clinton, Jr.

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Documents

LML - Response to Statement of Undisputed Facts 952006