BMW Financial Services v. Smoke Rise Corp

Brief Fact Summary. BMW Financial Services, (Appellant), sued Smoke Rise Corp., (Appellee), for the excess mileage charge owed by Appellee by the terms of their lease agreement. Appellant appeals the trial court decision denying its motion for summary judgment.

Synopsis of Rule of Law. Unconscionability, is whether in the light of the commercial needs of the particular trade involved, the agreement is one which ” no sane man not operating under a delusion would make and no honest man would take advantage of.

Facts. Appellee leased a car with the option to buy from Appellant. If Appellee chose not to purchase the car, it would have to pay a $0.15 charge for every mile traveled above 85,011. At the end of the lease term, Appellee returned the car and refused to pay the charge claiming the total $14,309.70 charge was unconcsioncable because it was greater than the value of the car itself and almost the same amount as the end of term purchase price.

Issue. Whether the excess mileage provision is unconscionable because the charge is almost as much as the projected end of term value of the car and greater than the actual value of the car with that mileage.

Held. No. the $0.15 charge is not unreasonable because it serves a necessary commercial function.

Discussion. The excess mileage charge is not unreasonable and certainly does not shock the conscience. The charege has a necessary commercial function of compensating for out of ordinary usage which will affect the residual value of the car. If at the end of the term, Appellees discovered that the charge was too high relative to the value of the car, they could have exercised their option to purchase it but they did not. Appellant is entitled to anything up to and including $0.15 per mile. The excess mileage provision is clear therefore the trial court erred in denying Appellant’s motion for summary judgment.