FLAGSTAR BANK FSB V VINCENT DILORENZO
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STATE OF MICHIGAN
COURT OF APPEALS
FLAGSTAR BANK, F.S.B.,
UNPUBLISHED
July 6, 2010
Plaintiff-Appellee,
v
No. 289856
Macomb Circuit Court
LC No. 2007-003381-CK
VINCENT DILORENZO and ANGELA
TINERVIA,
Defendants-Appellants.
Before: METER, P.J., and SERVITTO and BECKERING, JJ.
PER CURIAM.
Defendants appeal as of right the trial court order granting partial summary disposition in
plaintiff’s favor and the later order granting summary disposition in plaintiff’s favor on the issue
of damages. We affirm.
On appeal, defendants first contend that the trial court erred in granting partial summary
disposition in plaintiff’s favor where plaintiff failed to provide any admissible evidence in
support of its motion. We disagree.
This Court reviews de novo a trial court's decision on a motion for summary disposition.
Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). Here, plaintiff moved for
summary disposition pursuant to MCR 2.116(C)(9) and (10). When deciding a motion under
MCR 2.116(C)(9) (which tests the sufficiency of a defendant's pleadings) the trial court accepts
as true all well-pleaded allegations, and properly grants summary disposition only where a
defendant fails to plead a valid defense to a claim. Slater v Ann Arbor Pub Schools Bd of Ed,
250 Mich App 419, 425; 648 NW2d 205 (2002). MCR 2.116(C)(10) provides for summary
disposition where there is no genuine issue regarding any material fact, and the moving party is
entitled to judgment as a matter of law. In reviewing a motion brought pursuant to MCR
2.116(C)(10), the trial court examines the pleadings, affidavits, and other documentary evidence,
viewing the same in a light most favorable to the nonmovant to determine whether a genuine
issue of material fact exists to warrant a trial. Quinto v Cross & Peters Co, 451 Mich 358, 362;
547 NW2d 314 (1996). Only “the substantively admissible evidence actually proffered” may be
considered. Maiden, 461 Mich at 121; MCR 2.116(G)(6). “A genuine issue of material fact
exists when the record, giving the benefit of reasonable doubt to the opposing party, leaves open
an issue upon which reasonable minds might differ.” West v Gen Motors Corp, 469 Mich 177,
183; 665 NW2d 468 (2003).
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We would first note that while defendants spend a significant amount of time addressing
whether summary disposition was appropriate under MCR 2.116(C)(9), plaintiff’s motion was
brought pursuant to both MCR 2.116(C)(9) and (10). Contrary to defendants’ assertion, plaintiff
did not “declare that it was seeking summary disposition under MCR 2.116(C)(9) and that
damages only were to be determined pursuant to MCR 2.116(C)(10),” nor was the MCR
2.116(C)(10) motion “unfiled.” Plaintiff specifically stated in its motion that it was seeking
summary disposition pursuant to both MCR 2.116(C)(9) and (10) “because there is no genuine
issue of material fact other than the amount of damages.” Plaintiff then argued that the
undisputed facts established that defendants guaranteed payment of a loan made by plaintiff, and
defendants were now obligated to comply with the guaranties. In response to the motion,
defendants specifically acknowledged, “[h]ere plaintiff has moved for summary disposition
pursuant to MCR 2.116(C)(10).” And, in ruling on plaintiff’s motion, the trial court referred to
and relied upon documents outside of the pleadings. The motion thus appears to have been
granted pursuant to MCR 2.116(C)(10). The first issue for our consideration, then, is whether
summary disposition was appropriately granted under that subrule.
Plaintiff asserted in its motion for summary disposition that defendants signed personal
guaranties for payment of a loan obtained in the name of a company jointly owned by
defendants, Bayside Mall, LLC. According to plaintiff, Bayside Mall, LLC defaulted on its loan,
thus prompting plaintiff to make an immediate demand to defendants for the outstanding loan
balance pursuant to their guaranties. Plaintiff attached several documents to its motion,
including the loan agreements purportedly signed by defendants as members of Bayside Mall,
LLC, and the guaranties concerning the loan that appears to bear defendants’ individual
signatures. Plaintiff also attached an October 30, 2006 letter it sent to defendant Dilorenzo
detailing that the subject loan was in default and making demand to the guarantors (defendants)
for payment of the loan in full, as well as a printout showing the principal amount that Bayside
Mall LLC had paid on the loan and the outstanding balance. While defendants assert that
plaintiff’s motion should have been denied because the submitted documentation did not contain
an affidavit and was otherwise inadmissible, we find this argument without merit.
First, defendants have not identified any court rule or other authority requiring the
submission of an affidavit in support of a (C)(10) motion. In fact, MCR 2.116(G)(3) provides
that “[a]ffidavits, depositions, admissions or other documentary evidence in support of the
grounds asserted in the motion are required” when the motion is brought pursuant to MCR
2.116(C)(10)(emphasis added). An affidavit, then, is but one of the identified forms of evidence
that may be submitted. Second, the trial court was free to consider the submitted documentation
as long as there was a plausible basis for its admission. MCR 2.116(G)(6) provides:
Affidavits, depositions, admissions, and documentary evidence offered in support
of or in opposition to a motion based on subrule (C)(1)-(7) or (10) shall only be
considered to the extent that the content or substance would be admissible as
evidence to establish or deny the grounds stated in the motion. (emphasis added).
With a proper foundation, the documents would be admissible as records of regularly conducted
activity. See MRE 803(6); Barnard Mfg Co, Inc v Gates Performance Engineering, Inc, 285
Mich App 362, 373-374; 775 NW2d 618 (2009). The trial court properly determined that the
documents were sufficient to support plaintiff’s motion with regard to its breach of contract
claims.
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Moreover, defendants do not challenge the authenticity or truth of the documents.
Attached to defendants’ response to plaintiff’s summary disposition motion is the affidavit of
defendant Dilorenzo, who swore that he and defendant Tinervia executed commercial guaranties
in favor of plaintiff as part of a loan plaintiff executed in favor of Bayside Mall, LLC.
Defendants, then, admitted signing the guaranties and defendants have provided no supportable
argument that the guaranties or copies of the same were not or would not be inadmissible.
Additionally, in its response to plaintiff’s motion for summary disposition, defendants
relied upon the very documentation that they now claim is inadmissible to support their assertion
that summary disposition was inappropriate because the documents were, for example,
ambiguous and contained no default provision. For defendants to now challenge the trial court’s
reliance on documents they themselves directed the court to review in determining the summary
disposition motion is disingenuous. We thus turn our attention to whether, as suggested by
defendants, summary disposition was inappropriate due to the lack of a default provision in the
guaranties and/or ambiguities as to whether the guaranties were collateral to the loan or, instead,
formed suretyships.
The proper interpretation of a contract is a question of law that this Court reviews de
novo. Wilkie v Auto-Owners Ins Co, 469 Mich 41, 47; 664 NW2d 776 (2003). “The
fundamental goal of contract interpretation is to determine and enforce the parties' intent by
reading the agreement as a whole and applying the plain language used by the parties to reach
their agreement.” Dobbelaere v Auto-Owners Ins Co, 275 Mich App 527, 529; 740 NW2d 503
(2007). If contractual language is clear and unambiguous, it reflects the parties’ intent as a
matter of law and courts must interpret and enforce the contract as written. Quality Products &
Concepts Co v Nagel Precision, Inc, 469 Mich 362, 375; 666 NW2d 251 (2003). Michigan
courts honor parties' bargains, and do not rewrite them. McDonald v Farm Bureau Ins Co, 480
Mich 191, 197; 747 NW2d 811 (2008). However, if contractual language is ambiguous, its
meaning is a question of fact for the jury to decide. Klapp v United Ins Group Agency, Inc, 468
Mich 459, 469; 663 NW2d 447 (2003).
With respect to defendants’ claim of a lack of default provision, it is unclear why
defendants appear to believe that such a provision is necessary for the guaranties to be effective.
A guaranty is, after all, “[a]n agreement in which the guarantor agrees to satisfy the debt of
another (the debtor), only if and when the debtor fails to repay . . . [a]n undertaking or promise
that is collateral to primary or principal obligation and that binds guarantor to performance in
event of nonperformance by the principal obligor.” Blacks Law Dictionary (abridged 6th ed). By
its very definition, a guarantor’s obligation is triggered by nonperformance of the principal
debtor. Where, as here, the guarantor was bound to perform in the event that the primary debtor
failed to repay its debt, and the primary debtor did fail to make repayment, the subsequent failure
of performance on the guarantor’s part renders the guarantor in breach of the guaranty contract,
regardless of any specific default provision.
Moreover, the guaranties at issue provide for several waivers by the guarantors
(defendants). Specifically, by signing the guaranties, defendants waived any right to require the
lender (plaintiff) to, among other things: to make any demand or notice of any kind of any
nonpayment on the part of the borrower, “to resort for payment or to proceed directly or at once
against any person, including borrower,” or “to pursue any other remedy within Lender’s
power.” Defendants also waived “any and all rights and defenses arising by reason of. . .(F) any
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defenses given to guarantors at law or in equity other than actual payment and performance of
the indebtedness.” Pursuant to the clear, unambiguous language of the guaranty contracts,
defendants cannot rely on the defense of “lack of a default provision.”
Defendants’ argument that the guaranty contracts may actually be suretyships also fails.
As indicated in Bandit Industries, Inc v Hobbs Intern, Inc, 463 Mich 504, 508; 620 NW2d 531
(2001) while guaranty contracts and suretyships bear some resemblance:
The main distinction between a contract of suretyship and of guaranty,
however, is that while the surety assumes liability as a regular party to the
primary undertaking, the guarantor does not, as his or her liability depends on an
independent collateral agreement by which he or she undertakes to pay the
obligation if the primary payor fails to do so.
Here, the parties undisputedly signed “Commercial Guaranty” agreements separate and distinct
from the promissory note executed by Bayside Mall, LLC and plaintiff. Under the guaranties,
defendants’ liability depends on whether the primary payor fails to pay its own indebtedness to
plaintiff. Defendants were not liable as regular parties to the loan transaction, but promised to
pay Bayside Mall, LLC’s indebtedness to plaintiff only if Bayside Mall, LLC failed to do so.
The unambiguous contract language supports a finding that the contracts are precisely what they
are entitled—guaranties. And, given that plaintiff properly supported its (C)(10) motion with
unambiguous guaranty contracts, and defendants have not contested that they received notice of
Bayside Mall, LLC’s failure to pay under the terms of the promissory note, that they signed the
guaranties at issue, or that they failed to pay for Bayside Mall, LLC’s indebtedness pursuant to
the terms of the guaranties, summary disposition was appropriately granted in plaintiff’s favor.
While defendants also claim that the trial court erred in failing to apply the election of
remedies doctrine, we see no error under the circumstances before us. The purpose behind the
election of remedies doctrine is to prevent one from obtaining a double recovery for a single
injury. Riverview Co-op, Inc v First Nat'l Bank & Trust Co of Michigan, 417 Mich 307, 311312; 337 NW2d 225 (1983). The rule requires “(1) [t]he existence of two or more remedies; (2)
the inconsistency between such remedies; and (3) a choice of one of them.” Id. at 313.
However, a plaintiff may simultaneously pursue all available remedies regardless of legal
consistency, as long as the plaintiff is not awarded a double recovery. Jim-Bob, Inc v Mehling,
178 Mich App 71, 92; 443 NW2d 451 (1989), quoting Walraven v Martin, 123 Mich App 342,
348; 333 NW2d 569 (1983).
Here, plaintiff alleged that Bayside Mall, LLC breached its agreement with plaintiff to
repay a loan. Defendants do not dispute that they received notice of this breach. Plaintiff
thereafter apparently began foreclosure proceedings on real property serving as collateral for the
loan, and also proceeded against defendants for their breach of the guaranty agreements.
Notably, the loan and promissory note in Bayside Mall, LLC’s name is separate and distinct
from the guaranty contracts executed by defendants. Thus, even where plaintiff foreclosed upon
the property, so long as the amounts received from the foreclosure are set off against the total
amount of indebtedness owed by Bayside Mall, LLC, as they were here, there is no double
recovery.
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Moreover, the guaranties specifically provide that guarantor waives “any and all rights
and defenses arising by reason of (A) any “one action” . . .or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against Guarantor, before or
after Lender’s commencement or completion of any foreclosure action. . .. . (F) any defenses
given to guarantors at law or in equity other than actual payment and performance of the
indebtedness.” As specified in the guaranties, defendants also waived any right to require
plaintiff to proceed directly against Bayside Mall, LLC or to exhaust any rights and
responsibilities associated with the collateral securing the loan prior to proceeding against
defendants under the guaranty contracts. Defendants having failed to raise and support any issue
of material fact, the trial court did not err in granting summary disposition in plaintiff’s favor on
its breach of contract claims against defendants.
Defendants next contend that the trial court erred in granting summary disposition in
plaintiff’s favor on the issue of damages. According to defendants, damages are not available
against defendants because when plaintiff sought foreclosure on the property serving as collateral
for the loan, it elected its remedy and the remainder of the contract between plaintiff and Bayside
Mall, LLC was forfeited. Defendants contend that because the plaintiff/Bayside Mall, LLC
contract was forfeited, it is not possible (under Michigan law) to recover anything against the
guarantors of that contract. We disagree.
As previously indicated, because the purpose of the election of remedies doctrine is to
prevent double recovery and there was and is no double recovery here, there is no election of
remedies issue. In addition, the cases relied upon by defendants to support their proposition that
forfeiture of a contract precludes any action against a guarantor of the contract, involve the sale
of land pursuant to land contracts. The sale of land involves statutes and law not applicable to
basic money loans supported by guaranties, as is the case here. For example, in Mazur v Young,
507 F 3d 1013, 1017 (CA 6, 2007), cited by defendants, the court noted, “when a seller of
property seeks redress against a recalcitrant buyer, the seller must make an election of remedies.
The seller can choose to pursue either foreclosure or forfeiture, but not both.” The Mazur court
also cites to MCL 600.5750, which provides, in part, “[A] judgment for possession after
forfeiture of an executory contract for the purchase of premises shall merge and bar any claim for
money payments due or in arrears under the contract at the time of trial.” The court does note
that, “as a general rule, a judgment for possession after forfeiture releases a guarantor from
liability” (Mazur, 506 F 3d at 1018), but not only have defendants failed to establish that a
forfeiture of the loan contract at issue occurred, its reliance on cases that involve a statutory
scheme applicable solely to land sale contracts is misplaced.
Defendants next contend that the trial court’s entry of a judgment in plaintiff’s favor in
the amount of $2,593,577.88, plus costs and interest, was in error given that the judgment was in
an amount in excess of what plaintiff claimed it was owed. In support of this argument,
defendants cite to a pleading purportedly submitted by plaintiff in a separate lawsuit whereby
plaintiff allegedly indicated that the balance due to plaintiff on Bayside Mall, LLC’s debt after
the collateral property was sold was only $584,914.61. Defendants have not provided a copy of
this pleading, nor did they attach a copy of the same to their response to plaintiff’s motion, such
that this bare assertion is unreviewable by this Court.
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Furthermore, in support of its motion for summary disposition as to damages, plaintiff
provided the affidavit of Ronald Wagonis. Mr. Wagonis swore that he was plaintiff’s assistant
vice president and commercial workout loan officer. Mr. Wagonis further swore that he
reviewed plaintiff’s files and records with respect to the instant matter and found that, after
applying the proceeds received from the sale of loan collateral, there remained an unpaid balance
(inclusive of interest and collection costs) of $2,514,025.62. Mr. Wagonis attached a copy of
plaintiff’s note payoff report and a copy of “seller’s final settlement statement” concerning the
sale of the loan collateral property to establish the balance owing. Defendants attached no
contradictory documentation to their response to plaintiff’s motion, and have not done so here.
Instead, defendants contend that the damages remain uncertain due to a lack of
verification of the amounts owing, that the issue of damages is generally a jury issue, and
because a jury question remains as to whether plaintiff acted reasonably in mitigating its
damages, summary disposition was inappropriate as to the amount of damages. Defendants also
contend that the waiver provisions contained in the guaranties, specifically those requiring
defendants to waive the right to a trial by jury and virtually any and all rights or defenses it may
have, essentially allowed plaintiff to disregard Michigan law and were, as such, contrary to
public policy. Because defendants, in signing the guaranties, agreed to waive any and all
defenses and the right to a jury trial, a resolution of whether any of the defenses asserted above
are meritorious necessarily first requires a determination of whether the waivers were, in fact,
contrary to Michigan law.
The guaranties at issue unquestionably contain broad and extensive waiver provisions.
However, the guaranties specify that “[e]xcept as prohibited by applicable law, guarantor waives
any right. . .” To the extent that the waivers would be contrary to law, then, they would be
stricken from the guaranties. Defendants have not, however, supported their contention that the
waivers are violative of law or policy. The bare assertion of a violation, without more, is
insufficient to defeat a summary disposition motion, and this Court will not search for authority
to support or reject a parties’ position. Mudge v Macomb Co, 458 Mich 87, 105; 580 NW2d 845
(1998). Absent any support for an argument otherwise, then, the waivers stand. That being true,
we need not consider defendants’ remaining claims with respect to an error in granting plaintiff’s
motion for summary disposition as to damages.
Touching on them briefly, in any event, we first note that with respect to the alleged
uncertainty of damages, plaintiff submitted an affidavit and records concerning the amount
owing on the loan made to Bayside Mall, LLC in support of its motion for summary disposition
as to damages. Having provided support for its motion, it was then incumbent upon defendants
to, “by affidavits, or as otherwise provided in [MCR 2.116], set forth specific facts showing that
there is a genuine issue for trial.” MCR 2.116(G)(4). Defendants have not submitted any
documentary evidence to contradict that submitted by plaintiff. We also note that while the issue
of damages is generally a jury question, there is nothing precluding a party from waiving the
right to a jury trial, as defendants did here when they signed the guaranties at issue. Finally,
concerning defendants’ claim regarding plaintiff’s mitigation of damages, defendants have failed
to present any documentary evidence suggesting that the amount received for the sale of the
collateral property was improper. Moreover, the sale occurred as a result of an order entered in a
separate circuit court case before a different judge. To the extent that defendants challenge the
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propriety of or the amount received from the sale, that issue would properly be addressed before
the court having issued the sale order.
Affirmed.
/s/ Patrick M. Meter
/s/ Deborah A. Servitto
/s/ Jane M. Beckering
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