Bank v. Mpc Investors LLC
| Decision Date | 09 April 2010 |
| Docket Number | Case No. 09-11249. |
| Citation | 705 F.Supp.2d 728 |
| Parties | WELLS FARGO BANK, NA, Plaintiff,v.MPC INVESTORS, LLC, Dominic Moceri, Gerald Carnago, Francis V. Moceri, Mariano Moceri, Peter K. Burton, Robert M. Katzman, Laurence R. Goss, Steven Bentley, Salvatore J. Palazzolo, Sebastian D. Palazzolo, Gregory A. Carnago, and Dominic J. Moceri, Defendants,andGregory A. Carnago and Gerald Carnago, Cross-Plaintiffs,v.Laurence R. Goss, Steven Bentley, Salvatore J. Palazzolo, Sebastian D. Palazzolo, Peter K. Burton, and Robert M. Katzman, Cross-Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
COPYRIGHT MATERIAL OMITTED
Brian M. Moore, Dykema Gossett, Detroit, MI, Joseph H. Hickey, Dykema Gossett, Bloomfield Hills, MI, for Plaintiff.
Dean R. Nelson, Jr., Charles J. Taunt & Associates, PLLC, Birmingham, MI, Gregory D. Hanley, Timothy O. McMahon, Kickham, Hanley P.C., Royal Oak, MI, David E. Schlackman, Carson Fischer, Howard Borin, Schafer & Weiner, Bloomfield Hills, MI, for Defendants.
The plaintiff bank filed suit in this case against a borrower and several guarantors to recover the balance of money due on a defaulted $4 million loan. The Court granted a default judgment against the borrower, MPC Investors, LLC. The plaintiff settled with one of the guarantors and filed a motion seeking summary judgment against the rest of them. The Court heard oral argument in open court on March 16, 2010, after which it gave the parties time to file supplemental affidavits. The matter is now ready for decision. The Court finds that there are no material facts in dispute, and the plaintiff is entitled to judgment as a matter of law in the amounts requested against the general guarantors and the remaining limited guarantor. The defendants have filed cross-claims against each other, which remain pending. The Court also finds, however, that there is no just reason for delaying entry of a final judgment against the defendants in favor of the plaintiff. The plaintiff's motion for summary judgment, therefore, will be granted.
On June 28, 2006, the plaintiff extended a $4 million loan (“the Loan”) to MPC Investors, Inc. (“MPC”), a limited liability company comprised of four other limited liability companies: Moceri Stoney Creek, LLC; B/K/G Investors, LLC; Palazzolo Bros of Oakland, LLC; and Carnago Investments, LLC. Each of these companies is in turn comprised of other limited liability companies, individual trust funds, and individuals. The Loan was jointly and severally guaranteed by several general guarantors and two limited guarantors. The general guarantors are:
See Compl., Ex. 3, Repayment Guaranty. The general guarantors “guarantee[d] and promise[d] to pay to Lender or order ... the principal sum of FOUR MILLION AND NO/100THS DOLLARS ($4,000,000.00) or so much thereof as may be due and owing under the Note or any of the other Loan Documents together with interest and any other sums payable....” Compl., Ex. 3, Repayment Guaranty, ¶ 1 (emphasis in original); see also id. ¶ 8 (). As part of the agreement, the general guarantors also agreed to waive all defenses to enforcement that the borrower might have.
The Loan was also guaranteed by two limited guarantors:
Compl., Ex. 4, Limited Repayment Guaranty. The language of the general and limited guaranty documents is identical, save for the addition of paragraph 16 in the Limited Repayment Guaranty, which states:
LIMITATION. Notwithstanding anything to the contrary set forth herein, the total obligation of each of the undersigned under this Guaranty shall not exceed the sum of (i) fifty percent (50%) of the amount of the principal amount of the Loan (as determined by Lender in writing but not sooner than the date the indebtedness becomes due and payable, whether by acceleration or otherwise [the “Determination Date”] ) plus (ii) accrued interest on the unpaid limited principal amount described in the preceding clause (i) from the Determination Date at the highest default rate set forth in the Note to the date of payment of the principal amount described in the preceding clause (i) that is paid to Lender by such Guarantor plus (iii) all expenses (including, without limitation, reasonable attorneys' fees) which may be incurred or paid by Lender (until the date of payment to Lender) in preserving, protecting or enforcing its rights or remedies in connection with or collecting against the Guarantor that is making the payments required in the preceding clauses (i) and (ii). In the event that the applicable Guarantor does not pay the entire amount owing to Lender under clause (i) in a lump sum then interest will continue to accrue on the unpaid principal amount for which the Guarantor is liable at the default rate set forth in the Note until the date of payment of that amount in full. Likewise, to the extent that the Lender continues to incur costs and expenses in preserving, protecting or enforcing its rights or remedies in connection with collecting against such Guarantor then that Guarantor will continue to be liable to Lender for those costs and expenses that Lender incurs.
Compl., Ex. 4, Limited Repayment Guaranty, ¶ 16.
The Loan Agreement was modified twice. The original maturity date of the loan was November 1, 2006. The first modification extended the maturity date to July 1, 2007. The second modification, which took place on August 1, 2007, extended the maturity date to May 1, 2010. As part of this modification, the following requirement was added: “commencing August 1, 2007 and each February 1 and August 1 thereafter during the term of the Loan, [MPC] will pay Lender the sum of FIVE HUNDRED THOUSAND AND NO/100THS DOLLARS ($500,000.00) as mandatory, permanent principal reduction payments.” Compl. ¶ 35 & Ex. 6, Modified Loan Agreement, ¶ 3.1 modifying ¶ 2.6 (emphasis in original). The parties also executed a Restated Promissory Note including these terms. The Promissory Note contained the following language concerning interest amounts:
[The borrower promises to pay the lender the principal amount of the loan] with interest thereon (based on a 360-day year and charged on the basis of actual days elapsed) at the rate of Zero Percent (0%) per annum in excess of Lender's “Prime Rate” in effect from time to time. As used herein, the term “Prime Rate” means a base rate of interest which Lender establishes from time to time and which serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto. Any change in the rate of interest on this note (“Note”) due to a change in the Prime Rate shall become effective on the date each change in the Prime Rate is announced within Lender.
Compl., Ex. 7, Restated Promissory Note, ¶ 1. The agreement also contains the following language increasing the interest rate after the lender accelerates payment on the loan:
From and after the Maturity Date, or such earlier date as all sums owing on this Note become due and payable by acceleration or otherwise, all sums owing on this Note shall bear interest until paid in full (based on a 360-day year and charged on the basis of actual days elapsed) at a rate equal to 5% per annum in excess of the interest rate otherwise accruing under this Note.
It is undisputed that MPC made the required semi-annual payments on August 1, 2007, February 1, 2008, and August 1, 2008. However, MPC failed to make the $500,000 payment due on February 1, 2009 under the modified loan agreement. The plaintiff declared a default under the terms of the loan agreement and sent a notice of default, acceleration, and a demand for payment to MPC, copied to all guarantors on March 19, 2010. When MPC failed to cure the default by March 30, 2009, the plaintiff sent a demand for payment to all of the guarantors.
When no payments were forthcoming, the plaintiff filed a complaint on April 3, 2009 and an amended complaint on April 7, 2009. The amended complaint alleges breach of contract against MPC and breach of guaranty against the general and limited guarantors. Thereafter, defendants Gregory and Gerald Carnago filed a crossclaim for contribution against Laurence Goss, Steven Bentley, Salvatore Palazzolo, Sebastian Palazzolo, Peter Burton, and Robert Katzman. On August 14, 2009, the Court entered a default judgment in favor of the plaintiff against defendant MPC in the amount of $2,584,534.53, inclusive of all principal, interest, and late charges as of July 31, 2009 but not including post-judgment interest and attorney's fees. Defendant Dominic S. Moceri, a limited guarantor, settled with the plaintiff and paid approximately $1,093,424.50 on November 17, 2009.
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