Huntington Nat'l Bank v. Daniel J. Aronoff Living Trust

• Court: Court of Appeal of Michigan
• Writing for the Court: M.J. KELLY, J.
• Citation: Huntington Nat'l Bank v. Daniel J. Aronoff Living Trust, 853 N.W.2d 481, 305 Mich.App. 496 (Mich. App. 2014)
• Decision Date: 27 March 2014
• Docket Number: Docket No. 309761.
• Parties: HUNTINGTON NATIONAL BANK v. DANIEL J. ARONOFF LIVING TRUST.

305 Mich.App. 496

853 N.W.2d 481

HUNTINGTON NATIONAL BANK

v.DANIEL J. ARONOFF LIVING TRUST.

Docket No. 309761.

Court of Appeals of Michigan.

Submitted Jan. 8, 2014, at Detroit.

Decided March 27, 2014.

Approved for publication June 3, 2014, at 9:00 a.m.

Plunkett Cooney, Bloomfield Hills (by Jeffrey C. Gerish, Douglas C. Bernstein, and Kenneth M. Mattson ), for plaintiff.

Allan Falk, PC, Okemos (by Allan Falk ), for defendants.

Before: STEPHENS, P.J., and M.J. KELLY and RIORDAN, JJ.

Opinion

M.J. KELLY, J.

In this suit to enforce several notes, letters of credit, and guaranties, defendants Daniel J. Aronoff; Arnold Y. Aronoff; their related trusts, the Daniel J. Aronoff Living Trust and the Arnold Aronoff Revocable Trust; and their business entities, Eagle Park Associates Limited Partnership, Tampa Associates Limited Partnership, The Star Group, Inc., Edison Farms, Inc., and Strategic Equities, Inc.,¹ appeal by right the trial court's judgment granting plaintiff Huntington National Bank's motion for summary disposition. On appeal, Daniel Aronoff, Arnold Aronoff, and the Aronoff entities argue that the trial court erred by granting Huntington's motion for summary disposition and, in the alternative, erred by failing to explicitly include a provision for adjusting interest on the unpaid debt in the judgment. Because we conclude there were no errors warranting relief, we affirm.

I. BASIC FACTS

Daniel and Arnold Aronoff own and operate various businesses. They financed their business activities in part through loans from Huntington. Eagle Park obtained a loan from Huntington for more than $14 million in December 2001, which Arnold Aronoff, his trust, Tampa Associates, and Strategic Equities guaranteed. Tampa Associates, under its former name, obtained a loan of more than $7 million from Huntington in December 2003. Arnold Aronoff, his trust, Eagle Park, and Strategic Equities guaranteed that loan. Daniel and Arnold Aronoff and their trusts took out a loan for more than $13 million from Huntington in February 2009. Tampa Associates, Eagle Park, The Star Group, Glades Enterprises, and Edison Farms each guaranteed that loan. Arnold Aronoff and Tampa Associates secured a standby letter of credit from Huntington in favor of the City of Novi. The City of Novi drew on the letters of credit in January 2010 and Arnold Aronoff and Tampa Associates became liable to Huntington for the outstanding balance.

After defaults on the notes and letters of credit, Huntington demanded payment from the obligors and guarantors of each note and letter of credit, but was unable to obtain full payment on the debts. In May 2010, Huntington sued Daniel Aronoff, Arnold Aronoff, and the Aronoff entities. By May 2011, it had amended its complaint to include all the outstanding notes and letters of credit involved. In its second amended complaint, Huntington asked the trial court to enter a judgment of more than $27 million each against Arnold Aronoff, his trust, Eagle Park, Tampa Associates, and Strategic Equities. It also asked for a judgment of almost $15 million each against Daniel Aronoff, his trust, the Star Group, Glades Enterprises, and Edison Farms. Huntington also asked the trial court to award it interest, costs, and attorney fees.

In answer to Huntington's claims, defendants alleged numerous affirmative defenses. In relevant part, they alleged that Huntington's claims were barred because it was impossible to perform after the advent of “unprecedented and unforeseen economic conditions” affecting business in Michigan and Florida. They also alleged that Huntington “reneged” on a $5 million loan commitment that it made to them in October 2007. They explained that Huntington's failure to meet its commitment placed them in a “distressed economic position and near insolvency.” Had Huntington fulfilled the loan commitment, they further stated, the debt would have been significantly reduced. For that reason, they asked the trial court to offset Huntington's claims by the amount that they would have been able to repay had Huntington not “breach[ed]” its obligations under the October 2007 loan commitment. They also claimed that Huntington's actions with regard to the October 2007 loan commitment amounted to fraud or misrepresentation, which negated their own liability under the notes, letters of credit, and guaranties.

In June 2011, Huntington moved for summary disposition under MCR 2.116(C)(9) and (10). Huntington argued that it was undisputed that defendants executed the notes, letters of credit, and guaranties at issue and failed to make the required payments under those agreements. Huntington also argued that the affirmative defenses that defendants alleged in their answer could not serve as a bar to Huntington's claims. It noted that the loan commitment allegedly made in October 2007 predated one loan and predated the amendments to others. For that reason, whatever effect that loan commitment might have had, it was superseded by subsequent agreements. Huntington also argued that MCL 566.132(2) barred any defense arising from the alleged October 2007 loan commitment because the loan commitment was not in writing and signed by someone authorized to act on Huntington's behalf. Finally, Huntington argued that a downturn in economic conditions did not amount to a defense to the required payments. Because the undisputed evidence showed that defendants were liable for the payments required under the notes, letters of credit, and guaranties, and had no valid defense to the claims, Huntington asked the trial court to grant summary disposition and enter judgment in its favor.

In response to Huntington's motion, defendants did not directly contest the validity and amounts due under the notes, letters of credit, and guaranties. Instead, they presented evidence and argued that their inability to pay under those agreements arose from Huntington's wrongful conduct.

They presented evidence that Daniel Aronoff began to negotiate a $5 million line of credit with Huntington in June 2007. The line of credit was to be secured by the proceeds from financial institutions in Florida that Daniel and Arnold Aronoff were in the process of acquiring. Huntington purportedly approved the line of credit in a letter dated July 2007 and the parties were to close on the line of credit by the end of October 2007. However, Huntington failed to close the loan. Despite reassurances that the closing would occur and that the loan documents were being drafted, Huntington still had not closed on the line of credit by November 2007. Finally, in December 2007, Huntington informed the Aronoffs that it would not fund the loan.

Defendants claim that Huntington's refusal to close the loan led to financial distress; they were even unable to meet their January 2008 payroll. They stated that Huntington then used their financial distress to compel them to accept a modified loan deal. The new loan was for $4.3 million rather than $5 million and required them to pledge their remaining assets as security for the loan. The parties agreed to the new loan in February 2008. Defendants presented evidence that, because they pledged the additional property as collateral for the new loan, they were unable to take advantage of other loan and sale offers.

In their answer to Huntington's motion for summary disposition, defendants argued that Huntington's refusal to meet the $5 million loan agreement in October 2007 was wrongful and proximately caused significant losses. They maintained that MCL 566.132(2) did not apply because that statute applied only to “actions” and not defenses. In any event, they explained, the documents and e-mails circulated before the proposed closing on the original commitment were sufficient to satisfy MCL 566.132(2). Because their “lender liability defense” would “fully defeat” Huntington's right to recover under the notes, letters of credit, and guaranties, they asked the trial court to deny Huntington's motion for summary disposition. Finally, in the alternative, defendants argued that summary disposition was premature because the parties had not yet concluded discovery.

In November 2011, the trial court issued its opinion and order granting Huntington's motion. The trial court first noted that defendants did not “dispute the existence of the loans, the terms, the payments, or that they are in default.” Instead, the court explained, they argued that they would not have defaulted but for Huntington's failure to abide by its promise to loan them an additional $5 million in October 2007. The trial court, however, determined that MCL 566.132(2) barred any defense premised on an attempt to enforce Huntington's oral promise to loan them money on terms other than those that the parties ultimately reduced to writing in February 2008. The trial court examined the evidence and concluded that, before February 2008, Huntington had not obligated itself to make the disputed loan in a properly signed promise or commitment:

To be sure, these documents suggest that the parties negotiated a $5 million loan in 2007, and that [Huntington's] representatives orally committed to closing the loan. The documents do not, however, constitute a written “promise or commitment” sufficient to satisfy the statute of frauds. The July 18 letter, for example, explicitly notes that [Huntington] is only “prepared to discuss a possible extension of credit for your operation,” and that “the terms outlined above are not all-inclusive, but merely reflect our discussions to date, are subject to change and will be supplemented by our standard loan requirements and documentation.” Thus, that document does not constitute a “promise or commitment” by [Huntington] to lend money, as it suggests only that [Huntington] was willing to consider such a loan, but had not yet committed to it. Nor could the November 29 “closing checklist” be considered a “promise or commitment” by [Huntington] to lend money, as it does not even describe the

...