Mercurio v. Huntington Nat'l Bank
| Docket Number | 361855 |
| Decision Date | 03 August 2023 |
| Parties | ALISHA MERCURIO, Plaintiff-Appellant, v. HUNTINGTON NATIONAL BANK and DANIEL J. LEFEVRE, Defendants-Appellees, and JENNIFER R. GRATZ-PIERSON, JENNIFER R. GRATZ-PIERSON TRUST, PIERSON GRATZ TRUST, SCOTT BREAZEALE, and JOE NADAR, Defendants. |
| Court | Court of Appeal of Michigan — District of US |
Oakland Circuit Court LC No. 2021-187510-CB
Before: RIORDAN, P.J., and MARKEY and YATES, JJ.
In this action alleging a fraudulently obtained personal guaranty and investment, plaintiff, Alisha Mercurio, appeals by right the trial court's order granting summary disposition in favor of defendants, Huntington National Bank (the bank) and its Vice-President of Special Assets Daniel J. LeFevre. Pursuant to MCR 2.116(C)(8), the trial court summarily dismissed plaintiff's claims of silent fraud, civil conspiracy, and respondeat superior, along with her requests for declaratory relief.[1] We affirm.
Because this case implicates MCR 2.116(C)(8), which provides for summary disposition when a party "has failed to state a claim on which relief can be granted[,]" our focus is on the allegations in plaintiff's second amended complaint (the complaint). For purposes of MCR 2.116(C)(8), the allegations in the complaint must be accepted as true. Esurance Prop & Cas Ins Co v Mich. Assigned Claims Plan, 507 Mich. 498, 508; 968 N.W.2d 482 (2021). Accordingly, although the following discussion of events is framed in a factual fashion, at this stage of the litigation we are solely addressing allegations made by plaintiff in the complaint.
In 2017, defendants, Jennifer Gratz-Pierson, Scott Breazeale and Joe Nader, formed Hardcore Meals, LLC, a catering business, and a related entity, HCMeals Properties, LLC, which held certain real property for the catering business. Later in 2017, the bank loaned HCMeals $625,000 that was secured by a mortgage on the real property, and the bank subsequently loaned $50,000 to Hardcore Meals in 2018. The companies were insolvent in 2018, 2019, and 2020, and they were never profitable. In 2019, the companies were not paying their debts, and late charges were assessed by the bank throughout 2019 with respect to the larger loan. The companies did not pay their real estate taxes for 2017, 2018, and 2019. In September 2019, the bank sent HCMeals a notice of default, which was signed by LeFevre. HCMeals failed to make its monthly loan payments for October, November, and December 2019. In October 2019, HCMeals's credit was downgraded by the bank, and the bank designated the loan to HCMeals as "troubled debt restructuring." Accordingly, the companies were in dire economic straits by the end of 2019 and going into 2020.
In the fall of 2019, Gratz-Pierson asked plaintiff to invest in the companies. Gratz-Pierson advised plaintiff, who had been her good friend since the sixth grade, that the companies were "in great shape" and "growing rapidly." Although no formal agreement was executed, Gratz-Pierson and plaintiff negotiated terms for plaintiff's investment in the companies, including granting plaintiff a 31% ownership interest in the companies in exchange for an $80,000 investment and an agreement to take on 50% of the companies' outstanding debt. On request of HCMeals, the bank in December 2019 showed a willingness to temporarily defer or forbear the missed fall 2019 payments under a "Change of Terms Agreement" (COT agreement), but only if the new investor, plaintiff, executed a personal guaranty. The companies would also have to resume making loan payments on January 5, 2020. In early January 2020, LeFevre and Gratz-Pierson worked out the arrangements regarding the COT agreement, which Gratz-Pierson executed on behalf of the companies and LeFevre signed on behalf of the bank. The COT agreement had a preprinted date of January 8, 2020. Plaintiff alleged that Gratz-Pierson executed the COT agreement on or about January 8, 2020.
As of January 15, 2020, the required January loan payment of $24,370 was past due, and the companies had no money in their bank accounts. On January 16, 2020, plaintiff met LeFevre at a Farmington Hills Starbucks where they "discussed the companies" and plaintiff's investment, and "at which time [LeFevre] spoke very highly about the Companies and how talented Jennifer, Scott and Joe were." At that time, plaintiff signed a personal commercial guaranty with respect to the loans.[2] We note that the guaranty had a preprinted date of January 8, 2020, which was the same date that was on the COT agreement. On January 23, 2020, plaintiff deposited $73,659.36 into Hardcore Meals's bank account and discovered that the account was in the negative.[3] This was the first indication to plaintiff that the companies were in financial trouble.
In an unsolicited e-mail sent by LeFevre to plaintiff on January 27, 2020, there were attachments showing that in 2019 the companies' credit had been downgraded, that the personal guaranty had been required because of the credit issues, and that the January 2020 payment was past due. According to plaintiff, only after she had executed the personal guaranty and made her investment did she learn of the 2019 loan late fees, the companies' failures in general to pay debts such as three years of real estate taxes, the fall 2019 non-payment of loans over a three-month span, the September 2019 loan default, the three years of insolvency status relative to the companies, the downgrade in credit status, the COT agreement, the failure to make the January 2020 payment, and the overall collusion to obtain her money and guaranty. The gist of plaintiff's position was that defendants, including and especially Gratz-Pierson and LeFevre, wrongfully concealed and failed to disclose the true financial status and circumstances of the companies despite numerous communications and interactions in which the opportunity existed to share accurate information with plaintiff.
Plaintiff then commenced the instant litigation. In her complaint, plaintiff sought declaratory relief in Count I. She requested that the trial court declare the personal guaranty unenforceable. In support of the request, plaintiff alleged that there was a lack of legally-sufficient consideration in exchange for her guaranty on loans that were already in default. Plaintiff additionally contended that the guaranty was unenforceable because it was procedurally and substantively unconscionable. She asserted that the actions of the bank and LeFevre constituted unconscionable business practices under MCL 440.2302 and the common law. Count II of the complaint alleged a claim of fraud-in-the-inducement against Gratz-Pierson. In Count III, plaintiff alleged a claim of silent fraud/fraudulent concealment against LeFevre for failing to disclose the true state of the companies' financial affairs and all the circumstances and events that demonstrated that the companies had essentially collapsed. Plaintiff maintained that LeFevre had a legal, contractual, and equitable duty to disclose the information. Plaintiff further alleged that 13 CFR 120.140(f) was applicable and imposed a duty on LeFevre to act with integrity and honesty, considering that the loans were guaranteed by the United States Small Business Administration (SBA). Plaintiff additionally relied on the law of surety, as reflected in Restatements, to establish a duty on LeFevre's part to disclose the companies' dire financial straits.
In Count IV of the complaint, plaintiff again sought declaratory relief, requesting the trial court to declare that the bank and LeFevre owed and breached a legal duty to plaintiff under 13 CFR 120.140(f), which prohibited them from "[e]ngag[ing] in conduct reflecting a lack of business integrity or honesty." Count V of the complaint alleged a claim of silent fraud/fraudulent concealment against the non-bank defendants. In Count VI of the complaint, plaintiff alleged a claim of civil conspiracy against all defendants. Plaintiff asserted that "[d]efendants illegally, maliciously, and wrongfully conspired with one another with the intent to and for the illegal purpose of defrauding [plaintiff] into signing the [g]uaranty and investing money in the [c]ompanies for the benefit of the [d]efendants." In Count VII, plaintiff alleged a claim of vicarious liability/respondeat superior, contending that the bank was liable for the wrongful acts committed by LeFevre. Finally, in Count VIII of the complaint, plaintiff alleged that the non-bank defendants violated the Michigan Limited Liability Company Act, MCL 450.4101 et seq.
Subsequently, the bank and LeFevre (hereafter "defendants") moved for summary disposition under MCR 2.116(C)(8) with respect to the claims pertaining to them. Plaintiff responded to the motion and also requested that judgment be entered in her favor under MCR 2.116(I)(2). Defendants filed a reply brief. We shall discuss the parties' arguments in the analysis section of this opinion to the extent that they are relevant in resolving this appeal. The trial court dispensed with oral argument, and it issued an order granting defendants' motion for summary disposition under MCR 2.116(C)(8).
With respect to Count I and plaintiff's request that the trial court declare the personal guaranty unenforceable based on lack of consideration and unconscionability, the trial court ruled that plaintiff failed to state a claim because her injuries had already occurred requiring no guidance relative to future conduct. Therefore, according to the court, there was no "actual controversy" as necessary to invoke a claim for declaratory relief under MCR 2.605. The trial court reached the same exact conclusion in regard to Count IV in which plaintiff sought a declaration that the bank and LeFevre...
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