PNC Bank, Nat'l Ass'n v. Goyette Mech. Co.
| Decision Date | 22 October 2015 |
| Docket Number | Case Number 14-10527 |
| Parties | PNC Bank, National Association, Plaintiff, v. Goyette Mechanical Company, Inc., Goyette-West, Inc., Dominic Goyette, and Dominic T. Goyette Trust Dated August 26, 1998, as Amended, Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
Joseph M. Ammar, Plunkett Cooney, Kalamazoo, MI, Matthew J. Boettcher, Patrick C. Lannen, Plunkett & Cooney, Bloomfield Hills, MI, for Plaintiff.
Alan D. Penskar, Harris, Goyette, Paul J. Goyette, Law Offices of Harris, Goyette & Winterfield, P.C., Flint, MI Latoya N. McBean, Mark W. Peyser, Howard and Howard, Royal Oak, MI, Chris M. Parfitt, Timothy P. Dugan, Deneweth, Dugan, Troy, MI, Marc A. Goldman, Marc A. Goldman Assoc., Farmington Hills, MI, for Defendants.
PNC Bank commenced this lawsuit against joint borrowers Goyette Mechanical Company, Inc. ("Goyette Mechanical"), E.L. Mechanical, Inc. ("ELM"), and Goyette-West, Inc. seeking damages and appointment of a receiver, alleging that the defendants breached the terms of a line of credit note and restated term note. Presently before the Court is the Bank's motion for summary judgment and ELM's motion for leave to amend its affirmative defenses. The Goyette defendants do not contest the entry of summary judgment except as to the Bank's request for an award of attorney fees and costs for its defense of a lawsuit filed against the Bank by ELM's principal, Gerald Peguese. ELM has filed a response arguing that the loan documents are forged and Gerald Peguese signed the Cash Collateral Agreement under duress. The Court heard oral argument on the motions on August 12, 2015.
ELM did not raise its forgery claim in its affirmative defenses. However, it need not do so, because proper execution of the loan documents is an element of the Bank's claims for which it carries the burden of proof. Therefore, it is not necessary for ELM to amend its affirmative defenses, and that motion will be denied. Nonetheless, there is no dispute of material fact that the defendants are liable to the Bank for the loan amounts, and the bank is entitled to summary judgment.
According to the pleadings and the discovery materials filed with the motion papers, Goyette Mechanical Company, Inc. is a Michigan corporation that performs mechanical contracting work, including plumbing, heating, HVAC, and electrical installations. Dominic Goyette and two other shareholders—Cherie Parks and Paul Goyette—own and operate Goyette Mechanical. ELM is a Michigan corporation and minority owned company. Gerald Peguese, a non-party, initially owned 55 percent of ELM; on April 29, 2013, he became the sole shareholder of the company. Peguese also served as the president of ELM until it went out of business.
In 2009, Goyette Mechanical joined with ELM in a partnership to expand Goyette Mechanical's minority contracting work in Detroit. Under the partnership, Goyette Mechanical provided capital, equipment, tools, vehicles, employees, and administrative and accounting support to ELM. Goyette Mechanical also collected all of ELM's receivables, managed cash, and paid ELM's obligations, including payroll, subcontractors, suppliers, and loan obligations.
The partnership obtained its funding from plaintiff PNC Bank, which extended a $6 million line of credit and a $451,107 term loan to defendants ELM, Goyette Mechanical Company, Inc., and Goyette-West, Inc. as joint borrowers. The borrowers each executed a security agreement in favor of the Bank, dated June 13, 2012, to secure the repayment of the funds and all indebtedness. The collateral included all personal property of each borrower, including accounts, investment property, deposit accounts, instruments, documents, chattel paper, inventory, goods, equipment, fixtures, general intangibles, cash, and proceeds of all property. The Bank's security interest in the collateral was perfected when financing statements were filed with the Michigan Secretary of State on July 13, 2011 and September 13, 2012. Dominic Goyette signed the loan, credit, and security documents on behalf of Goyette Mechanical and Goyette-West; Gerald Peguese signed them on behalf of ELM.
Additionally, Dominic Goyette personally guaranteed the payment of all loans, advances and liabilities that Goyette Mechanical and ELM owed the Bank up to $3.5 million. Additionally, the Dominic T. Goyette Trust Dated August 26, 1998 ("the Trust") executed a guarantee without financial limitation. The borrowers also executed various amendments to the loan documents, including a waiver and amendment to loan documents dated September 13, 2011; a second amendment to loan documents dated February 29, 2012; a waiver and third amendment to loan documents dated June 13, 2012; and a waiver and fourth amendment to loan documents dated June 21, 2013. Dominic Goyette again signed the amendments on behalf of Goyette Mechanical and Goyette-West; Gerald Peguese again signed the amendments on behalf of ELM.
The loan documents required the borrowers to (1) maintain at all times a minimum Tangible Net Worth of $3.2 million beginning with the period ending September 30, 2011; and (2) maintain at all times a ratio of funded debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) of less than 3.5:1 beginning with the period ending December 31, 2011. Although the borrowers appear to have met these requirements for a few years, the relationship between ELM and Goyette Mechanical deteriorated in 2013 and, by September 30, 2013, the borrowers fell out of formula and thereby defaulted under their loan agreement with the Bank. Soon thereafter the Bank sent the borrowers a notice of default and accelerated the indebtedness.
On February 4, 2014, the Bank filed a complaint in this Court against ELM, Goyette Mechanical, Goyette-West, Inc., Dominic Goyette, and the Trust for breach of the various notes and guarantees. The Bank also included a count of claim and delivery to take the collateral, and sought the appointment of a receiver.
The Court initially denied the Bank's motion to appoint a receiver and instead issued a preliminary injunction that was intended to restore the relationship of the borrowers to status quo ante —that is, before the falling out of Peguese and the Goyettes—and make the Bank secure. The preliminary injunction required the borrowers to, among other things, abide by the terms and conditions of a cash collateral agreement that had been signed on February 17, 2014, which ratified all of the loan documents, confirmed that the borrowers were in default under the terms of those documents, waived any defenses or set-offs, and renewed the guarantee and security agreements described above.
The preliminary injunction failed in its purpose. Goyette Mechanical accused ELM of misappropriating profits, failing to provide a complete accounting, and refusing to deposit funds into the cash collateral account in violation of the Court's order. ELM, in turn, accused Goyette Mechanical of using the authority of the injunction to cut off all funding for ELM's payroll and refusing to approve funding of the remaining work on a project with the Chrysler Jefferson North Assembly Plant ("JNAP") unless ELM agreed to disburse $650,000 to PNC Bank. And the Bank reported that while Goyette Mechanical and ELM bickered, their joint business operations appear to have ground to a halt and the Bank has not been paid.
On April 25, 2014, the Court appointed Russell Long as Receiver of the defendant's businesses: ELM, Goyette Mechanical, and Goyette-West. Since that time, the Receiver has been marshaling the assets of the receivership entities, completing outstanding projects, collecting revenue, and paying creditors. Nevertheless, according to the Bank, as of May 12, 2015, the receivership entities owed a total of $3,862,330.11 under the Line of Credit Note ($3,858,390.64 in principal, $200 in late fees, and $3,739.47 in accrued and unpaid interest) and $286,169.90 under the Restated Term Note ($285,701.42 in principal and $468.48 in accrued and unpaid interest). The defendants do not dispute those facts. The Bank also says it has incurred $44,795.67 in consultant and field examination fees, attorney's fees in the amount of $210,148, and other legal costs in the amount of $1,211.01. The Bank argues in its motion that it is entitled to a judgment against all the defendants as a matter of law.
The Bank argues that the plain terms of the loan documents and the defendants' undisputed breach of those agreements make clear that it is entitled to summary judgment against the borrowers. It contends that the borrowers have defaulted under the notes and it is entitled to full and immediate repayment of all sums due and owing under the Line of Credit Note and the Restated Term Note. The Bank also argues that it is likewise entitled to full and immediate repayment under the Guaranties. It contends that both guarantor defendants also agreed to reimburse it for its costs and attorney fees incurred in the enforcement of the notes. Finally, the Bank contends that it is entitled to a judgment of possession and delivery of all remaining collateral identified in the loan documents.
The Goyette defendants do not contest the entry of summary judgment on the grounds the Bank asserts, with one exception. They dispute that they are responsible for the attorney's fees and costs the Bank incurred in its defense of the lawsuit known as Peguese v. PNC Bank and Dominic Goyette , originally filed in this Court (docket no. 15-10475), dismissed on May 6, 2015, and re-filed in the Wayne County, Michigan circuit court on May 7, 2015 (docket no. 15-006100-CB). The Goyette defendants do not read the loan and guarantee documents as creating a responsibility on their part for those...
To continue reading
Request your trial
- Warren v. Fed. Reserve Bank of Chi. & Nancy Brzezinski
- Kelly Servs., Inc. v. Creative Harbor, LLC
- PNC Bank Nat'Lass'N v. MB Wholesale, Inc.
-
Kelly Servs., Inc. v. Creative Harbor, LLC, 16-1200
...court granted Kelly Services' cross-motion for summary judgment, voiding the Applications in their entirety. Kelly Servs. II, 140 F. Supp. 3d at 623. The district court concluded that there was no genuine issue of material fact that Creative Harbor lacked a bona fide intent to use the Mark ......