Greenville Lafayette, LLC v. Elgin State Bank
296 Mich. App. 284
| Mich. Ct. App. | 2012Background
- Plaintiff appeals the trial court’s dismissal of its complaint seeking an injunction against foreclosure by advertisement.
- Defendant sought to foreclose on plaintiff’s Montcalm County property after default on a June 2007 loan secured by mortgage and guaranties.
- Guaranties of $300,000 each by Avi Banker and Ahron Shulman were separate obligations but tied to the mortgage debt.
- Plaintiff filed suit Oct 20, 2011 to enjoin foreclosure and obtain a declaratory judgment under MCL 600.3204(1).
- Defendant moved for summary disposition under MCR 2.116(C)(8); trial court held foreclose-by-advertisement permitted despite pending guarantor action.
- This Court reviews de novo, focusing on statutory interpretation and contract terms to determine if the guaranties are part of the indebtedness secured by the mortgage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether guaranties are part of the mortgage debt | Leslie distinguishes guaranties as separate debt | Guaranties are separate from the mortgage debt | Yes; guaranties are incorporated into indebtedness under the mortgage |
| Effect of including guaranties on the one-action rule | Inclusion violates the one-action rule | Leslie permits simultaneous actions | Foreclosure by advertisement invalid under MCL 600.3204(1)(b) |
| Application of Leslie to the present mortgage | Leslie does not apply since indebtedness includes guaranties | Leslie controls; separate debt if guaranties not included | Leslie not controlling; language includes guaranties in indebtedness |
| Statutory interpretation of MCL 600.3204(1)(b) | Text requires not suing for debt to permit sale | Statute allows pending guarantor actions to coexist | Plain language bar to foreclosure by advertisement when debt is being pursued |
Key Cases Cited
- United States v. Leslie, 421 F.2d 763 (6th Cir. 1970) (guaranty considered separate from mortgage debt; no bar to foreclosure)
- Mazur v. Young, 507 F.3d 1013 (6th Cir. 2007) (guaranty separate from mortgage; ability to pursue guaranty and foreclosure)
- Church & Church, Inc. v. A-1 Carpentry, 281 Mich. App. 330 (2008) (foreclosure & guaranty actions election of remedies; one debt; note)
- Dobbelaere v. Auto-Owners Ins. Co., 275 Mich. App. 527 (2007) (contract interpretation and plain language)
- Frankenmuth Mut. Ins. Co. v. Masters, 460 Mich. 105 (1999) (interpretation of clear and unambiguous contract terms)