Huntington National Bank v. Aronoff Living Trust
305 Mich. App. 496
| Mich. Ct. App. | 2014Background
- Daniel and Arnold Aronoff and several related entities guaranteed or borrowed under multiple Huntington National Bank notes and letters of credit; defaults left Huntington seeking roughly $43.8 million plus interest, costs, and fees.
- Defendants asserted affirmative defenses principally alleging Huntington had wrongfully reneged on a promised $5 million loan commitment (Oct. 2007), causing financial distress and losses that should offset Huntington’s claims.
- Huntington moved for summary disposition, arguing the alleged Oct. 2007 commitment was not a signed written promise by the bank and therefore barred by MCL 566.132(2) (statute of frauds for financial institutions); Huntington also argued economic downturn is not a defense to payment obligations.
- The trial court granted summary disposition for Huntington, finding no signed written commitment, that internal unsigned documents could not satisfy MCL 566.132(2), and that further discovery would not likely uncover a valid written promise; judgment entered for Huntington for the amounts claimed (with costs and agreed attorney fees).
- Defendants’ motion for reconsideration was denied except to recalculate attorney fees; they appealed, arguing the bank-commitment defense was improperly barred, discovery was prematurely curtailed, amendment should have been allowed, interest adjustments were inadequately specified, and the court was biased.
Issues
| Issue | Huntington's Argument | Aronoffs' Argument | Held |
|---|---|---|---|
| Whether defendants may assert breach/"lender liability" defense based on an alleged Oct. 2007 loan commitment | The alleged commitment was not a written, signed promise by the bank and is barred by MCL 566.132(2) | The parties agreed to a $5M loan in Oct. 2007; Huntington’s refusal caused losses that offset its claims; statute of frauds inapplicable to defenses | Held for Huntington: defense is an action to enforce a promise to lend and is barred absent a written signed commitment under MCL 566.132(2) |
| Whether the documentary evidence defendants produced satisfied the statute of frauds | Documents were preliminary, unsigned, and insufficient to establish essential terms | Documents (letters, checklist, e-mails) show an enforceable commitment | Held for Huntington: documents were proposals/checklists lacking essential terms and authorized signature; insufficient under the statute |
| Whether summary disposition was premature because additional discovery might uncover internal bank documents signed by authorized personnel | Further discovery would not produce an external signed commitment; internal documents cannot satisfy MCL 566.132(2) | Further discovery might reveal internal signed documents or other evidence satisfying the statute | Held for Huntington: internal documents cannot satisfy the statute’s writing/signature requirement and further discovery had no fair chance of changing the result |
| Whether the court abused discretion in denying amendment or failing to include an interest-adjustment provision or showing bias | Amendment would be futile because of statute; judgment already permitted credit application; no reversible bias shown | Court should have allowed amendment, included explicit interest-adjustment clause, and was biased in case management | Held for Huntington: amendment futile, no palpable error re interest adjustment, no showing of disqualifying bias; judgment affirmed |
Key Cases Cited
- Barnard Mfg Co, Inc v Gates Performance Engineering, Inc, 285 Mich. App. 362 (standard of review for summary disposition)
- Kincaid v Cardwell, 300 Mich. App. 513 (de novo review of statute interpretation)
- Hammel v Foor, 359 Mich. 392 (burden to prove existence of agreement)
- Goldman v Century Ins Co, 354 Mich. 528 (meeting of the minds / mutual assent)
- Dodge v Blood, 307 Mich. 169 (contract requires agreement on essential points)
- Harper Bldg Co v Kaplan, 332 Mich. 651 (acceptance must be substantially as made)
- Fothergill v McKay Press, 361 Mich. 666 (statute of frauds: memorandum sufficient to summarize essential terms)
- Barclae v Zarb, 300 Mich. App. 455 (application of statute of frauds principles in lender disputes)
- Crown Technology Park v D&N Bank, FSB, 242 Mich. App. 538 (broad protection for financial institutions under MCL 566.132(2))
- Ass’n of Hebrew Teachers v Jewish Welfare Federation, 62 Mich. App. 54 (writing must contain essential terms)
- Thomai v MIBA Hydramechanica Corp, 303 Mich. App. 196 (summary disposition can be premature if discovery may produce supporting facts)
- Crider v Borg, 109 Mich. App. 771 (standard for when further discovery might preclude summary disposition)
- Zaremba Equip, Inc v Harco Nat’l Ins Co, 280 Mich. App. 16 (promise must induce reliance)
- Weymers v Khera, 454 Mich. 639 (futility as ground to deny amendment)
- Adell Broadcasting Corp v Apex Media Sales, Inc, 269 Mich. App. 6 (modification/consideration principles)
- Smith v Khouri, 481 Mich. 519 (abuse of discretion standard)
- In re MKK, 286 Mich. App. 546 (presumption of judge's impartiality; remarks alone usually not disqualifying)
- Mitcham v Detroit, 355 Mich. 182 (issue-preservation/abandonment on appeal)