Wells Fargo Bank, N.A. v. Mitchell's Park, LLC, 1:10-cv-03820

Bridger Commercial Funding loaned Mitchell’s Park $5.55 million in July 2003 to build an apartment complex, with the loan secured by a promissory note, security deed, and related documents.
Bright signed a Guaranty; Wells Fargo later acquired the loan rights as successor by consolidation with a special servicer, ORIX Capital.
The transaction was non-recourse, but the Limited Recourse Liability Clause and Full Recourse Liability Clause allowed personal liability under certain breaches of Exhibit B single-purpose entity requirements.
Mitchell’s Park defaulted on February 1, 2010; Wells Fargo accelerated, demanded payment, and foreclosed on July 6, 2010, obtaining proceeds of $2.125 million on real property and $25,000 on personal property.
After applying foreclosure proceeds, Wells Fargo claimed Mitchell’s Park triggered the Full Recourse Liability Clause, leaving an outstanding balance of approximately $4.24 million as of 2012.
Wells Fargo filed suit for breach of contract seeking damages and attorneys’ fees, with Wells Fargo asserting both Mitchell’s Park and Bright breached their respective obligations.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the court has subject matter jurisdiction despite a trust plaintiff	Wells Fargo claims diversity exists since plaintiff acts as trustee.	Defendants contend no diversity because trust and trustees from same state negate citizenship.	Denied; diversity jurisdiction maintained.
Whether Bright is shielded from partial summary judgment on the limited guaranty	Guaranty language shows Bright is bound under full recourse.	Guaranty misidentifies borrower; should be read to exclude Bright from full recourse.	Denied; Bright is encompassed by full recourse as guarantor.
Whether the Full Recourse Liability Clause is enforceable and not a liquidated damages clause	Clause allocates liability and seeks actual damages; not a penalty.	Clause functions as a liquidated damages provision because it caps damages.	Enforceable; not a liquidated damages clause.
Whether Wells Fargo is entitled to summary judgment on breach of contract claims	There were breaches by Mitchell’s Park and Bright; damages and fees due.	Disputed facts regarding damages and scope of liability; but argues against summary judgment on some points.	Granted; Plaintiff entitled to summary judgment on Counts I, II, and IV (breach and fees).

51382 Gratiot Avenue Holdings, LLC v. Chesterfield Development Co., 835 F. Supp. 2d 384 (E.D. Mich. 2011) (upholding full recourse liability under breach of solvent/solvency covenant)
CSFB 2001-CP-4 Princeton Park Corporate Center, LLC v. SB Rental I, LLC, 980 A.2d 1 (N.J. Super. Ct. App. Div. 2009) (carve-out of non-recourse loan not liquidated damages; damages are actual)
Wells Fargo Bank, N.A. v. Cherryland Mall Limited Partnership, 812 N.W.2d 799 (Mich. Ct. App. 2011) (failure to remain solvent breached single-purpose entity covenant and triggered full recourse)