The Huntington National Bank v. Najero, Inc. et al

Filing 35

OPINION AND ORDER granting 32 Plaintiff's Motion for Summary Judgment. Signed by District Judge Robert H. Cleland. (LWag)

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

THE HUNTINGTON NATIONAL BANK,
Plaintiff,
Case No. 13-11632

v.
NAJERO, INC., et al.,
Defendants.
/

OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT
Plaintiff The Huntington National Bank, successor to Fidelity Bank and
Community Bank of Dearborn, filed the instant action against Defendants Najero, Inc.
(“Najero”), Norian Properties, Inc. (“Norian”), Kara Developments, LLC (“Kara”), NCI
Services, Inc. (“NCI”), Ice Box Sports Center, LLC (“Ice Box”), Johno P. Norian, and
Hagop Norian, alleging that Defendants breached certain contracts between the parties
related to Plaintiff’s issuance of two loans––one to Najero for $1,000,000 (the “Najero
Loan”) and the other to NCI for $714,422 (the “NCI Loan”).
Plaintiff moves for summary judgment against Defendants. Plaintiff seeks a
judgment, jointly and severally, in the amount of $1,075,480.84 for breaching
agreements related to the Najero Loan, and a judgment against Defendants, jointly and
severally, in the amount of $476,659.27 for breaching agreements related to the NCI
Loan. Defendants concede that they executed and defaulted on the relevant loan
agreements, but contend that Plaintiff has failed to establish that it sustained any injury
for which damages could be entered because Plaintiff has not disposed of the collateral

securing the loans. The matter is fully briefed, and no hearing is needed. See E.D.
Mich. LR 7.1(f)(2). For the reasons stated below, Plaintiff’s motion for summary
judgment is granted.
I. BACKGROUND
On November 23, 2011, Plaintiff extended a $1,000,000 loan to Najero, Inc.
pursuant to a loan agreement (the “Najero Loan Agreement”), (Dkt. # 32-4, Pg. ID 56998), and a promissory note executed by Najero in Plaintiff’s favor for the sum of the loan
plus interest with a maturity date of November 23, 2014 (the “Najero Note”). (Dkt. # 322, Pg. ID 559-61.) The loan was secured by a guaranty of repayment of the Najero
Note entered into by Defendants Johno P. Norian, Hagop Norian, Norian Properties,
Inc., Kara Development, LLC, NCI Services, Inc. and Ice Box Sports Center, LLC (the
“Najero Guarantors”) and Artemis Norian, (Dkt. # 32-3, Pg. ID 563-66), a mortgage on
property located at 21902 Telegraph Road, Brownstown Township, Michigan (the
“Najero Property”), (Dkt. # 1-5, Pg. ID 41), and a mortgage on property located at 22100
Telegraph Road, Brownstown Township, Michigan (the “Norian Property”). (Dkt. # 1-6,
Pg. ID 65.)
On April 8, 2005, NCI obtained a loan of $714,422 from Plaintiff and executed a
promissory note in Plaintiff’s favor for the sum of the loan plus interest with a maturity
date of April 8, 2010.1 (Dkt. # 32-5, Pg. ID 600-02.) NCI secured its loan with a
mortgage on property located at 2674 Jefferson, Trenton, MI (the “NCI Property”). (Dkt.
# 1-10, Pg. ID 130.) On November 23, 2011, Defendants Johno P. Norian, Hagop
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The NCI Note was modified by amendments dated November 1, 2007 and
December 18, 2009. (Dkt. # 1, Pg. ID 4; Dkt. # 13, Pg. ID 200.)
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Norian, Norian Properties, Inc., Najero, Inc., Kara Development, LLC, NCI Services, Inc.
and Ice Box Sports Center, LLC (the “NCI Guarantors”) and Artemis Norian executed a
guaranty of repayment on the NCI Note, (Dkt. # 32-6, Pg. ID 604-08), and Plaintiff, NCI,
the NCI Guarantors, and Artemis Norian entered into an agreement extending the
maturity date of the NCI Note to November 23, 2013 (the “NCI Forbearance
Agreement”). (Dkt. # 32-7, Pg. ID 610-30.)
It is undisputed that Defendants defaulted under the terms of the documents
executed in connection with the Najero Loan and the NCI Loan by failing to make
required payments. (Dkt. # 34, Pg. ID 658.)
Plaintiff filed the instant lawsuit asserting claims for breach of the Najero Note,
the NCI Note, the NCI Forbearance Agreement, the Najero Guaranty, and the NCI
Guaranty. (Dkt. # 1, Pg. ID 7-11.) The complaint also seeks appointment of receiver
for, and judicial foreclosure of, the Najero Property, the NCI Property, and the Norian
Property. (Id. at Pg. ID 11-19.)
This suit was temporarily resolved by a Settlement Agreement and a Stipulated
Order for Dismissal without Prejudice entered on September 6, 2013. (Dkt. # 26, Pg. ID
227-28.) After Defendants failed to fulfill the terms of the Settlement Agreement,
Plaintiff moved to have its lawsuit reinstated and to have a receiver appointed over
certain encumbered properties, including the NCI Property, the Najero Property, the
Norian Property the encumbered properties. (Dkt. # 32-8, Pg. ID 637.) On June 19,
2014, this court granted Plaintiff’s motion. (Dkt. # 30, Pg. ID 512-36.)
Plaintiff now moves for summary judgment. Plaintiff seeks a money judgment
against Defendants, jointly and severally, for breach of the Najero Note and Najero
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Guaranty in the amount of $1,075,480.84––which consists of $886,860.46 in principal,
$163,139.96 in accrued and unpaid interest, $10,628.40 as a late charge, and
$14,852.02 for Plaintiff’s costs and attorneys’ fees. Plaintiff also seeks a money
judgment against Defendants, jointly and severally, for breach of the NCI Note, the NCI
Forbearance Agreement, and the NCI Guaranty in the amount of $476,659.27––which
consists of $451,199.59 in principal, $8,143.70 in accrued and unpaid interest,
$2,463.96 as a late charge, and $14,852.02 in costs and attorneys’ fees. (Dkt. # 32, Pg.
ID 555.)
II. STANDARD
Summary judgment is proper “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). “In deciding a motion for summary judgment, the court
must view the evidence in the light most favorable to the non-moving party, drawing all
reasonable inferences in that party’s favor.” Sagan v. United States, 342 F.3d 493, 497
(6th Cir. 2003). The movant has the initial burden of showing the absence of a genuine
dispute as to a material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The
burden then shifts to the nonmovant, who must put forth enough evidence to show that
there exists “a genuine issue for trial.” Horton v. Potter, 369 F.3d 906, 909 (6th Cir.
2004) (citation omitted). Summary judgment is not appropriate when “the evidence
presents a sufficient disagreement to require submission to a jury.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 251–52 (1986).
The existence of a factual dispute alone does not, however, defeat a properly
supported motion for summary judgment—the disputed factual issue must be material.
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“A fact is ‘material’ for purposes of summary judgment if proof of that fact would
establish or refute an essential element of the cause of action or defense.” Bruederle v.
Louisville Metro Gov’t, 687 F.3d 771, 776 (6th Cir. 2012) (citation omitted).
III. DISCUSSION
To recover on a claim of breach of contract under Michigan law, a plaintiff must
established the elements of a valid contract, “then prove by a preponderance of the
evidence the terms of the contract, that the defendant breached the terms of the
contract, and that the breached caused the plaintiff’s injury.” In re Brown, 342 F.3d 620,
628 (6th Cir. 2003). Defendants concede that they entered into the loan documents and
defaulted under their terms, but contend that Plaintiff has failed to establish that it has
sustained any damages because Plaintiff possesses collateral with a fair market value
greater than the alleged damages. (Dkt. # 34, Pg. ID 658.) Defendants argue that a
secured creditor cannot obtain a money judgment until its collateral has been disposed
of in a commercially reasonable manner. (Dkt. # 34, Pg. ID 660.) Defendants’ argument
is without merit.
Defendants cite to United States v. Willis, 593 F.2d 247 (6th Cir. 1979) for the
proposition that a secured lender is compelled to sell collateral securing a loan before
being able to pursue money damages for default on that loan. However, in Willis, the
Sixth Circuit held that, under the UCC, the duty to dispose of collateral in a
commercially reasonable manner extends to a lender’s decision to proceed by private or
public sale without ever addressing whether a secured lender is required to dispose of
the collateral before pursuing a money judgment. Id. at 259. Meanwhile, the Michigan
Uniform Commercial Code (the “UCC”) provides that, “[a]fter default, a secured party . .
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. [m]ay reduce a claim to judgment, foreclose, or otherwise enforce the claim . . . by any
available judicial procedure.” Mich. Comp. Laws § 440.9601(1). The statute
emphasizes that these rights “are cumulative and may be exercised simultaneously.”
Mich. Comp. Laws § 440.960(3); see Spizizen v. Nat’l City Corp., No. 09-11713, 2011
WL 1429226, at *5 (E.D. Mich. Apr. 14, 2011) (“Michigan courts have been consistent in
holding that, under the UCC, banks may seek money judgments against a debtor in
default while simultaneously pursing other remedies, such as foreclosing on collateral.”);
cf. Michigan Nat’l Bank v. Marston, 185 N.W.2d 47, 51 (Mich. Ct. App. 1970)
(concluding that “the intent of the [UCC] was to broaden the options open to a creditor
after default rather than to limit them”).
Furthermore, the Najero Guaranty and the NCI Guaranty both provide that
“Guarantors waive all rights and defenses that Guarantors may have because the
Indebtedness owing by [Plaintiff] is secured by real property. This means, among other
things . . . “[Plaintiff] may collect from Guarantors without first foreclosing on any real or
personal property collateral pledged by [Najero and NCI, respectively].” (Dkt. # 32-3,
Pg. ID 564; (Dkt. # 32-6, Pg. ID 605.) This language waives the Defendants’ argument
and permits Plaintiff to pursue its claim for money damages against Defendants without
disposing of the collateral. See Comerica Bank v. Berman, No. 2:10-cv-12952, 2011
WL 2144538 (E.D. Mich. May 31, 2011) (holding that a lender need not sell collateral
before obtaining a judgment against a borrower where the loan documents expressly
state such action is not required).
Defendants proffer no other arguments against Plaintiff’s motion for summary
judgment, and they do not challenge the amount of judgment requested by Plaintiff.
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IV. CONCLUSION
For the reasons stated above, IT IS ORDERED that Plaintiff’s motion for
summary judgment (Dkt. # 32) is GRANTED.

s/Robert H. Cleland
ROBERT H. CLELAND
UNITED STATES DISTRICT JUDGE
Dated: September 15, 2014

I hereby certify that a copy of the foregoing document was mailed to counsel of record
on this date, September 15, 2014, by electronic and/or ordinary mail.
s/Lisa Wagner
Case Manager and Deputy Clerk
[phone]

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