PNC Bank, National Association, successor by merger to National City Bank, a national banking association v. Legal Advocacy, P.C. et al

Filing 74

OPINION and ORDER (1) Granting Plaintiff's 63 Motion for Summary Judgment; and (2) Denying Defendants' 64 Motion for Summary Judgment. Signed by District Judge Linda V. Parker. (RLou)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
PNC BANK, National Association,
successor by merger to National City Bank,
a national banking association,
Plaintiff,
Civil Case No. 16-cv-13258
Honorable Linda V. Parker

v.
LEGAL ADVOCACY, P.C., a Michigan
Professional Corporation, f/k/a
NORMAN YATOOMA & ASSOCIATES, P.C.
and NORMAN YATOOMA,
Defendants.
________________________________/

OPINION AND ORDER (1) GRANTING PLAINTIFF’S MOTION FOR
SUMMARY JUDGMENT [ECF NO. 63] AND (2) DENYING
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [ECF NO. 64]
On September 9, 2016, Plaintiff PNC Bank brought this action against
Defendant Legal Advocacy, P.C., f/k/a Norman Yatooma & Associates, P.C. and
Defendant Norman A. Yatooma, alleging breach of promissory note and breach of
guaranty. (Compl., ECF No. 1.) Presently before the Court are Plaintiff’s and
Defendants’ (collectively “Parties”) cross-motions for summary judgment, both
filed on March 15, 2019. (ECF Nos. 63 & 64.) The motions have been fully

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briefed. Finding the facts and legal arguments sufficiently presented in the
Parties’ briefs, the Court dispensed with oral argument pursuant to Eastern District
of Michigan Local Rule 7.1(f). For the reasons that follow, the Court grants
Plaintiff’s motion, (Pl.’s Mot., ECF No. 63), and denies Defendants’ motion,
(Defs.’ Mot., ECF No. 64).
FACTUAL BACKGROUND
On August 27, 2008, Plaintiff extended credit to Defendant Legal Advocacy
in the amount of $1,500,000, which was executed by a Promissory Note (“Note”)
and secured with a Commercial Guaranty. (Pl.’s Mot., ECF Nos. 63-2, 63-4, 635.) Defendant Yatooma executed the Commercial Guaranty and agreed to be
financially responsible for the indebtedness of Defendant Legal Advocacy. (Pl.’s
Mot., ECF No. 63-4.) The Note provided that payment would be due upon
demand. (Pl.’s Mot., ECF No. 63-2 at Pg. ID 720.)
In early 2010, Plaintiff asked Defendants to sign new commercial loan
documents and submit past due financial reports by March 15, 2010. (Pl.’s Mot.,
ECF No. 63-7 at Pg. ID 763.) Defendants did not do so. (Id.) On March 24,
2010, Plaintiff noted in its internal database that Defendants “defaulted” on their
loan. (Defs.’ Mot., ECF No. 64-5; Defs.’ Resp., ECF No. 68 at Pg. ID 1068.)
On April 30, 2010, Plaintiff sent Defendants a demand letter (“Demand
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Letter #1). (Pl.’s Mot., ECF No. 63-7 at Pg. ID 763.) The letter sought full
payment of the debt by no later than June 30, 2010. (Id.) Having received no
payment by that date, on July 8, 2010, Plaintiff sent Defendants a second demand
letter but to no avail. (Defs.’ Mot., ECF No. 64-8.) From July 2010 to October
2010, the Parties exchanged several emails and letters regarding the loan account.
(Defs.’ Mot., ECF Nos. 64-9, 64-10, 64-11, 64-12, 64-13, 64-14, 64-15.)
However, from September 2008—the month after the loan’s inception—
through October 2010, Defendants consistently and timely made “interest-only”
payments. (Pl.’s Mot., ECF No. 63-6.) These “interest-only” payments include a
$3,550.37 payment on September 27, 2010 (the same day as the “bill due” date)
and a $3,435.85 payment on October 26, 2010 (one day before the “bill due” date).
(Id. at Pg. ID 756; Pl.’s Mot., ECF Nos. 63-8, 63-9.)
PROCEDURAL HISTORY
On September 9, 2016, Plaintiff brought this action, alleging breach of
promissory note and breach of guaranty.
In response, Defendants filed a motion for summary judgment, claiming
Plaintiff’s claims are barred by the six-year statute of limitations. (Defs.’ Mot.,
ECF No. 18 at Pg. ID 166.) Plaintiff filed a cross-motion for summary judgment,
arguing that the claims were not time-barred. (Pl.’s Reply, ECF No. 23 at 359.)
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The Court denied both motions on December 12, 2017, finding them premature.
(Order, ECF No. 24.) The Court noted that the Parties had not yet engaged in
discovery, which may reveal whether the September 27, 2010 and October 26,
2010 “interest-only” payments revived the statute of limitations. (Id. at Pg. ID
372-73.) The Court provided the same reasoning in response to Plaintiff’s motion
for reconsideration. (Pl.’s Recons. Mot., ECF No. 33; Order, ECF No. 43.)
On March 15, 2019, following discovery, the Parties again filed crossmotions for summary judgment, proffering substantially the same arguments in
their respective briefs. (ECF Nos. 63 & 64.)
SUMMARY JUDGMENT STANDARD
Summary judgment pursuant to Federal Rule of Civil Procedure 56 is
appropriate “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). The central inquiry is “whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that one
party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 251-52 (1986). After adequate time for discovery and upon motion, Rule 56
mandates summary judgment against a party who fails to establish the existence of
an element essential to that party’s case and on which that party bears the burden
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of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
The movant has the initial burden of showing “the absence of a genuine
issue of material fact.” Id. at 323. Once the movant meets this burden, the
“nonmoving party must come forward with specific facts showing that there is a
genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 587 (1986) (internal quotation marks and citation omitted). To
demonstrate a genuine issue, the nonmoving party must present sufficient evidence
upon which a reasonable jury could find for that party; a “scintilla of evidence” is
insufficient. See Liberty Lobby, 477 U.S. at 252.
“A party asserting that a fact cannot be or is genuinely disputed” must
designate specifically the materials in the record supporting the assertion,
“including depositions, documents, electronically stored information, affidavits or
declarations, stipulations, admissions, interrogatory answers, or other materials.”
Fed. R. Civ. P. 56(c)(1). The court must accept as true the non-movant’s evidence
and draw “all justifiable inferences” in the non-movant’s favor. See Liberty
Lobby, 477 U.S. at 255.

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APPLICABLE LAW & ANALYSIS
Count I: Breach of Promissory Note
Under Michigan law, the statute of limitations for a breach of contract claim
is six years. See Mich. Comp. Laws § 600.5807(9). However, a partial payment
on a loan will restart the running of the limitations period. See Yeiter v. Knights of
St. Casimir Aid Soc’y, 607 N.W.2d 68, 70 (Mich. 2000) (citations omitted) (“A
partial payment made on a debt after the debt matures serves to revive the statute
of limitations. A new cause of action accrues on the date of payment.”);
Buchanan v. Northland Grp., 776 F.3d 393, 396 (6th Cir. 2015) (citation omitted)
(partial payments on time-barred debt restarts statute of limitations under Michigan
law); Fed. Deposit Ins. Corp. v. Garbutt, 370 N.W.2d 387, 390 (Mich. Ct. App.
1985) (citations omitted) (“[I]f a partial payment is made on a note after it matures,
a cause of action accrues as of the time of the partial payment.”).
However, the partial payment must be “accompanied by a declaration or
circumstance that rebuts the implication that the debtor by partial payment admits
the full obligation.” Yeiter, 607 N.W.2d at 71; see also Charbonneau v. Mary
Jane Elliott, P.C., 611 F. Supp. 2d 736, 741 (E.D. Mich. 2009) (citation omitted).
This is because “[p]artial payment [on a debt] is equivalent to a new promise, and
operates as an acknowledgment of the continued existence of the demand and as a
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waiver of any right to take advantage by plea of limitations of any such lapse of
time as may have occurred previous to the payment being made.” Yeiter, 607
N.W.2d at 71 n.6 (citation omitted).
Defendants argue Plaintiff’s suit is barred by the six-year statute of
limitations, which began to accrue on either April 30, 2010, the date of Demand
Letter #1, or June 30, 2010, the date payment was expected per that demand letter.
(Defs.’ Mot., ECF No. 64 at Pg. ID 831.) Defendants contend that they made the
September 27, 2010 and October 26, 2010 “interest-only” payments for the sole
purpose of advancing settlement negotiations. (Id. at Pg. ID 832-34.)
Plaintiff responds that no declaration or circumstance rebutting the
implication that Defendants admitted the full obligation accompanied the two
“interest-only” payments. (Pl.’s Mot., ECF No. 63 at Pg. ID 691.) Thus, the two
payments constituted new promises to pay and the September 9, 2016 Complaint
was filed within the six-year statute of limitations that ran anew beginning on each
of the two days. (Id. at Pg. ID 703.)
Notably, the focus of this analysis is the debtor, who supplies the partial
payment—not the creditor, or his intent or understanding when receiving it.1 See
1 For this reason, arguments that point to Plaintiff’s intent or understanding at the time of the
two “interest-only” payments do not impact the analysis and thus fail at the outset. These
inapplicable arguments include: (i) Plaintiff, in its internal database, relabeled Defendants’ loan

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Yeiter, 607 N.W.2d at 71 n.7 (partial payment paid by debtor “must be
accompanied by . . . indication of an intention to pay”). After a careful review of
the record, the Court agrees with Plaintiff.
No Declaration or Qualification Rebutting Financial Obligation
The record is clear: Defendants’ failed to make the requisite declaration or
qualification at the time of the September 27, 2010 and October 26, 2010 “interestonly” payments.
Defendants argue that, at the time of the September 27, 2010 partial
payment, “[Plaintiff] was well aware that settlement discussions were ongoing and
that these payments were not being made on an open account.” (Defs.’ Resp.,
ECF No. 68 at Pg. ID 1071.)

This argument fails. As previously mentioned,

what Plaintiff was aware of or what Plaintiff understood plays no role in answering
the question at hand. Notably, Defendants do not point to any case law in which a
court has found that a plaintiff’s subjective understanding of the parties’ mutual
intent at the time of a partial payment satisfies the requisite declaration or
qualification to be made by a defendant. Indeed, even if Plaintiff subjectively

from “performing” to “non-performing” or in default; (ii) Plaintiff, after threatening to litigate,
began discussing alternative resolutions; and (iii) a particular member of Plaintiff’s staff never
before encountered a debtor who made payments after a demand for payment in full. (Defs.’
Resp., ECF No. 68 at Pg. ID 1056, 1068.)

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understood that settlement discussions were ongoing, Defendants’ two “interestonly” payments could have led Plaintiff to believe—at the moment that each of
those two payments were made—that settlement discussions were no longer to
continue and Defendants manifested a new commitment to pay the full obligation,
only to have Defendants change their minds and restart settlement discussions.
“To allow this would be to permit chaos in the legal and business world”: the
antithesis of the public policy underlying the requirement that partial payments be
accompanied by a declaration or circumstance rebutting the implication of a
promise to pay. Yeiter, 607 N.W.2d at 71 n.7 (quoting Bonga v. Bloomer, 165
N.W.2d 487, 489 (Mich. App. Ct. 1968)) (“If this were not true, it would be
possible for one to make a partial payment and intend to pay the balance at a later
date, but in the interim, change his mind and effectively renege.”).
Defendants further argue that since “[settlement] communications were
constant in both September and October 2010, they clearly constitute declarations
of the manner in which these payments were being made. If the Court needs to
anchor to a specific document, the October 6, 2010 email makes clear the nature of
the payments . . . .” (Defs.’ Resp., ECF No. 68 at Pg. ID 1081.) To the contrary,
the October 6 email does not state or make clear that Defendants were not
admitting the full obligation. (Defs.’ Resp., ECF No. 68-13.) Moreover,
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Defendants did not send this email at the time of either partial payment, as
required by Michigan law. See Yeiter, 607 N.W.2d at 71 n.7 (quoting Bonga, 165
N.W.2d at 489 (disallowing attempts to qualify a partial payment two months after
the unqualified payment)).
Defendants also contend that, at the time of the October 26, 2016 “interestonly” payment, Plaintiff had not requested a tolling agreement. (Defs.’ Mot., ECF
No. 64 at Pg. ID 825.) But Defendants point to no case law requiring Plaintiff to
take such affirmative action. Ultimately, the record lacks any declaration or
qualification accompanied by the two “interest-only” payments.
No Circumstance Rebutting Financial Obligation
No reasonable jury could find a circumstance rebutting the implication that
Defendants admitted the full obligation at the time of the “interest-only” payments.
First, Plaintiff presented evidence in the form of a “Note Recap,” identifying
all of the “interest-only” payments Defendants made since the inception of the
loan. (Pl.’s Mot., ECF No. 63-6.) These payments, which with few exceptions
matched the exact amount noted on the “bill due” date, were made on the day or
within a day of the respective “bill due” dates. (Id.) The two payments at issue
happened to be Defendants’ last two “interest-only” payments. (Id. at Pg. ID
756.) Notably, Defendants do not dispute the accuracy of the Note Recap.
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Instead, they argue that they made the two payments in the middle of settlement
discussions. But this argument, which the Court already determined is
unpersuasive, does not explain away the fact the two “interest-only” payments
were no different than the “interest-only” payments Defendants previously made
like clockwork—payments that correspond with reductions in the amount owed on
the Note. (Id.); see also Smith v. Jim Madden & Assocs., Inc., (No. 19-5061),
1997 WL 33344679, at *3 (Mich. Ct. App Jul. 11, 1997) (unpublished) (noting that
the partial payment that revived the statute of limitations appeared as the last entry
on the general ledger maintained by plaintiff).
In fact, Defendant Yatooma concedes that the “interest-only” payments were
indeed payments on the financial obligation required by the Note. (Pl.’s Mot.,
ECF No. 63-3 at Pg. ID 731-32.) When asked by Plaintiff’s counsel if he admits
that at the time of the “interest-only” payments he “owed the money,” Defendant
Yatooma answered affirmatively and further stated: “Again, I don’t dispute then
or now [that] . . . the loan document required me to make those payments and I was
making those payments even when the bank defaulted me . . . . I was doing what
the document said. I was honoring the agreement. I was making those payments
every month.” (Id. at Pg. ID 732.) No reasonable jury could find that this
circumstance—in which Defendants state that the Note “required” the two
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“interest-only” payments—shows any intention contrary to making a payment on a
financial obligation Defendants understood they held.
Second, no reasonable jury could find persuasive Defendants’ argument that
they were told that “settlement discussions could not be had if [they] refused
payment, so [they] made payments in hopes to continue discussions.” (Id. at Pg.
ID 731.) There is no evidence on the record suggesting that Plaintiff made such a
statement. Even if true, Defendants offer no case law supporting the argument
that when defendants face a choice of two evils—such as, cease payments and thus
settlement discussions, or the inverse—the decision to choose one over the other
renders the choice involuntary. See Hiscock v. Hiscock, 240 N.W. 50, 53 (Mich.
1932) (finding that a “voluntary and unqualified payment” is “the best evidence”
that defendant intends to waive his legal rights and “perform his moral obligation
to pay the whole of the just debt”). Indeed, in even less discretionary
circumstances and circumstances concerning liberty interests, Michigan courts
have still found partial payments waived the statute of limitations defense. See
Wayne Cty. Soc. Servs. Dir. ex rel. Yates v. Yates, 681 N.W.2d 5, 8 (Mich. Ct. App.
2004) (finding partial payment waived statute of limitations defense even though
made pursuant to income withholding order); Alpena Friend of the Court ex rel.
Paul v. Durecki, 491 N.W.2d 864, 865-66 (Mich Ct. App. 1992) (finding partial
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payment waived statute of limitations defense even though made to avoid being
held in contempt of court and to avoid jail sentence).
For the reasons outlined above, this Court finds that there is no genuine issue
of material fact regarding whether the September 27, 2010 and October 26, 2010
“interest-only” payments constituted unqualified partial payments on the Note and
therefore renewed the statute of limitations. The statute of limitations did not
expire until October 26, 2016 and thus the September 9, 2016 action is not timebarred. The Court grants Plaintiff’s motion and denies Defendants’ motion as to
Count I.
Count II: Breach of Guaranty
It is undisputed that the Commercial Guaranty states:
Guarantor also waives any and all rights or defenses based on
suretyship or impairment of collateral including, but not limited to, any
rights or defenses arising by reason of . . . (E) any statute of limitations,
if at any time any action or suit brought by Lender against Guarantor is
commenced, there is outstanding indebtedness which is not barred by
any applicable statute of limitations . . . .
(Pl.’s Mot., ECF No. 63-4 at Pg. ID 742.)
Because the Court finds that the six-year statute of limitations does not bar
the claim under Count I, “there is outstanding indebtedness which is not barred by
an[] applicable statute of limitations.” The clear and unambiguous language of

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the contract prevails: Defendant Yatooma waived the statute of limitations
defense. Since no genuine issue of material fact remains, the Court grants
Plaintiff’s motion and denies Defendants’ motion as to Count II.
CONCLUSION
For the reasons set forth above, the Court grants Plaintiff’s motion and
denies Defendants’ motion as to both counts. Defendants do not contest the
validity of the underlying agreement. The Court, therefore, awards Plaintiff the
accrued principal, unpaid interest, late charges, and reasonable collection costs and
attorneys’ fees in seeking recovery as agreed to in the Note.
Accordingly,
IT IS ORDERED that Plaintiff’s motion for summary judgment (ECF No.
63) is GRANTED and Defendants’ motion for summary judgment (ECF No. 64)
is DENIED.
IT IS FURTHER ORDERED that counsel for the Parties will meet and
confer to determine whether they can agree on the amount owed to Plaintiff for the
accrued principal, unpaid interest, late charges, and reasonable collection costs and
attorneys’ fees in seeking recovery. Within 21 days of this Opinion and Order,
counsel shall either (i) prepare and submit a stipulated proposed judgment, if there
are no disputes as to the amount of the judgment to be entered by the Court, or (ii)
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inform the Court in writing, if there are disputes. If no agreement is reached, the
Court will schedule a status conference with counsel to decide how to proceed.
s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: September 30, 2019

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