FirstMerit Bank, N.A. v. Taylor et al

Filing 47

OPINION; signed by Judge Gordon J. Quist (Judge Gordon J. Quist, jmt)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
__________________________
FIRSTMERIT BANK, N.A.,
Plaintiff,
v.

Case No. 1:14-CV-370

DAVID W. TAYLOR and MARIAN
TAYLOR, jointly and severally,

HON. GORDON J. QUIST

Defendants.
______________________________/
OPINION
Plaintiff, FirstMerit Bank, N.A., invoking this Court’s diversity jurisdiction under 28 U.S.C.
§ 1332(a), filed a two-count Complaint against Defendant, David W. Taylor, alleging claims of
breach of contract and open account. Both claims arise out of a loan that Defendant obtained from
Citizens Bank, FirstMerit’s predecessor-in-interest.1
FirstMerit has moved for summary judgment. After the motion was fully briefed, the Court
set it for oral argument.

On October 15, 2014—the day the motion was set for oral

argument—Defendant filed a Chapter 13 bankruptcy petition. (Dkt. # 20.) The Court then
administratively closed the case. On December 17, 2014, the Court granted FirstMerit’s motion to
reopen the case after the bankruptcy court dismissed Defendant’s Chapter 13 case because
Defendant failed to file the requisite schedules and other documents. (Dkt. # 26.) The Court then
re-noticed FirstMerit’s motion for oral argument for January 8, 2015. However, on January 7, 2015,
Defendant filed another Chapter 13 bankruptcy petition. On February 9, 2015, the bankruptcy court
dismissed Defendant’s second bankruptcy case, again for failure to file the proper documents. (Dkt.

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On October 29, 2014, the Court dismissed Marian Taylor as a Defendant pursuant to Fed. R. Civ. P. 25(a)(1)
because no party had made a motion for substitution. (Dkt. # 21.)

# 32-7.) FirstMerit then moved to reopen the case before this Court. The Court granted the motion
and set FirstMerit’s motion for summary judgment for oral argument for March 24, 2015. The Court
heard oral argument on that date. Counsel for FirstMerit and a representative of FirstMerit attended
the hearing, but neither Defendant nor his counsel showed up.
For the reasons set forth below and for the reasons given at oral argument, the Court will
grant the motion and enter judgment for FirstMerit against Defendant.
I. FACTS
On December 14, 2012, Defendant obtained a loan from Citizens Bank in the principal
amount of $720,862.08. In connection with the loan, Defendant executed a promissory note (Note)
in favor of Citizens Bank and a related Business Loan Agreement (Loan Agreement). (Dkt. ## 14-1,
14-2.) First Merit is the successor to Citizens Bank and, thus, is the holder of the Note and the Loan
Agreement.
The Loan Agreement imposes certain obligations on Defendant. One such obligation is that
Defendant must furnish the following to First Merit: “Annual Certificate of Compliance for Rental
Dwelling of David and Marian Taylor. Due as soon as available but in no event later than 30 days
after existing Certificate Expiration Date.” (Dkt. #14-3 at Page ID#78.) The Note specifies that a
failure to comply with or perform any obligation, covenant, or condition under any of the related
loan documents constitutes a default under the Note. (Dkt. # 14-2 at Page ID#74.) In the event of
a default, FirstMerit “may declare the entire unpaid principal balance under [the] Note and all
accrued unpaid interest immediately due . . . .” (Id. at Page ID# 75.)
On January 27, 2014, FirstMerit sent Defendant a notice of default on the loan, based on
Defendant’s failure to timely provide an Annual Certificate of Compliance. (Dkt. # 14-4.)
FirstMerit gave Defendant until February 14, 2014 to cure the default, and warned him that if he

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failed to cure the default by that date, FirstMerit may exercise its rights and remedies provided under
the loan documents and/or by law. (Id. at Page ID#84.) Defendant failed to cure the default within
the time provided, (see Dkt. # 14-7 at Page ID#95, ¶ 2), and FirstMerit filed the instant lawsuit to
collect the amount due under the Note.
II. SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate if there is no genuine issue as to any material fact and the
moving party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(c). Material facts are
facts which are defined by substantive law and are necessary to apply the law. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510 (1986). A dispute is genuine if a reasonable
jury could return judgment for the non-moving party. Id.
The court must draw all inferences in a light most favorable to the non-moving party, but
may grant summary judgment when “‘the record taken as a whole could not lead a rational trier of
fact to find for the non-moving party.’” Agristor Fin. Corp. v. Van Sickle, 967 F.2d 233, 236 (6th
Cir. 1992) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106
S. Ct. 1348, 1356 (1986)).
III. DISCUSSION
In order to establish a breach of contract claim, a plaintiff must prove: “(1) the existence of
a contract between the parties, (2) the terms of the contract require performance of a certain action
by the defendant, (3) the defendant breached its obligation to perform, and (4) the plaintiff incurred
damages as a result of the breach.” I.B. Mini-Mart II, Inc. v. JSC Corp., No. 296982, 2011 WL
1435978, at *2 (Mich. Ct. App. Apr. 14, 2011) (per curiam) (citing Synthes Spine Co. v. Calvert, 270
F. Supp. 2d 939, 942 (E.D. Mich. 2003)).
FirstMerit has carried its summary judgment burden by showing that: (1) the parties entered
a binding contract consisting of the Note and the Loan Agreement; (2) the Loan Agreement requires
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Defendant to furnish an Annual Certificate of Compliance within a specified time; (3) Defendant
failed to provide the Annual Certificate of Compliance within that time; and (4) as a result of the
breach, FirstMerit has suffered damages because Defendant failed to pay the amount due under the
Note—$691,358.67 as of March 27, 2015—after FirstMerit accelerated the balance based on
Defendant’s default. As of the date of oral argument, March 24, 2015, the unpaid balance was
$750,416.00.
In his response, Defendant admits that he entered into the Note and Loan Agreement and that
under the Loan Agreement is obligated to provide a timely Annual Certificate of Compliance.
While Defendant concedes that he failed to provide a timely Annual Certificate of Compliance to
FirstMerit, he argues that he is excused from this requirement because the City of Lansing has
refused to inspect the rental premises and provide him the necessary certificate. Defendant further
argues that FirstMerit has failed to show that it suffered damages because he has made all of the
payments due under the Note in a timely manner. However, Defendant fails to cite any provision
of the Note or the Loan Agreement that excuses compliance with his obligations under those
documents when a third-party fails to act. Moreover, Defendant cites no case law supporting his
argument that the City of Lansing’s failure to act excuses him from complying with his obligations
under the Note and/or Loan Agreement. As for Defendant’s assertion that FirstMerit has failed to
show that it suffered damages, FirstMerit has shown that it has been damaged by Defendant’s failure
to pay the balance due under the Note after he failed to cure his default.2 In other words,
Defendant’s failure to pay the accelerated balance under the Note has caused FirstMerit damage.
Finally, Defendant contends that FirstMerit acted in bad faith by accelerating the balance of

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FirstMerit also contends that Defendant has defaulted on the Note by failing to pay real property taxes on
certain property on which FirstMerit holds a mortgage. The Court will not consider this allegation because FirstMerit
has not presented any admissible evidence that establishes this default.

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the Note because Defendant is not responsible for the default. However, Defendant has not
supported his allegations of bad faith, as FirstMerit is simply exercising its contractual right to
enforce the terms of the Note.3 Moreover, Defendant has now had ample time to cure the default
by obtaining and submitting an Annual Certificate of Compliance to FirstMerit, but he has failed
to do so.
IV. CONCLUSION
For the foregoing reasons, the Court will grant FirstMerit’s Motion for Summary Judgment
and enter judgment against Defendant in the amount of $750,416.00, together with interest accruing
at the statutory rate permitted by M.C.L. § 600.6013(7), and attorney fees and costs that FirstMerit
has incurred in enforcing the Note.
A separate Order consistent with this Opinion will be entered.

Dated: March 26, 2015

/s/ Gordon J. Quist
GORDON J. QUIST
UNITED STATES DISTRICT JUDGE

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As FirstMerit notes, the Court need not address its open account claim if it concludes that FirstMerit is entitled
to summary judgment on its breach of contract claim. Having so concluded, the Court will not consider the open account
claim.

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