Talmer West Bank v. Terry Lynn Stewart Revocable Trust ( 2014 )

STATE OF MICHIGAN
COURT OF APPEALS
TALMER WEST BANK f/k/a MICHIGAN UNPUBLISHED
COMMERCE BANK, December 11, 2014
Plaintiff,
v Nos. 316678; 317420
Kalamazoo Circuit Court
TERRY L. STEWART, as Trustee of the TERRY LC No. 2012-000271-CK
LYNN STEWART REVOCABLE TRUST,
Defendant-Appellee,
and
TERRY L. STEWART, and TLS VENTURES
L.L.C.,
Defendants,
and
ROBERT B. BORSOS,
Defendant-Appellant.
Before: MARKEY, P.J., and SAWYER and OWENS, JJ.
PER CURIAM.
In these consolidated appeals, defendant-appellant Robert Borsos appeals by right the
June 7, 2013 order granting plaintiff Michigan Commerce Bank1 a final judgment and the July 8,
2013 order granting plaintiff’s motion for reconsideration regarding collection of the judgment in
part. We affirm.
1
Michigan Commerce Bank is now known as Talmer West Bank.
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On December 14, 2007, and June 14, 2007, Stewbor Ventures, L.L.C. (Stewbor)
borrowed a total of $2,275,000 from plaintiff. On December 14, 2007, Borsos and Terry
Stewart, both individually and in his capacity as trustee of Terry Lynn Stewart Revocable Trust,
signed commercial guaranties that guaranteed payment of the indebtedness Stewbor incurred to
plaintiff. On June 14, 2007, TLS Ventures L.L.C. (TLS) signed a commercial guaranty that
guaranteed payment of the indebtedness Stewbor incurred to plaintiff.
On January 27, 2012, Stewbor filed Chapter 11 Bankruptcy in the United States
Bankruptcy Court for the Western District of Michigan. On February 10, 2012, Stewbor filed its
reorganization plan that bifurcated Stewbor’s indebtedness to plaintiff into $1,643,000 in secured
debt and $614,192.40 in unsecured debt. The reorganization plan provided that Stewbor would
repay the secured portion of its debt to plaintiff but that Stewbor would no longer be liable for
the unsecured debt. On March 29, 2012, plaintiff approved the reorganization plan, and on May
24, 2012, the Bankruptcy Court entered an order confirming the reorganization plan.
On May 17, 2012, plaintiff filed its complaint against Borsos, Terry Stewart, both
individually and in his capacity as trustee of Terry Lynn Stewart Revocable Trust, and TLS.
Plaintiff argued that pursuant to the commercial guaranties, defendants, as guarantors, were
liable to it for the full amount of Stewbor’s debt.
On October 3, 2012, plaintiff moved the trial court for summary disposition pursuant to
MCR 2.116(C)(10). Plaintiff argued that, under the language of the reorganization plan, the
entry of the reorganization plan did not discharge defendants’ liabilities as guarantors in this
case. Plaintiff further argued that under the language of each defendant’s commercial guaranty,
each defendant was liable for the full amount of Stewbor’s indebtedness to plaintiff.
On March 8, 2013, the trial court entered an order granting plaintiff’s motion for
summary disposition, and on June 7, 2013, entered a final judgment of $2,242,338.87 against
defendants.
On appeal, Borsos2 argues that the trial court erred in granting plaintiff summary
disposition because plaintiff consented to the reorganization plan, and the plan barred plaintiff
from pursuing this action against defendants as guarantors. The grant or denial of summary
disposition under MCR 2.116(C)(10) is reviewed de novo to determine if the moving party is
entitled to judgment as a matter of law. Maiden v Rozwood, 461 Mich. 109, 118; 597 NW2d
817 (1999). Also, to the extent this issue requires the interpretation of the reorganization plan,
we review de novo questions involving the proper interpretation of a contract. Alpha Capital
Mgt, Inc v Rentenbach, 287 Mich. App. 589, 611; 792 NW2d 344 (2010).
2
Initially, all four defendants appealed the trial court’s judgments. On March 7, 2014, plaintiff
assigned its interest in the judgments against defendants to Stewart as Trustee of Terry Lynn
Stewart Revocable Trust. This Court subsequently dismissed Stewart’s appeals, both
individually and in his capacity as Trustee of Terry Lynn Stewart Revocable Trust, and TLS’s
appeal. We also substituted Stewart as Trustee of Terry Lynn Stewart Revocable Trust for
plaintiff as the appellee in this case.
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Under MCR 2.116(C)(10), summary disposition of all or part of a claim or defense may
be granted when “[e]xcept as to the amount of damages, there is no genuine issue as to any
material fact, and the moving party is entitled to judgment or partial judgment as a matter of
law.” A court reviewing such a motion “must determine whether there exists a genuine issue of
material fact on which reasonable minds could differ or whether the moving party is entitled to
judgment as a matter of law.” Gibson v Neelis, 227 Mich. App. 187, 190; 575 NW2d 313 (1997).
In this case, it is undisputed that on December 14, 2007 and June 14, 2007, defendants
signed commercial guaranties that guaranteed payment of the debt Stewbor incurred to plaintiff.
The issue is whether the reorganization plan affected defendants’ obligations under the
guaranties.
Generally, “[t]he discharge of a debtor in bankruptcy does not discharge the obligations
of guarantors.” Mich Nat’l Bank v Laskowski, 228 Mich. App. 710, 712; 580 NW2d 8 (1998).
Under the Bankruptcy Code, a “‘discharge of a debt of the debtor does not affect the liability of
any other entity on, or the property of any other entity for, such debt.” Id., quoting 11 USC
524(e). Thus, because it can affect only the relationship between debtors and their creditors,
“[t]he bankruptcy court cannot affect the obligations of guarantors.” Laskowski, 228 Mich. App.
at 712-713. A guaranty, however, may be discharged in bankruptcy where the discharge of a
guaranty is “accepted and confirmed as an integral part of reorganization.” Id. at 713.
In this case, the reorganization plan only refers to defendants’ guaranties in two places.
Section 6.2(C) of the reorganization plan provides that “[n]othing in this Plan, however, shall be
construed to limit [plaintiff’s] right to pursue collection of the unsecured claim from any
guarantor.” Article 24 of. The conclusion of the reorganization plan in article 24, states that
“[u]nsecured creditors other than [plaintiff] and Insiders shall be paid 100%. [Plaintiff] will be
paid its secured claim in the amount of $1,643,000.00 with no payment on its remaining
unsecured claim. The rights of [plaintiff] as to any guarantor of its debt are preserved.”
Accordingly, nothing in the plain and ordinary language of the reorganization plan indicates that
defendants’ guaranties were discharged or that such a discharge would be integral to the plan.
Thus, the bankruptcy reorganization plan in this case did not discharge any guarantee.
Laskowski, 228 Mich. App. at 713.
Because the reorganization plan did not affect the obligations of defendants as guarantors
and there was no genuine issue as to any material fact regarding the existence and operation of
those guaranties, plaintiff was entitled to summary disposition pursuant to MCR 2.116(C)(10).
Gibson, 227 Mich. App. at 190. The trial court did not err in granting plaintiff’s motion for
summary disposition.
We affirm. As the prevailing party Defendant-appellee may tax costs pursuant to MCR
7.219.
/s/ Jane E. Markey
/s/ David H. Sawyer
/s/ Donald S. Owens
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