PER CURIAM.
Defendant, Walter Cohen, appeals as of right a judgment entered in favor of plaintiff, Comerica Bank, in this contract dispute. On appeal, defendant challenges the circuit court's order granting plaintiff's motion for summary disposition plaintiff. We affirm.
As noted in the preceding paragraph, this is a contract dispute. On August 1, 2006, plaintiff and 21 Century Arizona Monteil L.L.C., entered into a loan agreement. The agreement specified that defendant, manager of 21 Century, was the guarantor. The agreement further specified that the term "loan" referred to "an equity loan in the amount of $226,750 . . . and an acquisition and renovation loan in the amount of $10,640,000." The maturity date was February 1, 2009.
Pursuant to paragraph 6.1(a) of loan agreement, an event of default is, inter alia:
The notice provision, Paragraph 8.3, states:
Also on August 1, 2006, defendant executed a limited guaranty, which first stated:
Interest and costs of collection were also included in the guarantor's obligation pursuant to paragraph 1. Paragraph 2 of the limited guaranty specified, "This is a continuing Guaranty of payment and not of collection and remains effective whether the Indebtedness is from time to time reduced and later readvanced or entirely extinguished and later reincurred."
In addition, paragraph 7 of the limited guaranty provides, "The undersigned waive(s) any right to require the Bank to (a) proceed against Borrower, any property or collateral . . . or (c) pursue any other remedy in the Bank's power." Finally, paragraph 13(a) of the limited guaranty specifies that:
On February 3, 2009, plaintiff filed a complaint alleging that 21 Century defaulted on the loan.
Defendant filed an answer on March 24, 2009, asserting, first, that plaintiff failed to mitigate its alleged damages by not approving a proposed sale of the property. Second, plaintiff failed to give proper notice of default to defendant's attorney under the terms of the loan agreement and note, and therefore, neither 21 Century nor defendant was in default. Third, since defendant's guaranty was limited to a portion of the debt, defendant's obligation would be satisfied by the sale and proceeds from a proposed sale of the real estate collateral.
On April 22, 2009, plaintiff filed a motion for summary disposition pursuant to MCR 2.116(C)(10). The trial court held a hearing on plaintiff's motion on May 27, 2009, and on June 2, 2009, the trial court entered an opinion and order granting plaintiff's motion for summary disposition. The court first stated that the terms of the guaranty were clear and unambiguous, and therefore, the court found "no merit in Defendant's contention that his obligation under the Guaranty would be satisfied by partial payment by the Borrower pursuant to a prospective sale of the Condominium Project securing the Note." The court further ruled:
Judgment for plaintiff was entered on July 9, 2009, and this appeal ensued.
Defendant first argues that the trial court erred in granting summary disposition to plaintiff because the court improperly interpreted the limited guaranty at issue.
Plaintiff brought its motion for summary disposition pursuant to MCR 2.116(C)(10). "This Court reviews de novo a trial court's decision on a motion for summary disposition." Allen v. Bloomfield Hills Sch. Dist., 281 Mich.App. 49, 52, 760 N.W.2d 811 (2008). A motion for summary disposition under MCR 2.116(C)(10) tests the factual sufficiency of the complaint. Corley v. Detroit Bd. of Ed, 470 Mich. 274, 278, 681 N.W.2d 342 (2004). This Court reviews
"There is a genuine issue of material fact when reasonable minds could differ on an issue after viewing the record in the light most favorable to the nonmoving party." Allison v. AEW Capital Mgmt, LLP, 481 Mich. 419, 425, 751 N.W.2d 8 (2008). In addition, "[t]he construction and interpretation of a contract present questions of law that we review de novo." Saint Clair Medical, PC v. Borgiel, 270 Mich.App. 260, 264, 715 N.W.2d 914 (2006).
"Contracts of guaranty are to be construed like other contracts, and the intent of the parties, as collected from the whole instrument and the subject-matter to which it applies, is to govern." First Nat'l Bank v. Redford Chevrolet Co., 270 Mich. 116, 121, 258 N.W. 221 (1935) (quotation marks and citation omitted). When interpreting a contract,
In addition,
It should also be noted that
Nevertheless:
Defendant argues that the trial court's finding—that defendant does not receive credit for any outside payment that is made in satisfaction of the indebtedness, and that, absent defendant's personal payment of the full 30 percent share, defendant will not be released from the guaranty—is illogical. According to defendant, the trial court's interpretation could be supported only by adding the bracketed words to the guaranty: "Upon payment in full of its percentage share (as set forth above) [by guarantor], Guarantor shall be released from liability hereunder . . .," and this interpretation violates the basic principle of contract law that courts are not permitted to rewrite contracts by adding additional terms. In addition, defendant argues that, pursuant to Chabut v. Chabut, 66 Mich.App. 440, 239 N.W.2d 401 (1976), plaintiff was required to foreclose on the condominium project before collecting on the guaranty, and furthermore, requiring foreclosure is a fair construction of the guaranty, as evidenced by the language of paragraph 13(a). Similarly, according to defendant, there is nothing in the guaranty that relieves plaintiff of its legal obligation to mitigate damages.
The plain language of the limited guarantee forecloses defendant's arguments. As noted in the Facts section of this opinion, the agreement specified that defendant was the guarantor, and the limited guaranty clearly states the unconditional obligation undertaken by defendant:
Paragraph 2 of the limited guaranty further specified, "This is a continuing Guaranty of payment and not of collection. . . ." Such a guaranty of payment is absolute under the terms of the contract and settled case law. Bastian Bros. Co. v. Brown, 293 Mich. 242, 248, 291 N.W. 644 (1940). It is a guaranty of collection, not applicable here, that "is conditional and becomes fixed only if the creditor exercises reasonable diligence in collecting from the principal debtor. Reasonable diligence in cases of guaranties of collection demands that, unless there are mitigating circumstances, the creditor prosecute to judgment and return of execution thereof unsatisfied." Id. at 248-249, 291 N.W. 644 (citations omitted).
The unconditional nature of defendant's obligation is further clarified by paragraphs 4 and 7 of the guaranty. Paragraph 4 states in relevant part:
And, pursuant to paragraph 7 of the agreement, defendant "waive(s) any right to require the Bank to: (a) proceed against Borrower, any property or collateral . . . or (c) pursue any other remedy in the Bank's power." Finally, paragraph 13(a) of the guaranty details defendant's specific obligation:
Thus, by the plain language of the guaranty, defendant unconditionally and absolutely agreed to pay 30 percent of the indebtedness and plaintiff was not required to foreclose on the real estate or proceed against other collateral before seeking payment from defendant. Furthermore, even if plaintiff did collect money through foreclosure, plaintiff would not be required to offset those funds against the money due from defendant unless the payment by defendant would result in recovery of more than 100 percent of the indebtedness. See Jim-Bob, Inc. v. Mehling, 178 Mich.App. 71, 92, 443 N.W.2d 451 (1989) ("[A] plaintiff may simultaneously pursue all of his remedies . . . so long as plaintiff is not awarded double recovery." (quotation marks and citation omitted)).
Although defendant relies on Chabut to support his position that plaintiff was first required to foreclose on the real estate, Chabut addressed a suretyship, which, as explained in Bandit Indus., 463 Mich. at 507-508 n. 4, 620 N.W.2d 531, is not the same thing as a contract of guaranty. Therefore, Chabut's holding that "a creditor must, in satisfaction of a debt, proceed against the collateral in such a fashion so as to protect the rights of an accommodation endorser . . ." is inapplicable. Chabut, 66 Mich.App. at 453, 239 N.W.2d 401.
Furthermore, while it is true that, "[i]n both contract and tort actions, an injured party must make every reasonable effort to minimize damages[,]" Bak v. Citizens Ins. Co., 199 Mich.App. 730, 736, 503 N.W.2d 94 (1993), by defendant's own admission, the alleged proposed sale of the real estate
Defendant next argues that the trial court erred in granting summary disposition when there was no default under the loan agreement at the time the complaint was filed. Specifically, defendant argues that, while plaintiff sent 21 Century a notice of default dated December 31, 2008, it did not send a copy of the notice of default to the company's attorney at the time. Instead, plaintiff sent a copy of the notice to the attorney on or about April 3, 2009, which was after plaintiff filed the lawsuit on February 3, 2009. Defendant thus concludes that, when plaintiff filed this action, there was no payment default under the loan agreement and no default under the limited guaranty on which this case is based. Again, defendant's argument cannot prevail in light of the contract language.
Pursuant to paragraph 6.1 of the loan agreement, an event of default is defined as:
According to paragraph 6.2(b), if an event of default occurs, plaintiff is entitled to "declare the entire outstanding principal balance of the Loan . . . together with all interest thereon, to be due and payable immediately." Further, paragraph 6.3 states:
Paragraph 8.3, the notice provision of the loan agreement, states:
The corresponding notice provision in the guaranty, paragraph 7, states, "Except as to any applicable notice . . . rights set forth in the Loan Documents, the undersigned waive(s) notice of . . . default, notice of intent to accelerate or demand payment of the Indebtedness. . . ."
First, whether lack of proper notice to 21 Century's attorney meant the loan was not actually in default on December 31, 2008, does not, as plaintiff asserts, affect defendant's obligation. The loan was due on February 1, 2009, and was not paid. The complaint was filed on February 3, 2009. As stated in the guaranty, defendant "unconditionally and absolutely guarantee(s) to [plaintiff] . . . payment when due, whether by stated maturity, demand, acceleration or otherwise, of all existing and future indebtedness to [plaintiff] of 21 Century. . . ." Therefore, defendant was not relieved of his obligation under the guaranty and the court did not err in granting summary disposition to plaintiff because of any alleged lack of notice. Second, it is, in any event, not at all clear from the wording of the notice provision that notice to 21 Century is ineffective simply because the attorney was not timely copied. Moreover, the loan agreement does not address notice to the guarantor, and the guaranty agreement indicates that notice to the guarantor is otherwise waived. Defendant does not and cannot dispute that he, personally, received notice of default. The demand letter, in fact, is addressed to defendant in his capacity as both manager of 21 Century and as guarantor. Defendant signed the return receipt for the letter on January 5, 2009.
Further, even if defendant, as guarantor, had not immediately received notice of default, which he clearly did,
See also Piasecki v. Fidelity Corp. of Mich., 339 Mich. 328, 337, 63 N.W.2d 671 (1954) ("[T]he guarantor of payment, not a party to the original note, cannot complain of laches, or want of notice, unless it has worked to his prejudice . . . .") (quotation marks and citation omitted). Defendant has not claimed that he suffered damages
Defendant next argues that the trial court erred in granting summary disposition before the close of discovery. Although a motion brought under MCR 2.116(C)(10) is usually not properly granted until the parties have had a chance for discovery, "`summary disposition may . . . be appropriate if further discovery does not stand a reasonable chance of uncovering factual support for the opposing party's position.'" Stringwell v. Ann Arbor Pub. Sch. Dist, 262 Mich.App. 709, 714, 686 N.W.2d 825 (2004), quoting Peterson Novelties, Inc. v. City of Berkley, 259 Mich.App. 1, 25, 672 N.W.2d 351 (2003).
We reject defendant's argument that granting plaintiff's motion was premature. First, regarding defendant's contention that further discovery would yield evidence regarding the meaning of the guaranty, "[c]ontracts of guaranty are to be construed like other contracts," First Nat'l Bank, 270 Mich. at 121, 258 N.W. 221 (quotation marks and citation omitted), and "[u]nder ordinary contract principles, if contractual language is clear, construction of the contract is a question of law for the court[,]" Meagher, 222 Mich.App. at 721, 565 N.W.2d 401. For all the reasons stated above, the meaning of the guaranty is clear and unambiguous, and discovery is not needed to uncover evidence regarding the parties' intent. Second, because mitigation of damages, i.e., a foreclosure proceeding, was not required pursuant to the unambiguous terms of the guaranty, discovery was not needed on this issue, either. Finally, regarding lack of notice, as explained above, defendant did receive notice, and even if he did not, he has not claimed that he was prejudiced in any way by any alleged lack of notice, and therefore, he is not relieved of his obligation under the guaranty. Therefore, the trial court did not err in granting plaintiff's motion for summary disposition before the close of discovery.
Affirmed. Plaintiff may tax costs, having prevailed in full. MCR 7.219(A).
