Guaranty enforcement; Statute of limitations defense; Waiver; MCR 2.111(D)(3)(a); Palenkas v Beaumont Hosp; Attorney Gen ex rel Dep’t of Envtl Quality v Bulk Petroleum Co; Motion for involuntary dismissal; Whether plaintiff first breached the loan agreement; Whether defendant signed the guaranty under undue influence; Misrepresentations; Deduction of a tax benefit from defendant’s liability; Contract interpretation; Damages mitigation; Uptown Ridge Investors, LLC (URI)

In this suit to enforce a guaranty, the court held that defendant waived the statute of limitations (SOL) defense, and even if he had not, the trial court correctly denied his motion for involuntary dismissal on this basis. Further, plaintiff did not first breach a contract, and defendant did not sign the guaranty under undue influence due to misrepresentations by plaintiff. Finally, the court concluded the trial court erred in deducting a tax benefit plaintiff received from defendant’s liability. Thus, it affirmed in part, vacated in part, and remanded for “the trial court to correct the amount of defendant’s liability in the judgment.” The case arose from a loan agreement between plaintiff and a nonparty-LLC (URI), for which all three members of URI, including defendant, signed guaranties. After a bench trial, the trial court found his total indebtedness was $649,628.62. But it deducted half of an alleged $228,845 benefit plaintiff had received from taking tax losses. He appealed and plaintiff cross-appealed. Defendant first asserted the trial court erred in ruling that the SOL did not bar plaintiff’s claim and in denying his motion for involuntary dismissal based on the SOL. The court disagreed, first concluding that he waived the SOL defense. “While he listed the statute as barring plaintiff’s claims, like the defendant hospital in Palenkas, defendant here did not state the facts to support his defense.” As to his motion, the “trial court weighed the evidence it had heard and determined that defendant had not established that the [SOL] barred plaintiff’s claims.” It did not clearly err in doing so. Next, the court found no contract language supporting his “argument that plaintiff first engaged in a breach, let alone a ‘substantial’ one that deprived defendant of something he reasonably expected to receive[.]” It noted that the “lack of additional loans may have slowed (and contributed to ending) URI’s project, but the trial court did not clearly err in concluding that plaintiff had not substantially breached a contract.” The court also held that “the trial court did not clearly err in concluding, based on the evidence, that defendant’s guaranty ‘was freely and voluntarily executed and delivered by’” him. Lastly, the court determined that the evidence and the agreements’ terms did “not support a factual finding or legal conclusion that the tax losses were intended to minimize defendant’s potential liability.”