In the News

Dykema Captures Major Victory in Sixth Circuit Court of Appeals

March 27, 2012

On March 9, 2012, Dykema obtained a significant victory for a major bank client (the “Bank”) in the Sixth Circuit Court of Appeals. In an opinion issued 24 hours after oral argument, the Court affirmed summary judgment obtained by Dykema which dismissed all claims against the Bank.

The case involved a proposed commercial real estate development project in which the Bank entered into a 20-year lease with the plaintiff developer, and apparently indicated to the plaintiff that it would like to finance the project’s construction. Plaintiff never obtained the construction financing, defaulted on its outstanding loans with another bank and lost the property to foreclosure in December 2008. Plaintiff blamed the Bank for this loss and sought an unspecified amount exceeding $15 million, claiming that the Bank breached a promise to provide construction financing, breached its lease and acted in bad faith.
 
The Sixth Circuit affirmed the dismissal of all of these claims by the lower court, finding that the Michigan statute of frauds, MCL 566.132(2), barred all claims. The Court rejected Plaintiff’s argument that a writing by the Bank’s loan officer that the Bank was committed to loaning Plaintiff the money was sufficient to satisfy the statute. Instead, it held that to be enforceable, the writing must contain essential terms of the loan, such as the amount, and method of payment.

The Court also rejected Plaintiff's attempts, using old law that predated the amendment of the Michigan statute, to argue that there were "exceptions" to this rule, including promissory estoppel, part performance and fraud.

This case has particular relevance to the lending industry, and should prove helpful in fending off efforts of those who hope to chisel away at the protections afforded by the statute of frauds. It may also be instructive to courts in other states that have similar statutes.
 
The Bank was represented by Dykema’s Marilyn A. Peters and Christyn Scott.