Name of Assigned Judge Blanche M. Manning Sitting Judge if Other or Magistrate Judge than Assigned Judge
The parties' cross-motions for summary judgment are before the court. For the following reasons, Mr. Najjar's motion for summary judgment as to Counts I-III [Dkt. 87] and the defendants' motion for summary judgment as to Counts I, III, and IV [Dkt. 127] are granted in part and denied in part as specified below. In addition, Dkt. 128 is stricken as duplicative of Dkt. 127. This matter is set for a status hearing on June 2, 2011 at 11:00 a.m. At this time, the parties should be prepared to agree to a firm trial date.
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On December 17, 2007, Pierre Najjar loaned $675,000 to Gus Dahleh, an officer of Mortgage Direct Company, for use in Mortgage Direct's business. In connection with that loan, Gus Dahleh signed a promissory note for $750,000 payable to Mr. Najjar and gave Mr. Najjar a check in the amount of $750,000 dated January 17, 2008, the date the promissory note was due. The promissory note specified that Michigan law would govern any disputes and required Gus Daleh to pay costs and fees if he defaulted. It also stated that Mr. Najjar was loaning $675,000 but that Gus Daleh was responsible for that amount plus a "balloon payment" of $75,000 or the "highest amount allowable under Michigan law" and that the total amount due was $750,000.
Finally, the note provided that:
in no event shall the amount of interest due hereunder, together with all amounts reserved, charged or taken by [Mr. Najjar] as compensation for fees, services or expenses incidental to the making, negotiation or collection of the loan evidenced hereby, which are deemed to be interest under applicable law, exceed the maximum rate of interest on the unpaid principal balance hereof allowed from time to time by applicable law. If any sum is collected in excess of the applicable maximum rate of interest, the excess sum collected shall apply to reduce the principal debt or be refunded to [Gus Daleh], at [Mr. Najjar's] option.
Third Amended Complaint, Ex. A (Dkt. 82-2).
On December 17, 2007, Gus Daleh also signed a "business purpose affidavit" stating that he signed the promissory note "for a business purpose (i.e., Mortgage Direct 360 W. Butterfield Elmhurst IL 60121) and the Note shall not be construed as a consumer contract." Id. at Dkt. 82-2, at 7. Apparently, however, he spent the funds on himself, including a trip to Las Vegas and on-line trading. When January 17, 2008, rolled around, Mr. Najjar presented the check to the bank to no avail, as Gus Dahleh's account was closed.
Sam Dahleh (Gus' brother) subsequently signed a personal guaranty dated August 10, 2009. See Third Amended Complaint, Ex. E (Dkt. 82-2, at 14). In the guaranty, Sam Daleh acknowledged that his "brother, Gus Daleh, and the company Mortgage Direct Company, owe Najjar $750,000 based on a December 17, 2007, Promissory Note that has matured." Sam Daleh also promised to unconditionally guaranty payment of that debt, plus interest and attorneys' fees, in one year. At the end of the document, Sam Daleh signed on two lines, one labeled "Sam Daleh, Individually" and the other labeled "Sam Daleh, as CEO and President of Mortgage Direct Company." Underneath the signature block, Sam Daleh wrote in:
This is not final agreement. We (Sam, Gus Pierre attorney's [sic] will work out changes by 08/11/09. I (Sam Daleh) signing as guarantor for the money owed to Pierre Najjar.
Sam Daleh then printed and signed his name under the handwritten addition and added the date of August 8, 2009. The parties agree that Sam Daleh made some payments by and through Mortgage Direct to Mr. Najjar.
Mr. Najjar sued Gus Daleh, Sam Daleh, and Mortgage Direct, based on diversity jurisdiction. Counts I and II are claims for breach of contract against Mortgage Direct and Gus Daleh, respectively, based on the promissory note and bounced check. Count III is a claim for breach of contract against Sam Daleh based on the guaranty. In Count IV, Mr. Najjar contends that all three defendants defrauded him because Gus Daleh and ...