JP Morgan Chase Bank v. Winget

Summarized by J. Debbeler , Bricker Graydon LLP
11 years 2 weeks ago

Citation:

File 15a0140n.06 (Case Nos. 14-1158,1172,1276) (Not recommended for publication)

Tag(s):

Ruling:

In a case arising out of the commercial law dispute between lender and borrowers over the terms of a guaranty, the Sixth Circuit reversed the district court's decision to reform a guaranty and remanded the case to the district court for entry of judgment for the lender. The Sixth Circuit affirmed the district court's grant of summary judgment to the lender on the remaining claims including the denial of sanctions against the lender's counsel.

Procedural context:

Lenders filed an action on a guaranty and certain pledge agreements. One of the borrowers filed a motion for judgment on the pleadings arguing that the guaranty's terms excepted a borrower from its enforcement. The district disagreed and the borrower filed a counterclaim for reformation. After denying the lender's summary judgment motion, a bench trial occurred and the court reformed the guaranty. The district court then granted the lender's motion for summary judgment on certain delay and enforceability defenses. The borrower sought sanctions against the lender for its opposition to the reformation claim- which sanctions were denied by the district court.

Facts:

The lender was the administrative agent for a group of lenders who loaned $450 million to a collection of related entities. The credit agreement was later amended to pick up a guaranty and two pledge agreements in return for certain forbearance. One of the obligors filed a Chapter 11 triggering certain defaults as to other obligors. The borrower believed that an obligor (a trust) was to be treated the same as another obligor although the trust was not mentioned in the guaranty. The district court found the exclusion of the trust from the guaranty was a mistake. The Sixth Court disagreed that there was a mistake. The Sixth Circuit rejected the borrower's argument that the bankruptcy did not affect a delay defense. The Sixth Circuit rejected the borrower's argument's on enforceability. The Sixth Circuit found there was no abuse of discretion in denying sanctions.

Judge(s):

Chief Judge Cole, Circuit Judge Griffin and District Judge Carr sitting by designation.

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