PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

DONALD F. RIESETT, 

Plaintiff-Appellant,

v.

W.B. DONER & COMPANY; DONER  No. 01-2307

INTERNATIONAL, LIMITED, d/b/a Doner

& Company, Limited, d/b/a Doner

Cardwell Hawkins,

Defendants-Appellees. 

DONALD F. RIESETT, 

Plaintiff-Appellee,

v.

W.B. DONER & COMPANY; DONER  No. 01-2339

INTERNATIONAL, LIMITED, d/b/a Doner

& Company, Limited, d/b/a Doner

Cardwell Hawkins,

Defendants-Appellants. 

Appeals from the United States District Court

for the District of Maryland, at Baltimore.

Frederic N. Smalkin, Chief District Judge.

(CA-00-2026-S)

Argued: May 8, 2002

Decided: June 6, 2002

Before WILKINSON, Chief Judge, and WILKINS and

LUTTIG, Circuit Judges.
Affirmed in part and vacated and remanded in part by published opinion. Judge Luttig wrote the opinion, in which Chief Judge Wilkinson

and Wilkins joined. 

COUNSEL

ARGUED: James A. Dunbar, VENABLE, BAETJER & HOWARD,

L.L.P., Towson, Maryland, for Appellant. Robert Michael Jackson,

HONIGMAN, MILLER, SCHWARTZ & COHN, L.L.P., Detroit,

Michigan, for Appellees. ON BRIEF: Kathleen E. Wherthey, VENABLE, BAETJER & HOWARD, L.L.P., Rockville, Maryland, for

Appellant. Robert J. Muchnick, HONIGMAN, MILLER,

SCHWARTZ & COHN, L.L.P., Detroit, Michigan; Abbey G. Hairston, SEYFARTH SHAW, Baltimore, Maryland, for Appellees.

OPINION

LUTTIG, Circuit Judge: 

W.B. Doner & Co. is an S corporation incorporated under the laws

of Michigan. Donald Riesett, a citizen of Maryland, worked for Doner

until February, 2000. While employed at Doner, Riesett held Doner

stock, pursuant to a Shareholder Agreement, which provided: 

[u]pon the termination of a Shareholder’s employment with

the Company for any reason . . . Company will buy, and

such shareholder . . . will sell, all of such Shareholder’s

Shares for the price established under Section 4.1 or .2

below, as applicable, with settlement to be made in accordance with Section 5 below. 

J.A. 66. Doner did not redeem the stock after Riesett’s termination of

employment, and on June 30, 2000 Riesett filed a twelve-count complaint against Doner, under the diversity jurisdiction of 28 U.S.C.

§ 1332, alleging breach of contract and violations of state law. J.A.

11-79. On February 14, 2001 the parties entered into a Settlement

Agreement that required Doner to pay Riesett several hundred thou2 RIESETT v. W.B. DONER & COMPANY
sand dollars in damages (some of it payable immediately, the remainder payable in 120 monthly installments). J.A. 340-41. Doner also

agreed to redeem Riesett’s stock for $142,257.70 (subject to adjustments), most of it payable in four yearly installments, each due on

May 31st. In the event of default by Doner, the Settlement Agreement

provides: 

Riesett shall provide Doner with written notice of such

untimely payment. If Doner fails to make any payment

required under this Agreement with [sic] five (5) business

days of receipt of notice from Riesett, then all further

amounts due under this Agreement or those agreements

shall become immediately due and payable. 

J.A. 342. Doner further agreed to provide Riesett’s accountant with

information "reasonably necessary to form an opinion as to the proper

valuation of Riesett’s stock in Doner." J.A. 341. 

Despite the settlement agreement, further litigation ensued. Riesett

filed an amended complaint in the district court, post-settlement, with

two new counts. Count XIII sought an order requiring Doner to produce certain documents that Riesett believed to be relevant to the valuation of Riesett’s Doner stock. J.A. 194-95. In Count XIV, Riesett

asserted his right, as a shareholder of Doner, to a distribution to

defray taxes on his income, which the other shareholders of Doner

received in January 2001. Finally, Riesett filed a motion to enforce

the settlement agreement by accelerating all the stock redemption

installment payments because the scheduled May 31, 2001 payment

arrived late. 

The district court granted summary judgment to Riesett on Count

XIII, J.A. 437-41, but granted summary judgment to Doner on Count

XIV, J.A. 441-45. Finally, the district court granted in part and denied

in part Riesett’s motion to enforce the settlement agreement. The district court refused to accelerate the remaining stock redemption

installment payments, as Riesett requested, but instead ordered Doner

to pay Riesett interest at the prime rate for the delay in the payment

that should have arrived on May 31, 2001. 

RIESETT v. W.B. DONER & COMPANY 3
Because the district court entered a final judgment on all these

claims pursuant to Fed. R. Civ. P. 54(b), we have jurisdiction over the

parties’ cross-appeals. 

I.

We begin with Count XIV of Riesett’s amended complaint, where

Riesett seeks enforcement of his rights as a shareholder of Doner.

Doner is an S corporation, and its shareholders receive distributions,

at the beginning of each calendar year, to help them defray taxes on

the income allocated to them by Doner and reflected on their K-1

statements. In January of 2001, Doner gave each of its shareholders

a check for 43.5% of the income allocated on their form K-1 to defray

tax liabilities. 

Doner refused to give Riesett such a disbursement because Doner

claimed he was no longer a shareholder. Riesett still received his form

K-1 on March 2, 2001, which allocated nearly $800,000 in taxable

income to Riesett for Doner’s fiscal year ending on February 29,

2000, and faced a significant personal tax liability on that income,

without receiving the customary distribution from Doner to defray

this cost. Riesett claims he is still a Doner shareholder notwithstanding his termination of employment, and claims that Doner violated

Mich. Comp. Laws Ann. § 450.1301(3)1 by withholding the distribution and treating him differently than other shareholders in the same

class. 

The district court concluded that Riesett’s shareholder status terminated when his employment ended in February, 2000, even though,

by March 2, 2001, Riesett had not yet surrendered his stock certificates to Doner and had not received full payment for the stock. J.A.

444. The district court reasoned that "[t]he unconditional requirement

that Riesett transfer his shares to Doner upon termination of his

employment clearly indicates that the parties contemplated that Rie1

"[E]ach share shall be equal to every other share of the same class."

Mich. Comp. Laws Ann. § 450.1301(3). See also Polish American Publishing Co. v. Wojcik, 273 N.W. 771, 774 (Mich. 1937) ("All persons

who own shares of stock in a corporation at the time a dividend is

declared thereon are entitled to share in the dividend."). 

4 RIESETT v. W.B. DONER & COMPANY
sett would be a shareholder only while employed for the corporation."2

J.A. 444. 

We do not agree with the district court that Doner was entitled to

summary judgment on the ground that Riesett was no longer a shareholder. The Shareholder agreement does not state that title to an

employee’s stock immediately passes to Doner upon that employee’s

termination; rather, it merely obligates the employee to sell and the

company to buy all of the shares the employee owns at some point

in time after termination of employment. The text of the Shareholder

agreement bears repeating: 

[u]pon the termination of a Shareholder’s employment with

the Company for any reason . . . Company will buy, and

such shareholder . . . will sell, all of such Shareholder’s

Shares for the price established under Section 4.1 or .2

below, as applicable, with settlement to be made in accordance with Section 5 below. 

J.A. 66 (emphasis added). Section 5 provides when the "closing" or

such a sale or purchase of stock would take place: 

The Closing Date will be . . . (b) if the purchase is made

other than under clause (a) above, the later of (1) 90 days

after the date of the event giving rise to the purchase of

Shares from the Shareholder and (2) 30 days after the financial statements needed to determine the Book Value of such

Shareholder’s Shares have been completed. 

J.A. 69. A reasonable jury could certainly conclude that, under the

Shareholder Agreement, a terminated employee retains his rights as

2The district court further relied on Jenkins v. Haworth, Inc., 572 F.

Supp. 591, 601 (W.D. Mich. 1983) (holding that a terminated employee

was no longer a shareholder, even though he had not yet surrendered his

stock certificates nor received payment for them, because of a Buy/Sell

agreement in the Shareholder contract similar to the one in this case).

Jenkins is not mandatory authority. It is a federal district court opinion

predicting what the Michigan state supreme court would do, not an

authoritative interpretation from a state court. 

RIESETT v. W.B. DONER & COMPANY 5
a shareholder until "closing," and that Riesett therefore retained his

rights as a shareholder after termination. Indeed, it is even possible,

although we need not reach the issue, that the shareholder agreement

unambiguously means that an employee does not automatically lose

his shareholder status upon termination of employment. The agreement did not require Riesett to sell his stock immediately (and he did

not), nor did it automatically strip Riesett of his status or rights as a

shareholder upon termination. The agreement easily could have been

drafted with provisions that would have eliminated any ambiguities

and clearly stated that employees immediately lose their rights as

shareholders upon termination of employment.3 It was not so drafted,

and the district court erred in granting summary judgment on this

ground. 

We nevertheless affirm the district court’s grant of summary judgment to Doner on Count XIV because, regardless of whether Riesett

remained a shareholder of Doner, he released this claim through the

Settlement Agreement he signed on February 14, 2001. Riesett agreed

to release Doner from: 

any claims for any other relief which have or could have

arisen out of the employment relationship, or any other

occurrence whatsoever to the date of execution of the agreement, whether presently asserted or otherwise, whether

known or unknown, whether suspected or unsuspected. 

J.A. 343 (emphasis added). Riesett’s claim accrued in January of

2001, when the distribution to the shareholders occurred. See Mich.

Comp. Laws Ann. § 600.5827 ("[a] claim accrues at the time the

wrong upon which the claim is based was done regardless of the time

when the damage results"). The settlement agreement was signed

after that and therefore released Doner from liability for not making

a distribution to Riesett. Riesett’s argument that the claim accrued on

3We are not the first court to make this observation regarding buy-sell

agreements in closely-held corporations. See Stephenson v. Drever, 947

P.2d 1301, 1305 ("[T]he parties have the power to agree that a shareholder loses his status as a shareholder upon some event other than actual

transfer of shares to another.") (citing Stephenson v. Drever, 57 Cal.

Rptr. 2d. 662, 664 (Cal. Ct. App. 1997)). 

6 RIESETT v. W.B. DONER & COMPANY
March 2, 2001 is without merit. Although Riesett received his form

K-1 on that date, the allegedly wrongful distribution to Doner’s shareholders, with Riesett excluded, occurred in January. Perhaps, Riesett

learned of his claim on March 2, 2001, but the release covers claims

"known or unknown" that existed on February 14. Accordingly, the

district court’s grant of summary judgment to Doner on Count XIV

is affirmed. 

II.

We next address Count XIII. After the parties executed the Settlement Agreement, Riesett’s accountant demanded the following documents from Doner: Doner’s annual audited financial statements and

federal tax returns, a complete analysis of stockholder equity transactions that occurred from March 1, 1981 through February 28, 2001,

and any analysis of shareholder retained earnings for the period 1982

through 2001. Doner refused to turn them over, and Riesett sued. The

district court granted Riesett’s motion for summary judgment on

Count XIII, concluding that Riesett’s accountant was entitled to these

documents pursuant to the Settlement Agreement, which provides: 

Riesett’s accountant shall have the right to obtain from

Doner’s accountants all information reasonably necessary

to form an opinion as to the proper valuation of Riesett’s

stock in Doner. . . . Upon receipt of the requested information, [Riesett’s accountant] will have the right to obtain from

Doner’s accountants additional information necessary and

appropriate to form an opinion as to the proper valuation

of Riesett’s stock in Doner. 

J.A. 341 (emphasis added). 

Doner deems this request unreasonable and unnecessary to calculate "book value" as defined in the Shareholder Agreement, and further contends that the only documents necessary to calculate the

"book value" as defined in the Shareholder Agreement are the balance

sheet and schedule of combined book value per share of common

stock for the end of the fiscal year 1999. Doner’s arguments are

beside the point because they disregard the language of the Settlement

Agreement. As the district court correctly observed, the Settlement

RIESETT v. W.B. DONER & COMPANY 7
Agreement does not require that the information requested by Riesett’s accountant be relevant to "book value" as defined in the Shareholder Agreement. J.A. 438. Rather, the only limitation on the

information available to Riesett’s accountant is that it be "reasonably

necessary to form an opinion" as to the "proper valuation" of Riesett’s stock. J.A. 341 (emphasis added). Nowhere does the Settlement

Agreement define "proper valuation" as "book value" under the

Shareholder Agreement; indeed, the Agreement does not provide any

definition of "proper valuation." Because the parties used such an

imprecise term, we conclude, as did the district court, that the Settlement Agreement entitles Riesett to make an independent assessment

of the value of his stock, and that the requested documents are "reasonably necessary" to that end. The district court’s grant of summary

judgment to Riesett on this issue is affirmed. 

III.

Finally, we turn to Riesett’s contention that the district court should

have accelerated Doner’s payments because of the late arrival of an

installment due on May 31, 2001. The Settlement Agreement provides that, in the event of default by Doner, 

Riesett shall provide Doner with written notice of such

untimely payment. If Doner fails to make any payment

required under this Agreement with [sic] five (5) business

days of receipt of notice from Riesett, then all further

amounts due under this Agreement or those agreements

shall become immediately due and payable. 

J.A. 342 (emphasis added). 

Doner had agreed to redeem Riesett’s stock for $142,257.70 (subject to adjustments), with most of that sum payable in four yearly

installments, each due on May 31. When Doner failed to make payment on May 31, 2001, Riesett sent a three-line notice of default

addressed to H. Barry Levine (Vice Chairman of Doner) by certified

mail. A return receipt shows an indecipherable signature (but not

Levine’s) and a date of delivery of June 1, 2001. J.A. 566. Doner

claims that Levine "does not recall" receiving the letter of May 31,

but that when Levine learned of the default on July 27, 2001, he

8 RIESETT v. W.B. DONER & COMPANY
promptly cured the default by mailing a payment of $26,673.36 to

Riesett on July 31, 2001. J.A. 566. (This was the amount due Riesett

on May 31, but without interest for Doner’s two-month delay.) 

The district court found that even though Riesett complied with the

notice requirement, it would be "unreasonable and unconscionable" to

impose upon Doner the "harsh sanction" of accelerating the entire

amount due Riesett for the redemption of his stock. J.A. 568. Instead,

the district court ordered Doner to pay interest at the prime rate for

the delay in payment from May 31, 2001 to August 2, 2001, when the

check of $26,673.36 was received by Riesett. Id. We must address

two issues: first, whether the conditions for enforcing the acceleration

clause were satisfied, and second, if they were, whether we should

nevertheless deny enforcement of that contractual provision. 

A.

Under the Settlement Agreement, only two conditions must be met

for Riesett to invoke the acceleration clause. First, Riesett must "provide Doner with written notice" of the untimely payment. Second,

Doner must "fail[ ] to make" the delinquent payment "with [sic] five

(5) business days of receipt of notice from Riesett." We find it difficult to credit Doner’s argument that Riesett failed to "provide Doner

with written notice," (emphasis added), as did the district court, which

found Doner’s arguments on this point to be "specious." J.A. 567.

Someone at Doner signed the certified mail receipt, and although Riesett addressed the notice to Mr. Levine, nowhere does the Settlement

Agreement require that Mr. Levine, or any specific officer at Doner,

personally receive notice from Riesett. Nor does the Settlement

Agreement require that notice be sent to Doner’s counsel, as Doner

appears to believe. See Appellant’s Br. at 40. We conclude, as did the

district court, that Riesett’s notice, addressed to Mr. Levine and sent

by certified mail, with the return receipt signed and received, sufficed

to "provide Doner with written notice" of the late payment. 

We are also satisfied that Doner "fail[ed] to make" the delinquent

payment within "five (5) business days of receipt of notice from Riesett," as the certified mail receipt was signed on June 1, 2001 and

Doner did not mail the payment to Riesett until July 31, 2001. Again,

the acceleration clause hinges on whether Doner was provided with

RIESETT v. W.B. DONER & COMPANY 9
notice, not whether Mr. Levine (or any particular officer at Doner)

received notice. We know that someone at Doner received notice and

signed the certified mail receipt. Perhaps this employee dropped the

ball by failing to deliver the package to Mr. Levine, or perhaps Mr.

Levine received the package but forgot about it — he did not deny

receiving the certified mail sent by Riesett, but merely asserted that

he "did not recall" receiving it. J.A. 447. Whatever the story, missteps

by Doner personnel do not render Riesett’s notice defective under the

language of the Settlement Agreement. Riesett fulfilled his obligations to notify Doner, and Doner failed to make the late payment

within the required five days. 

B.

Notwithstanding Riesett’s notice to Doner, the district court denied

enforcement of the acceleration clause, in part because it believed that

enforcement of the clause would be "unconscionable" given the circumstances of this case. To the extent the district court’s opinion suggests or intimates that Doner could rely on the unconscionability

doctrine to escape its contractual obligations under the Settlement

Agreement, this was a mistake. When the substantive terms of a contract are so one-sided that a court is led to conclude that some defect

in bargaining process (such as fraud, duress, or incompetence of a

contracting party) led to the formation of the contract, then the unconscionability doctrine may be useful in helping courts ferret out such

contracts, whose enforcement would neither promote the autonomy of

the contracting parties nor enhance social welfare.4 The unconscionability doctrine has no application to contracts, such as the Settlement

Agreement in this case, which were entered into by sophisticated parties who bargained at arms’ length and were represented by counsel

throughout the negotiations. See Stenke v. Masland Development Co.,

Inc., 394 N.W.2d 418, 424 (Mich. Ct. App. 1986) (refusing to find a

4

See, e.g., Northwestern National Insurance Co. v. Donovan, 916 F.2d

372, 377 (7th Cir. 1990) ("Perhaps the correct inference to be drawn

from . . . cases that might be cited is that ‘unconscionability’ is little

more than an umbrella term for fraud, duress, illegality, and violation of

a fiduciary relationship."). 

10 RIESETT v. W.B. DONER & COMPANY
lease agreement unconscionable because it was "extensively negotiated by experienced and knowledgeable persons").5

Doner attempts to defend the district court’s decision not to accelerate by claiming that it "substantially performed" its contractual obligations, because the payment arrived 61 days late and Levine

"promptly corrected" the breach when it was brought to his attention.

Doner misunderstands the doctrine of substantial performance. First,

liability for breach of contract is strict, so Doner’s contention that

Levine "acted in good faith" by promptly sending payment to Riesett

once the breach was brought to his attention is not sufficient to establish that Doner substantially performed its obligations under the settlement agreement. Notwithstanding the observation in Jacob &

Youngs, Inc. v. Kent, 129 N.E. 889 (N.Y. 1921), that the contractor’s

failure to use the Reading pipe specified in the contract had been "unintentional," the court’s finding of substantial performance in that

case rested on the facts that the performance was "substantially" what

the homeowner had bargained for and on Judge Cardozo’s belief that

the parties had not sufficiently stated in their contract that use of the

5Neither the parties nor the district court discussed the choice of law

issue for interpretation of the settlement agreement. In the briefs, the parties seem to assume without explanation that Michigan contract law

applies. As a federal court sitting in diversity, we must apply the choice

of law rules of the forum state, see Klaxon Co. v. Stentor Electric Mfg.

Co., 313 U.S. 487 (1941), in this case, Maryland. Absent a choice-of-law

provision in the contract, Maryland applies the law of the jurisdiction

where the contract was made to matters regarding the validity and interpretation of contract provisions, see American Motorists Insurance Co.

v. ARTRA Group, Inc., 659 A.2d 1295, 1301 (Md. 1995), and a contract

is made where the last act necessary to make the contract binding occurs,

see Commercial Union Insurance Co. v. Porter Hayden Co., 698 A.2d

1167, 1200 (1997). See also Continental Cablevision of New England,

Inc. v. United Broadcasting Co., 873 F.2d 717, 720-21 (4th Cir. 1989)

(explaining that, under Maryland choice of law rules, construction of settlement agreement is governed by the law of state to which agreement

was mailed for execution by sole remaining party). 

The settlement agreement was signed first by Donald Riesett on February 14, 2001, and last by Doner’s representative in Michigan on February

19, 2001. The signatures by Doner’s representative would be the "last act

necessary" to make the settlement agreement binding. 

RIESETT v. W.B. DONER & COMPANY 11
Reading pipe was a condition precedent to receipt of payment. See

Jacob & Youngs, 129 N.E. at 891 ("This is not to say that the parties

are not free by apt and certain words to effectuate a purpose that performance of every term shall be a condition of recovery. . . . This is

merely to say that the law will be slow to impute the purpose, in the

silence of the parties, where the significance of the default is grievously out of proportion to the oppression of the forfeiture.").

Although a breaching party’s inadvertence may, in some cases, be relevant evidence as to whether the defect was "insubstantial," the doctrine of substantial performance ultimately turns on whether "all the

essentials necessary to the full accomplishment of the purposes for

which the thing contracted has been performed with such approximation that a party obtains substantially what is called for by the contract," Gibson v. Group Insurance Co., 369 N.W.2d 484, 486 (Mich.

Ct. App. 1985) (quoting 6A Michigan Law & Practice, Contracts,

§ 314, pp. 315-316), not on the breaching party’s state of mind. 

The second and more fundamental problem with Doner’s argument

is that parties cannot escape their contractually-chosen remedies for

breach by invoking the doctrine of substantial performance. Although

the doctrine of substantial performance prevents promisee opportunism by forbidding a promisee from walking away from a contract and

refusing to perform his reciprocal contractual duties because of a

minor breach by the promisor,6 it does not mean that a promisor who

"substantially performed" can avoid a lawsuit for damages by the

promisee, or can escape the parties’ chosen remedy for that shortcoming. See 3A Corbin, Contracts § 702 ("Substantial performance" is not

a complete discharge of duty. It is not a defense in a suit . . . for damages."); People v. Walton, 440 N.W.2d 114, 116 (Mich. Ct. App.

1989) (holding that even where a party substantially performs its contractual obligations, "the other party may be entitled to ‘extra compensation or damages’ as a result of the deviation"). Even if we were

to assume arguendo that Doner’s late payment to Riesett constituted

"substantial performance," it would not render inapplicable the acceleration clause. In Jacob & Youngs, notwithstanding the contractor’s

"substantial performance," the court still held that the homeowner was

6

See, e.g., Antonoff v. Basso, 78 N.W.2d 604, 610 (Mich. 1956) (if one

party substantially performs, the other may not "refuse to render a reciprocally promised performance") (emphasis added). 

12 RIESETT v. W.B. DONER & COMPANY
entitled to expectation damages — the difference in the value of the

house resulting from the use of non-Reading pipe. In this case, the

district court (rather than enforcing the acceleration clause) ordered

a make-whole remedy to put Riesett in the position he would have

enjoyed had the late payment not occurred. This would have been an

appropriate remedy if the parties had not agreed to a different remedy

in the Settlement Agreement in the event of a late payment after

notice. But Doner and Riesett bargained around the default rule of

expectation damages and agreed that, in the event of a failure by

Doner to make payment within five days of receipt of notice of

default, all amounts not yet paid would become immediately due and

payable.7

If courts were to substitute expectation damages for the parties’

chosen remedy under an acceleration clause by talismanic invocation

of "substantial performance," this would have serious ramifications

for commercial lending. Acceleration clauses are essential in lending

agreements because often, if a borrower makes late payments, litigation costs will dwarf any "expectation damages" (interest on late payments) that the lender might hope to recover in court. If lenders had

to make do with expectation damages notwithstanding the existence

of an acceleration clause in their agreements, borrowers would have

every incentive to shirk and no incentive to pay on time, because borrowers would know that litigation over late payments would be une7

Jenkins v. USA Foods, Inc., 912 F. Supp. 969 (E.D. Mich. 1996), on

which Doner heavily relies, is inapposite. In Jenkins, the plaintiff could

not enforce the acceleration clause without violating his reciprocal contractual duty to "cooperate reasonably" with the defendants "to avoid the

undue interruption of [the defendant’s] operations and activities." 912 F.

Supp. at 975. Therefore, because the defendants in Jenkins "substantially

performed" their end of the bargain, the court refused to allow the plaintiff to disown his agreements and escape his contractual duties owed to

the defendant by enforcing the acceleration clause. 

In this case, by contrast, Riesett’s enforcement of the acceleration

clause would not violate any contractual duty owed to Doner under the

settlement agreement. The "substantial performance" by a party only prevents the other party from repudiating his contractual promises, and

Doner does not point to a single contractual obligation under the settlement agreement that Riesett has failed to perform or is trying to avoid.

RIESETT v. W.B. DONER & COMPANY 13
conomical for the lender. We cannot accept Doner’s argument that it

can avoid the acceleration clause by relying on the doctrine of substantial performance. 

C.

Even though enforcement of the acceleration clause cannot be

denied by relying on the doctrines of unconscionability or substantial

performance, neither of the parties, nor the district court, discussed

the Michigan law governing the validity and enforceability of acceleration clauses. Although acceleration clauses are valid and enforceable

in Michigan, see Washburn v. Michailoff, 613 N.W.2d 405, 408

(Mich. Ct. App. 2000), a court may decline to enforce an acceleration

clause where it would be "inequitable" to do so, see State-William

Partnership v. Gale, 425 N.W.2d 756, 759 (Mich. Ct. App. 1988), or

when "an honest dispute exists," see Mitchell v. Dahlberg, 547

N.W.2d 74, 78 (Mich. Ct. App. 1996). The district court did not apply

Michigan law at all, and the factual record is insufficiently developed

for us, as an appeals court, to determine as a matter of first impression

whether enforcement of the acceleration agreement would be "inequitable" under Michigan law or whether "an honest dispute exists."

These are fact-bound inquiries, and we will therefore remand this

issue to allow the parties the opportunity to establish, before the district court, whether the acceleration clause is valid and enforceable

under Michigan law. 

CONCLUSION

The district court’s grants of summary judgment to Doner on Count

XIV and to Riesett on Count XIII are affirmed. The district court’s

denial of Riesett’s motion to enforce the settlement agreement is

vacated and the case is remanded for further proceedings. 

SO ORDERED

14 RIESETT v. W.B. DONER & COMPANY