UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

 

BROWN BARK, III, L.P.,

Plaintiffs,

v. Case No. 08-14509-DT

ONE MANAGEMENT INC. and JERRY WATHA,

Defendants.

/

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND CONVERTING

 AUGUST 26, 2009 HEARING INTO A STATUS CONFERENCE

Before the court is a motion for summary judgment filed by Plaintiff Brown Bark

III, L.P. (“BBIII”) on July 1, 2009. The motion has been fully briefed and the court

concludes that a hearing is unnecessary. See E.D. Mich. LR 7.1(e)(2). For the

reasons stated below, the court will grant the motion in part and deny it in part.

I. BACKGROUND

BBIII initiated this action on October 22, 2008, in a five-count complaint against

Defendants One Management, Inc., and Jerry Watha. The complaint asserts claims for 

Breach of Contract-Against Borrower One Management (Count I), Breach of ContractAgainst Guarantor Watha (Count II), Breach of Contract-Implied in Fact (Count III),

Breach of Contract-Implied in Law (Count IV), and Promissory Estoppel (Count V). 

The complaint alleges that this action arises from a banking relationship and

course of dealing between Miami Valley Bank (“MVB”) and One Management and

Watha, whereby One Management obtained financing from MVB for the operation of

2:08-cv-14509-RHC-RSW Doc # 26 Filed 08/26/09 Pg 1 of 12 Pg ID 420
2

One Management’s real estate business, and Watha guaranteed One Management’s

repayment obligations. (Compl. ¶ 5.) MVB was placed in receivership under the

Federal Deposit Insurance Corporation (“FDIC”). (Id.) The FDIC, as receiver, became

entitled to enforce Defendants’ obligations to repay the financing One Management

received from MVB, and otherwise under the contracts between Defendants and MVB.

For valuable consideration, FDIC assigned its right, title, and interest in and to the loans

and all related contracts to BBIII. By virtue of the foregoing, BBIII contends it now has

the right to collect the loans and otherwise enforce Defendants’ contracts. (Id.) 

Specifically, the complaint asserts that MVB and One Management entered into

an agreement whereby MVB loaned One Management funds for the purpose of

purchasing and/or maintaining residential real estate properties in Wayne County,

Michigan, which One Management acquired for investment purposes. (Id. ¶ 6.) One

Management executed and delivered to MVB thirteen promissory notes (the “Notes”) to

evidence the terms of funding provided and One Management’s repayment

obligations. (Id.) To induce MVB to extend funding to One Management, Watha agreed

to guaranty the obligation of One Management to MVB to repay funds loaned, including,

but not limited to, the obligations imposed under the Notes. (Id. ¶ 7.) The complaint

further alleges that Watha executed written guaranty agreements requiring him to

personally repay each of the Notes and that MVB loaned funds and extended credit to

One Management pursuant to the Notes. (Id. ¶¶ 7 & 8.)

BBIII alleges that the Notes have all matured, and immediate payment is due of

all principal and interest owed under the Notes. The Notes also require One

Management to pay the lender’s costs of collection, including reasonable attorney fees. 

2:08-cv-14509-RHC-RSW Doc # 26 Filed 08/26/09 Pg 2 of 12 Pg ID 421
3

(Id. ¶ 9.) BBIII further alleges that One Management has defaulted on its obligations

under the Notes by failing to pay them in full upon maturity. (Id. ¶ 10.) 

The FDIC as receiver for MVB assigned its rights under the Notes to BBIII. (Id. ¶

11.) BBIII contends that as a consequence of One Management’s default, BBIII is

presently entitled to exercise all rights and remedies provided by law and the Notes to

enforce One Management’s and Watha’s obligations to pay all amounts outstanding

under the Notes and that One Management and Watha are liable to BBIII for all costs

and expenses incurred in connection with the enforcement of the Notes, including

reasonable attorney fees. (Id. ¶¶ 12-13.) BBIII has demanded that One Management

and Watha pay all amounts outstanding under the Notes, but Defendants have failed to

do so. (Id. ¶ 14.)

Following discovery, BBIII brought the instant motion for summary judgment,

asserting that there is no genuine issue of material fact, and BBIII is entitled to judgment

as a matter of law in the amount of $679,878.68 against One Management and Watha,

jointly and severally and $53,904.73 against only One Management. BBIII contends

these amounts are due under the thirteen relevant Notes, twelve of which were

personally guaranteed by Watha. (Pl.’s Mot. at 7.) BBIII also asserts that it is entitled

to interest accruing under the parties’ contracts after June 16, 2009, costs and attorney

fees of $16,279.31, and further costs and attorney fees that may accrue until judgment

is paid in full. (Id. at 1.) 

In response, Defendants do not contest the existence of the Notes, or that a

balance in some amount remains in default. (Defs.’ Resp. at 4.) Rather, Defendants

assert that payments of $25,000 each were paid directly to MVB on behalf of One

2:08-cv-14509-RHC-RSW Doc # 26 Filed 08/26/09 Pg 3 of 12 Pg ID 422
4

Management by Heritage Title Agency on loans pertaining to the properties at (1) 15882

Blackstone, (2) 4885 Courville, (3) 9352 Hartwell, (4) 5028 Bedford, and (5) 5060 Three

Mile Drive for which credit was purportedly not been provided. (Id.) Moreover,

Defendants contend that after the commencement of this action, an additional $25,000

was paid to BBIII on the loan pertaining to the property at 2329 Danforth. Accordingly,

Defendants contend that an issue of fact remains as to whether the judgment against

Defendants should be $150,000 less than that which BBIII seeks.

Additionally, Watha disputes the authenticity of one of the twelve guarantees

purportedly signed by Watha. (Defs.’ Resp. at 6-7.) Watha contends that the signature

on the guaranty related to the property at 15755 Patton is “incorrect.” (Id. at Ex. 5,

Watha Aff. ¶ 4.) Watha avers that “[t]he signature on that guaranty is not mine, nor do I

know who executed that document. Further, I am not in possession of any executed

guaranty on a loan for that property, nor do I believe that one was ever executed by

me.” (Id.) 

II. STANDARD

Under Federal Rule of Civil Procedure 56, summary judgment is proper when

there is no genuine issue as to any material fact and the moving party is entitled to

judgment as a matter of law. Fed. R. Civ. P. 56(c). “In deciding a motion for summary

judgment, the court must view the evidence in the light most favorable to the nonmoving party, drawing all reasonable inferences in that party’s favor.” Sagan v. United

States, 342 F.3d 493, 497 (6th Cir. 2003). “Where the moving party has carried its

burden of showing that the pleadings, depositions, answers to interrogatories,

admissions and affidavits in the record, construed favorably to the non-moving party, do

2:08-cv-14509-RHC-RSW Doc # 26 Filed 08/26/09 Pg 4 of 12 Pg ID 423
5

not raise a genuine issue of material fact for trial, entry of summary judgment is

appropriate.” Gutierrez v. Lynch, 826 F.2d 1534, 1536 (6th Cir. 1987) (citing Celotex

Corp. v. Catrett, 477 U.S. 317 (1986)).

The court does not weigh the evidence to determine the truth of the matter, but

rather, to determine if the evidence produced creates a genuine issue for trial. Sagan,

342 F.3d at 497 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). 

The moving party must first show the absence of a genuine issue of material fact. Plant

v. Morton Int’l, Inc., 212 F.3d 929, 934 (6th Cir. 2000) (citing Celotex, 477 U.S. at 323). 

The burden then shifts to the nonmoving party, who “must do more than simply show

that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus.

Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). He must put forth enough

evidence to show that there exists a genuine issue to be decided at trial. Plant, 212

F.3d at 934 (citing Anderson, 477 U.S. at 256). Summary judgment is not appropriate 

when “the evidence presents a sufficient disagreement to require submission to a jury.” 

Anderson, 477 U.S. at 251-52 (1986). The existence of a factual dispute alone does

not, however, defeat a properly supported motion for summary judgment – the disputed

factual issue must be material. See id. at 252 (“The judge’s inquiry, therefore,

unavoidably asks whether reasonable jurors could find by a preponderance of the

evidence that the plaintiff is entitled to a verdict – ‘whether there is [evidence] upon

which a jury can properly proceed to find a verdict for the party producing it, upon whom

the onus of proof is imposed.’” (alteration in original)(citation omitted)). A fact is

“material” for purposes of summary judgment when proof of that fact would establish or

refute an essential element of the claim or a defense advanced by either party. Kendall

2:08-cv-14509-RHC-RSW Doc # 26 Filed 08/26/09 Pg 5 of 12 Pg ID 424
6

v. Hoover Co., 751 F.2d 171, 174 (6th Cir. 1984) (citation omitted). 

III. DISCUSSION

The facts in this case are largely undisputed. In support of its motion for

summary judgment, BBIII presented sufficient factual and legal support establishing the

existence of thirteen Notes executed by One Management which are in default, and that

at least eleven of these are admittedly guaranteed by Watha. BBIII also presented

sufficient support for its contention that, under the terms of the Notes, it is due interest,

costs, and attorney fees. Defendants do not expressly contest these assertions, and

the court finds that their silence indicates their admission of liability of these amounts.

(1/26/09 Scheduling Order at 7 (“Any proffered fact in the movant’s Statement of

Material Facts that is not specifically contested will, for the purpose of the motion be

deemed admitted.”).) See also Fed. R. Civ. P. 56(e)(2) (“When a motion for summary

judgment is properly made and supported, an opposing party may not rely merely on

allegations or denials in its own pleading; rather, its response must--by affidavits or as

otherwise provided in this rule--set out specific facts showing a genuine issue for trial. If

the opposing party does not so respond, summary judgment should, if appropriate, be

entered against that party. “). Accordingly, the only contested issues before the court

relate to whether an issue of fact exists as to (1) whether BBIII has properly credited all

of Defendants payments on the Notes and (2) whether Watha signed the guaranty

pertaining to 15755 Patton. 

A. Proper Credit

As stated above, Defendants assert that payments of $25,000 each were paid

directly to MVB on behalf of One Management by Heritage Title Agency on loans

2:08-cv-14509-RHC-RSW Doc # 26 Filed 08/26/09 Pg 6 of 12 Pg ID 425
1Petroff-Kline involved federally guaranteed student loan, approved by a private

bank, assigned to Sallie Mae, and then assigned back to the government. Petroff-Kline,

557 F.3d at 288-289. Similarly, here, the loans at issue were issued by MVB, which

was subsequently placed in receivership under the FDIC. (Id.) The FDIC then

assigned its right, title and interest to the loans and all related contracts to BBIII. (See

Compl. ¶ 5; Pl.’s Mot. at Ex.1, Johnson Decl.)

7

pertaining to the properties at (1) 15882 Blackstone, (2) 4885 Courville, (3) 9352

Hartwell, (4) 5028 Bedford, and (5) 5060 Three Mile Drive for which credit has

purportedly not been provided. (Defs.’ Resp. at 4.) Defendants also contend that after

the commencement of this action, an additional $25,000 was paid to BBIII on the loan

pertaining to the property at 2329 Danforth. (Id.)

BBIII argues that where, as here, it has made its prima facie case entitling it to

recovery on a promissory note, the burden shifts to Defendants to show any

nonexistence, extinguishment, or variance in payment of the obligation. BBIII cites to

United States v. Petroff-Kline, 557 F.3d 285 (6th Cir. 2009), which held:

To recover on a promissory note the government must first make a prima

facie showing that (1) the defendant signed it, (2) the government is the

present owner or holder and (3) the note is in default (United States v.

MacDonald, No. 93-1924, 1994 WL 194248, at *2 (6th Cir. May 16, 1994)

(per curiam); United States v. Lawrence, 276 F.3d 193, 197 (5th

Cir.2001)). For that purpose the government may introduce evidence of

the note and a sworn transcript of the account or certificate of

indebtedness (United States v. Davis, 28 Fed. Appx. 502, 503 (6th Cir.

2002)). Once such a prima facie case is established, defendant has the

burden of proving the nonexistence, extinguishment or variance in

payment of the obligation (id.).

Id. at 290.1 Similarly, on summary judgment, when the moving party has set forth

sufficient facts establishing that it is entitled to judgment as a matter of law, the burden

then shifts to the nonmoving party, who “must do more than simply show that there is

some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., 475

2:08-cv-14509-RHC-RSW Doc # 26 Filed 08/26/09 Pg 7 of 12 Pg ID 426
2As stated above, the relevant properties are 15882 Blackstone, 4885 Courville,

9352 Hartwell, 5028 Bedford, 5060 Three Mile, and 2329 Danforth.

8

U.S. at 586. Indeed, “[t]he failure to present any evidence to counter a well-supported

motion for summary judgment alone is grounds for granting the motion.” Everson v.

Leis, 556 F.3d 484, 496 (6th Cir. 2009) (citing Skousen v. Brighton High School, 305

F.3d 520, 528 (6th Cir. 2002)). 

Here, BBIII has set forth sufficient facts showing that, as of June 16, 2009, One

Management owed BBIII $733,783.41 for principal, interest and other contractual

charges, including $632,502.67 in outstanding principal and $102,325.53 in accrued

interest. (Pl.’s Mot. at Ex. 1, Johnson Decl. ¶ 4.) Under Rule 56 as well as under

Petroff-Kline, the burden then shifts to Defendants to show that this amount is incorrect

or that there are additional amounts which are not credited to the balance owed. 

The only evidence provided by Defendants, however, is an affidavit in which

Watha avers “upon information and belief” that the six relevant $25,000 payments were

not credited to the amount due.2

 BBIII argues, in response that Watha cannot rely on

his statements made only “upon information and belief” but must proffer admissible

evidence sufficient to create a triable issue regarding Defendants indebtedness. BBIII

cites to a First Circuit case which rejected reliance on statements made “upon

information and belief”:

 Finally, the proposed amended answer asserts-based exclusively on

“information and belief”-that ComFed failed to require the borrower to

submit appraisals substantiating the 75% loan-to-collateral-value ratio

required under the note, which allegedly placed Gold at undue risk under

its unconditional loan guaranty. Not only does Gold point to no evidentiary

basis for its “information and belief,” it fails even to intimate that such

evidence exists. 

2:08-cv-14509-RHC-RSW Doc # 26 Filed 08/26/09 Pg 8 of 12 Pg ID 427
9

Resolution Trust Corp. v. Gold, 30 F.3d 251, 253-54 (1st Cir. 1994). The court agrees

that Defendants cannot merely rest on statements made upon information and belief. 

Indeed, under Federal Rule of Civil Procedure 56(e),

A supporting or opposing affidavit must be made on personal knowledge,

set out facts that would be admissible in evidence, and show that the

affiant is competent to testify on the matters stated. If a paper or part of a

paper is referred to in an affidavit, a sworn or certified copy must be

attached to or served with the affidavit. The court may permit an affidavit

to be supplemented or opposed by depositions, answers to

interrogatories, or additional affidavits. 

Fed. R. Civ. P. 56(e)(1); see also Alexander v. CareSource, — F.3d —, 2009 WL

2475355, at *9 (6th Cir. Aug. 14, 2009) (“Rule 56(e) requires affidavits to be made on

personal knowledge.”). Here, BBIII has not proffered any admissible evidence which

2:08-cv-14509-RHC-RSW Doc # 26 Filed 08/26/09 Pg 9 of 12 Pg ID 428
3Attached to Defendants’ response are various unauthenticated documents

which are unexplained in Defendants response brief. The Sixth Circuit has recently

reiterated that

It is also the basis of this court’s repeated emphasis that unauthenticated

documents do not meet the requirements of Rule 56(e). Michigan Paytel

Joint Venture v. City of Detroit, 287 F.3d 527, 532 n. 5 (6th Cir. 2002); see

also Meals v. City of Memphis, Tenn., 493 F.3d 720, 728-29 (6th Cir.

2007); Moore v. Holbrook, 2 F.3d 697, 699 (6th Cir. 1993) ( “This court

has ruled that documents submitted in support of a motion for summary

judgment must satisfy the requirements of Rule 56(e); otherwise, they

must be disregarded.” (citing Dole v. Elliott Travel & Tours, Inc., 942 F.2d

962, 968-69 (6th Cir. 1991), and State Mutual Life Assurance Co. of

America v. Deer Creek Park, 612 F.2d 259, 264 (6th Cir. 1979))).

Alexander, — F.3d at —, 2009 WL 2475355, at *4. Moreover, even if these documents

were admissible, there is no corresponding explanation of how these documents refute

BBIII’s proffered facts in a way sufficient to create a triable issue for the jury. While the

documents are purported “evidence” that some form of payment may have been made

by Heritage Title Agency to MVB they in no way explain how these payments may or

may not affect the total indebtedness which BBIII has shown to be due by Defendants.

10

creates a triable issue of fact related to the amount owed on the Notes.3

 Accordingly,

the court will grant Defendants summary judgment on this issue. 

B. 15755 Patton

With respect to one of the twelve guarantees purportedly signed by Watha,

Watha contends that the signature on the guaranty related to the property at 15755

Patton is “incorrect.” (Defs.’ Resp. at Ex. 5, Watha Aff. ¶ 4.) The court finds that Watha

has presented evidence sufficient to create a triable issue of fact with respect to

whether Watha signed the guaranty related to the Note for the property 15755 Patton. 

There is some authority in the Sixth Circuit for granting summary judgment even

when a party disputes the signature on a promissory note. In Petroff-Kline, the Sixth

2:08-cv-14509-RHC-RSW Doc # 26 Filed 08/26/09 Pg 10 of 12 Pg ID 429
11

Circuit affirmed a grant of summary judgment when the defendant challenged the

validity of the promissory notes at issue. Petroff-Kline, 557 F.3d at 291. In that case,

however, the Sixth Circuit found that the defendant’s challenge was “wholly

disingenuous” in light of her previous testimony, in a bankruptcy proceeding, that she

had reviewed the loan documents before signing them. Id. at 290. Further, the

defendant in Petroff-Kline stated only that she did not “recognize” the notes containing

the signature and insisted that the Government produce the original, rather than

photocopied, promissory notes. Id. at 291. Under these facts, the Sixth Circuit found

that the defendant failed to present a triable issue of fact with respect to the validity of

the promissory notes. Id.

In this case, however, Watha does more than assert he does not “recognize” the

signature on the relevant guaranty. He avers, under oath, that “[t]he signature on that

guaranty is not mine, nor do I know who executed that document. Further, I am not in

possession of any executed guaranty on a loan for that property, nor do I believe that

one was ever executed by me.” (Defs.’ Resp. Ex. 5, Watha Aff. at ¶ 4.) Thus, Watha

challenges more than the validity of the Note, he also challenges the authenticity of the

signature and affirmatively states that he does not “believe” he executed a guaranty for

that property. While Watha’s credibility relative to this statement may be subject to

challenge, summary judgment is not appropriate when “the evidence presents a

sufficient disagreement to require submission to a jury.” Anderson, 477 U.S. at 251-52

(1986). It is for the jury to determine Watha’s credibility on this statement. See United

States v. Williams, No. 04-73603, 2005 WL 1343389 (E.D. Mich. May 26, 2005)

(Duggan, J.) (denying summary judgment for plaintiff, despite being “skeptical” of

2:08-cv-14509-RHC-RSW Doc # 26 Filed 08/26/09 Pg 11 of 12 Pg ID 430
S:\Cleland\JUDGE'S DESK\C3 ORDERS\08-14509.BROWNBARK.SJ.PromissoryNote.wpd

12

defendant’s assertion that he did not sign the promissory note at issue). Accordingly,

the court will grant BBIII’s motion for summary judgment on all issues except the issue

of whether Watha has signed a guaranty on the property at 15755 Patton.

IV. CONCLUSION

IT IS ORDERED Plaintiff’s motion for summary judgment [Dkt. # 20] is

GRANTED IN PART and DENIED IN PART. Specifically, it is DENIED with respect to

the issue of the authenticity of the guaranty on 15755 Patton. It is GRANTED in all

other respects. 

IT IS FURTHER ORDERED that the August 26, 2009 hearing is CONVERTED

into a status conference.

 S/Robert H. Cleland 

ROBERT H. CLELAND

UNITED STATES DISTRICT JUDGE

Dated: August 26, 2009

I hereby certify that a copy of the foregoing document was mailed to counsel of record

on this date, August 26, 2009, by electronic and/or ordinary mail.

 S/Lisa G. Wagner 

Case Manager and Deputy Clerk

(313) 234-5522

2:08-cv-14509-RHC-RSW Doc # 26 Filed 08/26/09 Pg 12 of 12 Pg ID 431