Opinion ID: 2163206
Heading Depth: 2
Heading Rank: 2

Heading: Casco Loan

Text: [¶ 22] With respect to the Casco loan, Liberty contends that Morse Insurance's claim for reimbursement is barred by the statute of limitations and that the trial court did not exceed the bounds of its discretion by striking paragraph 15 of the factual stipulation.
[¶ 23] The trial court concluded that Morse Insurance's claim for reimbursement was not barred by 14 M.R.S.A. § 752. Section 752 provides that civil actions must be commenced within 6 years after the cause of action accrues but does not specify when the cause of action accrues. See M.R.S.A. § 752 (1980). [6] When the Legislature does not give explicit directions, the `definition of the time of accrual ... remains a judicial function.' Nevin v. Union Trust Co., 1999 ME 47, ¶ 24, 726 A.2d 694, 699 (quoting Anderson v. Neal, 428 A.2d 1189, 1191 (Me.1981)). [¶ 24] In this case, the trial court held that a secondary obligor's action does not accrue until the date of the secondary obligor's performance of the secondary obligation. Accordingly, the court held that Morse Insurance did not perform its obligation until it was released by Casco in January 1991. [¶ 25] In considering this issue, we adopt the approach taken by RESTATEMENT (THIRD) OF SURETYSHIP AND GUARANTY § 62 (1996). Section 62 of the RESTATEMENT provides: (1) A secondary obligor's cause of action against a principal obligor to enforce the principal obligor's duty to reimburse or the secondary obligor's right of restitution accrues at the later of: (a) the date for performance of the underlying obligation; and (b) the date of the secondary obligor's performance of the secondary obligation. RESTATEMENT (THIRD) OF SURETYSHIP AND GUARANTY § 62 (1996). The Restatement did not define the term performance. BLACK'S LAW DICTIONARY, however, defines it as [t]he successful completion of a contractual duty, usu[ally] resulting in the performer's release from any past or future liability. BLACK'S LAW DICTIONARY 1158 (7th ed.1999). In the present case, the successful completion of Morse Insurance's contractual duty occurred on January 1, 1991, when it satisfied its guaranty obligations to, and obtained a release from, Casco. Because the suit was brought on December 3, 1996, Morse Insurance's claim for reimbursement is not time barred. This restatement rule allows a guarantor to work with the principal debtor in its effort to put its financial affairs in order by discouraging precipitous actions by the guarantor against the principal. The rule further relieves the court of the burden of repetitious litigation.
[¶ 26] We review a motion to strike a stipulated fact for an abuse of discretion. See Adelman v. Town of Baldwin, 2000 ME 91, ¶ 6, 750 A.2d 577 (citing McNutt v. Johansen, 477 A.2d 738, 740 (Me.1984) (reviewing denial of motion to strike default judgment for abuse of discretion); Michaud v. Steckino, 390 A.2d 524, 531 (Me.1978) (reviewing denial of motion to strike testimony for abuse of discretion)). [¶ 27] Liberty's motion to strike pertains to paragraph 15 of the factual stipulations that the parties executed in January 1998. Paragraph 15 provides, in full: On or about January 1, 1991, Morse, Payson & Noyes Insurance and MP Associates agreed to settle with Casco on their guarantees of the Middle Pearl Associates deficiency. Under this settlement, Morse, Payson & Noyes Insurance and MP Associates agreed to pay an additional $452,177 against their guarantee liability of the Middle Pearl Associates deficiency. After adjustments between MP Associates and Morse, Payson & Noyes Insurance, each paid $439,512.99 on their obligations. The relevant portion of the Casco settlement agreement referenced above provides as follows: I. REPRESENTATION, ACKNOWLEDGEMENTS and AGREEMENTS. The Debtors hereby represent and acknowledge to and agree with Casco as follows: 1.1 Existing Indebtedness. The existing Loans are as follows: . . . . (b) MPA Loan: $2,500,000 note dated September 9, 1986, with a principal balance as of December 31, 1990 of $533,387.97. The MPA Loan is guaranteed by [Morse Insurance], as well as by MP Associates, a general partnership of which Henry S. Payson, James J. Kilbride, Daniel G. Hall and Maine XYZ, Inc. are general partners. At the request of the MPA partners, Casco has released its mortgage of the MPA property, to enable a sale of same, the proceeds of which were paid to the first mortgagee, there being no equity to reach the MPA Loan made by Casco. No other collateral is held by Casco for the MPA Loan. At the request of the Debtors, Casco has agreed to the exclusion of Henry S. Payson, MP Associates, and Maine XYZ, Inc. from this Agreement and the other Loan Documents as Debtors, and the release of such parties from liability on the Indebtedness, as hereinafter defined. (Italics added for emphasis.) The trial court found that, as written, the settlement clearly excludes MP Associates from the settlement. It concluded, therefore, that [p]aragraph 15 is clearly a mistaken statement of the reality of the settlement agreement and granted Defendant's motion to strike. [¶ 28] In Maine, [a] stipulation between litigants made under supervision of the court `derives effect from the control of the court rather than from any virtue in the stipulation itself.' Rush v. County of Aroostook, 447 A.2d 478, 479 (Me.1982) (quoting Perley v. Bailey, 89 N.H. 359, 360, 199 A. 570, 571 (1938)). Nevertheless, [s]tipulations fairly entered into are favored because they expedite a trial and eliminate the necessity of much tedious proof. T I Federal Credit Union v. Del-Bonis, 72 F.3d 921, 928 (1st Cir.1995) (quoting Burstein v. United States, 232 F.2d 19, 23 (8th Cir.1956)). Once crafted, therefore, the parties are not generally free to extricate themselves from those stipulations at will. Id. (citing Marshall v. Emersons Ltd., 593 F.2d 565, 569 (4th Cir.1979)). See also 73 AM.JUR.2d, STIPULATION § 11 (1974) (stating [i]t is generally considered that stipulations which tend to expedite the trial should be enforced unless good cause is shown to the contrary). [¶ 29] A stipulation should be adhered to unless it becomes apparent that it may inflict a manifest injustice upon one of the contracting parties or where it becomes evident that the agreement was made under a clear mistake. T I Federal Credit Union, 72 F.3d at 928 (quoting Brast v. Winding Gulf Colliery Co., 94 F.2d 179, 180 (4th Cir.1938)). See also United States v. Wingate, 128 F.3d 1157, 1160 (7th Cir.1997) (holding once made, a stipulation is binding unless relief from the stipulation is necessary to avoid `manifest error' or the stipulation was entered into through inadvertence or based on an erroneous view of the facts or law); Yanovitch v. United States, 985 F.Supp. 17, 19 (D.Mass.1997) (stating the First Circuit has indicated, in civil cases, that [in] our judicial system, `[s]tipulations fairly entered into are favored,' and once made, the parties are not generally free to extricate themselves from those stipulations). [¶ 30] Although a court may relieve a party from an improvident discovery stipulation or one that might work an injustice, [t]he stage at which a party requests relief from a stipulation bears heavily on whether the court should grant the relief, and a court must determine whether there are overriding rules or policy considerations that compel granting or denying such relief. Kirtley v. Sovereign Life Ins. Co. of California (In re Durability Inc.), 212 F.3d 551, 555-56 (10th Cir. 2000); see also Carnegie Steel Co. v. Cambria Iron Co., 185 U.S. 403, 444, 22 S.Ct. 698, 714-15, 46 L.Ed. 968 (1902) (stating, while the stipulation is undoubtedly admissible in evidence it ought not to be used as a pitfall, and where the facts subsequently developed show, with respect to a particular matter, that it was inadvertently signed, we think that, upon giving notice in sufficient time to prevent prejudice to the opposite party, counsel may repudiate any fact inadvertently incorporated therein) (emphasis added). For instance, if a party waits until trial to withdraw stipulations submitted in the pretrial order, the recital of facts `may be modified at the trial only to prevent manifest injustice.' Kirtley, 212 F.3d at 556 (citations omitted). Moreover, relief may not be granted when it would be partial in nature, leaving the party against whom it was granted wholly or partially bound and at a disadvantage because of having changed his position or acted in reliance upon it. 73 AM.JUR.2d, STIPULATION § 13 (citations omitted). [¶ 31] In this case, Liberty's repudiation of the facts in paragraph 15 did not occur until July 17, 1998, well beyond the scheduling order delineated even by the modified consent order  dated February 12, 1998  and beyond the oral argument  held on July 10, 1998. Because of the tardiness of Liberty's motion to strike, MP Associates was prejudiced. For this reason and because the trial court's relief was only partial in nature, the court exceeded the bounds of its discretion in allowing Liberty to withdraw from part of its stipulation without giving MP Associates an opportunity to provide proof that it made the disputed payment. Had Liberty dissented earlier or been more careful examining documents he possessed for over a year, MP Associates would have had an opportunity to respond. [7] [¶ 32] Liberty's other contentions lack merit and do not warrant discussion. The entry is: Judgment affirmed in part and vacated in part; remand to Superior Court to grant MP Associates an opportunity to demonstrate that it made the payment indicated in paragraph 15 of the stipulation and for further proceedings consistent with the opinion herein.