Court Opinion

ID: 4188369
Source: CourtListenerOpinion
Date Created: 2017-07-21 17:01:16.73426+00
Date Added: 2024-06-11T07:47:23.698424
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 17a0429n.06

                                       Case No. 16-2130

                         UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT

                                                                              FILED
JP MORGAN CHASE MANHATTAN                         )                      Jul 21, 2017
BANK,                                             )                 DEBORAH S. HUNT, Clerk
                                                  )
       Plaintiff-Appellee,                        )       ON APPEAL FROM THE UNITED
                                                  )       STATES DISTRICT COURT FOR
v.                                                )       THE EASTERN DISTRICT OF
                                                  )       MICHIGAN
LARRY J. WINGET; LARRY J. WINGET                  )
LIVING TRUST,                                     )
                                                  )
       Defendants-Appellants.                     )

       BEFORE: GIBBONS, ROGERS, and DONALD, Circuit Judges.

       BERNICE BOUIE DONALD, Circuit Judge. This case arises from a longstanding

commercial dispute between an administrative agent for a group of lenders that extended credit

to a company, and the owner and his trust for the company.          Because the district court:

1) properly interpreted the language of the guaranty to hold the owner responsible for the full

payment of costs and expenses under the final judgment; 2) properly denied the owner relief

under Fed. R. Civ. P. 60(b)(5) and determined that there was no partial satisfaction of the

attorney fees and expenses; and 3) properly determined that the doctrine of res judicata did not

bar the administrative agent from recovering costs and expenses, we AFFIRM the district

court’s decision.
Case No. 16-2130, JP Morgan Chase v. Larry Winget

                                                           I.

           The dispute between the parties to this appeal stretches back to March 28, 2003, when

Venture Holdings Company, LLC (“Venture”), an entity owned and controlled by Larry J.

Winget (“Winget”) and/or The Larry J. Winget Living Trust (the “Trust”), filed a Chapter 11

petition for bankruptcy. E.D. Mich. Case No. 2:08-cv-13845, Complaint, RE 1, Page ID # 2-

3.1 JPMorgan Chase Bank, N.A. (“Chase”) is the administrative agent for a group of lenders that

extended credit to Venture pursuant to a Credit Agreement signed in 1999 (the “Credit

Agreement”). Credit Agreement, RE 530-1 – 530-2, Page ID # 18741-18892.2 The Credit

Agreement was amended several times, and this appeal arises out of the eighth and final

amendment (the “Eighth Amendment”). Guaranty, RE 487-1, Page ID #16717-16729; Pledge

of P.I.M. Management Co., RE 525-4, Page ID # 18579-18591; Pledge of Venco #1, L.L.C.,

RE 525-5, Page ID #18592-18604.                     The Eighth Amendment included a guaranty (the

“Guaranty”) and two related pledge agreements (the “Pledges”). Id.

           When Venture filed for bankruptcy protection, the filing was an event of default under

the Credit Agreement, and all obligations under the Credit Agreement became immediately due

and payable. RE 1, Page ID #5. After an attempt at restructuring failed, Venture’s assets were

liquidated and the proceeds applied to Chase’s underlying debt. However, Chase and the lenders

were still owed more than $300 million under the Credit Agreement. Id. at Page ID #10. Based

on the Pledges, Winget paid Chase $50 million for the release of the pledged stock. However,

there still remained a substantial balance due to Chase. Thereafter, Chase brought its first action

1
  There are three different district court records at issue in this case. Any citation to the record with “RE” that does
not specify the specific district court case is citing to E.D. Mich. Case No. 2:08-cv-13845, since that is the major
record in this appeal. The other district court cases are cited for purposes of background.
2
    Chase is the successor to the original Administrative Agent, Bank One.

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Case No. 16-2130, JP Morgan Chase v. Larry Winget

against Winget and the Trust to enforce the Guaranty. There are several sections of the Guaranty

at issue in this appeal, but the most important are Sections 3, 10, and 17.

       Section 3 of the Guaranty provides, in relevant part, as follows:

       SECTION 3. The Guaranty. . . . Notwithstanding anything herein or elsewhere to
       the contrary, no action will be brought for the repayment of the Guaranteed
       Obligations under this Guaranty and no judgment therefor will be obtained or
       enforced against Larry Winget other than with respect to the Pledged Stock . . . .

RE 487-1, Page ID #16718.

       Section 10 of the Guaranty provides, in relevant part, as follows:

       SECTION 10. Application of Payments. All payments received by the
       Administrative Agent hereunder shall be applied by the Administrative Agent to
       payment of the Guaranteed Obligations in the following order unless a court of
       competent jurisdiction shall otherwise direct: (a) FIRST, to payment of all costs
       and expenses of the Administrative Agent incurred in connection with the
       collection and enforcement of the Guaranteed Obligations . . . .

RE 487-1, Page ID #16721.

       Section 17 of the Guaranty provides, in relevant part, as follows:

       SECTION 17. Costs of Enforcement. The Guarantor agrees to pay all costs and
       expenses including, without limitation, all court costs and attorneys’ fees and
       expenses paid or incurred by the Administrative Agent or any Lender or any
       Affiliate of any Lender in endeavoring to collect all or any part of the Guaranteed
       Obligations from, or in prosecuting any action against, the Guarantor with respect
       to his obligations hereunder.

Id., Page ID #16724-16725.

       The 2005 Action

       In 2005, Chase sued Winget and the Trust to enforce specific provisions of the Guaranty

providing Chase with rights to inspect the books and records of the pledger companies under the

Pledges (the “2005 Action”). RE 497, Page ID #17590-17591. Chase also brought a claim to

recover its expenses under Section 17 of the Guaranty, and Winget brought certain counterclaims

against Chase related to Chase’s conduct during the bankruptcy proceedings. E.D. Mich. Case

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Case No. 16-2130, JP Morgan Chase v. Larry Winget

No. 2:05-cv-74141, Complaint, RE 1, Page ID #11. The district court found in Chase’s favor

and granted specific performance regarding the books-and-records provision of the Guaranty

(E.D. Mich. Case No. 2:05-cv-74141, Amended Order, RE 50, Page ID #591-594), and this

Court affirmed (JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577, 579 (6th Cir. 2007)).

However, the district court severed the counterclaims from the 2005 Action, including Chase’s

claim to recover its expenses under Section 17 of the Guaranty, and instructed Winget and the

Trust to bring them in a separate suit.

       The 2006 Action

       In 2006, Winget and the Trust brought the counterclaims from the 2005 Action against

Chase, alleging that it had wrongfully and purposefully diminished the value of certain

companies owned by Winget during the course of the Venture bankruptcy in order to gain assets

pledged by Winget under his limited Guaranty (the “2006 Action”). On March 7, 2007, the

district court dismissed the 2006 Action on the grounds that Winget and the Trust’s claims were

barred by res judicata.    E.D. Mich. Case. No. 2:06-cv-13490, Memorandum and Order

Granting Motion to Dismiss, RE 28, Page ID #1064-1081. Chase did not bring its claim to

recover expenses under Section 17 of the Guaranty during the 2006 Action.

       The 2008 Action

       In 2008, Chase filed the present action (the “2008 Action”) seeking to enforce the

Guaranty against Winget and the Trust and alleging that its recourse against the Trust was

unlimited. RE 1. On January 28, 2009, Chase moved for summary judgment as to Count I,

pursuant to which it claimed that the Trust had unlimited liability under the Guaranty. RE 23.

The district court denied Chase’s motion for summary judgment without prejudice and allowed

the Trust to file a counterclaim seeking reformation of the Guaranty to determine whether the

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Case No. 16-2130, JP Morgan Chase v. Larry Winget

parties’ intended the Guaranty to be limited to the pledged stock and subject to release upon

payment of $50 million as to both Winget and the Trust. The district court bifurcated the case

and stayed all claims related to Winget’s limited personal liability obligations under the

Guaranty. RE 19. For over two years, the parties engaged in discovery related to the Trust’s

liability under the Guaranty. On October 17, 2012, after an eight-day bench trial on only the

Trust’s counterclaim for reformation, the district court reformed the Guaranty to limit Chase’s

recourse against the Trust to the pledged stock, subject to release upon payment of $50 million.

RE 365, Page ID #13835.

       2008 Action Initial Appeal

       On January 29, 2014, following years of further litigation, the district court entered final

judgment against Winget and the Trust in the amount of $425,113,115.59, plus attorney fees and

costs under Section 17 of the Guaranty. RE 487. The district court limited Chase’s recourse, as

to both Winget and the Trust, to $50 million, the amount of the payment for the pledged stock.

Chase appealed the reformation decision to this Court (the “2008 Action Initial Appeal”).

       On February 20, 2015, this Court reversed the district court’s decision on reformation,

concluding that the Guaranty should not have been reformed to limit the obligations of the Trust

because, under the Guaranty, the parties did not agree to treat Winget and the Trust as one in the

same. JPMorgan Chase Bank, N.A. v. Winget, 602 F. App’x 246, 259 (6th Cir. 2015)

(finding, “Winget and the Trust are separate and distinct legal persons” with distinct obligations

under the Guaranty). This Court determined that Chase’s recourse against Winget was limited

by Section 3 of the Guaranty to $50 million. The case was then remanded back to the district

court, and a final judgment was entered pursuant to which the Trust’s obligation was for the full

amount of the deficiency of the judgment without limitation under the Guaranty. RE 568.

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Case No. 16-2130, JP Morgan Chase v. Larry Winget

       Chase’s Motion for Costs and Expenses

       On July 6, 2015, Chase filed a revised motion under Section 17 of the Guaranty seeking

$12,693,867.67 in fees and expenses allegedly incurred in the 2005, 2006, and 2008 Actions.

RE 563, Page ID # 23293-23303. In response, Winget and the Trust argued that res judicata

barred Chase from seeking recovery of costs and expenses incurred in the 2005 and 2006

Actions. Winget and the Trust also asserted that in light of this Court’s holding that the

obligations of Winget and the Trust are separate and distinct under the Guaranty, Chase must

segregate the costs and expenses allegedly incurred in enforcing each guarantor’s obligation and

seek recovery from Winget and the Trust separately under Section 17 of the Guaranty.

       In an order entered on January 13, 2016, the district court rejected these arguments and

awarded Chase $11,154,874.65 in costs and expenses as against both Winget and the Trust

pursuant to Section 17 of the Guaranty. RE 671, Page ID #24923. Winget then filed a motion

for partial satisfaction of judgment pursuant to Fed. R. Civ. P. 60(b)(5), seeking an order that,

pursuant to Section 10 of the Guaranty, Winget’s obligations for costs and expenses under

Section 17 had been satisfied by his payment to Chase of $50 million that Chase applied to the

Guaranty on January 7, 2014. RE 672, Page ID # 24924-24931. On June 28, 2016, the district

court denied that motion, asserting that Winget’s interpretation of Section 10 of the Guaranty

“defies logic.” RE 683, Page ID #25019. Winget and the Trust timely appealed.

                                               II.

       Defendants appeal the district court’s ruling granting Chase’s motion for costs and

expenses (RE 671) in two respects. First, Defendants attack the district court’s conclusion that

the liability for costs and expenses under the Guaranty should not be apportioned separately

between Winget and the Trust. Second, they challenge the lower court’s decision that, under

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Case No. 16-2130, JP Morgan Chase v. Larry Winget

Section 17 of the Guaranty, Chase is entitled to costs and expenses incurred in pursuing the 2005

and 2006 Actions to enforce the Guaranty. Challenges to the district court’s interpretation of the

contract language present questions of law that are reviewed de novo. See Meridian Leasing,

Inc. v. Associated Aviation Underwriters, Inc., 409 F.3d 342, 346 (6th Cir. 2005).

       Defendants also appeal the district court’s disposition of Winget’s Rule 60(b)(5) motion

for partial satisfaction. (Appellants’ Principal Br. at 10 (stating that an issue for appeal is

“[w]hether the district court erred by denying Winget relief under Fed. R. Civ. P. 60(b)(5)”).)

This Court “review[s] for an abuse of discretion a district court’s denial of a motion for relief

from judgment under Rule 60(b)(5).” Casasanta v. Fed. Nat’l Mortg. Ass’n, 591 F. App’x 464,

465 (6th Cir. 2015) (citing Northridge Church v. Charter Twp. of Plymouth, 647 F.3d 606, 613

(6th Cir. 2011) and Export-Import Bank of the United States v. Advanced Polymer Scis., Inc.,

604 F.3d 242, 247 (6th Cir. 2010)).

                                         III. ANALYSIS

   A. The district court correctly interpreted the language of Section 17 of the Guaranty
      when it held that Winget was responsible for the full payment of costs and expenses
      under the final judgment.

       “Where the language of a contract is clear and unambiguous, the intent of the parties will

be ascertained according to its plain sense and meaning.” Haywood v. Fowler, 475 N.W.2d 458,

461 (Mich. Ct. App. 1991); see also Wilkie v. Auto–Owners Ins. Co., 664 N.W.2d 776, 787

(Mich. 2003) (“Well-settled principles of contract interpretation require one to first look to a

contract’s plain language. If the plain language is clear, there can be only one reasonable

interpretation of its meaning and, therefore, only one meaning the parties could reasonable [sic]

expect to apply. If the language is ambiguous, longstanding principles of contract law require

that the ambiguous provision be construed against the drafter.” (citation omitted)).

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Case No. 16-2130, JP Morgan Chase v. Larry Winget

       The Guaranty’s costs and expenses provision in Section 17 provides, in relevant part,

“[t]he Guarantor agrees to pay all costs and expenses including, without limitation, all court costs

and attorneys’ fees and expenses paid or incurred by the Administrative Agent . . . in

endeavoring to collect all or any part of the Guaranteed Obligations from, or in prosecuting any

action against, the Guarantor with respect to his obligations hereunder.” RE 487-1, Page ID #

16724-25. The Guaranty describes “Larry J. Winget and the Larry J. Winget Living Trust” as

“collectively, the Guarantor” and Chase as the Administrative Agent. Id. at Page ID #16717.

Therefore, the plain language reading of Section 17 indicates that both Winget and the Trust, as

Guarantor of the Credit Agreement, are liable for all costs and expenses, including Chase’s costs

and expenses associated with collection of the guaranteed obligation.

       However, Winget and the Trust contend that their obligations under Section 17 should be

separate and distinct from each other. Appellant Br. at 12-15. Winget and the Trust argue that

any award to Chase of fees and costs allegedly incurred in attempting to enforce the Trust’s

unlimited Guaranty should have been the responsibility of the Trust alone, not Winget.

Conversely, they argue that the Trust has no responsibility for fees and costs incurred in

attempting to enforce Winget’s limited Guaranty.

       Winget and the Trust base this theory on this Court’s decision in the 2008 Action Initial

Appeal which held that “Winget and the Trust are separate and distinct legal persons.” Winget,

602 Fed. App’x at 256. Although this Court’s ruling that Winget and the Trust are separate and

distinct legal entities stemmed from the reformation context, Winget and the Trust argue that the

limitation on recourse in Section 3 of the Guaranty (which limits Winget’s liability to the $50

million pledge) necessarily compels the conclusion that there are two separate and distinct

obligations under the Guaranty more generally, including in Section 17.

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Case No. 16-2130, JP Morgan Chase v. Larry Winget

       However, this reading of the contract ignores the plain language of the Guaranty and

misunderstands this Court’s prior ruling.      This Court’s reformation decision looked to the

language of Section 3 and determined that its limitation on recourse applied only to Winget and

not to the Trust. See Winget, 602 F. App’x at 256. The relevant portion of Section 3 reads as

follows, “no action will be brought for the repayment of the Guaranteed Obligations under this

Guaranty and no judgment therefor will be obtained or enforced against Larry Winget other than

with respect to the Pledged Stock . . . .” RE 487-1, Page ID # 16718 (emphasis added).

Nowhere in the language of Section 3 does the Guaranty indicate that there was a limited

obligation placed on the Trust. Section 3 only deals with the limited obligation placed on

Winget. Therefore, in the context of this Court’s reformation decision, it makes sense that the

Court held that Winget and the Trust are separate legal entities for purposes of Section 3’s

limitation on recourse.

       Unlike Section 3, which lists Winget individually, however, Section 17 lists both Winget

and the Trust collectively as the “Guarantor” responsible for costs and expenses of collection.

RE 487-1, Page ID #16724-25. The very next section of the Guaranty (“Section 18”) further

explains, “[e]xcept as limited by Section 3, the obligations of the Guarantor hereunder shall be

joint and several with any other Guarantor and the Guarantor shall be liable for all of the

Guaranteed Obligations . . . .” Id. at Page ID #16725. The Guaranty contemplated this very

distinction and made clear in Section 18 that Section 3 contained a discrete exception to joint and

several liability. However, as Section 18 explains, all other liability is joint and several. Thus,

both Winget and the Trust are jointly and severally liable for Chase’s costs and expenses of

collection under Section 17 of the Guaranty.

                                                 9
Case No. 16-2130, JP Morgan Chase v. Larry Winget

         It is important to note the difference between liability and recourse to fully appreciate

Winget and the Trust’s erroneous contention. Under the Guaranty generally, the liability of the

Guarantor (Winget and the Trust) is coterminous, as well as joint and several. However, under

Section 3, Chase’s recourse to collect the underlying debt is limited as to Winget, who is

specifically named separately in Section 3 of the Guaranty. The decision from this Court that

Winget and the Trust rely on addressed whether the Guarantors are separate for purposes of the

recourse provision. This Court’s previous decision did not, therefore, negate the entirety of the

Guaranty language, especially in the context of the Guarantor’s liability. The plain language of

the Guaranty still governs liability, and indicates that both Winget and the Trust are jointly and

severally liable. Therefore, the district court did not err when it found that Chase may collect the

full amount of its costs and expenses incurred in endeavoring to collect on the Guaranty from

both Winget and the Trust.

   B. The district court properly denied Winget’s motion under Fed. R. Civ. P. 60(b)(5)
      and determined that there was no partial satisfaction of the costs and expenses
      Chase incurred in endeavoring to collect on the Guaranty.

         “Contractual language is construed according to its plain and ordinary meaning, and

technical or constrained constructions are to be avoided.” Dillon v. DeNooyer Chevrolet Geo,

550 N.W.2d 846, 848 (Mich. Ct. App. 1996). “As with statutory construction, when construing a

contract the Court should ‘give effect to every word, phrase, and clause in a contract and avoid

an interpretation that would render any part of the contract surplusage or nugatory.’” Elite Int’l

Enter., Inc. v. Patton Wallcoverings, Inc., No. 12-14620, 2014 WL 1652197, at *3 (E.D. Mich.

Apr. 24, 2014) citing Klapp v. United Ins. Grp. Agency, Inc., 663 N.W.2d 447, 453 (Mich.

2003).

         Winget contends that he was entitled to relief under Fed. R. Civ. P. 60(b)(5) because his

prior payment of $50 million to Chase under the Pledges in connection with the underlying debt
                                                10
Case No. 16-2130, JP Morgan Chase v. Larry Winget

also satisfied his obligation under Section 17 to pay costs and expenses Chase incurred in the

collection and enforcement of the Guarantee Obligation. Winget refers to Section 10 of the

Guaranty to support his position. The relevant portion of Section 10 reads, “[a]ll payments

received by the Administrative Agent hereunder shall be applied by the Administrative Agent to

payment of the Guaranteed Obligations in the following order . . . FIRST, to payment of all costs

and expenses of the Administrative Agent incurred in connection with the collection and

enforcement of the Guaranteed Obligations . . . .” RE 487-1, Page ID #16721. Section 10

further explains that payments will next satisfy any accrued interest before satisfying outstanding

obligations of the principal debt.    Winget argues that this Section instructs Chase, as the

Administrative Agent, to first deduct from the costs and expenses Chase incurred in connection

with collecting on the Guaranteed Obligation the $50 million it received from Winget .

Therefore, Winget contends, the $11,154,874.65 Chase is seeking in costs and expenses

allegedly incurred in attempting to collect on the Guaranteed Obligations has been satisfied with

the $50 million that Winget has already paid to Chase. As Winget sees it, since Chase already

received $50 million from Winget, it must first apply that $50 million payment. Therefore,

Winget would not be responsible for any payments over and above the $50 million already paid

in exchange for the pledged stock.

       Winget’s argument fails first on procedural grounds, because both the district court and

this Court have considered and rejected this exact argument. A Rule 60(b) motion is not the

proper vehicle to relitigate issues that were already considered and decided.        See Lacey v.

Robertson, 11 F. App’x 481, 482 (6th Cir. 2001) (affirming denial of a motion for Rule 60(b)

relief because the request was “simply an attempt to relitigate the underlying action which is

prohibited under Rule 60(b)”); Whitaker v. New York Univ., 543 F. App’x 113, 114 (2d Cir.

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Case No. 16-2130, JP Morgan Chase v. Larry Winget

2013) (“[A] Rule 60(b) motion is properly denied where it seeks only to relitigate issues already

decided.”).

       Specifically, in the 2008 Action Initial Appeal, this Court rejected Winget’s argument

that the $50 million payment satisfied all of Winget’s obligations, including his obligation to pay

costs and expenses of collection. Winget, 602 F. App’x at 265-66. Because this issue was

previously raised and resolved by this Court, this Court’s prior ruling is the law of this case. See

Bowling v. Pfizer, Inc., 132 F.3d 1147, 1150 (6th Cir. 1998) (“Under the law of the case doctrine,

a court is ordinarily precluded from reexamining an issue previously decided by the same court,

or a higher court in the same case.”). Since the district court could not depart from the law of

this case, the district court properly rejected Winget’s Rule 60(b)(5) motion as an improper

attempt to relitigate issues that were already considered and decided. The analysis can stop here.

       However, Winget’s argument is also wrong on the merits. The plain language of Section

10 of the Guaranty explains how payments under the Guaranty should be applied by Chase, in its

capacity as Administrative Agent, as between the lenders under the Credit Agreement. Section

10 also alerts Winget and the Trust that any payment made by them under the terms of the

Guaranty will not reduce the amount owed in principal until the costs and interests associated

with the principal debt are satisfied. Section 10 acts as a shield in favor of Chase by forcing

Winget and the Trust to pay interest and Chase’s out-of-pocket expenses before satisfying their

underlying obligation, and by ensuring that interest continues to accrue until the last cent is paid.

Section 10 does not, as Winget contends, act as a sword against Chase by requiring Chase to use

the $50 million it received from Winget for pledged stock to also pay costs and expenses under

Section 17. Winget is liable for both the underlying debt (under Section 3) and the costs and

expenses Chase incurred in collecting on that debt (under Section 17). There is no language in

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Case No. 16-2130, JP Morgan Chase v. Larry Winget

Section 10 that would limit Chase’s right to receive cost and expenses, nor does Section 10

address how the Guarantors may satisfy their obligations under the Guaranty.

       Further, Section 3 provides that Chase’s recourse against Winget for the Guaranteed

Obligations is limited to the stock listed in the pledge agreements associated with the Guaranty.

RE 487-1, Page ID #16718-19. Section 3 only limits Chase’s recourse against Winget for the

guaranteed obligations to $50 million—the amount required to terminate the Pledges. In fact,

Section 3 recognizes the distinction between payments made to terminate the Pledges and other

costs arising out of the enforcement of the Guaranty in providing that, notwithstanding the

limitations in Section 3, “the Guarantor shall be fully and personally liable for any damages

arising from any violations of any of the agreements of the Guarantor herein.” RE 487-1, Page

ID # 16718. Again, Section 3 does not impact Winget’s liability under the Guaranty, nor does it

limit his distinct responsibility to pay the costs and expenses of Chase’s collection and

enforcement efforts. Thus, Winget is still liable for Chase’s costs and expenses associated with

collection of the Guaranteed Obligation. Therefore, the district court properly denied Winget’s

motion under Fed. R. Civ. P. 60(b)(5) in determining that there was no partial satisfaction of

Chase’s costs and expenses for collection and enforcement of the Guaranteed Obligations.

   C. The district court properly determined that the doctrine of res judicata did not bar
      Chase from recovering costs and expenses incurred in the 2005 and 2006 Actions.

       Pursuant to the doctrine of res judicata, “a final judgment on the merits bars further

claims by parties or their privies based on the same cause of action.” Montana v. United States,

440 U.S. 147, 153 (1979) (citations omitted). In Michigan, a claim is barred by res judicata if

the following three elements are present:

       (1) the prior action was decided on the merits, (2) both actions involve the same
       parties or their privies, and (3) the matter in the second case was, or could have
       been, resolved in the first.

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Case No. 16-2130, JP Morgan Chase v. Larry Winget

Washington v. Sinai Hosp. of Greater Detroit, 733 N.W.2d 755 (Mich. 2007); See Estes v. Titus,

751 N.W.2d 493, 499 (Mich. 2008).

       The parties agree that the first two elements are present here. However, Winget and the

Trust contend that the doctrine of res judicata should bar Chase from recovering costs and

expenses incurred in the 2005 and 2006 Actions because Chase failed to bring those claims

during those prior Actions. Winget and the Trust contend that by Chase’s own admission, the

2005 and 2006 Actions were efforts to collect the Guaranteed Obligations, which were subject to

rights under Section 17 of the Guaranty. It follows, the Defendants argue, that because rights to

costs and expenses (like attorney’s fees) are in the nature of damages under Michigan law, claim

preclusion bars Chase’s attempt to enforce such costs from the 2005 and 2006 Action. There are

two reasons this argument fails. First, the procedural history suggests that Chase properly

brought its motion for costs and expenses after Chase had been granted a final judgment

regarding enforcement of the Guaranteed Obligations. In fact, Chase brought a claim to recover

its expenses under Section 17 of the Guaranty during the 2005 Action (RE 1, Page ID #11), but

the district court did not rule on that claim in the 2005 Action and instead instructed the parties,

specifically Winget, to bring the remaining claims in a separate action (the 2006 Action). The

district court then dismissed Winget’s 2006 Action for failure to state a claim (E.D. Mich. Case.

No. 2:06-cv-13490, Judgement, RE 30, Page ID #1244).               Because the 2006 Action was

dismissed before Chase was able to file an answer, Chase had neither the need nor the

opportunity to assert a counterclaim for the recovery of costs and expenses of enforcement of the

Guaranty. It was only after Chase succeeded in its efforts to secure rulings as to Winget and the

Trust’s liability under the Guaranty in the 2008 Action that Chase was in the appropriate position

to pursue the costs and expenses of enforcement. Thus, from a procedural perspective, Chase

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Case No. 16-2130, JP Morgan Chase v. Larry Winget

properly brought its motion for costs and expenses in the 2008 Action for all prior collection

efforts.

           Second, even if res judicata applied, the district court properly determined that Winget

and the Trust contractually waived any res judicata defense in the Guaranty, and they are bound

by that waiver. Courts frequently enforce waivers of defenses, including waivers of res judicata.

See Fourteen Corp. v. Magnoli, No. 13-11803 2013 WL 4551705, at *6 (E.D. Mich. Aug. 28,

2013) (granting summary judgment after finding a guarantor’s affirmative defenses barred by a

contractual waiver of certain defenses, including res judicata); LNV Corp. v. Savannah Dev.,

LLC, No. 12-13562, 2014 WL 4978668, at *5–6 (E.D. Mich. Oct. 6, 2014) (barring assertion of

equitable estoppel based on a contractual waiver); Hartford Cas. Ins. Co. v. Comanche Constr.,

Inc., 103 F. Supp. 3d 900, 907 (W.D. Tenn. 2015) (holding that an agreement between parties

constituted a waiver of res judicata when that agreement stated that nothing in the document

would operate to prejudice a subsequent claim for declaratory relief).

           Section 13 of the Guaranty provides in relevant part that “[n]o failure or delay by the

Administrative Agent or any Lenders in exercising any right, power or privilege hereunder shall

operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or

further exercise thereof or the exercise of any other right, power or privilege.” RE 487-1, Page

ID #16724. The plain language of this provision indicates that Chase, as the Administrative

Agent, can exercise a right under the Guaranty regardless of any perceived or real delay in

exercising that right. Under the Guaranty, Chase has the right to the costs and expenses it

incurred in collecting on the debt of the Guaranteed Obligations as governed by Section 17 of the

Guaranty. Therefore, any alleged failure to exercise that right does not waive Chase’s right to

later collect under Section 17 of the Guaranty.

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Case No. 16-2130, JP Morgan Chase v. Larry Winget

       The language of Section 4 of the Guaranty further reinforces that the district court

correctly determined that Defendants contractually waived any res judicata defense. Section 4

provides that Defendants’ obligations under the Guaranty are “unconditional and absolute,” and

that they “shall not be released, discharged or otherwise affected by” any action or omission by

Chase that might otherwise prevent enforcement of the obligations on any legal or equitable

grounds. (Id. at Page ID #16719) Winget and the Trust’s argument that Chase had to exercise

its rights under Section 17 in the 2005 and 2006 Actions or lose those rights plainly conflicts

with several provisions of the Guaranty.

       Winget and the Trust, however, contend that these kinds of contractual waivers to res

judicata are against public policy and should not be enforced because they amount to simply

“boilerplate” language. (Appellant’s Br. at 23). However, all parties to this agreement were

sophisticated negotiators and could have removed the “boilerplate” language for waivers that

prohibit Winget and the Trust’s res judicata defense.       This Court will not automatically

invalidate boilerplate language between sophisticated parties. See Martin Cty. Coal Corp. v.

Universal Underwriters Ins. Co., 727 F.3d 589, 600 (6th Cir. 2013) (Rogers, J. dissenting)

(explaining that this Court has required a major disparity in bargaining power to invalidate a

contractual provision). Thus, the terms of the contract must stand. Therefore, the district court

did not err when it determined that the doctrine of res judicata does not bar Chase from

recovering costs and expenses incurred in the 2005 and 2006 Actions.

                                      IV. CONCLUSION

       For the aforementioned reasons, we AFFIRM.

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