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Note: Presidential Facility, LLC (Applicant) unconditionally guaranteed payment to Wachovia Bank (Lender) to secure a loan made to SJH Capital Partners, LLC (Borrower) pursuant to a guarantee agreement (the "[Lender] Guaranty"). In the event of a default, the Lender Guaranty provided that Applicant would reimburse Lender through an LC, issued by Comerica Bank (Issuer). Applicant then secured its risk by a separate guarantee (the "Presidential Guaranty") issued in its favor by Debbas, Griffiths, Campbell, Pinkas, and Sinatra (Co-guarantors). Under the Presidential Guaranty, expressly subject to the laws of the State of Michigan, the Co-guarantors agreed to reimburse Applicant USD 10 million if Lender sought repayment on the Lender Guaranty.

Borrower subsequently defaulted on the loan, and Issuer paid Lender. Applicant then sued Co-guarantors, seeking reimbursement. The United States District Court for the Eastern District of Michigan, Southern Division, Zatkoff, J., ruled that Applicant satisfied its obligations under the Presidential Guaranty.

Applicant first moved for summary judgment against the
Co-guarantors in 2010, and after several denials of its motions, Applicant filed a Motion for Reconsideration and attached additional evidence that Applicant's actions triggered the
Co-guarantors' obligations. The Presidential Guaranty, in part, read: "[Co-guarantors] have agreed to guaranty repayment to [Applicant] of any Loan Guaranty Commitment paid by it under the [Lender] Guaranty . . .". Relying on the phrase "paid by it," the Co-guarantors argued that their obligations were not triggered because the LC was not a direct payment from Applicant to Lender.

First, the LC payments by Issuer to Lender satisfied the phrase "paid by it" found in the Presidential Guaranty. The "paid by" commitment was modified by the phrase "under the [Lender] Guaranty," which required that payment be made through an LC. Furthermore, Co-guarantors did not cite any legal authority that the phrase excluded satisfying the obligation through an LC. Second, the Court held that there was no reason to require any direct payments to Lender. Finally, the Court ruled that the Presidential Guaranty did not require Applicant to satisfy its obligations to Issuer before the Co-guarantors obligations would be triggered. Applicant could not pay Issuer because
Co-guarantors refused to honor the Presidential Guaranty, so it arranged to have another entity satisfy that obligation. Thus, the Applicant's obligation to Lender was satisfied when Lender received payment from Issuer.

[JEB/ak]

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