                     NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                                File Name: 12a1008n.06

                                               No. 11-3938

                               UNITED STATES COURT OF APPEALS
                                    FOR THE SIXTH CIRCUIT
                                                                                          FILED
                                                                                      Sep 12, 2012
FIRST FEDERAL BANK OF THE MIDWEST,                           )                  DEBORAH S. HUNT, Clerk
                                                             )
          Plaintiff-Appellee,                                )
                                                             )   On Appeal from the United States
v.                                                           )   District Court for the Northern
                                                             )   District of Ohio
BRION R. BAITH; LISA L. BAITH;                               )
KAREN L. BAITH,                                              )
                                                             )
          Defendants-Appellants.                             )
                                                             )




Before:             BOGGS and MCKEAGUE, Circuit Judges; and WATSON, District Judge.*

          BOGGS, Circuit Judge. Brion, Lisa, Karen, and Robert Baith executed a promissory note

for $748,000 with First Federal Bank of the Midwest (“First Federal”) in 2005.1 The Baiths

purchased an apartment building, The Arlington, with the money. In 2007, Karen and Robert Baith

transferred their interest in the property to Brion and Lisa. In 2010, Brion and Lisa stopped paying

the installments owed on the promissory note (the “Arlington loan”). At that time, per the terms of

the note, the entire remaining amount became due. First Federal sold The Arlington to satisfy the

debt, but the sale left a remaining debt of $408,182. First Federal sought to recover this amount from


          *
        The Honorable Michael H. Watson, United States District Judge for the Southern District
of Ohio, sitting by designation.
          1
              Karen and Robert Baith were married. Brion and Lisa Baith are Karen’s son and daughter-
in-law.
No. 11-3938
First Federal Bank of the Midwest v. Baith

the Baiths personally. After removal by defendants, the district court granted summary judgment

in First Federal’s favor. Only Karen Baith appeals, arguing that First Federal released her from her

obligation on the Arlington Loan, and the district court erred when it judged her to still be liable.

The district court’s decision is affirmed.


                                                  I

       On June 30, 2005, Karen Baith, along with her husband, Robert, and Brion and Lisa Baith,

took out a loan of $748,000 with First Federal in order to purchase an apartment building, The

Arlington. The Baiths executed a promissory note for the loan. The note named all four Baiths as

“jointly and severally promis[ing]” to repay the loan, with interest, beginning June 30, 2005. The

note also contained the following provision:

       Upon any change in the terms of this Note, and unless otherwise expressly stated in
       writing, no party who signs this Note, whether as maker, guarantor, accommodation
       maker or endorser, shall be released from liability.

       In October 2007, Robert and Karen Baith sold their ownership interest in the apartment to

Brion and Lisa. A few months after this transaction, Robert Baith passed away. In April 2008, First

Federal gave Brion and Lisa Baith two additional loans—one for $110,000 and one for about

$350,000.

       On November 23, 2009, First Federal and the remaining Baiths—Karen, Brion, and

Lisa—executed a “Change in Terms Agreement” on the Arlington loan. The impetus for the change

in terms was twofold—Robert Baith’s death and Brion and Lisa’s difficulty keeping up with the

payments on the loan. The Change in Terms Agreement “modif[ied] the payment schedule, add[ed]


                                                -2-
No. 11-3938
First Federal Bank of the Midwest v. Baith

collateral and remove[d] Robert J. Baith as a borrower.” The Agreement allowed Brion and Lisa

Baith, who were having trouble making their payments, to make interest-only payments for six

months. The Agreement also added two additional properties, owned by Brion and Lisa, as collateral

for the loan. Finally, the Agreement stated that, “[T]his Note will no longer include Robert J. Baith

as a borrower due to his death.” The Agreement contained the following provision:

       Except as expressly changed by this Agreement, the terms of the original obligation
       or obligations, including all agreements evidenced or securing the obligation(s),
       remain unchanged and in full force and effect. . . . It is the intention of Lender to
       retain as liable parties all makers and endorsers of the original obligation(s) . . .
       unless a party is expressly released by Lender in writing.

The Agreement bears the signatures of Brion, Lisa, and Karen Baith, on lines designated “Borrower.”

       Craig Curtis, First Federal’s Vice President of Commercial Lending, provided as attachments

to his affidavit below several letters he sent to the Baiths between November 13, 2009 and July 2,

2010, regarding the financial health of The Arlington and the Baiths’ loans. In none of these letters

is it stated that Karen Baith is merely a guarantor. In a letter dated November 13, 2009, First Federal

discussed the Baiths’ loans, designating the “A” loan, the “B” loan, and the “C” loan. Apparently,

the “B” loan was for the Arlington apartment, since it had a balance of $666,610. The “A” and “C”

loans, which had balances of $331,145 and $105,819, respectively, were apparently the smaller

loans Brion and Lisa took out after they took out the Arlington loan. In the letter, Karen is referred

to as a “Borrower,” along with Brion and Lisa, on the “B” loan. Only Brion and Karen are listed as

the “Borrower” on the “A” loan and the “C” loan.

       On December 5, 2009, Craig Curtis sent a memorandum to Karen Baith. First Federal had

asked Karen to allow her interest in the Arlington apartment building to be additional collateral for

                                                 -3-
No. 11-3938
First Federal Bank of the Midwest v. Baith

the two smaller loans that Brion and Lisa Baith had taken out after the Baiths took out the Arlington

loan. Curtis’s memorandum was in regard to this cross-collateralization agreement. The memo

stated the following:

       Karen:

       Per our previous conversations regarding the cross-collateralization of all three loans,
       First Federal presently has three (3) loans Lisa and Brion [sic] including the one on
       which you are a guarantor. They are:

         Loan                         Balance                       Collateral
         #661289826                   $105,592.62                   “Reed Street”
         #661226737                   $330,088.82                   “Glen Ridge”
         #661236348                   $664,747.11                   “Arlington”


       The purpose of this cross-collateralization is to provide additional security to First
       Federal Bank on the two smaller loans—Reed Street and Glen Ridge. In other
       words, if either of these properties are [sic] sold, and the balance of the loan is higher
       than the agreed upon sale price, we would look to the Arlington loan to provide
       additional support based upon its (presumed) equity. . . .

       At no time are you a guarantor on these two smaller loans. You are only agreeing to
       allow First Federal Bank to take some of YOUR investment holdings (i.e., strictly
       Arlington), as additional security for the two smaller loans. In doing this, it does not
       affect in ANY way, any of your additional assets.

       We can discuss this further at any time.

       Craig Curtis

(emphasis added).

       On September 15, 2010, First Federal commenced foreclosure proceedings against the Baiths

in the Court of Common Pleas in Lucas County, Ohio. First Federal’s complaint alleged ten claims.

                                                 -4-
No. 11-3938
First Federal Bank of the Midwest v. Baith

This appeal only deals with one: First Federal’s breach of contract claim regarding the Arlington

loan.

        On October 15, 2010, the Baiths removed the case to the United States District Court for the

Northern District of Ohio.

        On December 8, 2010, the Baiths filed their answer to First Federal’s complaint in the district

court. Brion and Lisa Baith did not participate in the answer.2 Karen Baith asserted eight affirmative

defenses and a counterclaim against First Federal.

        Because there is dispute among the parties as to the content of Baith’s affirmative defenses,

they are detailed here. The affirmative defenses Karen Baith raised were: (1) “Release and

Satisfaction,” arguing that First Federal’s consent to Karen transferring her interest in the Arlington

property to Brion and Lisa meant that the bank “implicitly acknowledged” that Karen was no longer

responsible or liable on the Arlington loan; (2) “No Consideration,” arguing that Karen received no

consideration for executing any documents for First Federal; (3) “No Detrimental Reliance,” arguing

that First Federal did not rely on any of Karen’s assets in making a loan to Brion and Lisa, (4)

“Appraisal Statutes/Standards,” arguing that the properties Brion and Lisa purchased “met all

appraisal standards and requirements of the Fed,” and that there was, therefore, no need for Karen

to provide First Federal with her guaranty; (5) “Lack of Cooperation/Breach of Contract/Duty,”

arguing that First Federal increased Karen’s liability and exposure by refusing to allow a payoff of



        2
        In order to meet their financial obligations, Brion and Lisa have sold all of their properties,
including The Arlington. However, there is still a shortfall of $409,182.58, which First Federal
seeks to recover from Brion, Lisa, and Karen, under the terms of the Arlington loan.

                                                 -5-
No. 11-3938
First Federal Bank of the Midwest v. Baith

the Arlington loan; (6) “Failure of Notification,” arguing that First Federal increased Karen’s

exposure because it “did not keep her apprised” of her responsibility, and “did not properly supervise

the loan” because it did not appoint a receiver; (7) “Failure to Execute Against Guarantor,” arguing

that by releasing Robert Baith from liability after his death, First Federal “impliedly released Karen

Baith from the same obligation and/or increased her risk”; and (8) “Confession of Judgment,”

arguing that the “confession of judgment” executed by Karen was invalid as being against public

policy.

          Karen Baith’s counterclaim, also asserted in her answer, stated that First Federal told her,

when she and Robert Baith transferred their interest in Arlington Drive to Brion and Lisa in 2007,

that she would no longer be liable on the Arlington loan. Karen’s counterclaim provided the

following statement in explanation:

          Defendant, Karen Baith, further states that her husband was a signor on said loan to
          Lisa and Brion Baith on the Arlington Drive property, that he is now deceased and
          [First Federal] released him from liability after his interest in the real property was
          transferred to Lisa and Brion Baith. Likewise, when Karen Baith transferred the
          property to Lisa and Brion Baith, she should have been released of liability on said
          note and indebtedness by the actions and acquiescence of [First Federal].

(emphasis added). She argued that First Federal was “breaching its obligation to her and should be

estopped from collecting any monies.”

          On May 26, 2011, First Federal moved for summary judgment. Karen Baith opposed the

motion. In her opposition, Karen Baith argued promissory estoppel, claiming that the memorandum

calling her a “guarantor” was “evidence that the Bank should be estopped from denying a change in

her status as primary obligor [on the Arlington loan].” Karen claimed that “the Bank at some point


                                                   -6-
No. 11-3938
First Federal Bank of the Midwest v. Baith

after 2005 and at latest in December of 2009 made a promise to [her] that she would no longer be

primarily liable as a maker of the [Arlington loan].” She argued that the Curtis memorandum

“evidenced” this change in status by referring to Karen as a “guarantor” on the Arlington loan.

Karen argued that she relied on her belief that her status had changed to her detriment. Specifically,

she argued that she would have been more proactive in safeguarding the Arlington investment and

would have insisted on a receiver being appointed to manage the Arlington apartment. Karen argued

that she suffered injustice as a result because the rent at the Arlington apartment building went

uncollected and the building was mismanaged, resulting in foreclosure.

          Karen also added an “impairment of collateral” argument, arguing that “the Bank should be

estopped from claiming recourse against Karen Baith . . . as a result of [First Federal’s] unjustified

impairment of collateral.” She argued that First Federal had a duty to her, a guarantor, not to impair

the value of the collateral.

          On August 11, 2011, the district court granted summary judgment for First Federal. The

court granted the motion with regard to Brion and Lisa, who had not responded to First Federal’s

claims.

          With regard to Karen’s claims, the court noted that the Michigan Statute of Frauds does not

allow actions against banks or other financial institutions that are based on the bank’s oral promises.

See MICH . COMP . L. (M.C.L.) § 566.132(2). That statute states:

          An action shall not be brought against a financial institution to enforce any of the
          following promises or commitment of the financial institution unless the promise or
          commitment is in writing and signed with an authorized signature by the financial
          institution:
          ...

                                                 -7-
No. 11-3938
First Federal Bank of the Midwest v. Baith

       (b) A promise or commitment to renew, extend, modify, or permit a delay in
       repayment or performance of a loan, extension of credit, or other financial
       accommodation.

M.C.L. § 566.132(2).

       The district court determined that Karen had not submitted evidence to satisfy M.C.L. §

566.132(2) because she had provided no writing signed by First Federal stating that she would no

longer be held liable as an obligor on the Arlington loan, or that she was being made a guarantor

rather than an obligor. Therefore, the district court determined that she was still liable on the loan.

       The district court next addressed Karen’s promissory-estoppel claim. The court determined

that, “[i]n context, [the Curtis] memorandum cannot reasonably be interpreted as a promise made

to Karen Baith that would remove her as a prime borrower on the [Arlington loan].” The court noted

that Baith had signed two official written documents from First Federal—the 2005 Arlington loan

agreement and the 2009 Change in Terms Agreement. The Change in Terms Agreement, which

removed Robert Baith as an obligor on the Arlington loan, exhibited the formality with which First

Federal removed a borrower from his obligation on a promissory note. The district court determined

that it was not reasonable for Karen to believe that Curtis’s casual memorandum, merely mentioning

her as a “guarantor,” could have been meant to remove her as an obligor on the Arlington loan.

Without a promise, which she had not shown, the district court held Karen had no promissory-

estoppel claim.

       The district court did not discuss the affirmative defenses Karen Baith listed in her answer

to the complaint, nor did it discuss her impairment-of-collateral argument.



                                                 -8-
No. 11-3938
First Federal Bank of the Midwest v. Baith

        The Baiths filed this timely appeal. Though named as parties in the appellate record, Brion

and Lisa Baith do not present any claims. Karen Baith alone presents arguments.


                                                   II

        We review the district court’s grant of summary judgment de novo. Reviewing the evidence

in the light most favorable to the non-moving party, summary judgment should only be granted if

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(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

        On appeal, Karen Baith argues that the Michigan Statute of Frauds, M.C.L. § 566.132(2),

does not apply in this case. She states that First Federal approached her “on several different

occasions in 2009” to try to get her to execute a cross-collateralization agreement. App’ant Brief

at 10. She claims that First Federal told her that if she agreed to the cross-collateralization agreement

she would be released from her obligation as a borrower on the Arlington loan. Ibid. She argues that

the Curtis memorandum reflected and memorialized the parties’ oral agreement, and that this

“memorialization of a prior oral agreement” is an exception to M.C.L. § 566.132(2). Id. at 11 (citing

Adolph v. Cookware Co. of Am., 278 N.W. 687, 689 (Mich. 1938)).

        Baith’s argument is meritless. First and foremost, Adolph, the only case Baith cites in

support of her argument, actually stands for a separate point of law. Adolph dealt with an oral

business arrangement between a chiropractor, Adolph, who lived in Georgia, and a book publisher,

Burnette, who lived in Tennessee. Adolph, 287 N.W. at 687. In a series of letters, Adolph and

Burnette agreed that Adolph would write a book for Burnette’s company for $25 per week. Burnette


                                                  -9-
No. 11-3938
First Federal Bank of the Midwest v. Baith

then wrote Adolph that he wished Adolph to assume the position of head of the “health extension

department” of the publishing company. Id. at 688. Adolph arrived in Tennessee, and the series of

letters ended. According to Adolph’s testimony, he and Burnette then negotiated orally regarding

Adolph’s pay as head of the health extension department. Eventually Burnette orally agreed to pay

Adolph 2% of the corporation’s gross sales. Id. at 689. However, this agreement was never reduced

to writing. Burnette then left on a trip to Europe. Adolph then had “disputes” with Burnette’s

secretary that led, several months later, to his discharge. Adolph brought a breach-of-contract suit.

The trial court directed a verdict for the defendant because the parties did not have an enforceable

contract under the Statute of Frauds.

       On appeal, the Michigan Supreme Court reversed, because Adolph’s testimony, taken as true,

showed an employment contract for an indefinite period. This fell within a recognized exception

to the Statute of Frauds—contracts that can feasibly be performed in less than one year. Id. at 689

(citing Smalley v. Mitchell, 68 N.W. 978, 979 (Mich. 1896)). This was the exception that led to the

case’s reversal, not, as Baith argues, that a subsequent writing memorializing a prior oral agreement

precludes the operation of the Statute of Frauds. Whether the contract between the parties was

complete, with the subsequent writing merely memorializing the terms, was a question for the jury,

but the case was reversed and sent back to a jury because the contract could be performed in less than

one year. Ibid.

       The fact that Baith misunderstood the significance of Adolph is also reflected in the case’s

citing history. Adolph has not been cited for the proposition that it is an exception to the Statute of

Frauds if a plaintiff can provide a writing that memorializes a prior oral agreement. The case has

                                                - 10 -
No. 11-3938
First Federal Bank of the Midwest v. Baith

only been cited for its actual holding, that terminable-at-will contracts are not governed by the

Statute of Frauds since they may be terminated less than a year after they are made. Adolph, 278

N.W. at 689; see, e.g., Bullock v. Auto. Club of Mich., 444 N.W. 2d 114, 137 (Mich. 1989); Rowe

v. Noren Pattern & Foundry Co., 283 N.W.2d 713, 715 (Mich. App. 1979).

       Moreover, Baith’s argument resembles a promissory-estoppel argument. Baith argued

promissory estoppel below. She does not explicitly renew a promissory-estoppel argument on

appeal, but her interpretation of the Adolph case seems to grasp at the same principles. Such an

action must fail. Promissory-estoppel actions, unless they are supported by signed writings, are

barred by M.C.L. § 566.132(2). Blackward Props., LLC v. Bank of Am., No. 10-2226, 2012 WL

762882, at *3 (6th Cir. Mar. 9, 2012) (deciding that the Michigan Supreme Court would follow the

Michigan intermediate courts in holding that M.C.L. § 566.132(2) bars a claim for promissory

estoppel); Crown Tech. Park v. D&N Bank, FSB, 619 N.W.2d 66, 72 (Mich. Ct. App. 2000); FEI

Co. v. Republic Bank, S.E., Docket No. 268700, 2006 WL 2313612, at *2 (Mich. Ct. App. Aug. 10,

2006) (“M.C.L. § 566.132(2) contains an unqualified and broad ban thereby eliminating the

possibility of creative pleading to avoid the ban. Claims of negligence and promissory estoppel

against a financial institution are among those barred.”) (internal quotation marks and citation

omitted).

       The Michigan Statute of Frauds bars any action, including a promissory-estoppel action

against a financial institution when the plaintiff fails to provide a written, signed promise from the

financial institution. See M.C.L. § 566.132(2). Therefore, any action brought by Baith would fail



                                                - 11 -
No. 11-3938
First Federal Bank of the Midwest v. Baith

without a written, signed promise from First Federal that she would no longer be an obligor on the

Arlington loan. She has presented none.

         Next, Baith argues that her case falls within a different exception to the Statute of

Frauds—that partial performance removes one from the Statute of Frauds. App’ant Brief at 13.

Baith argues that she partially performed her “new loan agreement” with First Federal by “agree[ing]

to enter into a cross–collateralization with the bank.” Id. at 14. In support of her argument, Baith

cites a contracts treatise and a single case, Boelter v. Blake, 12 N.W.2d 327 (Mich. 1943).

        Baith’s argument is likely barred by M.C.L. § 566.132(2), since Michigan courts have made

it clear that the provision’s reference to “any action” should be read as broadly as possible. See, e.g.,

FEI Co., 2006 WL 2313612, at *2. The only case that Baith cites, Boelter v. Blake, 12 N.W. 2d 327

(1943), predates the 1992 revision of M.C.L. § 566.132 to its present language. The statute in 1943

did not contain a provision similar to today’s § 566.132(2).

        However, we do not need to attempt to divine Michigan’s answer to whether an equitable

action for partial performance would defeat the plain language of M.C.L. § 566.132(2). Baith did

not present the argument of partial performance in her answer to First Federal’s complaint or in her

opposition to summary judgment. Baith has waived her argument by failing to present it to the

district court; accordingly, we decline to reach the merits. Thurman v. Yellow Freight Sys., Inc., 90

F.3d 1160, 1172 (6th Cir. 1996) (“Issues that are not squarely presented to the trial court are

considered waived and may not be raised on appeal.”).

        Finally, Baith argues that the district court erred when it granted summary judgment to First

Federal without considering her affirmative defense and counterclaim of negligence and impairment

                                                 - 12 -
No. 11-3938
First Federal Bank of the Midwest v. Baith

of collateral. App’ant Brief at 14. Baith makes reference to her fifth, sixth, and seventh affirmative

defenses to show that she pleaded impairment of collateral, and the first paragraph of her

counterclaim, which states that the counterclaim “adopts all of the statements and allegations in the

foregoing Answer including the Affirmative Defenses.” App’ant Brief at 15. Baith’s argument is

flawed on several levels and must fail.

        First, Baith’s fifth, sixth, and seventh affirmative defenses did not mention “impairment of

collateral.” They in fact were titled as follows: (5) “Lack of Cooperation/Breach of Contract/Duty,”

arguing that First Federal increased her liability and exposure by refusing to allow a payoff of the

Arlington loan; (6) “Failure of Notification,” arguing that First Federal increased her exposure

because it “did not keep her apprised” of her responsibility and “did not properly supervise the loan”

because it should have appointed a Receiver; and (7) “Failure to Execute Against Guarantor,”

arguing that by releasing Robert Baith from liability after his death, First Federal “impliedly released

Karen Baith from the same obligation and/or increased her risk.” These affirmative defenses do not

give the court notice of an “impairment of collateral” argument; further, Baith cited no law regarding

impairment of collateral. It is not reasonable to suggest that the district court should have addressed

impairment of collateral based on these defenses.3




        3
        Baith argued that she also asserted impairment of collateral in her counterclaim. However,
she cites only to the first paragraph of the counterclaim, which stated that it incorporated the
arguments made in her affirmative defenses. Because Baith did not properly assert or support an
impairment-of-collateral claim in her affirmative defenses, then, she also failed to assert it in her
counterclaim.


                                                 - 13 -
No. 11-3938
First Federal Bank of the Midwest v. Baith

       Baith did make an “impairment of collateral” argument in her opposition to summary

judgment. (“[T]he Bank should be estopped from claiming recourse against Karen Baith . . . as a

result of the Bank’s unjustified impairment of collateral.”). However, Baith made this argument

specifically as relates to her as a guarantor on the Arlington loan, not as an obligor. (“Karen Baith

as a guarantor necessarily enjoys additional protection from impairment of collateral under both the

common law and the UCC.”) (emphasis added). The district court found that Baith was not a

guarantor on the Arlington Loan, but rather, at the loan’s inception and throughout, an obligor.

Because the district court correctly determined that Baith was an obligor on the Arlington loan, it

did not err in declining to address her impairment-of-collateral argument, which was explicitly based

on Baith having guarantor status.4

                                                  III

       For the foregoing reasons, the district court’s judgment is AFFIRMED.




       4
         Moreover, Baith made the impairment-of-collateral argument within her larger promissory-
estoppel argument—she argued that the bank promised her she was a guarantor, that it owed a duty
to refrain from impairing the collateral to her, the guarantor, that she relied, and that the bank
breached its duty to her, as a guarantor, not to impair the value of the collateral. As discussed above,
M.C.L. § 566.132(2) prohibits a promissory-estoppel action against the bank unless the plaintiff can
show a signed writing from the bank. The district court did not entertain Baith’s promissory-
estoppel arguments for that reason; therefore, it was also not error to decline to address impairment
of collateral, which was interwoven with her promissory-estoppel argument.


                                                 - 14 -
