                                 RECOMMENDED FOR FULL-TEXT PUBLICATION
                                      Pursuant to Sixth Circuit Rule 206
                                               File Name: 07a0455p.06

                        UNITED STATES COURT OF APPEALS
                                          FOR THE SIXTH CIRCUIT
                                            _________________


                                                     X
                               Plaintiff-Appellant, -
 RICHARD F. MAZUR,
                                                      -
                                                      -
                                                      -
                                                          No. 06-1525
          v.
                                                      ,
                                                       >
 ROI W. YOUNG; DYAN YOUNG,                            -
                            Defendants-Appellees. -
                                                     N
                      Appeal from the United States District Court
                    for the Eastern District of Michigan at Bay City.
                   No. 05-10109—David M. Lawson, District Judge.
                                             Argued: May 29, 2007
                                  Decided and Filed: November 16, 2007
         Before: DAUGHTREY and MOORE, Circuit Judges; SHADUR, District Judge.*
                                              _________________
                                                    COUNSEL
ARGUED: Charles M. Fortino, FORTINO, PLAXTON, MOSKAL & COSTANZO, Alma,
Michigan, for Appellant. James J. Hayes IV, LAMBERT, LESER, COOK, GIUNTA, MILSTER
& GANNON, Bay City, Michigan, for Appellee. ON BRIEF: Charles M. Fortino, FORTINO,
PLAXTON, MOSKAL & COSTANZO, Alma, Michigan, for Appellant. James J. Hayes IV,
LAMBERT, LESER, COOK, GIUNTA, MILSTER & GANNON, Bay City, Michigan, for
Appellee.
    MOORE, J., delivered the opinion of the court, in which DAUGHTREY, J., joined.
SHADUR, D. J. (pp. 10-14), delivered a separate dissenting opinion.
                                              _________________
                                                  OPINION
                                              _________________
       KAREN NELSON MOORE, Circuit Judge. In this diversity action we are asked to
determine whether, under Michigan law, the guarantor of a land contract is liable to the seller for
any deficiency once the seller has elected forfeiture as his remedy. For the reasons discussed below,
we conclude that a judgment for possession after forfeiture extinguishes the land contract, leaving


         *
          The Honorable Milton I. Shadur, United States District Judge for the Northern District of Illinois, sitting by
designation.


                                                           1
No. 06-1525                        Mazur v. Young et al.                                       Page 2


no legal basis to pursue further claims against the guarantor. Therefore, in this case, the guarantor
is not liable, and we affirm the district court’s entry of summary judgment for the guarantor.
                                        I. BACKGROUND
        Roi and Dyan Young, a husband and wife, moved to Michigan in 1993 so that Roi Young
could work with Richard Mazur. In August of that year, the Youngs found a vacation home in
Perrinton, Michigan (“the property”) that they wanted to purchase. Their efforts were frustrated,
however, when Roi Young could find financing only at an interest rate that he believed was too high.
When Roi Young shared his problem with Mazur, Mazur indicated that “he could buy the property
at an unbelievably low rate and just sell it back to [Roi Young].” Joint Appendix (“J.A.”) at 235
(Roi Young dep. at 19). In September 1993, Mazur bought the property for $525,000; Roi Young
contributed the $125,000 down payment, and Mazur took out a mortgage on the property for the
remaining $400,000.
        The Youngs apparently did not want to own the property in their name because Roi Young
worked in a litigious business. J.A. at 238. Accordingly, in December 1993, the parties agreed that
Mazur would sell the property not to the Youngs, but to Equitable Benefit Insurance Services, Inc.
(“EBIS”), a California corporation of which Roi Young was the sole shareholder. Under the terms
of the land contract, EBIS was to pay Mazur according to the payment terms of the mortgage.
Additionally, Roi and Dyan Young entered into a guaranty contract with Mazur that
“unconditionally guarantee[d] to [Mazur] the full and complete performance of all of [EBIS’s]
covenants and obligations under [the] Land Contract to the same extent and with the same force and
effect as though the undersigned was the primary debtor under the Land Contract.” J.A. at 18
(Guaranty of Land Contract ¶ A).
        Sometime during the summer of 1997, EBIS stopped making payments on the land contract,
and the Youngs stopped using the property. Eventually, Mazur changed the locks and, in December
of that year, he tried to sell the property. Mazur, however, was unable to sell the property because
EBIS held the title.
        To reclaim the title, in February 1999, Mazur served EBIS and the Youngs with a notice of
forfeiture. Mazur filed for possession, and on February 4, 2000, Mazur and EBIS entered into a
consent judgment wherein Mazur took possession of the property, EBIS agreed that the land contract
had been forfeited, and EBIS waived redemption rights. J.A. at 118. On April 28, 2000, the state
trial court dismissed without prejudice Roi and Dyan Young as defendants in the action because of
a lack of progress in the case.
        According to Mazur, for the next two years he continued to pay installments on the then-
refinanced mortgage, utility bills, property taxes, and general maintenance and housekeeping costs.
On March 26, 2002, Mazur sold the property for $400,000. Mazur claims that the sale price did not
fully satisfy the cost of sale, outstanding property taxes, and the outstanding debt on the mortgage,
costing him $41,405.75 out-of-pocket.
        To recover that deficiency and other losses, Mazur sued the Youngs in the Gratiot County
Circuit Court for $274,676.95, alleging that EBIS had breached its land contract with Mazur and that
the Youngs were liable as guarantors for all damages that resulted from the breach. On the basis of
federal diversity jurisdiction, the Youngs removed the case to the federal district court. Both parties
filed motions for summary judgment, and on March 17, 2006, the district court granted the Youngs’
motion and denied Mazur’s. Mazur now appeals the district court’s judgment.
No. 06-1525                              Mazur v. Young et al.                                                 Page 3


                         II. EFFECT OF THE GUARANTY AGREEMENT
A. Standard of Review
        We review de novo a district court’s order granting summary judgment. Himmel v. Ford
Motor Co., 342 F.3d 593, 597 (6th Cir. 2003). Summary judgment is proper if the evidence, taken
in the light most favorable to the nonmoving party, shows that there are no genuine issues of
material fact and that the moving party is entitled to a judgment as a matter of law. Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); FED. R. CIV. P. 56(c).
       Because this is a diversity case, we must apply the choice-of-law rules and substantive law
of Michigan, the forum state. Himmel, 342 F.3d at 598. If we confront an issue that “has not yet
been resolved by the [Michigan] courts, we must attempt to predict what the [Michigan] Supreme
Court would do if confronted with the same question.” Id. In such circumstances, we consider
decisions of the Michigan Court of Appeals as well as relevant Michigan Supreme Court dicta,
restatements of law, law-review commentaries, and the rules adopted by other jurisdictions. Garden
City Osteopathic Hosp. v. HBE Corp., 55 F.3d 1126, 1130 (6th Cir. 1995).
B. Default Guaranty Rules
        Before considering the specific contract provisions at issue in this case, we briefly review
the default rules that govern guaranties and land contracts under Michigan law. Except where the
specific terms of the agreement between Mazur and the Youngs override, we apply the default rules.
See RESTATEMENT (SECOND) OF CONTRACTS § 5 cmt. b (1981) (“Much contract law consists of rules
which may be varied by agreement of the parties.”).
         When a seller of property seeks redress against a recalcitrant buyer, the seller must make an
election of remedies. The seller can choose to pursue either foreclosure or forfeiture, but not both.
See Mich. Nat’l Bank v. Cote, 546 N.W.2d 247, 249 n.4 (Mich. 1996) (“If the plaintiff prefers to
have money damages under the contract, he should be required to elect that remedy or to foreclose
in the circuit court where the defendant will receive credit for the proceeds of the foreclosure sale.”
(quoting MICH. LAW REVISION COMM’N, 5TH ANNUAL REPORT 36) (emphasis removed)).
        In a foreclosure action under Michigan law, “the court has the power to order a sale of the
premises which are the subject of the . . . land contract, or of that part of the premises which is
sufficient to discharge the amount due on the . . . land contract plus costs.” MICH. COMP. LAWS
§ 600.3115. The proceeds of the court-ordered foreclosure sale are applied toward paying down the
debt, and the defendant-buyer can keep any surplus that might remain. MICH. COMP. LAWS
§ 600.3135(1). Of particular importance for this case, if a foreclosure sale is insufficient to cover
the entirety of the debt, “the clerk of the court shall issue execution for the amount of the deficiency”
against either the defendant, MICH. COMP. LAWS § 600.3150, or against any other party liable for
the deficiency, MICH. COMP. LAWS § 600.3160. Thus, when a seller chooses to pursue foreclosure,
the plaintiff-seller can keep neither the property nor any surplus from the court-ordered sale, but the
defendant, as well as the guarantor, remains liable for any deficiency that remains after the sale of
the property. See MICH. COMP. LAWS § 600.3160; United States v. Leslie, 421 F.2d 763, 766 (6th
Cir. 1970).
      In contrast, a seller may instead elect to pursue forfeiture. If the seller opts for forfeiture1
and prevails, the seller receives “full possession of the premises.” MICH. COMP. LAWS

         1
           Forfeiture is not always available; the agreement between the parties must “expressly provide for termination
or forfeiture, or give the vendor the right to declare a forfeiture, in consequence of the nonpayment of any moneys
required to be paid under the contract or any other material breach of the contract.” MICH. COMP. LAWS § 600.5726.
No. 06-1525                        Mazur v. Young et al.                                       Page 4


§ 600.5744(1). At that point, the seller can keep the property, sell the property, or do with it
whatever the seller pleases. What the victorious seller cannot do, however, is continue to pursue the
buyer for any deficiency: “[A] judgment for possession after forfeiture of an executory contract for
the purchase of premises shall merge and bar any claim for money payments due or in arrears under
the contract at the time of trial.” MICH. COMP. LAWS § 600.5750 (emphasis added); see also Cote,
546 N.W.2d at 249 n.1 (“This section is, in effect, a codification—arguably with modifications—of
the common-law rule that the forfeiture of an executory contract for purchase of land constitutes an
election of remedies, precluding the vendor from later seeking damages for breach of contract.”
(citation omitted)); Durda v. Chembar Dev. Corp., 291 N.W.2d 179, 182 (Mich. Ct. App. 1980) (“It
is clear that once the vendor has elected the remedy of forfeiture and proceeded to the point of
issuance of a writ of restitution, he cannot recover a deficiency judgment for money due under the
contract.”).
         Because forfeiture discharges the buyer from liability for the debt, even if there is a
deficiency, judgment for possession after forfeiture has important consequences for guarantors. “As
a general rule, the guarantor is released from liability if some act or omission on the part of the
creditor discharges the principal debtor of the principal obligation by a rule of law, even if the
principal obligation has not been paid.” 38 AM. JUR. 2D Guaranty § 96; see also Wilson Leasing Co.
v. Seaway Pharmacal Corp., 220 N.W.2d 83, 88-89 (Mich. Ct. App. 1974) (“Any material alteration
of a principal debt or obligation operates to completely discharge any guaranty of that debt or
obligation, unless the guarantor consented to the alteration.” (citations omitted)). Thus, as a general
rule, a judgment for possession after forfeiture releases a guarantor from liability.
C. The Effect of the Guaranty Agreement
        If we simply applied the general rule to the facts of this case, we could reach no other
conclusion than that reached by the district court: Mazur’s choice to pursue forfeiture and discharge
the buyer, EBIS, also discharged the Youngs as guarantors. We cannot, however, simply apply the
general rule. Instead, we must first consider whether the guaranty contract altered the default
relationship of the parties. See First Nat’l Bank of Ypsilanti v. Redford Chevrolet Co., 258 N.W.
221, 223 (Mich. 1935) (“In construing a contract of guaranty, the intention of the parties should
govern. Where the language of the writing is not ambiguous the construction is a question of law
for the court, on a consideration of the entire instrument.” (internal quotation marks omitted)).
Although we look to the language of the contract, we will not read expansively a guaranty contract.
See Bandit Indus., Inc. v. Hobbs Int’l, Inc., 620 N.W.2d 531, 535 (Mich. 2001) (“[T]he courts will
not assume such an obligation [to take on another’s debts] in the absence of a clearly expressed
intention to do so.”).
         Mazur asserts that the guaranty contract overrides the default contract rules. First, Mazur
argues that “[a] ‘guaranty’ is by its very nature a separate and distinct obligation” under which the
Youngs remained liable for EBIS’s default under the land contract, despite the fact that EBIS was
no longer liable under the land contract. Appellant’s Reply Br. at 5. Second, Mazur argues that
even if the guaranty agreement does not create continuing liability by its own independent existence,
the Youngs accepted liability above and beyond that of a normal guarantor and agreed to remain
bound regardless of what happened to EBIS.
       We conclude that these arguments are without merit.
       1. A Guaranty Agreement’s Continuing Liability
       Mazur argues that a guaranty is a separate obligation, distinct from the land contract, and the
guarantor thus remains liable under the guaranty regardless of the principal’s liability under the land
contract. If this were true, then our default rule would not be much of a default rule at all; the
No. 06-1525                        Mazur v. Young et al.                                       Page 5


guaranty agreement would leave the guarantor responsible for any deficiency regardless of the
remedy the seller elects. That is not to say that Mazur’s assertion is totally inaccurate, because a
guaranty is “‘an independent, collateral agreement by which [the guarantor] undertakes to pay the
obligation if the primary payor fails to do so.’” First Nat’l Bank & Trust Co. of Ann Arbor v. Dolph,
283 N.W. 35, 37-38 (Mich. 1938) (quoting Bedford v. Kelley, 139 N.W. 250, 252 (Mich. 1913))
(emphasis added). Furthermore, Mazur is correct that we have observed that “[t]he guaranty is an
obligation separate from the mortgage note” and concluded that, under Michigan law, a creditor may
simultaneously proceed against a guarantor and foreclose on a mortgaged property. Leslie, 421 F.2d
at 766.
         Mazur’s argument fails because of an important difference between Leslie and the instant
case: Leslie was decided in the context of a foreclosure action, not a forfeiture action. That a
guaranty agreement is an independent, collateral agreement is what allows a seller to proceed against
a guarantor without having first exhausted the foreclosure remedy against the buyer. Allowing a
seller to proceed against a guarantor in the foreclosure context is simply expeditious, because the
guarantor will still be liable for any deficiency that remains after foreclosure—something that is not
true following forfeiture. See Cote, 546 N.W.2d at 249 n.4.
        Although not raised by Mazur, Judge Shadur’s dissent makes a compelling argument that
a recent, unpublished opinion of the Court of Appeals of Michigan holds that a guaranty contract
provides an independent basis for liability even after a forfeiture action. In Richard v. 380 Fair
Assocs., Inc., No. 268299, 2006 WL 2355096 (Mich. Ct. App. Aug. 15, 2006) (unpublished
opinion), the court held that § 5750, which bars collection of a deficiency from a buyer after
forfeiture, was no defense for a guarantor because the plaintiff’s claims arose under the “the wholly
separate and discrete guaranty contract” and was not for “money payments due or in arrears under
the [land] contract” that are barred by § 5750. Id. at *3 (quoting MICH. COMP. LAWS § 600.5750).
        We conclude that Richard is distinguishable from the case at hand. In Richard, the seller
was seeking money from the guarantor due to the plaintiff under a “pocket” consent judgment that
the buyer and seller agreed to during the forfeiture action. Id. at *1. Accordingly, § 5750 would not
have protected the buyer, let alone the guarantor, because “that liability arose out of the forfeiture
proceeding, rather than a separate, subsequent action for amounts due under the land contract.” Id.
at *4. Because of the nature of the consent judgment, Richard was actually more like a foreclosure
action in that liability continued for the buyer even after the seller received judgment for possession
after forfeiture. In Mazur’s case, however, there is no dispute that § 5750 would be a defense for
EBIS. Thus, while Richard asked whether a guarantor is liable when the buyer is also still liable,
we face the much different question of whether a guarantor is liable when the buyer has been
discharged of all liability. In any event, Richard is an unpublished decision, which is not binding
under Michigan Court Rules. See MICH. CT. R. 7.215(C)(1).
       We conclude that, although a guaranty agreement is an independent contract, that fact alone
does not create liability for the guarantor after the buyer is discharged.
       2. The Youngs’ Obligations Under This Guaranty Agreement
        The guarantor, through explicit language in the guaranty agreement, can assume additional
and lasting obligations to the seller that continue past forfeiture. See Davis v. Yellow Mfg.
Acceptance Corp., 242 F.2d 503, 505 (6th Cir. 1957) (applying Michigan law and concluding that
the appellant was not released from an obligation by discharge of the principal because the
obligation was “independent of and additional to his guarantee of the buyer’s performance of the
conditional sale contract”). The question before us, and the locus of our principal disagreement with
Judge Shadur, is whether the Youngs assumed such a lasting obligation. We conclude that they did
not.
No. 06-1525                                Mazur v. Young et al.                                                    Page 6


         At issue is Paragraph D of the guaranty agreement. The relevant portion of Paragraph D
reads:
         The undersigned’s obligations hereunder shall remain fully binding although Seller
         may have waived one or more defaults by Buyer, extended the term of performance
         by Buyer, released, returned or misapplied other collateral at any time given as
         additional security (including other guarantees), and/or released Buyer from the
         performance of its obligations under such Land Contract.
J.A. at 18 (Guaranty ¶ D). If forfeiture is simply a fancy word for “release,” then Paragraph D
would apply and would trump the default contract rules; that would leave the Youngs liable to
Mazur despite the release of EBIS. It is our determination, however, that forfeiture did far more
than simply release EBIS from the performance of its obligations under the land contract; forfeiture
extinguished the land contract altogether, meaning that the Youngs as guarantors cannot be held
liable for damages due to breach of the now-extinguished contract.
        As discussed earlier, when a seller elects to seek forfeiture under Michigan law, the seller
retakes possession of the property as full satisfaction for the debt2 and no further obligations remain
on either side. Thus, “[f]undamentally, forfeiture is rescission.” Orzechowski v. Kolodziejski, 275
N.W. 722, 722 (Mich. 1937). At the conclusion of a summary proceeding for possession after
forfeiture, the seller recovers possession of the land, and the contract is effectively rescinded.3 There
can be no liability for breach of contract under a contract that has been rescinded. See
RESTATEMENT (SECOND) OF CONTRACTS § 283. In other words, forfeiture is a full and complete
remedy. Cote, 546 N.W.2d at 249 n.4.
        Mazur has not identified any precedent to the contrary. In United States v. Beardslee, 562
F.2d 1016 (6th Cir. 1977), cert. denied, 439 U.S. 833 (1978), and Leslie, we considered the liabilities
of guarantors in the context of foreclosure actions, not forfeiture actions, see Beardslee, 562 F.2d
at 1018; Leslie, 421 F.2d at 766, which, as explained above, is a dispositive distinction. In Davis,
we concluded that the contract at issue in that case, unlike the contract at issue here, in “clear terms
imposed an obligation upon the appellant” beyond a guaranty, specifically “to repurchase the trucks
in the event of default by the buyer and repossession by the seller.” Davis, 242 F.2d at 505.
Because we determine Paragraph D to be inapplicable, the general rule applies, and the guarantor
cannot be liable for a principal’s breach of a contract that has been rescinded.
       Judge Shadur, in his dissent, claims that our reading of Paragraph D essentially renders
Paragraphs A and B as dead letter.4 He claims that we are erroneously reading Paragraphs A and


         2
           As observed by the Michigan Court of Appeals in a recent unpublished opinion, forfeiture and rescission are
not identical. “‘Forfeiture terminates an existing contract without restitution, while a rescission of such contract
terminates it with restitution and restores the parties to their original status.’” Geno Enters., Inc. v. Newstar Energy USA,
Inc., No. 232777, 2003 WL 21299926, at *5 (Mich. Ct. App. June 5, 2003) (unpublished opinion) (quoting 17B C.J.S.
Contracts § 450). Forfeiture is more favorable to the seller than rescission because the seller is not required to return
to the buyer the payments the buyer already made. Therefore, any distinction between forfeiture and rescission is
immaterial to this case because rescission offers no additional benefits to the seller.
         3
           The buyer may still be liable for other damages, “[e].g., the reasonable rental value of the property during the
time that the vendee remained in possession or damages for waste.” Cote, 546 N.W.2d at 249 n.3 (citation omitted).
Mazur claims only damages arising from EBIS’s alleged breach of contract.
         4
          The relevant portions of Paragraphs A and B are:
         A. The undersigned, in consideration of and to induce the Seller to enter into said Land Contract
             with the Buyer, does hereby unconditionally guarantee to Seller the full and complete
             performance of all of the Buyer’s covenants and obligations under such Land Contract to the
No. 06-1525                             Mazur v. Young et al.                                                     Page 7


B as establishing the guarantor’s obligations post-forfeiture. He is only partly correct; while we do
conclude that a guarantor has no obligations post-forfeiture, we read Paragraphs A and B to establish
obligations post-remedy. We need not adopt a pre-forfeiture reading of Paragraphs A and B for
them to have meaning, as they will have effect when the seller opts for release or foreclosure instead
of forfeiture. Therefore, Paragraphs A and B are quite forceful and intact—but they apply only
when the seller has elected a remedy that is less than a full and complete remedy.
        The inapplicability of Paragraph D is further evident from a plain reading of its terms.
Paragraph D maintains the guarantor’s liability when the seller releases the buyer “from the
performance of its obligations under such Land Contract.” J.A. at 18 (emphasis added) (Guaranty
¶ D). From the moment that EBIS and Mazur executed the land contract, EBIS held title over the
property. Thus, a simple release of the buyer from its obligations would merely allow EBIS to stop
paying while retaining title over the property. Forfeiture, in contrast, is far more than a simple
release from obligations.
        Judge Shadur concludes—indeed, it is necessary for his argument to succeed—that the
Youngs “undert[ook] a greater liability than the buyer under the Land Contract.” Dissent at 12. We
respectfully disagree. Paragraph A, by a plain reading, says the exact opposite: “[The guarantor]
does hereby unconditionally guarantee to Seller the full and complete performance of all of the
Buyer’s covenants and obligations under such Land Contract to the same extent and with the same
force and effect as though the undersigned was the primary debtor under the Land Contract.” J.A.
at 18 (emphasis added) (Guaranty ¶ A). In light of Michigan’s precedent establishing that guaranty
contracts shall be read narrowly and by only their plain meaning, Bandit Indus., 620 N.W.2d at 535
(declaring that courts should “apply the principle of strict interpretation to the construction of [a
guaranty] contract”); Dillon v. DeNooyer Chevrolet Geo, 550 N.W.2d 846, 848 (Mich. Ct. App.
1996) (“Contractual language is construed according to its plain and ordinary meaning, and technical
or constrained constructions are to be avoided.”), we cannot conclude that the Youngs’ guaranty
contract created any additional liability that would survive forfeiture.
D. Consent
         Although a judgment for possession after forfeiture normally discharges a guarantor from
liability for a principal’s breach of a land contract, a guarantor might not be discharged if the
guarantor consents to the discharge of the principal debtor. See Wilson Leasing Co., 220 N.W.2d
at 88-89 (“Any material alteration of a principal debt or obligation operates to completely discharge
any guaranty of that debt or obligation, unless the guarantor consented to the alteration.” (citations
omitted) (emphasis added)). Mazur argues that the Youngs accepted additional liability because
they consented to the discharge of EBIS. Mazur    asserts that the same attorney represented EBIS and
the Youngs in the state-court forfeiture action.5 The consent judgment for possession after forfeiture
was signed by that attorney, so Mazur argues that, because an attorney representing both EBIS and
the Youngs signed the consent judgment, the Youngs consented to the discharge of EBIS as the


              same extent and with the same force and effect as though the undersigned was the primary
              debtor under the Land Contract. The liability hereunder of the undersigned to Seller shall be
              direct and absolute, and shall not be conditional upon the pursuit by Seller of whatsoever
              remedies that may at any time be available to Seller against Buyer.
         B.   By way of illustration, but without limitation, the undersigned hereby unconditionally guarantees
              to Seller the full and timely payment of the rent and all other charges to be paid by Buyer
              pursuant to the provisions of said Land Contract . . . .
J.A. at 18.
         5
           The Joint Appendix does not contain a record of an appearance by an attorney on behalf of EBIS and the
Youngs in the state-court forfeiture action, but does contain the answer filed on behalf of both EBIS and the Youngs,
which reflects that one law firm was representing all defendants.
No. 06-1525                         Mazur v. Young et al.                                        Page 8


principal debtor. The judgment, however, listed only EBIS as a defendant, and the Youngs were
later dismissed as defendants due to lack of progress in the case.
         We need not resolve the question of whether the Youngs consented. The consent judgment
at issue was a judgment for possession after forfeiture, which effectively rescinded the contract.
Thus, the most that can be said is that the Youngs consented to forfeiture of the contract, which, as
explained above, extinguished any liability of both EBIS and the Youngs for damages for breach
of the land contract. It would be bizarre to construe the consent judgment as both extinguishing the
Youngs’ liability and simultaneously acting as consent for greater liability.
                                           III. FAIRNESS
       The soundness of our conclusion that a judgment for possession after forfeiture extinguishes
a guarantor’s liability is underscored by considerations of fairness. Judge Shadur suggests that
today’s decision is inherently unfair to Mazur, who accommodated the Youngs by agreeing to let
them interpose EBIS between Mazur and the Youngs for liability-evading purposes. Mazur,
however, does not lose because of the corporate structure the Youngs used; rather, Mazur loses
because he made a choice of remedy that he now regrets. Had Mazur opted instead to use
foreclosure, it would not have mattered whether EBIS or the Youngs signed the land contract,
because both parties would still be liable for any deficiency.
        Judge Shadur would prefer that we allow a seller to pursue forfeiture and then, if the seller
cannot find a buyer willing to pay enough, allow the seller to seek damages for the deficiency. To
do this would be to give Mazur a third type of remedy: “foreclosure plus.” This new remedy would
allow the seller to play the market. Just like forfeiture, the seller could keep the property, and if the
value increases the seller could keep the surplus. And just like foreclosure, if the value declines the
seller could seek the remainder from the buyer or guarantor. Creating this new remedy would
contradict Michigan law: “A land contract seller may not take possession of the property and
attempt to sell it and, if unable to do so, seek then to foreclose.” Gruskin v. Fisher, 273 N.W.2d 893,
901 (Mich. 1979).
        Furthermore, the dissent’s conclusion that a guarantor is still liable following judgment for
possession after forfeiture would create an opportunity for sellers to take advantage of
unsophisticated guarantors. Such a rule would leave parents, relatives, and other unsophisticated
guarantors with a surprising liability, even when the seller chooses not to pursue foreclosure, and
even when the buyer returns the property and relinquishes any claim to payments already made
under the land contract. Under such a rule, the guarantors would still be liable if the seller was
unsatisfied with a later sale of the property—even if the sale was years later. Instead, we conclude
that, should sellers wish to establish such lasting and pervasive liability, they cannot claim that it
exists as a default, but must instead explicitly negotiate it with the buyers and the guarantors.
                                        IV. CONCLUSION
       Because we conclude as explained above that the district court was correct in granting
summary judgment, we need not address the district court’s alternate ruling that Mazur’s claim was
barred by the statute of limitations applicable to breach-of-contract claims. Accordingly, we
AFFIRM the district court’s grant of summary judgment.
No. 06-1525                                 Mazur v. Young et al.                                                  Page 9


                                                  ________________
                                                      DISSENT
                                                  ________________
        SHADUR, District Judge, dissenting. With regret, I believe that the majority opinion has
mistakenly looked to a generalized legal doctrine as somehow overriding the specific language of
the contract between the parties--a near-classic exaltation of form over substance. Because there
is of course no contention that the guaranty executed by Roi and Dyan Young (“Youngs”) is
somehow contrary to public policy so as to render it unenforceable, I submit that no basis exists for
such a failure to hold Youngs to the unambiguous language of their commitment under the guaranty.
Hence I respectfully dissent.
        Most troubling is that, as the majority opinion would have it, not all of the expressly-
bargained-for provisions in the binding guaranty contract between Mazur and the Youngs are given
effect. That result is particularly problematic, given the long-held principles that govern the
interpretation of such a contract, under which the general rules of contract construction must be
applied (First Nat’l Bank v. Redford Chevrolet Corp., 258 N.W. 221, 223 (Mich. 1935)). As was
explained there, quoting even earlier caselaw:
         In construing a contract of guaranty the intention of the parties should govern.
         Where the language of the writing is not ambiguous the construction is a question of
         law for the court, on a consideration of the entire instrument.
For that purpose, of course, “the courts will not assume such an obligation [to assume another’s
debts] in the absence of a clearly expressed intention to do so” (Bandit Indus., Inc. v. Hobbs, 620
N.W.2d 531, 535 (Mich. 2001)).
         But before parsing out the terms of the guaranty contract that should be given their full force,
it is critical to look at Mazur’s position vis-a-vis Equitable Benefit. It is undisputed that under
Michigan law a land contract vendor who finds himself in Mazur’s position, confronting a purchaser
in default, must choose between two enforcement options against the purchaser: (1) foreclose on
the contract, sell the property and, after applying the proceeds, proceed against the purchaser for any
deficiency (Mich. Comp. Laws §§600.3101 - 600.3180)1 or (2) commence a summary proceeding
in the district court for forfeiture of the land contract, obtain possession of the property and retain
all payments made to date (Section §600.5744). That second alternative brings into play Section
600.5750:
         The remedy provided by summary proceedings is in addition to, and not exclusive
         of, other remedies, either legal, equitable or statutory. A judgment for possession
         under this chapter does not merge or bar any other claim for relief, except that a
         judgment for possession after forfeiture of an executory contract for the purchase of
         premises shall merge and bar any claim for money payments due or in arrears under
         the contract at the time of trial and that a judgment for possession after forfeiture of
         such an executory contract which results in the issuance of a writ of restitution shall
         also bar any claim for money payments which would have become due under the
         contract subsequent to the time of issuance of the writ.




         1
             Further citations to the Michigan statutes will take the form “Section --,” omitting the prefatory “Mich. Comp.
Laws.”
No. 06-1525                        Mazur v. Young et al.                                       Page 10


And that, of course, meant that Mazur’s pursuit of that remedy let Equitable Benefit off the hook for
any monetary liability, whether past or future. According to the majority opinion, letting Equitable
Benefit off the hook also released the Youngs from any further obligation under the generalized
theory that a land contract vendor in Mazur’s position must elect his remedies, in spite of the fact
that the parties here--Mazur and the Youngs--had clearly and unambiguously expressed their
contrary intentions vis-a-vis each other in the language of their separate and enforceable guaranty
contract.
       As the Michigan Court of Appeals rearticulated last year in Richard v. 380 Fair Assocs., Inc.,
No. 268299, 2006 WL 2355096, at *3 (Mich. App. Aug. 15)(per curiam), quoting from Mich. Nat’l
Bank v. Cote, 546 N.W.2d 247, 249 n.1 (Mich. 1996), but with brackets inserted by the Richard
opinion:
       Section 5750 is, “in effect, a [modified] codification...of the common-law rule that
       the forfeiture of an executory contract for purchase of land constitutes an election of
       remedies, precluding the vendor from later seeking damages for breach of contract.”
Like the guarantor in Richard, the Youngs contend that Mazur’s claim under their guaranty
constitutes a “claim for money payments due or in arrears under the contract at the time of trial” as
contemplated by Section 5750, so that Mazur’s claim under the guaranty was barred by his election
to pursue forfeiture proceedings against the land contract purchaser.
       But like the guarantor in Richard, the Youngs are wrong. To find in favor of the Youngs,
both the district court and the majority opinions impermissibly conflate the Land Contract and the
guaranty contract. As was held to be the case in Richard, Mazur’s claim against the Youngs stems
from their obligations under the quite separate (albeit related) guaranty contract and “thus is simply
not a post-forfeiture claim for ‘money payments due or in arrears under the [land] contract’”
(Richard, 2006 WL 2355096, at *3, quoting Section §5750). And as United States v. Leslie, 421
F.2d 763, 766 (6th Cir. 1970) has emphasized in the similar context of a guaranteed mortgage, “[t]he
guaranty is an obligation separate from the mortgage note....[T]he obligation of guaranty is distinct
from the debt” under the mortgage.
       It should be remembered that the Youngs were not themselves parties to the Land Contract.
But they expressly entered into the separate guaranty contract, under which they obligated
themselves to “unconditionally guarantee to Seller the full and complete performance of all of the
Buyer’s covenants and obligations under such Land Contract.”
        Indeed, there is a special irony--or perhaps a special degree of nerviness--in the Youngs’
effort to take advantage of a release of their corporation from liability to benefit themselves
personally. After all, the original transaction was structured as it was solely at their behest, not
Mazur’s, because they wanted to shoehorn Equitable Benefit into the picture to insulate themselves
against potential personal liability to unknown future litigants by not taking title in their own names.
Mazur accommodated their desire and now faces their effort to avoid liability to him. Truly no good
deed goes unpunished.
        What seems more remarkable is the refusal of the Youngs (and regrettably the failure of both
the district court and the majority) to parse the Guaranty of Land Contract to see the basic illogic
of the Youngs’ position. Here are Paragraph A and the opening sentence of Paragraph B of that
guaranty contract:
 A.    The undersigned, in consideration of and to induce the Seller to enter into said Land Contract
       with the Buyer, does hereby unconditionally guarantee to Seller the full and complete
       performance of all of the Buyer’s covenants and obligations under such Land Contract to the
       same extent and with the same force and effect as though the undersigned was the primary
No. 06-1525                          Mazur v. Young et al.                                          Page 11


        debtor under the Land Contract. The liability hereunder of the undersigned to Seller shall
        be direct and absolute, and shall not be conditional upon the pursuit by Seller of whatsoever
        remedies that may at any time be available to Seller against Buyer.
  B.    By way of illustration, but without limitation, the undersigned hereby
        unconditionally guarantees to Seller the full and timely payment of the rent and all
        other charges to be paid by Buyer pursuant to the provisions of said Land Contract.
As the Youngs would have it, the forfeiture proceeding meant that the Buyer (Equitable Benefit) no
longer had any obligation to make any payments or perform any other Land Contract obligations
(true enough), but they then go on to contend that result deprives the quoted language from
Paragraphs A and B of any further force.
        But that position begs the question, for it rests on a premise that the guaranty language of
Paragraphs A and B speaks in terms of the Buyer’s obligations--or lack of obligations--post
forfeiture. And that premise is of course false, because it is flatly contradicted by this provision of
Paragraph D of the Guaranty that expressly provides for the Youngs’ continuing obligations
(emphasis added):
        The undersigned’s obligations hereunder shall remain fully binding although Seller
        may have waived one or more defaults by Buyer, extended the term of performance
        by Buyer, released, returned or misapplied other collateral at any time given as
        additional security (including other guarantees), and/or released Buyer from the
        performance of its obligations under such Land Contract.
        Once the Seller has so released the Buyer, by definition the latter no longer has any Land
Contract obligations--so what obligations of the Guarantor can then “remain fully binding”? In the
Youngs’ (and the majority’s) eyes, none. But that would render meaningless the guaranty provisions
of Paragraphs A and B. It is obvious, then, that those latter provisions speak of what the Buyer’s
obligations originally were under the Land Contract itself, unaffected by the later release of the
Buyer that Paragraph D says does not diminish the Guarantor’s obligations. And that identical
meaning of Paragraphs A and B plainly applies to a release of the Buyer through a forfeiture
proceeding, just as it does to any other release.
       In that respect the majority seeks to perform a feat worthy of a conjurer--but not, I submit,
of persuasive legal analysis. It begins innocently enough by identifying a “default rule”: a
proposition that by definition (and as the label expressly denotes) operates only in the absence of
an agreement betwen the parties. But then having done so, it impermissibly proceeds to use the
“default rule”--which, it will be remembered, operates only in a contractual vacuum--to trump the
clear meaning and thrust of the agreement that the parties have arrived at. To me that attempted
transmutation is somewhat reminiscent of the imaginary “philosophers’ stone” by which the
alchemists of the Middle Ages hoped to transmute base metal into gold.
        In fact, the distinction set out in this dissent is directly fortified by a look at what the earlier-
quoted forfeiture statute--Section 600.5750--says and what it does not say. It says that a post-
forfeiture judgment for possession or writ of restitution bars claims for money payments “under the
contract” (the Land Contract)--claims that by definition could be made only against the party to that
contract (here Equitable Benefit). It says nothing to negate claims against a third party (here the
Youngs in their capacity as guarantors under a separate contract) who can choose, as the Youngs
have, to undertake a greater liability than the buyer under the Land Contract. Neither the principles
of statutory construction nor the principles of construing contracts permit a Procrustean alteration
of the statute and guaranty contract to read them in a way that terminates that fundamental
distinction.
No. 06-1525                         Mazur v. Young et al.                                       Page 12


         This interaction of Mazur’s two separate contracts--the Land Contract with Equitable Benefit
as Buyer and the Guaranty of Land Contract with the Youngs as guarantors--contrasts sharply with
the situation in VanElsacker v. Erzberger, 357 N.W.2d 891, 894 (Mich. App. 1984), which barred
a later suit on a promissory note because the parties there had elected “to treat the promissory note
and land contract as a single contractual obligation in the summary proceedings for forfeiture and
restitution.” Here, however, Section 600.5750 clearly supports the outcome under which Mazur may
pursue the Youngs for damages based on the separate and independent guaranty contract, because
it expressly states that the summary proceedings remedy “is in addition to, and not exclusive of,
other remedies, either legal, equitable or statutory.” To the same effect, Paragraph A of the guaranty
(emphasis added) specifically provides that the Youngs’ liability “shall be direct and absolute, and
shall not be conditional upon the pursuit by Seller of whatsoever remedies that may at any time be
available to Seller against Buyer.”
                                        Statute of Limitations
        That, then, calls for rejection of the district court’s decision and the majority’s affirmance
in substantive terms, but I pause to address what had been the district court’s alternative ruling that
Mazur’s claim was barred by Michigan’s six-year statute of limitations applicable to breach of
contract claims--a period that begins to run as soon as the cause of action accrues (see Section
600.5807(8)). Cordova Chem. Co. v. Dep’t of Natural Resources, 536 N.W.2d 860, 865 (Mich.
App. 1995) explains that a breach of contract claim “accrues when the promissor fails to perform
under the contract” (accord, such cases as H.J. Tucker & Assocs., Inc. v. Allied Chucker & Eng’g
Co., 595 N.W.2d 176, 183 (Mich. App. 1999)). Mazur contends that his claim against the Youngs
accrued either (1) on March 26, 2002, when the post-forfeiture sale to Fisher was completed and
Mazur learned the extent of his damages, or (2) when the instant lawsuit was filed in October 2004,
while the Youngs urge that Mazur’s claim accrued in June 1997, when they stopped making
payments under the Land Contract.
       Agreeing with the Youngs, the district court held that “there can be no question that Mazur’s
claim accrued when [Equitable Benefit] defaulted on its monthly land contract payments and the
guarantors failed to cure that default.” In taking that view that the breach occurred when Equitable
Benefit defaulted on the Land Contract payments in 1997 because that event assertedly triggered the
Youngs’ obligation under the guaranty agreement, the district court further held that Mazur’s 2004
lawsuit was time barred.
        Again I respectfully disagree. United States v. Brown, 833 F.Supp. 625, 628 (E.D. Mich.
1993), discussing a similar cause of action arising under identical federal law, stated that “[t]he point
at which plaintiff’s cause of action accrued is governed by the language of the guaranties,” and it
held the cause of action against the guarantor did not accrue until the obligee had made a demand
on the guarantor. Just so, in addition to the language quoted earlier from Paragraph B of the
guaranty agreement, the same paragraph goes on to state (emphasis added):
        The undersigned shall pay such indebtedness to Seller on demand inasmuch as the
        undersigned hereby agrees that such indebtedness constitutes the undersigned’s
        direct and primary obligation; and Seller shall not be obligated to first resort to any
        actions or remedies against the Buyer before proceeding against and collecting from
        the undersigned, or any of them.
       As stated earlier, Michigan courts have long held that guaranty contracts are subject to the
same rules of interpretation and construction as any other contracts (see First Nat’l Bank, 258 N.W.
at 223). And here it is undisputed that Mazur did not demand payment from the Youngs when
Equitable Benefit stopped honoring its obligations in 1997.
No. 06-1525                              Mazur v. Young et al.                                                Page 13


        As above, the district court’s and majority’s holding that the guaranty contract was breached
back in 1997 has impermissibly conflated the Youngs’ obligations under the guaranty agreement
with Equitable Benefit’s obligations under the Land Contract. Diversified Fin. Sys. v. Schanhals,
513 N.W.2d 210, 211 (Mich. App. 1994) (per curiam) teaches that a guaranty is breached and the
statute of limitations starts to run only when a demand is made to enforce the terms of the guaranty
contract. Thus Diversified, id. held that “[d]efendants were in breach of the guaranty contracts
when...[plaintiff] brought suit...to enforce the guaranty contracts.”
         And that approach makes eminently good sense. It allows the obligee to forbear pursuit of
the guarantor until he knows (1) that he has ultimately sustained damages as a result of2 the
underlying breach or breaches and (2) what the extent of those damages has turned out to be. In
this instance Mazur’s pursuit of the forfeiture alternative, with its swifter entitlement to possession
than foreclosure of the Land Contract would have provided, enabled Mazur to seek a new buyer at
a favorable price (Mazur had actually listed the property for sale not long after Equitable Benefit
stopped making payments under the Land Contract), and one offer was received but the deal fell
through. Needless to say, Mazur (like any rational person in the same position) was looking to
recoup his money (or to limit his mortgage obligation) rather than simply acquiring a cause of
action--and if he had been successful in obtaining a favorable sale price as he sought to do, he would
have sustained no damages and the Youngs would have had no liability as guarantors (for of course
Mazur was not entitled to a double recovery).
       In fact, even under the Youngs’ approach, when reasonably assessed, Mazur’s October 19,
2004 lawsuit was not a stale claim for limitations purposes. Six years earlier (on October 19, 1998)
Mazur had listed the property for sale but had not yet obtained possession through forfeiture
proceedings. It was not then known whether he would in fact sustain damages by reason of
Equitable Benefits’ defaults--damages that Paragraph B of the guaranty would have obligated the
Youngs to pay “forthwith.”
        In short, the Youngs’ limitations defense, like their substantive contention, fails as a matter
of law. And that being so, I cannot join the majority opinion upholding the district court’s decision,
which fails to take into account the parties’ intentions under the guaranty contract. As stated at the
outset, I respectfully dissent.




         2
            As is true of the typical guaranty document, the Guaranty of Land Contract here is chock full of provisions
that protect the remedies of the party guaranteed against breaches of the underlying obligor without stating when or how
he must pursue any of those remedies. What the text reflects is the most logical answer to that question.
