Client Advisory: Recent Decisions in the State of Michigan May Affect the Non-Recourse Nature of CMBS Loans Throughout the Country

This advisory discusses two recent cases from Michigan that imposed full recourse liability under “springing guarantees” executed in connection with purportedly “non-recourse” CMBS loans.  The first decision is from the United States District Court for the Eastern District of Michigan, in 51382 Gratiot Avenue Holdings, LLC v. Chesterfield Development Company, LLC, et al., 2011 U.S. Dist. LEXIS 142404 (E.D. Mi. Dec. 12, 2011).  The second decision is from the Court of Appeals for Michigan, Wells Fargo Bank, N.A. v. Cherryland Mall Limited Partnership, 2011 WL 6785393 (Mich. App. Dec. 27, 2011).  The consequences of these decisions could be far reaching to the commercial real estate industry.