Comerica v. Mahmoodi (CA1 5/4/10)

This plaintiff apparently figured that it had its case in a bag when the defendant claimed not to remember anything.

Comerica gave Mahmoodi’s business a line of credit. He essentially maxed it out and then moved the business without telling Comerica. Comerica asked about its status, wasn’t satisfied with the answers, and sued for repayment. The business declared bankruptcy, in the process providing accountings of its receivables that were about 350% less than those it had, pursuant to the contract, provided Comerica in the prior few months. Comerica therefore added fraud to its contract claim.

As the result of a car accident, Mahmoodi lost his memory of his dealings with Comerica.

Comerica moved for summary judgment. Defendants did not oppose it on the contract claim but argued issues of fact on the fraud claim. Comerica apparently contended that it should have summary judgment because it could present a prima facie case to which Mahmoodi, due to lack of memory, couldn’t respond. The trial court agreed.

The Court of Appeals didn’t. A jury could find that there was an innocent explanation for the difference in receivables – namely, that receivables really had fallen hugely in one month. Factually unlikely, perhaps, but this is fraud – the standard is clear and convincing. A jury could also find that the accountings to Comerica were phony but that Mahmoodi didn’t know it (thought the basis for that conclusion isn’t clear from the opinion; Comerica had evidence that he did know). Finally, since Mahmoodi had already gotten the money before the receivable reports in controversy were made, Comerica hadn’t met its “burden of production” (whatever that is) to show that they had damaged it.

Nothing novel here. Why publish it? To remind us that a prima facie case is not the same as a summary judgment case. The opinion might have been useful had the court found a clear way to say that rather than to attempt erudite pedagogy.