JPMorgan Chase Bank v. Winget ( 2007 )


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  •                            RECOMMENDED FOR FULL-TEXT PUBLICATION
    Pursuant to Sixth Circuit Rule 206
    File Name: 07a0482p.06
    UNITED STATES COURT OF APPEALS
    FOR THE SIXTH CIRCUIT
    _________________
    X
    -
    JPMORGAN CHASE BANK, N.A., as Administrative
    Plaintiff - Appellee, -
    Agent,
    -
    -
    No. 07-1096
    ,
    v.                                           >
    -
    LARRY J. WINGET and the LARRY J. WINGET LIVING -
    -
    Defendants-Appellants. -
    TRUST,
    -
    N
    Appeal from the United States District Court
    for the Eastern District of Michigan at Detroit.
    No. 05-74141—Avern Cohn, District Judge.
    Argued: November 1, 2007
    Decided and Filed: December 14, 2007
    Before: SILER, MOORE, and GILMAN, Circuit Judges.
    _________________
    COUNSEL
    ARGUED: John E. Anding, DREW, COOPER & ANDING, Grand Rapids, Michigan, for
    Appellants. Melville W. Washburn, SIDLEY AUSTIN, Chicago, Illinois, for Appellee.
    ON BRIEF: John E. Anding, Thomas V. Hubbard, DREW, COOPER & ANDING, Grand Rapids,
    Michigan, for Appellants. Melville W. Washburn, Matthew A. Clemente, Larry J. Nyhan, Kevin
    C. Pecoraro, Brian D. Rubens, SIDLEY AUSTIN, Chicago, Illinois, William T. Burgess,
    DICKINSON WRIGHT, Detroit, Michigan, for Appellee.
    _________________
    OPINION
    _________________
    RONALD LEE GILMAN, Circuit Judge. Through a series of transactions between 1999 and
    2002, JPMorgan Chase Bank and its predecessor served as agent for a number of lenders that had
    advanced credit to Venture Holding Company LLC, a company owned by Larry J. Winget and the
    Larry J. Winget Living Trust (hereafter collectively referred to as Winget). JPMorgan, on the basis
    of the various agreements between the parties, sought to inspect the financial records of two other
    companies owned by Winget after Venture filed for bankruptcy. The district court granted
    JPMorgan’s request for specific performance of the bank’s inspection rights, a decision that Winget
    has appealed. For the reasons set forth below, we AFFIRM the judgment of the district court.
    1
    No. 07-1096           JPMorgan Chase Bank v. Winget et al.                                      Page 2
    I. BACKGROUND
    A.     Factual background
    1.      The parties’ relationship
    In October of 2002, JPMorgan and Winget entered into the Eighth Amendment of the Credit
    Agreement between the lenders and Venture. A guaranty of payment (Winget Guaranty) was
    executed pursuant to the Eighth Amendment, which memorialized Winget’s personal guarantee of
    Venture’s obligations under the Credit Agreement. Winget also entered into two pledge agreements
    (Winget Pledges) in conjunction with the Winget Guaranty, whereby Winget pledged all of the
    present and future stock in two other companies owned by Winget—P.I.M. Management Co.
    (P.I.M.) and Venco #1, LLC (Venco). Finally, P.I.M. and Venco executed guaranties that were
    similar to the Winget Guaranty and the Winget Pledges (P.I.M. Guaranty and Venco Guaranty).
    Venture and a number of Winget’s other companies later filed for bankruptcy. Following
    the sale of various assets of the bankrupt companies, Venture’s outstanding debt under the Credit
    Agreement stood at approximately $350 million. On September 21, 2005, JPMorgan, through its
    counsel, sent a letter to Winget requesting inspection of his personal financial records and the
    financial records of P.I.M. and Venco pursuant to the terms of the Winget Guaranty. Winget, on
    October 5, 2005, denied JPMorgan’s request.
    2.      Relevant contractual provisions
    At issue in this appeal is the inspection covenant set forth in § 11(d)(i) of the Winget
    Guaranty. This section provides in pertinent part as follows:
    Each of the Guarantor Controlled Companies will permit the Administrative Agent,
    by its representatives and agents, to inspect any of the Property, corporate books and
    financial records of such Guarantor Controlled Company, . . . to examine and make
    copies of the books and accounts and other financial records of such Guarantor
    Controlled Company, and to discuss the affairs, finances and accounts of such
    Guarantor Controlled Company with, and to be advised as to the same by, their
    respective officers at such reasonable times and intervals as the Administrative
    Agent may designate . . . .
    This inspection covenant is one of a series of covenants that govern the actions that may be taken
    with respect to Winget’s companies, including P.I.M. and Venco. These covenants include
    restrictions on (1) the declaration and payment of dividends (§ 11(d)(ii)), (2) the incurring of
    indebtedness (§ 11(d)(iii)), (3) mergers and consolidations (§ 11(d)(iv)), (4) investments and
    acquisitions (§ 11(d)(v)), (5) the creation of liens (§ 11(d)(vi)), and (6) transactions with specific
    affiliated entities (§ 11(d)(vii)). The Winget Guaranty states that Winget “will cause the Guarantor
    Controlled Companies to comply with each of the . . . covenants.”
    Another portion of the Winget Guaranty that is relevant to this appeal is § 3, which sets out
    the limits on JPMorgan’s potential recovery under the Credit Agreement:
    [N]o action will be brought for the repayment of the Guaranteed Obligations under
    this Guaranty and no judgment therefor will be obtained or enforced against Larry
    Winget other than with respect to the Pledged Stock in accordance with the
    provisions of the related pledge agreements, provided that the Guarantor shall be
    fully and personally liable for any damages arising from any violations of any of the
    agreements of the Guarantor herein in favor of the Lenders. No action for money
    judgment shall be commenced by the Administrative Agent arising from any alleged
    No. 07-1096           JPMorgan Chase Bank v. Winget et al.                                     Page 3
    violation of the covenants contained in Section 11(d) until the completion of
    collection and liquidation efforts (as described in Section 5.2 of the Pledge
    Agreement of Guarantor as to PIM), unless there is a good faith allegation of
    material and irreparable harm. However, an action for specific performance and/or
    injunctive relief can be brought at any time following an alleged violation.
    Although § 3 of the Winget Guaranty references only the P.I.M. Pledge, § 5.2 of both the
    P.I.M. Pledge and Venco Pledge contain identical language regarding any collection action against
    the pledged stock. These sections provide in pertinent part that
    [n]otwithstanding anything herein or elsewhere to the contrary, the Agent shall not
    exercise any rights or remedies under this Pledge Agreement until all reasonable
    efforts have been made by it to collect the Obligations from other collateral held by
    the Agent . . . , it being intended that the Collateral provided by this Pledge
    Agreement . . . shall be realized upon by the Agent only as a last resort.
    The “other collateral” that must first be pursued by JPMorgan is not defined in the Winget Guaranty,
    but the pledged stock of P.I.M. and Venco are explicitly excluded from the contemplated “other
    collateral.” An almost identical “reasonable efforts” provision appears in § 3(iii) of both the P.I.M.
    and Venco Guaranties. Finally, pursuant to § 10 of the Winget Pledges, Winget can obtain a release
    of the P.I.M. and Venco stock by paying JPMorgan “not less than $50,000,000” to satisfy each
    pledge.
    B.     Procedural background
    In Count I of the Complaint, JPMorgan requests an order for specific performance under the
    Winget Guaranty, requiring Winget to comply with the inspection requests outlined in its September
    21, 2005 letter. Winget filed both an Answer, raising affirmative defenses, and a Counterclaim,
    which was subsequently amended. JPMorgan moved to dismiss the amended Counterclaim. The
    district court eventually dismissed the Counterclaim without prejudice and permitted Winget to
    assert those claims in a new, related case, which Winget did.
    JPMorgan then moved for judgment on the pleadings pursuant to Rule 12(c) of the Federal
    Rules of Civil Procedure. In its motion, JPMorgan sought to have Winget’s affirmative defenses
    stricken and requested a final judgment as to its request for specific performance. The district court
    granted JPMorgan’s request for specific performance and ruled that the affirmative defenses would
    be litigated as part of the companion case initiated on the basis of Winget’s former Counterclaim.
    At the request of the district court, both parties submitted proposed orders that would
    implement the specific performance of JPMorgan’s inspection right. JPMorgan’s proposed order
    was adopted, which the district court subsequently modified to protect Winget’s right to assert his
    Fifth Amendment privilege against self incrimination in other proceedings. The district court also
    entered a protective order that restricts the use of any confidential material produced during the
    inspection process. On appeal, Winget argues that the district court erred by (1) failing to apply the
    “reasonable efforts” provision to JPMorgan’s inspection rights, and (2) granting an overly broad
    order of specific performance.
    II. ANALYSIS
    A.     Standard of review and applicable substantive law
    We review de novo a judgment on the pleadings granted pursuant to Rule 12(c) of the
    Federal Rules of Civil Procedure, using the same standard as applies to a review of a motion to
    dismiss under Rule 12(b)(6). Roger Miller Music, Inc. v. Sony/ATV Publishing, LLC, 
    477 F.3d 383
    ,
    No. 07-1096           JPMorgan Chase Bank v. Winget et al.                                      Page 4
    389 (6th Cir. 2007). “For purposes of a motion for judgment on the pleadings, all well-pleaded
    material allegations of the pleadings of the opposing party must be taken as true, and the motion may
    be granted only if the moving party is nevertheless clearly entitled to judgment.” Southern Ohio
    Bank v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 
    479 F.2d 478
    , 480 (6th Cir. 1973). But we
    “need not accept as true legal conclusions or unwarranted factual inferences.” Mixon v. Ohio, 
    193 F.3d 389
    , 400 (6th Cir. 1999). A Rule 12(c) motion “is granted when no material issue of fact exists
    and the party making the motion is entitled to judgment as a matter of law.” Paskvan v. City of
    Cleveland Civil Serv. Comm’n, 
    946 F.2d 1233
    , 1235 (6th Cir. 1991).
    Jurisdiction in the present case is based on diversity of citizenship. “In diversity cases such
    as this, we apply state law in accordance with the controlling decisions of the state supreme court.”
    Allstate Ins. Co. v. Thrifty Rent-A-Car Sys., Inc., 
    249 F.3d 450
    , 454 (6th Cir. 2001). Accordingly,
    we apply Michigan state law to the interpretation of the parties’ agreements and the district court’s
    order of specific performance.
    B.      The “reasonable efforts” provision
    Winget contends that JPMorgan’s inspection rights as set forth in § 11(d) of the Winget
    Guaranty are subject to the “reasonable efforts” provisions of the Winget Pledges, P.I.M. Guaranty,
    and Venco Guaranty. He advances this contention by arguing that the district court misapplied the
    legal standard applicable to a judgment on the pleadings. According to Winget, “[u]nder 12(c), this
    Court must accept as true [his] allegation that [JPMorgan] failed to use ‘all reasonable efforts’ to
    obtain payment of the Guaranteed Obligations from the other collateral.” Winget also claims that
    “in the context of [JPMorgan’s] Rule 12(c) motion, the district court was required to accept as true,
    given the state of the pleadings, that [JPMorgan] was contractually barred from taking action that
    would affect the rights of Venco and P.I.M.”
    We conclude that Winget’s argument is both a misapprehension of the proper analysis under
    Rule 12(c) and an incorrect interpretation of the language of the Winget Guaranty. Although “all
    well-pleaded material allegations of the pleadings of the opposing party must be taken as true,”
    Southern Ohio 
    Bank, 479 F.2d at 480
    , Winget’s assertion that JPMorgan was contractually barred
    from exercising its inspection rights until it satisfied the “reasonable efforts” provision is a legal
    conclusion, not a factual allegation. Accordingly, we are not required to accept Winget’s argument
    as true. 
    Mixon, 193 F.3d at 400
    . Winget repeatedly asserts that the district court erred because it
    failed to accept his contention that JPMorgan had not used all “reasonable efforts” before seeking
    to exercise its inspection rights. In fact, the district court made no such error, because the court
    actually concluded that the “reasonable efforts” provision was inapplicable to JPMorgan’s
    inspection rights as Agent.
    The proper interpretation of a contract is a question of law. Archambo v. Lawyers Title Ins.
    Corp., 
    646 N.W.2d 170
    , 174 (Mich. 2002). Thus, whether the “reasonable efforts” provisions of
    the P.I.M. Guaranty and the Venco Guaranty are applicable to the Agent’s inspection rights under
    the Winget Guaranty is a legal question that may be decided on a motion for judgment on the
    pleadings. According to Winget, § 3(iii) of the P.I.M. and Venco Guaranties limit JPMorgan’s
    inspection rights under § 11(d) of the Winget Guaranty. Section 3(iii) provides that JPMorgan “shall
    not exercise any rights or remedies under this Guaranty until all reasonable efforts shall have been
    made by it to collect the Guaranteed Obligations from other collateral held by the Administrative
    Agent.” Winget argues that because JPMorgan has failed to demonstrate that it has made “all
    reasonable efforts” to collect from other collateral, it cannot exercise its inspection rights as Agent.
    The numerous, interrelated contracts governing the relationship between Winget and
    JPMorgan are undoubtedly complex, and JPMorgan’s ability to seek certain forms of relief is
    circumscribed by the provisions of the various agreements. For example, § 3 of the Winget
    No. 07-1096           JPMorgan Chase Bank v. Winget et al.                                     Page 5
    Guaranty provides that “[n]o action for money judgment shall be commenced by the Administrative
    Agent arising from any alleged covenants contained in Section 11(d) until the completion of
    collection and liquidation efforts (as described in Section 5.2 of the Pledge Agreement of Guarantor
    as to PIM), unless there is a good faith allegation of material and irreparable harm.” If JPMorgan
    were seeking a money judgment based on Winget’s response to its request to inspect the financial
    records, this provision makes clear that JPMorgan must first complete the “collection and liquidation
    efforts” set forth in § 5.2 and make a good-faith allegation of material and irreparable harm.
    The language related to JPMorgan’s inspection rights, in contrast, is consistent,
    unambiguous, and not circumscribed by any similar limitation. The Winget Guaranty, the P.I.M.
    Guaranty, and the Venco Guaranty each unequivocally state that, with respect to the inspection
    rights, “an action for specific performance and/or injunctive relief can be brought at any time
    following an alleged violation.” Winget argues that we must look to the intention of the parties, and
    that the intention of the parties is clear from the contractual language. He specifically relies on
    § 3(iii) of both the P.I.M. and Venco Guaranties, where the parties state that they “intended that this
    Guaranty and the collateral provided by the Pledge Agreement from the Guarantor . . . shall be
    realized upon by the Administrative Agent only as a last resort.”
    In other words, Winget contends that JPMorgan may seek recovery from P.I.M. and Venco
    only if no other assets are reasonably available. But JPMorgan is not seeking recovery from P.I.M.
    and Venco. Rather, JPMorgan is simply seeking to exercise its right to inspect the financial records
    of those two companies, a right that it may exercise through an action for specific performance “at
    any time following an alleged violation.” Here the alleged violation is Winget’s denial of
    JPMorgan’s request, sent by letter in September of 2005, to inspect the financial records of P.I.M.
    and Venco.
    Moreover, the Winget Guaranty, upon which the instant action is based, contains no
    “reasonable efforts” provision and no reference to recovery as a last resort. The absence of a
    “reasonable efforts” provision is a compelling indication that the parties did not intend that any of
    JPMorgan’s inspection rights under the Winget Guaranty would be circumscribed by such a
    requirement. This interpretation is consistent with the stated intention of the P.I.M. and Venco
    Guaranties that recovery must first be sought from other assets owned or controlled by Winget.
    Because the last sentence of § 3 of the Winget Guaranty explicitly permits JPMorgan to
    exercise its inspection rights under § 11(d)(i) “at any time following an alleged violation,” we
    conclude that the “reasonable efforts” provisions are inapplicable to such rights. JPMorgan was thus
    entitled to a judgment on the pleadings on this issue.
    C.     The specific performance order
    Winget has also raised a number of arguments related to the propriety of specific
    performance as a remedy for JPMorgan’s alleged injury, and he challenges the scope of the district
    court’s order. In particular, he claims that (1) JPMorgan failed to properly plead irreparable harm
    and “clean hands,” (2) JPMorgan has not shown that Winget has the authority to produce the
    financial records requested for inspection, and (3) the specific-performance order is improper
    because it entangles the district court in the supervision of the inspection process and is unnecessary
    because Winget can satisfy his obligations under the agreement through the payment of $50 million.
    Winget asserts that “Michigan law is settled that specific performance of a contract requires
    the plaintiff to allege and prove that it will suffer irreparable harm from a breach such that damages
    are not an adequate remedy.” Because JPMorgan failed to plead irreparable harm, Winget argues,
    specific performance cannot be granted. This argument, however, misstates the elements of specific
    performance under Michigan law.
    No. 07-1096           JPMorgan Chase Bank v. Winget et al.                                      Page 6
    An inadequate remedy at law, not irreparable harm, is what must be alleged and proven in
    a claim for specific performance. Laker v. Soverinsky, 
    27 N.W.2d 600
    , 601 (Mich. 1947) (“Specific
    performance will not be decreed where there is an adequate remedy at law.”). Although one of the
    cases cited by Winget, Barbers Local 552 v. Sealy, 
    118 N.W.2d 837
    , 839 (Mich. 1962), uses the
    term “irreparable harm,” it uses the term as synonymous with the more commonplace “inadequate
    remedy at law.” See Lamar v. Detroit Apartments Corp., 
    211 N.W. 643
    , 645 (Mich. 1927)
    (explaining that specific performance “rests on the incompleteness or inadequacy of the remedy at
    law as applied to the contract sought to be specifically enforced under the facts shown”).
    JPMorgan’s Complaint in this case states that
    [s]pecific performance is appropriate and necessary. The Agent will lack an
    adequate remedy at law if Winget, through his control of P.I.M. and Venco, engages
    in a liquidation, divestment, sale of assets, or any other course of action or dealing
    that results in a material diminution of the value of the foreign subsidiaries owned
    by P.I.M. and Venco. In addition, allegations of misconduct and financial
    manipulation made in numerous lawsuits currently pending against Winget raise
    concern as to whether Winget remains in compliance with the covenants referred to
    in ¶ 29 above. Only through inspection of the records and assets that form the basis
    of the pledged shares’ value can the Agent verify the value of its collateral and
    ensure that Winget has not violated the covenants contained in the Guaranty or
    otherwise compromised the pledged collateral and will not do so in the future.
    In his Answer, Winget’s complete response to the above paragraph is: “Denied as untrue.” Winget
    once again argues that the district court improperly applied the standard for judgment on the
    pleadings with respect to JPMorgan’s assertion and Winget’s blanket denial. According to Winget,
    the district court erred when it “ignor[ed] Winget’s denial [and] made the factual finding that
    specific performance was the ‘only way’ for the Agent to enforce its ‘audit rights.’”
    Winget has again misapprehended the proper analysis under Rule 12(c). The issue of
    whether JPMorgan has an adequate remedy at law that would make specific performance
    inappropriate is a legal conclusion, not a factual determination. The facts underlying JPMorgan’s
    request for specific performance are generally undisputed. Section 11(d) of the Winget Guaranty
    contains a number of negative covenants that restrict the actions that can be taken by P.I.M. and
    Venco during the existence of the Winget Guaranty. JPMorgan is also granted inspection rights in
    § 11(d) in order to ensure proper compliance with the covenants.
    By its letter dated September 21, 2005, JPMorgan sought to exercise its right of inspection.
    Winget refused the request. These basic facts are alleged in the Complaint and are not refuted.
    Winget attempts to argue that JPMorgan’s letter does not closely track the language of the inspection
    provisions, but does not elaborate as to how exactly the letter and the provisions differ. In all
    material respects, we find that the letter properly tracks the language of the inspection provisions.
    The presence of the negative covenants applicable to Winget’s collateral, along with JPMorgan’s
    letter and Winget’s response, support the conclusion that specific performance was proper in order
    to ensure that JPMorgan can properly evaluate the condition of the pledged P.I.M. and Venco stock
    and ensure compliance with the negative covenants.
    In the alternative, Winget argues that any possible harm to JPMorgan arising from a breach
    of the Guaranty can be remedied through an award of monetary damages. But the only plausible
    remedy for Winget’s failure to allow inspection is to order such inspection. The inspection rights
    are essential to permit enforcement of the negative covenants listed in § 11(d) of the Winget
    Guaranty. These covenants govern the collateral pledged by Winget, in the form of guaranties by
    P.I.M. and Venco, and restrict the actions that can be taken with respect to those entities.
    No. 07-1096           JPMorgan Chase Bank v. Winget et al.                                       Page 7
    Thus, contrary to Winget’s assertion that “the sole right of [JPMorgan] under those
    documents is to enforce its security interest and apply the proceeds to satisfaction of the Guaranteed
    Obligations,” JPMorgan has an explicit right to inspect the financial records of Winget and the
    companies he controls in order to ensure that there is sufficient collateral to satisfy Winget’s debt
    if JPMorgan needs to enforce its security interest at a later time. We therefore conclude that
    JPMorgan lacks an adequate remedy at law to enforce its inspection rights under the Winget
    Guaranty.
    Winget also asserts that specific performance is inappropriate because JPMorgan has failed
    to demonstrate its “clean hands” in seeking specific performance. In support of this argument,
    Winget cites to Rust v. Conrad, 
    11 N.W. 265
    , 267 (Mich. 1882), which states that equitable relief
    is unavailable
    [i]f the contract is unequal; if he has bought land at a price which is wholly
    inadequate; if he has obtained the assent of the other party to unreasonable
    provisions; if there are any indications of overreaching or unfairness on his part, the
    court will refuse to entertain his case, and turn him over to the usual remedies.
    Thus, “one who seeks the aid of equity must come in with clean hands.” Rose v. National Auction
    Group, Inc., 
    646 N.W.2d 455
    , 463 (Mich. 2002) (quoting Stachnik v. Winkel, 
    230 N.W.2d 529
    , 532
    (Mich. 1975)).
    Winget included specific allegations of unclean hands in both his Answer and in his amended
    Counterclaim. In his Answer, Winget baldly asserts that “Plaintiff’s claims are barred based on
    unclean hands.” The allegations of unclean hands in his amended Counterclaim relate to
    JPMorgan’s actions during the bankruptcy of Venture. As such, these allegations cannot be said to
    be “willful act[s] concerning the cause of action” presently before the court. 
    Stachnik, 230 N.W.2d at 534
    (quoting Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 
    324 U.S. 806
    , 815
    (1945)). Winget argues that the district court erred in ignoring these allegations in granting
    judgment on the pleadings, but we conclude that Winget has not actually raised the issue of unclean
    hands with respect to the specific performance of the inspection rights of the Winget Guaranty.
    Another argument briefly raised by Winget is that JPMorgan has not alleged that Winget has
    any legal right to any of the financial information belonging to P.I.M. and Venco. We find this
    argument meritless, if not disingenuous. Although Winget is correct in asserting that § 11(d)
    provides that he will “cause” certain information to be produced, there is no requirement that
    JPMorgan prove that Winget can actually produce the information. Winget entered into an
    agreement wherein he promised to cause the production of the requested information from entities
    that are explicitly referred to as “Guarantor Controlled Companies.” The language of the contract
    speaks for itself. Winget cannot avoid the promise he made by arguing that before receiving
    judgment on the pleadings, JPMorgan is required to prove that Winget can actually deliver on that
    promise.
    Winget further contends that the order entered by the district court impermissibly involves
    the court in supervision of the inspection process. Under Michigan law, “[s]pecific performance will
    not be decreed where enforcement of the decree would require continuous judicial supervision.”
    Edidin v. Detroit Econ. Growth Corp., 
    352 N.W.2d 288
    , 291 (Mich. Ct. App. 1984). But the
    inspection requested by JPMorgan and ordered by the district court does not involve continuous
    judicial supervision of the kind disfavored by the Michigan courts. For example, Michigan courts
    have refused to order specific performance of a long-term joint commercial venture, 
    id., or the
    continued performance of laundry services throughout the term of a lease and its renewal, Laker v.
    Soverinsky, 
    27 N.W.2d 600
    , 601 (Mich. 1947). But the inspection in the instant case is more
    analogous to the limited discovery process commonly undertaken in the district courts. In the cases
    No. 07-1096           JPMorgan Chase Bank v. Winget et al.                                        Page 8
    cited by Winget, moreover, the trial court determined that its own resources would not be taxed by
    the relief requested. Similarly, the district court here is in the best position to determine whether it
    can properly supervise the inspection of the records it has ordered.
    An order has already been entered outlining the procedure for production and inspection of
    the records. The district court has also entered a protective order designed to alleviate Winget’s
    concerns about the misuse of confidential financial data. After carefully reviewing these orders, we
    conclude that they do not impermissibly embroil the district court in the kind of continuous judicial
    supervision disfavored by the Michigan courts.
    Finally, Winget argues that the district court’s order is “vain” because Winget can release
    the pledged P.I.M. and Venco stock at any time through the payment of $50 million for each pledge.
    The Michigan Supreme Court has stated that specific performance should not be granted where “one
    of the parties might nullify its action through the exercise of a discretion which the contract or the
    law invests him with.” 
    Rust, 11 N.W. at 267
    . This standard has been explained as follows:
    In such situations it is obvious, of course, that there are corresponding benefits under
    the contract flowing from the first party to the second and from the second party to
    the first, which are parallel, continuous, contemporaneous and co-extensive and that,
    hence, termination of the contract by either party at any particular time would leave
    both in substantially status quo ante, thus resulting in no substantial injustice to
    either party.
    Plastray Corp. v. Cole, 
    37 N.W.2d 162
    , 166 (Mich. 1949).
    The party seeking specific performance in Plastray had provided a large initial capital outlay
    in anticipation of a future benefit. “In consequence, termination at any time by defendant might not
    leave the parties in status quo ante and refusal to grant specific performance would, accordingly,
    work a hardship and result in an injustice.” 
    Id. On the
    other hand, this court has found specific
    performance inappropriate when “the party requesting specific performance may, through the
    exercise of discretion, terminate the contract.” Lowe’s Home Ctrs., Inc. v. LL & 127, LLC, 147 F.
    App’x 516, 524 (6th Cir. 2005) (holding that the district court did not abuse its discretion in denying
    the plaintiff’s request for specific performance where the “agreement [the plaintiff] is seeking to
    enforce vests [the plaintiff] with the discretion to avoid performing under certain circumstances”).
    JPMorgan requested the order of specific performance but, unlike the plaintiff in Lowe’s,
    it does not have the discretion to avoid performing under the Guaranty. 
    Id. Rather, the
    present case
    is more analogous to 
    Plastray. 37 N.W.2d at 166
    . JPMorgan provided a significant initial capital
    outlay in anticipation of future repayment by Winget. Moreover,Winget’s exercise of his partial
    buyout option by paying $50 million per pledge “might not leave the parties in status quo ante.” See
    
    id. In order
    to not “work a hardship . . . result[ing] in an injustice,” we conclude that the
    specific-performance order is not “vain.” See 
    id. III. CONCLUSION
           For all of the reasons set forth above, we AFFIRM the judgment of the district court.