Cox v. Cmty. State Bank
| Decision Date | 12 July 2019 |
| Docket Number | No. 119,375,119,375 |
| Citation | 444 P.3d 377 (Table) |
| Parties | Don and Reba COX, and Robert E. Cox, Appellants, v. COMMUNITY STATE BANK, Appellee. |
| Court | Kansas Court of Appeals |
Stephen P. Weir, of Stephen P. Weir, P.A., of Topeka, for appellants.
M. Doug Bell, of Hall, Levy, DeVore, Bell, Ott & Kritz, of Coffeyville, for appellee.
Before Malone, P.J., Schroeder, J., and McAnany, S.J.
Banks expect to be repaid on their loans. Robert Cox, Don Cox, and Reba Cox each obtained multiple commercial loans from the Community State Bank (formerly Condon Bank) (Bank). Don and Reba are Robert's parents. Robert, Don, and Reba initiated this litigation claiming, among other things, Bank acted negligently because it misapplied payments to their various commercial loan accounts. Bank filed a counterclaim against Robert, Don, and Reba claiming each failed to timely pay or otherwise comply with the terms of their notes, mortgages, and security agreements with Bank. Bank moved for summary judgment on its counterclaims, but Robert, Don, and Reba failed to respond. The district court granted Bank's summary judgment motion on its counterclaims for judgment on the various commercial notes and for foreclosure of the mortgages and security agreements. Robert, Don, and Reba moved to alter or amend the summary judgment order, alleging excusable neglect in their failure to timely respond. The district court denied their request, finding no excusable neglect. Bank then moved for summary judgment on the claims Robert, Don, and Reba raised against Bank. Although Robert, Don, and Reba timely opposed the motions, the district court granted summary judgment in favor of Bank, finding no genuine issues remained. Robert, Don, and Reba now argue the district court erred in granting the first summary judgment, denying their request to amend that judgment, and granting the second summary judgment. Robert, Don, and Reba's cases have been consolidated on appeal.
Robert's loans
Robert's relationship with Bank was extensive, and he entered into the following commercial notes, mortgages, and security agreements:
All of Robert's agreements contain similar language. Under the four promissory notes and cross-collateralization agreements, default by Robert on one loan allowed Bank to call all the notes due and payable. In the event of Robert's default, the notes, mortgage, and security agreements provided Bank with several remedies. First, Bank could declare the entire unpaid balance immediately due. Next, Bank could request judicial foreclosure of the mortgaged property and sell it. Third, Bank could repossess the collateral listed in the security agreements and sell it. Finally, Bank could set-off any of Robert's loans or his security agreements with other payments Bank received from him.
In 2011, Robert fell behind on paying Bank, missing multiple payments. In 2013, Bank repossessed the pickup and trailer. Bank eventually sold the pickup to pay off the first 2010 commercial note.
Don and Reba's loans
Don and Reba agreed to at least seven commercial loans with Bank, but the parties did not include all of those agreements in the record on appeal. The appellate record includes the following notes and security interests Don and Reba made with Bank:
The security agreements, commercial loans, and mortgage all contained similar language. Under those agreements, default by Don and Reba on one loan allowed Bank to call all the notes due and payable. The mortgage required Don and Reba to maintain insurance and pay their property taxes when due. The agreements also gave Bank the same default remedies against Don and Reba that Bank had against Robert. All of Don and Reba's security agreements and the mortgage contained cross-collateralization clauses securing any after-acquired property and all other amounts now or in the future owed by Don and Reba to Bank.
Bank repossessed the 2011 PJ trailer and in the process damaged Don and Reba's gate, so they sued Bank.
Robert's suit
Robert filed a pro se lawsuit against Bank, but the district court ordered Robert to make a more definite statement. Robert hired counsel, who filed an amended petition. Robert alleged he made multiple payments and Bank misapplied those payments to real estate taxes, his "operating loan," or even the wrong note. According to Robert, Bank's actions resulted in Robert's default and Bank repossessed his pickup without proper notice. Robert claimed Bank was liable for negligence and for failing to provide a notice of consumer right to cure under K.S.A. 16a-5-110.
Bank filed an answer denying Robert's claims and alleging counterclaims against him. According to Bank, Robert defaulted on his 2011 loans listing his pickup and trailer as collateral because he did not timely pay. His default on his 2011 loans caused Robert to default on the 2008 mortgage loan. Based on Robert's alleged defaults, Bank claimed it was entitled to collect all balances owed, foreclose on the 2008 mortgage, and seize the collateral in the security agreements. Bank also argued it was entitled to costs and attorney fees as described in the agreements.
Robert's counsel withdrew, so Don filed an answer to Bank's counterclaims on Robert's behalf, but Robert did not sign it. Robert's answer denied he made late payments on the 2011 loan secured by his pickup and again claimed Bank misapplied his payments to the wrong note. Robert also alleged he was current on the 2008 mortgage and promissory note, but those agreements were not connected to any other obligation with Bank. Robert claimed he paid his 2010 pickup loan in full. He failed to mention the 2011 security agreement listing the trailer as collateral.
Don and Reba's suit
Don and Reba first filed a pro se petition for conversion against Bank, but the district court ordered Don and Reba to provide a more definite statement. They hired an attorney who prepared their first amended petition.
According to their petition, Don and Reba had a right to recover against Bank for negligence, breach of contract, two violations of Kansas consumer notice requirements under K.S.A. 16a-5-110, and trespass to chattel.
They alleged Bank committed negligence in two respects. First, Don and Reba alleged in 2012 Don delivered a check for $38,010.29 from the proceeds of the sale of the livestock secured in their 2010 security agreement. Don also delivered $10,000 in cash for Bank to apply to other loans. They claimed they owed $27,000 for their livestock loan, but Bank failed to apply the check to the proper loan. Next, Don and Reba alleged Bank took several of their payments and applied those to Robert's loans. Based on Bank's misapplication of these payments, Don and Reba claimed they became delinquent in their own loans.
For their breach of contract claim, Don and Reba alleged Bank forced them to purchase insurance on their mortgaged property. They claimed the mortgage and promissory note did not require they purchase insurance to cover the house.
Don and Reba also claimed in June 2013 bank employees repossessed a 2011 PJ trailer and a Lincoln car without providing a consumer notice under K.S.A. 16a-5-110. During the repossession, Don and Reba alleged bank employees entered their land, broke the gate, and had no security interest in the 2011 PJ trailer. Accordingly, they raised a claim against Bank for trespass to chattel.
As a result of repossessing the trailer, Don and Reba alleged Reba was unable to operate her business. Don and Reba also claimed they paid all of their loans in full, but Bank refused to release its lien on their Kenworth truck and trailer.
It would appear Bank filed an answer and counterclaims, but the parties did not include those documents in the appellate record. However, the record reflects Don filed a pro se answer to Bank's counterclaims. Don's answer alleged Bank never applied the $38,010.29 from the proceeds of the sale of the livestock or the $10,000 in cash to his mortgage or to the payment "that was due on the day [he] presented the check to the bank." He admitted he signed an agreement with Bank in September 2014 but claimed he signed...
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