Enter. Bank v. Barney Ashner Homes, Inc.
| Decision Date | 03 May 2013 |
| Docket Number | 106,882,Nos. 106,588,106,883.,s. 106,588 |
| Citation | 300 P.3d 115 |
| Court | Kansas Court of Appeals |
| Parties | ENTERPRISE BANK & TRUST, Appellee, v. BARNEY ASHNER HOMES, INC.; Daniel H. Waldberg; and Bernard Ashner, Appellants. Enterprise Bank & Trust, Appellee, v. Eben, L.L.C.; Daniel H. Waldberg; and Brenda Waldberg, Appellants. and Enterprise Bank & Trust, Appellee, v. DR Builders, L.L.C.; Daniel H. Waldberg; and Robert P. Levitch, Appellants. |
OPINION TEXT STARTS HERE
Consolidated appeals from Johnson District Court; [No. 106,588] David W. Hauber and [Nos. 106,882 and 106,883] Gerald T. Elliott, Judges.
John M. Duggan and Devon A. Anliker, of Duggan, Shadwick, Doerr & Kurlbaum, P.C., of Overland Park, for appellants.
Kristie Remster Orme, Adam J. Gasper, and Linda McFee, of McDowell, Rice, Smith & Buchanan, P.C., of Kansas City, Missouri, for appellee.
Before LEBEN, P.J., ATCHESON, J., and BUKATY, S.J.
In three cases consolidated for appeal, Plaintiff Enterprise Bank & Trust sued affiliated corporations and individuals to collect on promissory notes and guaranties given to secure business loans. The defendant corporations and individuals asserted counterclaims and defenses that two Johnson County District Court judges rejected. Based on the loan documents governing those financial transactions, including choice-of-law provisions requiring the use of Missouri law, and relevant conflict-of-law principles, we affirm the judgments in favor of Enterprise Bank. We also take up Enterprise Bank's motions to recover attorney fees and costs for this appeal.
In short, we find that the substantive law of Missouri applies to the loan transactions between Enterprise Bank and the Defendants. As reflected in Mo.Rev.Stat. § 432.047 (2000 ed., 2012 Supp.), the Defendants cannot base counterclaims or defenses in these collection actions on oral representations of officers or agents of Enterprise Bank. The Defendants relied largely on such representations in an effort to modify or extinguish their obligations under promissory notes and commercial guaranty agreements with Enterprise Bank. The bulk of this decision deals with the choice-of-law considerations that dominate the issues on appeal. We also address other points the Defendants have raised and find them unavailing. We affirm the district court judgments entered in favor of Enterprise Bank. Finally, on Enterprise Bank's request for attorney fees on appeal, we grant that request, less expenses the Defendants correctly disputed.
Before turning to the legal analysis, we outline pertinent provisions of the notes and guaranties and the factual background in each case. That entails a certain amount of unavoidable repetition because the documents are generally similar and in most relevant aspects identical. We also dispense with much of the procedural history of the cases in the district court. The parties are well familiar with the voluminous record they have created in each of the cases and the particulars of the district court decisions. Although that expanse of legal argument and the resulting rulings broadly inform our review, they need not be catalogued or detailed here.
In August 2006, Defendant Barney Ashner Homes, a company specializing in residential construction, obtained two loans from NorthStar Bank, a predecessor in interest to Enterprise Bank. Company representatives signed deeds of trust on property in Kansas City, Missouri, used as collateral for the loans and promissory notes. In December 2006, the company obtained a third loan from what had become Enterprise Bank and approved another note. At that time, Defendants Barney Ashner and Daniel Waldberg, who are principals in the company, each signed a “commercial guaranty” of the company's debt.
Representatives of Barney Ashner Homes periodically signed replacement promissory notes presumably corresponding to the company's indebtedness to Enterprise Bank. In February 2009, Ashner signed the notes at issue here as the agent of Barney Ashner Homes, The commercial guaranties that Ashner and Waldberg signed remained in effect.
The construction company defaulted on the loans. Enterprise Bank foreclosed on and sold the real property collateralizing the loans. Eventually, Enterprise Bank sued Barney Ashner Homes, Ashner, and Waldberg in Johnson County District Court to collect the balance remaining on the February 2009 promissory notes and to enforce the commercial guaranties against Ashner and Waldberg. In response to the suit, the Defendants answered and counterclaimed against Enterprise Bank. Before discussing the suit, we identify portions of the financial documents that figure in the points on appeal.
The promissory notes from Barney Ashner Homes are identical and include the following provisions:
•A choice-of-law clause stating:
•A clause disavowing any oral agreements and declaring the note to be a fully integrated recitation of rights and obligations:
•The borrower's waiver of a right to jury trial.
The commercial guaranties Ashner and Waldberg personally signed are identical. Each includes the following provisions:
•A clause making the guarantor (Ashner or Waldberg) principally liable on the debt by requiring that he:
•A clause extending the agreement to future loans to Barney Ashner Homes:
“THIS IS A ‘CONTINUING GUARANTY’ UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED ON AN OPEN AND CONTINUING BASIS.”
•A clause incorporating related loan documents into the guaranty:
•The phrase “Related Documents” is a term defined in the guaranty agreement to mean “all promissory notes, credit agreements, loan agreements, ... mortgages, deeds of trust ..., and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the indebtedness.”
•A choice-of-law clause providing:
•The Guaranty Agreement allows Enterprise Bank to recover “reasonable costs” including attorney fees against the guarantor in any action to collect the indebtedness.
•A clause superseding any earlier or contemporaneous oral agreements: “This written agreement is the final expression of the agreement between Lender and Guarantor and may not be contradicted by evidence of any prior oral agreement or of a contemporaneous oral agreement between lender and Guarantor.” That section also provided a place to list “nonstandard terms,” including any oral agreements. No such terms or agreements were listed. The guarantor (either Ashner or Waldberg) then initialed that section as indicated on the form.
The Defendants' counterclaims rested on oral representations an officer of Enterprise Bank purportedly made after the February 2009 promissory notes were signed. According to the Defendants, the bank officer told the defendants the notes would not be called so long as the interest on the indebtedness was paid. They contend the bank officer made other oral representations indicating Enterprise Bank would refrain from taking legal action on the notes or the guaranty agreements or would reduce the amount of the indebtedness. The Defendants argued various contract and tort theories, including fraud. The Defendants also asserted numerous affirmative defenses.
In seeking dismissal of the counterclaims in pretrial motions filed with the district court, Enterprise Bank did not dispute the representations attributed to its officer. District Court Judge David W. Hauber granted the motion to dismiss. He later entered summary judgment against the Defendants for the balances due on the notes and awarded attorney fees to Enterprise Bank, as permitted in the documents. The Defendants timely appealed.
This case fits the same general pattern of Barney Ashner Homes in that Enterprise Bank's predecessor made loans to Eben, a limited liability corporation involved in the construction business, and took promissory notes in August 2006. The bank also received deeds of trust on two pieces of real estate in Kansas City, Missouri, as collateral. The promissory notes were periodically renewed and came due in 2009. Daniel...
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