FH Partners, LLC v. Complete Home Concepts, Inc.

• Decision Date: 18 September 2012
• Docket Number: No. WD 74653.,WD 74653.
• Citation: FH Partners, LLC v. Complete Home Concepts, Inc., 378 S.W.3d 387 (Mo. App. 2012)
• Parties: FH PARTNERS, LLC, Appellant, v. COMPLETE HOME CONCEPTS, INC., et al., Respondents.
• Court: Missouri Court of Appeals

378 S.W.3d 387

FH PARTNERS, LLC, Appellant,

v.COMPLETE HOME CONCEPTS, INC., et al., Respondents.

No. WD 74653.

Missouri Court of Appeals, Western District.

Sept. 18, 2012.

Matthew L. Faul and Randall F. Scherck, Kansas City, MO, for appellant.

John R. Shank, Jr., Kansas City, MO, for respondents.

Before DIV III: VICTOR C. HOWARD, Presiding Judge, KAREN KING MITCHELL, Judge and CYNTHIA L. MARTIN, Judge.

CYNTHIA L. MARTIN, Judge.

This case involves a dispute over the right to collect two commercial loans issued by a bank which failed and became subject to the control of the Federal Deposit Insurance Corporation (“FDIC”). FH Partners, LLC (“FH Partners”) claims it has the right to collect both loans. FH Partners appeals from the trial court's grant of summary judgment in favor of Complete Home Concepts, Inc. (“CHC”), the borrower on the loans, and James G. Goodwin, Sheryl A. Goodwin, Jeffrey W. Goodwin, Gail B. Goodwin, Ralph Haughenberry, Jennifer M. Haughenberry, JJJ Enterprises, LLC, and J–Jay Properties, LLC, (“Guarantors”) the guarantors on the loans.¹

We affirm in part, reverse in part, and remand for further proceedings consistent with this Opinion.

Factual and Procedural History

The material facts are not in dispute.

The Columbian Bank Loans to CHC

On August 1, 2007, Columbian Bank and Trust Company (“Columbian”) loaned $925,000.00 (“Loan A”) to CHC evidenced by a promissory note (“Note A”) and a security agreement. Note A required equal payments of $19,148.90 on the first of each month beginning September 1, 2007, through August 1, 2012. On the same date, the Guarantors executed a commercial guaranty where they guaranteed payment of CHC's indebtedness to Columbian then existing or thereafter arising.

On September 27, 2007, Columbian loaned $1,250,000.00 (“Loan B”) to CHC evidenced by a promissory note (“Note B”) and a security agreement. Note B required that all outstanding principal and interest be paid on or before September 27, 2008 (the “Maturity Date”).

Notes A and B each included a cross-default provision which permitted CHC to be declared in default on either Note should CHC fail “to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between [Columbian] and [CHC].”

The Columbian/Bank of Weatherford Participation Agreements

On February 22, 2008, Columbian and Bank of Weatherford (“Weatherford”) entered into Non–Recourse Loan Participation Agreements (“Participation Agreements”) which transferred to Weatherford a 94.5% participation interest in Loan A and a 64% participation interest in Loan B. Pursuant to the terms of the Participation Agreements, Columbian remained the “lead lender” with the responsibility to collect and account for payments made on both Loans.

The FDIC's Appointment as Receiver

On August 22, 2008, Columbian failed. The FDIC was named as receiver and took control of Columbian. Pursuant to 12 U.S.C. section 1821(d)(2)(A)(i), the FDIC “succeed[ed] to ‘all rights, titles, powers and privileges of [Columbian.]’ ” Sunflower Bank, N.A. v. F.D.I.C., No. 09–4006–SAC, 2010 WL 3913597, at *7 (D.Kan. September 30, 2010), and thus assumed Columbian's position under Loan A and Loan B Participation Agreements.

The FDIC/Weatherford Assignment of Loan A

On September 10, 2008, the FDIC and Weatherford entered into an Assignment Agreement where the FDIC conveyed all of its rights and interests in Loan A to Weatherford. As a result, Weatherford owned 100% of Loan A, and assumed the FDIC's rights to collect and enforce Loan A. Consistent with this fact, on or about September 20, 2008, CHC received correspondence from Weatherford indicating that: (1) Loan A had been assigned to Weatherford by the FDIC, and (2) future payments should be made to Weatherford. CHC began making its payments on Loan A to Weatherford.

The FDIC/FH Partners Agreement Involving Loan A and Loan B

On December 16, 2008, the FDIC and FH Partners closed a transaction which purported to transfer Loan A and Loan B from the FDIC to FH Partners. The FDIC and FH Partners executed: (1) a Loan Sale Agreement, (2) a Bill of Sale, and (3) an Assignment and Assumption of Interests and Obligations (hereinafter, collectively, the FDIC/FH Loan Sale Documents). The FDIC/FH Loan Sale Documents reflected the FDIC's agreement to sell, and FH Partners' agreement to purchase, “all the right, title and interest” of the FDIC in Loans A and B. The FDIC/FH Loan Sale Documents did not address Weatherford's September 10, 2008 acquisition of a 100% ownership interest in Loan A, or the February 22, 2008 Participation Agreement which transferred a 64% participation interest in Loan B.

The FDIC/FH Loan Sale Documents provided that after closing, the FDIC could elect to grant FH Partners a limited power of attorney to prepare and execute transfer documents not delivered at closing. The term “transfer documents” was defined in the Loan Sale Agreement to include allonges, assignments, and any other documents “required under the laws of any jurisdiction within the United States to evidence the transfer” of Loan A and Loan B from the FDIC to FH Partners. The definition of “transfer documents” expressly excluded the FDIC/FH Loan Sale Documents.

As anticipated by the Loan Sale Agreement, the FDIC granted FH Partners a limited power of attorney to prepare and sign transfer documents. An Assignment of Loan and Liens, and an Allonge, were prepared for both Loan A and Loan B (collectively “Transfer Documents”). The Transfer Documents were signed on the FDIC's behalf by Deborah Butler (“Butler”), a vice-president with FH Partners. The Transfer Documents bear a stated effective date of December 16, 2008, but do not indicate when they were actually signed. The FDIC's limited power of attorney authorized FH Partners to prepare and execute the Transfer Documents was effective from December 17, 2008, through December 31, 2009.

The FDIC/Weatherford Agreement Involving Loan A and Loan B

On June 10, 2009, the FDIC and Weatherford entered into a Loan Exchange Agreement (the “FDIC/Weatherford Agreement”). The FDIC/Weatherford Agreement purported to exchange various loans so that the FDIC would own 100% of Loan A and Loan B and Weatherford would own 100% of other loans unrelated to this case. Weatherford executed a Termination of Participation Agreement for Loan A and Loan B terminating Weatherford's rights under the February 22, 2008 Participation Agreements.

The FDIC/Weatherford Agreement was executed on June 10, 2009. It provided for an effective date of November 7, 2008, a date which preceded the December 16, 2008 FDIC/FH Loan Sale Documents. The FDIC/Weatherford Agreement did not explain the purpose for the retroactive effective date.

FH Partners' Lawsuit to Collect Loan A and Loan B

On November 13, 2009, FH Partners made demand on Respondents for the immediate and full payment of all amounts due on Notes A and B. CHC admits that it is in default on Note B.² However, CHC denies that it owes the amounts due on Note B to FH Partners. CHC also denies that FH Partners has the right to enforce collection of Note A.³

On April 13, 2010, FH Partners filed a seven count petition (“Petition”) against CHC and the Guarantors alleging Count I (an action on Note A against CHC), Count II (an action on Note B against CHC), Count III (an action on Note A against the Guarantors), Count IV (an action on Note B against the Guarantors), Count V (a claim for replevin and money damages against CHC), Count VI (an claim for injunctive relief against CHC), and Count VII (a request for the appointment of a receiver).

The Competing Summary Judgment Motions

On August 16, 2011, FH Partners filed a motion for summary judgment. The Respondents filed a counter motion for summary judgment. On November 8, 2011, the trial court denied FH Partners' motion for summary judgment and granted the Respondents' counter motion for summary judgment (“Judgment”). Pertinent to this appeal, the trial court concluded as a matter of law: (i) that the FDIC/Weatherford Agreement was not retroactively effective to November 7, 2008 because the FDIC and Weatherford had not reached complete assent about the terms of the agreement until on or after June 9, 2009 and did not have mutuality of assent as to the effective date of the agreement; (ii) that the FDIC had no transferable interest in Loan A or Loan B on December 16, 2008 (the date of the FDIC/FH Loan Sale Documents) and that FH Partners never acquired an ownership interest in either Loan as a result; (iii) that FH Partners failed to establish that it owned either of the Loans it was seeking to collect; (iv) that the Respondents negated an essential element of FH Partners' claims (ownership of Loan A and Loan B); and (v) that the FDIC/Weatherford Agreement did not negate, cure, or correct the null, void, and invalid transfers of Loan A and Loan B under the FDIC/FH Loan Sale Documents. The Judgment dismissed Counts I, II, III, IV, V, and VI of the Petition with prejudice.⁴

On November 17, 2011, FH Partners filed a motion to amend, vacate, and correct judgment and a motion for new trial which was denied after a hearing. Judgment was entered and FH Partners' petition was dismissed with prejudice.

FH Partners appeals.

Standard of Review

“ ‘When considering appeals from summary judgments, [we] will review the record in the light most favorable to the party against whom judgment was entered.’ ” State ex rel. Ad Trend, Inc. v. City of Platte City, 272 S.W.3d 201, 203 (Mo.App. W.D.2008) (quoting ITT Commercial Fin. Corp. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993)). “ ‘Our review is essentially de novo. The criteria on appeal for testing the propriety of summary judgment are no different from those which should be employed by the trial court to determine the propriety of sustaining the motion initially.’ ” Id. (citation omitted). “Summary judgment is proper when there is no genuine issue as to any...