Gateway Metro Fed. Credit Union v. Jones

• Decision Date: 09 June 2020
• Docket Number: No. ED 108286,ED 108286
• Citation: 603 S.W.3d 315
• Parties: GATEWAY METRO FEDERAL CREDIT UNION, Respondent, v. Dominic JONES, Appellant.
• Court: Missouri Court of Appeals

603 S.W.3d 315

GATEWAY METRO FEDERAL CREDIT UNION, Respondent,

v.Dominic JONES, Appellant.

No. ED 108286

Missouri Court of Appeals, Eastern District, DIVISION FOUR.

Filed: June 9, 2020

FOR APPELLANT: Bryan P. Cavanaugh, 75 West Lockwood Avenue, Suite 222, Saint Louis, MO 63119.

FOR RESPONDENT: Clayton G. Kuhn, Nicholas G. Klumb, 600 Washington Avenue, 15^th Floor, Saint Louis, MO 63101.

Gary M. Gaertner, Jr., Judge

Introduction

Dominic Jones (Jones) appeals the trial court's summary judgment in favor of Gateway Metro Federal Credit Union (Gateway) on Gateway's suit on a promissory note and Jones’ counterclaim for unjust enrichment. Because we find the evidence in the summary judgment record did not establish the balance that remains due on the promissory note, an element of Gateway's claim, we must reverse the summary judgment in favor of Gateway on the promissory note, as well as the summary judgment on Jones’ counterclaim.

Background

On January 25, 2007, Jones executed a promissory note (2007 Note) in the principal amount of $109,000, and a deed of trust to secure the promissory note. On April 25, 2008, Jones executed a second promissory note in the principal amount of $376,800 (2008 Note), also secured by a deed of trust. Gateway is the holder of both notes and entered into a subordination agreement to subordinate the 2007 Note and deed of trust to the 2008 Note and deed of trust.

Jones subsequently failed to make all payments due under both notes. Gateway foreclosed on the 2007 Note and purchased the underlying real estate for $103,107.41. Gateway stated in its motion for summary judgment that it spent $39,532.07 to improve the property and then sold the property for $264,396.41. Gateway further stated that after applying the proceeds of the sale, the principal balance due on the 2008 Note was $333,926.21, and that balance continued to accrue interest.

Additionally, Gateway obtained a default judgment against Jones in St. Charles County, Missouri, which Gateway later filed with a district court in Colorado. The Colorado court issued a writ of continuing garnishment against Jones, through which Gateway collected $10,515.73. The Circuit Court of St. Charles County later set aside the default judgment against Jones for lack of personal jurisdiction. The garnishment in Colorado has not been contested or set aside.

Gateway filed the present suit to collect on the 2008 Note in March of 2018. In its statement of uncontroverted material facts attached to its motion for summary judgment, Gateway claimed that as of May 14, 2019, after applying the proceeds received in the Colorado garnishment, the principal balance on the 2008 Note was $333,926.21, the interest balance was $175,306.09, and the late fee balance was $13,350.48. Gateway attached an affidavit executed by Lisa Ellison (Ellison affidavit), Respondent's Vice President of Risk Management, to support these facts. Jones responded that Jones could not admit or deny these facts without further discovery. Jones counterclaimed for unjust enrichment, arguing that because the Colorado garnishment was based on a void judgment, the $10,515.73 that Gateway collected is unjustly retained by Gateway. Jones further argued that the merger doctrine operated to extinguish Gateway's mortgage interest in the property, or at minimum, a question of fact remained regarding the applicability of the merger doctrine.

The trial court granted summary judgment in favor of Gateway on both Gateway's claim and Jones’ counterclaim. The trial court ordered Jones to pay $333,926.21 in principal, $175,306.09 in interest, $13,350.48 in late fees, and $52,856.44 in attorney's fees. This appeal follows.

Standard of Review

Our review of summary judgment is essentially de novo. ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). We use the same criteria the trial court employed to determine whether the movant has made a prima facie showing under Rule 74.04(c) that there is no genuine issue regarding the material facts, and that the movant is entitled to judgment as a matter of law. Id. at 376, 378, 381. Additionally, where the movant has first made a prima facie showing and the non-movant raises an affirmative defense, we must determine whether the movant has established that the affirmative defense fails as a matter of law. Id. at 381. We view the record in the light most favorable to the non-movant, according the non-movant the benefit of all reasonable inferences from the record. Id. at 376. We take facts set forth by affidavit or otherwise in support of the motion as true unless contradicted by the non-movant's response. Id.

Discussion

Jones raises four points on appeal. In Point I, he argues that the trial court erred in granting summary judgment on Gateway's suit on account because the Ellison affidavit attached to the motion was not based on personal knowledge. In Point II, Jones argues that the trial court erred in granting summary judgment as a matter of law because the merger doctrine, which Jones asserted as an affirmative defense, prevents Gateway from obtaining relief on the 2008 Note. Jones argues in Point III that Gateway failed to prove damages in that the Ellison affidavit is inconsistent with the promissory note as well as a prior affidavit Ellison executed, which Gateway attached to its earlier motion for default judgment. In Point IV, Jones argues that the trial court erred in granting summary judgment in favor of Gateway on Jones’ counterclaim for unjust enrichment because the Colorado garnishment judgment is void in light of the St. Charles County court setting aside its default judgment against Jones. Regarding the summary judgment on Gateway's suit on account, we find Point I is dispositive.

Thus, we discuss only Points I and IV.¹

Point I

Jones argues that the Ellison affidavit is invalid because it is not based on personal knowledge. We agree that the Ellison affidavit, which was the only evidence offered to show Jones’ default and the amount due on the 2008 Note, was insufficient to establish a prima facie right to summary judgment in favor of Gateway.

First, to make a prima facie showing of a right to summary judgment on a suit on account, Gateway had to establish the following elements by undisputed facts: (1) the existence of a valid promissory note signed by the maker, (2) a remaining balance due, and (3) that a demand for payment has been made and refused, leaving the maker in default. The Bus. Bank of St. Louis v. Apollo Invs., Inc., 366 S.W.3d 76, 80 (Mo. App. E.D. 2012). Gateway can make such a case "by producing the note admittedly signed by the maker and showing the balance due." Sverdrup Corp. v. Politis, 888 S.W.2d 753, 755 (Mo. App. E.D. 1994).

Here, Gateway attached the 2008 Note to the initial petition, which Jones admitted was an accurate copy of the note and did contain Jones’ signature. Jones further admitted he failed to make all of the payments due on the 2008 Note.² In order to show the remaining element, the balance due on the note, Gateway submitted the Ellison affidavit.

Regarding affidavits attached to motions for summary judgment, Rule 74.04(e) requires the following:

Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served therewith.

While an affidavit need not contain a particular "magic phrase" in order to establish that it is made on personal knowledge, the averments should still demonstrate that the affiant has personal knowledge of the matters contained in the affidavit. See Scott v. Ranch Roy-L, Inc., 182 S.W.3d 627, 635 (Mo. App. E.D. 2005) ; see also May & May Trucking, L.L.C. v. Progressive Nw. Ins. Co., 429 S.W.3d 511, 515 (Mo. App. W.D. 2014). On the other hand, "[a]n affidavit which relates information gained from other documents relates hearsay, not such facts as would be admissible in evidence, and is not sufficient to support a motion for summary judgment." Perry v. Kelsey-Hayes Co., 728 S.W.2d 278, 280 (Mo. App. W.D. 1987) (quoting Allen v. St. Lukes Hosp. of Kan. City, 532 S.W.2d 505, 508 (Mo. App. W.D. 1975) ); see also May & May Trucking, 429 S.W.3d at 516 (holding that affidavit by claims specialist who relied on documents to form her statements contained hearsay and was not made on personal knowledge). In such a case, if the documents themselves qualify as business records, a party may submit them through use of a business records affidavit to avoid any hearsay issue.³ Section 490.692, (RSMo. 2000 ).

Here, the Ellison affidavit opens with the following statements:

1. I am employed as a Vice President of Risk Management for [Gateway].

2. In my position with Gateway, part of my day-to-day responsibilities include supervising, maintaining and reviewing the records and information pertaining to the [sic ] Gateway's loans. It is within this capacity I have reviewed the records that Gateway maintains with respect to the loan made to [Jones].

3. Gateway's records include a physical loan file and a computer database of acts, transactions, payments, communications, escrow account activity, disbursements, events and analyses with respect to the [sic ] Gateway's loans (the "Loan Records"). The information described herein and referenced below is found in the [sic ] Gateway's business records. The entries in those records are made at the time of the events and conditions they describe either by people with first-hand knowledge of those events and conditions or from information provided by people with such first-hand knowledge. Recording such information is a regular practice of Gateway's regularly conducted business activities. I have access to the Loan Records with respect to the subject loan and have

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