Court of Appeals of Missouri, Western District, Second Division
Appeal from the Circuit Court of Pettis County, Missouri. The Honorable Robert L. Koffman, Judge.
For Appellant: Daniel Baker, Sedalia, MO.
For Respondent: Robert W. Russell, Sedalia, MO.
Before Division II: Victor C. Howard, Presiding Judge, and Mark D. Pfeiffer and Gary D. Witt, Judges.
Mark D. Pfeiffer, Judge
Lindworth Investments, LLC (" Lindworth" ), and Paul Vogel (" Vogel" ) appeal the summary judgment granted bye the Circuit Court of Pettis County, Missouri (" trial court" ), in favor of Big A, LLC (" Big A" ). On appeal, Lindworth and Vogel claim that the trial court erred in granting summary judgment to Big A because section 432.040 does not apply to
the fraudulent misrepresentations that Lindworth and Vogel allege to have been made by Big A's predecessor in interest and upon which Lindworth and Vogel relied in executing the promissory notes that were the subject of Big A's lawsuit. We reverse the judgment of the trial court and remand for further proceedings consistent with this opinion.
Factual and Procedural Background
Viewing the facts in the light most favorable to the non-movants, as we must, they are as follows:
Vogel is the manager of Lindworth, an investment company. Lindworth and/or Vogel had done business with Excel Bank (" Bank" ) in the past and trusted Bank's officers. In June of 2010, Shaun Hayes (" Hayes" ), an officer and director of Bank, contacted Vogel about an investment opportunity. Vogel met Hayes and another bank officer named Timothy Murphy (" Murphy" ) in one of Bank's offices.
At the meeting, Hayes and Murphy told Vogel that Bank had made certain loans to an entity known as Eighteen Investments, Inc. (" Eighteen" ). The loans were evidenced by promissory notes (" the Eighteen promissory notes" ) and were secured by real property in Arizona. Hayes and Murphy told Vogel that Bank wanted to get the loans to Eighteen off of its books for regulatory reasons and that it would sell the notes to Vogel and/or Lindworth for an amount less than the note balances. They fraudulently misrepresented to Vogel that the value of the Arizona real estate exceeded the balance due on the notes. They also fraudulently misrepresented to Vogel that a property manager was managing the Arizona real estate and that the rents coming in would more than service the debt.
Lindworth and Vogel relied upon these misrepresentations, and on June 29, 2010, Lindworth, through Vogel, executed promissory notes (" the Lindworth promissory notes" ) borrowing money from Bank with which Lindworth either purchased the Eighteen promissory notes from Bank or purchased the real property from Eighteen (the pleadings in the record indicate both scenarios in different places, and the exact sequence of transactions is unclear). Vogel served as guarantor of the Lindworth promissory notes. The rents for the Arizona properties were assigned to Bank. A few months later, Bank called Vogel and notified him that no payments had been made on the Lindworth promissory notes for some time. Vogel learned for the first time that no property manager handled the Arizona properties, no rent was being collected and forwarded to Bank, rental income was not sufficient to service the debt on the Lindworth notes, and the balance due on the Lindworth notes far exceeded the value of the Arizona property.
Bank subsequently assigned the Lindworth promissory notes to Big A. Big A sued Lindworth and Vogel, seeking a judgment for the balance due on the unpaid Lindworth promissory notes plus interest, late fees, collection costs, ...