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Great Southern Bank v. Blue Chalk Construction, LLC

Court of Appeals of Missouri, Southern District, Second Division

August 11, 2016

GREAT SOUTHERN BANK, Plaintiff-Respondent,
v.
BLUE CHALK CONSTRUCTION, LLC, a Missouri Limited Liability Company, HAILEY REAL ESTATE & DEVELOPMENT, LLC, a Missouri Limited Liability Company, and MICHAEL L. HAILEY and NANCY A. HAILEY, husband and wife, Defendants-Appellants.

         APPEAL FROM THE CIRCUIT COURT OF GREENE COUNTY Honorable Michael J. Cordonnier

          GARY W. LYNCH, P.J. AUTHOR

         Blue Chalk Construction, LLC ("Blue Chalk"), Michael Hailey, Nancy Hailey, and Hailey Real Estate and Development, LLC ("HRE") (collectively, "Appellants"), appeal from the summary judgment granted in favor of Great Southern Bank ("Great Southern"). In six points, Appellants contend the trial court erred in granting summary judgment in favor of Great Southern because "there were genuine issues of material fact on Appellants' claims" of (1) breach of fiduciary duty, (2) fraud, (3) breach of contract, and (4) violation of the Missouri Merchandising Practices Act; and "there was a genuine dispute regarding one or more material facts supporting Appellants' affirmative defenses" of (5) fraud and unclean hands, and (6) breach of the duty of good faith and fair dealing. Finding no merit in Appellants' points, we affirm the trial court's judgment.

         Standard of Review and Applicable Legal Principles Related to Summary Judgment

When considering appeals from summary judgments, the Court will review the record in the light most favorable to the party against whom judgment was entered. Facts set forth by affidavit or otherwise in support of a party's motion are taken as true unless contradicted by the non-moving party's response to the summary judgment motion. We accord the non-movant the benefit of all reasonable inferences from the record.
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. The propriety of summary judgment is purely an issue of law. As the trial court's judgment is founded on the record submitted and the law, an appellate court need not defer to the trial court's order granting summary judgment.

ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993) (internal citations omitted). Here, judgment was entered against Appellants. Therefore, we view the record in the light most favorable to them and, as the non-movants, accord them the benefit of all reasonable inferences. Id.

         "The language of Rule 74.04 establishes the boundaries of Missouri's summary judgment practice." [1] Id. at 380. "'Because the underlying purpose of Rule 74.04 is directed toward helping the court expedite the disposition of [the] case, compliance with the rule is mandatory.'" Pub. Sch. Ret. Sys. of Missouri v. Taveau, 316 S.W.3d 338, 343 (Mo.App. 2010) (quoting State ex rel. Nixon v. Hughes, 281 S.W.3d 902, 908 (Mo.App. 2009)).

         Under that rule, the first inquiry is the identification of the movant and whether the movant is a "claimant, " see Rule 74.04(a), or a "defending party, " see Rule 74.04(b). Here, Great Southern is the movant, and it is both a "claimant, " as related to the claims in its petition and the affirmative defenses to those claims raised by Appellants in their answer (Appellants' points 5 and 6), and a "defending party, " as related to the claims raised by Appellants in their counterclaims (Appellants' points 1 through 4).

         The second inquiry is whether the movant's motion for summary judgment properly pleads all of the elements as detailed in Rule 74.04(c)(1). See ITT Commercial Fin. Corp., 854 S.W.2d at 380. As claimant, Great Southern "must establish that there is no genuine dispute as to those material facts upon which [it] would have had the burden of persuasion at trial." Id. at 381. Also as claimant, Great Southern's "right to judgment depends just as much on the non-viability of [all] affirmative defense[s] as it does on the viability of [Great Southern's] claim." Id. "Unlike the burden of establishing all of the facts necessary to [its] claim, however, the claimant may defeat an affirmative defense by establishing that any one of the facts necessary to support the defense is absent." Id. As defending party to Appellants' counterclaims, summary judgment is established where Great Southern shows:

(1) facts that negate any one of the claimant's elements facts, (2) that the non-movant, after an adequate period of discovery, has not been able to produce, and will not be able to produce, evidence sufficient to allow the trier of fact to find the existence of any one of the claimant's elements, or (3) that there is no genuine dispute as to the existence of each of the facts necessary to support the movant's properly-pleaded affirmative defense.

Id.

         This Rule 74.04(c)(1) inquiry focuses only upon the movant's summary judgment motion and its required elements. See ITT Commercial Fin. Corp., 854 S.W.2d at 381 (what the non-movant has said or done is irrelevant at this stage in the proceedings). If the movant's motion fully complies with the requirements of Rule 74.01(c)(1) and the movant's stated material facts, to which movant claims there is no genuine issue, support the movant's right to judgment as a matter of law, then the movant has made what our supreme court has described as a "prima facie showing" of a right to summary judgment. ITT Commercial Fin. Corp., 854 S.W.2d at 380-81. Here, none of Appellants' points challenge Great Southern's prima facie showing of a right to summary judgment as a claimant on its petition or as a defending party on Appellants' counterclaims.[2]

         The third and final inquiry occurs only when the movant has made "a prima facie showing that there are no genuine issues of material fact and that the movant is entitled to judgment as a matter of law[.]" Id. at 381. At that point, the burden shifts to the non-movant to show that "one or more of the material facts shown by the movant to be above any genuine dispute is, in fact, genuinely disputed." Id. "To put a fact in 'genuine dispute, ' the non-movant may not rely on a general denial, but, instead, must support that denial with 'specific references to the discovery, exhibits or affidavits that demonstrate the specific facts showing that there is a genuine issue for trial.'" Reverse Mortgage Sols., Inc. v. Estate of Hunter, 479 S.W.3d 662, 666 (Mo.App. 2015) (citing and quoting Pub. Sch. Ret. Sys. of Mo., 316 S.W.3d at 346) (citing Rule 74.04(c)(2))). "A 'genuine issue' that will prevent summary judgment exists where the record shows two plausible but contradictory accounts of the essential facts." Wallingsford v. City of Maplewood, 287 S.W.3d 682, 685 (Mo. banc 2009).

         Factual and Procedural Background

         Great Southern filed a petition against Appellants alleging that Appellants had failed to pay the balance due on five promissory notes and five guaranties tied to loans that Great Southern had previously extended to Appellants.[3] Appellants answered with a general denial and fifteen affirmative defenses. Appellants also filed essentially mirror-image counterclaims alleging claims for fraud, violation of the Missouri Merchandising Practices Act, breach of fiduciary duty, punitive damages, and breach of contract.

         Great Southern filed a motion for summary judgment concerning all claims in its petition and in Appellants' counterclaims. In addition to Suggestions in Support, Great Southern's motion was accompanied by a Statement of Uncontroverted Material Facts that included 130 numbered paragraphs of what it contends are material facts with specific references to supporting documents.[4] Appellants filed a response to Great Southern's motion for summary judgment, and it is from this response that we determine the facts on appeal. As pertinent here, Appellants admitted:[5]

3. Michael Hailey has been the sole member of Blue Chalk since its formation.
. . .
5. Michael Hailey and Nancy Hailey have been the only members of HRE since its formation, each owning a 50% interest.
. . .
7. On August 31, 1999, in consideration for a loan from Great Southern, HRE executed and delivered a Promissory Note payable to Great Southern in the original principal amount of $395, 000.00 which was thereafter modified by Change in Terms Agreements . . . .
. . .
9. Payment of the HRE Loan was secured by a Deed of Trust granted by HRE in favor of Great Southern covering certain real property in Jasper County, Missouri . . . .
. . .
11. Payment of the HRE Loan was personally and unconditionally guaranteed by Michael Hailey, Nancy Hailey, and Blue Chalk.
. . .
13. HRE admits that it defaulted on the HRE Loan by not paying the balance thereof when it matured on June 28, 2013.
. . .
17. On June 20, 2013, Great Southern exercised its right to appoint a successor trustee under the HRE Deed of Trust, and appointed GRE, LLC ("GRE") as the successor trustee.
. . .
22. On January 30, 2007, in consideration for a loan from Great Southern, Blue Chalk executed and delivered a Promissory Note payable to Great Southern in the original principal amount of $306, 795.00 which was thereafter modified by Change in Terms Agreements . . . .
. . .
25. Payment of Note 1877 was secured by a Deed of Trust covering property located at 1817 Cattails Drive, Joplin, Missouri . . . .
. . .
26. Payment of Note 1877 was guaranteed by HRE and Michael Hailey.
. . .
30. Blue Chalk admits that it defaulted by not paying the balance of Note 1877 when it ...

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