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Radiance Capital Receivables Eighteen, LLC v. Concannon

United States District Court, W.D. Missouri, Central Division

September 20, 2017

RADIANCE CAPITAL RECEIVABLES EIGHTEEN, LLC, Plaintiff,
v.
MATTHEW JEROME CONCANNON, Defendant.

          ORDER

          NANETTE K. LAUGHREY United States District Judge

         In this lawsuit, Plaintiff Radiance Capital seeks payment from Defendant Matthew Concannon as the guarantor of a loan made to Providence Farms by Premier Bank. Radiance is the successor in interest to Premier Bank and the debt is past due. Both parties have moved for summary judgment. Docs. 23 and 25. Radiance's motion, Doc. 25, is granted in part and denied in part. Concannon's motion, Doc. 23, is denied.

         I. Background

         The following facts are not disputed. In October 2006 and January 2008, Providence Farms took out loans from Premier Bank and executed Promissory Notes in favor of Premier in the principal amounts of $4, 379, 000 and $9, 700, 000, respectively. The Promissory Notes were renewed from time to time, through September 2009. When the Promissory Notes matured in January 2010, Providence Farms made no payments toward the principal or accrued interest, and defaulted.

         In October 2010, Premier Bank was shut down and the Federal Deposit Insurance Corporation was appointed as its receiver. The FDIC, acting as a receiver for failed institutions, has entered into structured transactions with private investors using LLCs that are co-owned by the FDIC and private investors. Doc. 24, p. 2. CADC/RADC Venture 2011-1 is an entity organized by the FDIC as an LLC. Id.

         CADC was a successor by assignment from the FDIC. See Doc. 26, p. 2, ¶ 5, and Doc. 37, pp. 1-2, ¶ 1.[1] In August 2011, the FDIC executed Allonges to the Providence Farms Promissory Notes, providing for the Notes' payment “to the order of CADC…, a Delaware limited liability company, without recourse and without representation or warranty…of any kind or nature whatsoever.” Doc. 26-2, pp. 36 and 55 of 62.

         In January 2012, CADC sent demand letters to Providence Farms, as well as to Jay Lindner and Matthew Concanncon as guarantors, trying to collect on the Promissory Notes. None made any payments. In February 2012, the real property securing the Notes was sold to CADC at a foreclosure sale for the credit bid of $3, 663, 728.00. Doc. 26-4, p. 2.

         In April 2013, CADC filed suit in the Circuit Court of Boone County, Missouri against Providence Farms, Jay Lindner, and Concannon to collect on the Notes. A “Consent Judgment of Providence Farms” was entered on 9/23/2014 in the state court case. The Consent Judgment was against Providence Farms only and provided that the Notes had been sold to CADC and that Providence Farm owed CADC, its successors, and assigns $15, 769, 774.46 in principal and interest, with interest accruing at the per diem rate of $4, 298.45 from 9/1/2014 through the date of entry of judgment. Doc. 26, p. 3, ¶ 9. The Consent Judgment further provided that the judgment amount reflected a reduction of Providence Farm's obligation by the amount of the credit bid. Doc. 26-4, p. 2. “Post-judgment interest [would] accrue at the contracted rate of 13.25% on the outstanding principal balance remaining due under the [N]otes until such amount is paid in full.” Id., p. 3. Concannon did not object to entry of the Consent Judgment, nor was he a party to it. CADC later dismissed its state court claims against Concannon without prejudice.

         Almost two years after entry of the Consent Judgment, Radiance purchased the debt obligations of Providence Farms from CADC, along with original records related to the debt including the Notes, loan documents, and guaranties. Doc. 26, p. 3, ¶ 11 (Doc. 26-5 (Bill of Sale dated 5/19/2016)) and Doc. 37-1 (Affidavit of Records Custodian). The Bill of Sale provides that pursuant to the parties' Loan Sale Agreement, CADC:

[D]oes hereby sell, assign and convey to Buyer, its successors and assigns, all right, title and interest of Seller in and to those certain loans, judgments or evidences of debt described in Schedule “A” attached hereto and made part hereof, including assignment of all Loan Documents, ….

Doc. 26-5, p. 1. Schedule A, marked “Loan Schedule, ” lists:

POOL NUMBER

ASSET NUMBER

ASSET NAME

SELLER

SFG-106

101900-001-DFJ

PROVIDENCE FARMS LLC

CADC/RADC VENTURE 2011-1, LLC

Id., p. 11. The Bill of Sale also states that it was executed “without recourse, ” “representation or warranty of any kind.” Id.[2]

         On 11/4/2016, CADC executed and filed an “Assignment of Judgment” in the state court case. Doc. 26, p. 3, ¶12 (citing Doc. 26-6). The Assignment stated that the Judgment entered against Providence Farms was assigned to Radiance, for value received and pursuant to the loan sale agreement executed by the parties, and incorporated by reference into the Assignment. The amounts due on the Providence Farm debts have not been fully repaid.

         When Radiance purchased the debt obligations of Providence Farms and original records from CADC in 2016, one of the records was a Guaranty dated January 24, 2008. Listed at the top of the document are Premier Bank as “Lender, ” Providence Farms as “Borrower, ” and Concannon as “Guarantor.” Doc. 37, p. 4, ¶ 6 (citing Doc. 26-7, p. 1, and Doc. 37-1). The Guaranty provides, in relevant part, that:

• Good and value consideration was given in exchange for the Guaranty, ¶ 2;
• Guarantor provided the Guaranty to induce Lender to extend credit to and engage in other transactions with Borrower, and executed the Guaranty with the intent that Lender rely upon the Guaranty in doing so, ¶¶ 2 and 13;
• Guarantor agreed absolutely and unconditionally to guaranty to Lender “ALL PRESENT AND FUTURE DEBTS” of “every type, purpose and description, ” including, “without limitation, all principal, accrued interest, attorney's fees and collection costs, ” ¶ 2 (capitalization in original);
• “Debts” includes, among other things, the Notes, Guaranty and “(extensions, renewals, refinancings and modifications of these debts), whether now existing or created or incurred in the future, due or to become due, or absolute or contingent, including obligations and duties arising from the terms of all documents prepared or submitted for the transaction such as . . . the Note, ” ¶¶ 1.B and 2;
• Defendant consented to all renewals, extensions, modifications and substitutions of the debt, and waived notice of and consent to future advances, ¶ 3 and 3.A;
• Guarantor is unconditionally liable under the Guaranty, regardless of whether Lender pursues any remedies against the Borrower, against any other maker, surety, guarantor or endorser of the Debt or against any Property, and Guarantor's obligation to pay according to the terms of the Guaranty shall not be affected by the illegality, invalidity or unenforceability of any notes or agreements evidencing the Debt, the violation of any applicable usury laws, forgery, or any other circumstances which make the indebtedness unenforceable against the Borrower, ¶ 4;
• Guarantor “agree[s] that this is an absolute and unconditional Guaranty, ” ¶ 6;
• Default on the Guaranty occurs when the Guarantor fails to make payments in full when due, fails to perform any condition or keep any promise or covenant of the Guaranty, or any default occurs under any document related to the debt, ¶ 8.A, 8.D and 8.E;
• Guarantor waives defenses of protest, presentment, demand and notice, and generally waives other defenses, ¶ 9, 9.A and 9.C; • Guarantor agrees to pay all costs of collection and enforcement of the Guaranty, including attorneys' fees, ¶ 11;
• Guarantor represents and warrants that he is entering the Guaranty at the request of the Borrower, he is “satisfied regarding the Borrower's financial condition and existing indebtedness, authority to borrow and the use and intended use of all Debt proceeds, ” and that he did not rely on Lender for any information about Borrower, ¶ 12;
• Guarantor represents and warrants that he has “a direct interest in the Borrower and expect to derive substantial benefits from any loans and financial accommodations resulting in the creation of ...

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