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Radiance Capital Receivables Eighteen, LLC v. Concannon

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

October 10, 2017




         In this lawsuit, Plaintiff Radiance Capital seeks payment from Defendant Matthew Concannon as guarantor on Providence Farm's promissory notes payable to Premier Bank. The debt is past due and Radiance sues as the successor in interest to Premier Bank. Radiance sues Concannon for breach of the Guaranty and alternatively for quantum meruit.

         To recover on a breach of guaranty in Missouri, a creditor must show that: (1) the defendant executed the guaranty; (2) the defendant unconditionally delivered the guaranty to the creditor; (3) the creditor, in reliance on the guaranty, thereafter extended credit to the debtor; and (4) there is currently due and owing some sum of money from the debtor to the creditor that the guaranty purports to cover. ITT Commercial Fin. Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 382 (Mo. 1993) (en banc). Radiance, as successor in interest to Premier Bank, is also required to show that it has a valid assignment of the Providence Farms debt and the guaranty which it seeks to enforce against Concannon.

         The Court granted Radiance summary judgment with respect to three elements of its breach of Guaranty claim-reliance by Premier Bank, ownership of the Guaranty and debt by Radiance, and the amount due and owing on the debt. The remaining elements were tried to the Court on September 26, 2017. The key disputes at trial were: (1) Whether Concannon executed the Guaranty, (2) Whether the Guaranty was delivered to Premier Bank on Concannon's behalf, and (3) Concannon's fraud in the factum defense that would make the Guaranty void even if signed and delivered. As discussed below, Radiance has proven its claim for breach of guaranty and Concannon's fraud defense fails.[1]

         I. General Findings of Fact

         José Lindner[2] was Concannon's friend, tax preparer, financial advisor, and business accountant. He helped Concannon with a real estate project involving a convenience store business, to market a software program that Concannon developed, and set up the books for Concannon's private practice. Lindner also developed and owned commercial real estate projects, including Providence Farms. Concannon paid Lindner a total of $600, 000 in installments, starting in late 2007, to invest in the Providence Farms project and obtain what Concannon thought was a tax credit. Concannon also understood himself to have become a member of Providence Farms, LLC through a holding company that Concannon owned, Millennium Medical Services, LLC. The Guaranty at issue in this case lists Premier Bank as the Lender, Providence Farms as the Borrower, and Concannon as the Guarantor, and is dated January 24, 2008. The final page of the Guaranty bears a signature on a line above Concannon's printed name. The Guaranty was delivered to Premier Bank, which in reliance on the Guaranty loaned a total of $14, 079, 000 to Providence Farms.

         Providence Farms never repaid Premier Bank any portion of the loans, or accrued interest. Sometime after Providence Farms' default, Premier Bank was taken over by the Federal Deposit Insurance Corporation. The FDIC assigned the Providence Farms loan debts to CADC/RADC Venture 2011-1, LLC. CADC demanded payment from Providence Farms, and Jay Lindner (José Lindner's son) and Concannon as guarantors, but none ever made any payments. CADC then filed a collections suit in the Circuit Court of Boone County, Missouri against Providence Farms, Jay Lindner, and Concannon. On September 10, 2014, Providence Farms filed a verified stipulation in which it admitted execution, delivery, and the renewals of the notes here in dispute, and the amount then due and owing on the notes. CADC dismissed its claims against Jay Lindner a few days later.

         On September 23, 2014, the Boone County Circuit Court entered a consent judgment against Providence Farms, incorporating the verified stipulation of facts. The consent judgment 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 September 1, 2014 through the date of entry of judgment, and post-judgment interest accruing at the contracted rate of 13.25% on the outstanding principal balance remaining due under the notes until such amount was paid in full. 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.

         In May 2016, Radiance purchased Providence Farms' debt obligations from CADC, along with original records related to the debts. The Bill of Sale stated that CADC sold, assigned and conveyed to Radiance all rights, title, and interest in the Providence Farms loans, judgments or evidence of debt, including assignment of all loan documents.

         On November 4, 2016, CADC executed and filed an Assignment of Judgment in the state court case. 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, as reflected in the state court judgment, Plaintiff's Exhibit 4, have not been repaid. The Guaranty at issue states, 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 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 indebtedness guarantied hereby, ” ¶ 13; • Lender “may rely conclusively on a continuing warranty that [Guarantor] continue[s] to be benefitted by this Guaranty and [Lender] will have no duty to inquire into or confirm the receipt of any such benefits, and this Guaranty will be effective and enforceable by [Lender] without regard to the receipt, nature or value of any such benefits, ” ¶ 13;
• It is assignable without notice to or consent by Guarantor, and enforceable by assignees and successors of Lender, ¶ 16; and
• Lender is permitted to obtain Guarantor's credit report from time to time, ¶ 19.

Plaintiff's Exhibit 7, pp. 1-3.

         The Court now turns to the specific ...

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