In the Missouri Court of Appeals Western District
CYGNUS SBL LOANS, LLC., WD81675 (CONSOLIDATED WITH WD81676) Respondent, v. OPINION FILED: MARCH 5, 2019 MICHAEL J. HEJNA, ET AL., Appellants.
Appeal from the Circuit Court of Jackson County, Missouri The Honorable S. Margene Burnett, Judge
Before Division Three: Mark D. Pfeiffer, Presiding Judge, Lisa White Hardwick, Judge, Anthony Rex Gabbert, Judge
Michael J. Hejna and Monique C. Hejna (“Hejna” collectively), Gordon A. Gundaker, Jr.,
and Gordon A. Gundaker, Jr. as trustee of the Gordan A. Gundaker, Jr. Revocable Trust dated
January 6, 1997 (“Gundaker” collectively),1 appeal the circuit court’s grant of partial summary
judgment to Cygnus SBL Loans, LLC.2 Appellants contend the circuit court erred, 1) in denying
1 Hejna and Gundaker will be referenced as “Appellants” collectively. Hejna and Gundaker separately appealed the court’s judgment. Those appeals have been consolidated. Various points on appeal in the Hejna and Gundaker briefs overlap. Where possible, overlapping points will be addressed together. 2 Cygnus received the original loan promissory note during the pendency of the underlying litigation from CADC /RADC VENTURE 2011-1, LLC. On September 14, 2017, Cygnus filed a Motion to Substitute upon Transfer of Interest. The motion was granted. As both CADC and Cygnus were Respondents at various points in the litigation, they may both be referenced as “Respondent” herein. Appellants’ motions to transfer venue, 2) in denying Appellants’ motions to strike the affidavit of
Mante Dzakuma, 3) in finding Respondent had standing to sue, 4) in entering summary judgment
on Count VI of Respondent’s petition without determining the Deed in Lieu Agreement invalid, 5)
in entering summary judgment on Count VI after accepting additional materials raising new facts
and evidence, and 6) in entering summary judgment on Count VI against Gundaker without
Respondent showing Gundaker executed and delivered a guaranty, that credit was extended in
reliance upon a guaranty, or that amounts remained due under an enforceable obligation. We
affirm.
Background and Procedural Information
Gunnett, LLC (“Gunnett”) is a Missouri limited liability company. Its members are Gordan
Gundaker, Michael Hejna, and Steve Stinnett. Gunnett entered into a loan with Premier Bank in
2006, borrowing approximately $8.3 million. The loan was secured by real property (“Property”)
located in Christian County, Missouri. Members of Gunnett, along with Monique C. Hejna,
Deborah Stinnett, and Gordon A. Gundaker in his capacity as trustee of the Gordon A. Gundaker,
Jr. Revocable Trust dated January 6, 1997 (collectively “Guarantors”), each executed and delivered
guaranties in 2006 promising repayment of the loan. From 2006 to 2010, Gunnett renewed the
note six times. The last note renewal was on January 15, 2010, in the principal amount of
$8,160,175, with a maturity date of January 15, 2011. Guarantors amended and restated their
guaranties on January 15, 2010.
Premier Bank was closed in 2010 by the Missouri Division of Finance, which appointed
the Federal Deposit Insurance Corporation (FDIC) as receiver with authority to handle and dispose
of Premier Bank’s assets, liabilities, and operations. The note matured on January 15, 2011, and
was unpaid. As part of the FDIC’s liquidation of Premier Bank, CADC/RADC VENTURE 2011-
2 1, LLC (CADC), a Delaware limited liability company, received the original loan promissory note
from Gunnett, endorsed in blank, together with all related loan documents.3 Sabal Financial
Group, L.P. (“Sabal”) was a disclosed agent for CADC. Mante Dzakuma was an asset manager
for Sabal and a disclosed agent for CADC. Karick M. Brown was a portfolio manager with Sabal
and a disclosed agent for CADC.4
In 2012, CADC, acting through Sabal, contacted Gunnett and Guarantors about repaying
the indebtedness. On or about July 6, 2012, Gunnett, Guarantors, and CADC executed a Deed-in-
Lieu Agreement (the “DIL”) related to the loan. Therein Guarantors agreed to each “execute and
deliver to Lender” promissory notes for specified amounts, referenced in the DIL as “Deficiency
Notes;” these notes were collectively equal to the overall deficiency amount in proportion to each
Guarantor’s liability under the guaranty. A developer agreement, lease agreement, and agreements
to convey certain documents were also included in the DIL. The Deficiency Notes stated they
were to replace the original guaranties. The DIL provided for the revival of Guarantors’ liability
under the loan and guaranties if the DIL or any related payments failed. The DIL and the maturity
dates of the Deficiency Notes provided Guarantors three years, to July 6, 2015, to sell the Property
in order to reduce or extinguish the deficiency amount. On July 6, 2015, the deficiency remained
unpaid.
On October 28, 2015, Respondent filed a Petition against Guarantors to collect the
deficiency. Count I through Count III of the Petition alleged breach of each Deficiency Note as a
3 The FDIC delivered the original note, endorsed in blank, together with all related loan documents to CADC on August 24, 2011. 4 Cygnus is a Georgia limited liability company that, during the underlying litigation, received the original loan promissory note, endorsed in blank, together with all related loan documents from CADC. Andrew Cummings is a manager of Cygnus.
3 written contract for repayment of a debt. Guarantors defended the suit by alleging the Deficiency
Notes were unenforceable because Guarantors had never delivered the notes as required under the
DIL. (Copies of signed Deficiency Notes were delivered to Respondent, but not the original
Deficiency Notes.) Respondent then amended its petition and added an alternative count (Count
VI) alleging breach of the original guaranties.
After service of both the initial petition and First Amended Petition, Appellants filed
motions to transfer venue, arguing the DIL’s forum selection clause was unenforceable because
the original Deficiency Notes were not delivered. The motions were denied.
Respondent filed a motion for partial summary judgment on September 9, 2016. For Count
VI, Respondent requested a determination of Appellants’ liability only on the breach of guaranties
claim. The guaranties provided for an interest component that continued to accrue. Respondent
requested that determination as to damages be made separately from underlying liability.
Appellants opposed summary judgment and filed separate motions to strike the affidavit of Mante
Dzakuma, which had been included with Respondent’s summary judgment motion.
On January 12, 2017, the court denied the Motion to Strike, and on January 17, 2017,
entered an order partially granting and partially denying summary judgment. Partial summary
judgment was granted on Guarantors’ liability under their original guaranties. Summary judgment
was denied on the remaining counts.
On January 20 and 23, 2017, Appellants filed motions to disqualify the judge arguing that
Respondent’s counsel’s wife’s father was first cousin to the judge’s law clerk’s grandfather. The
court informed the parties that the relationship had no connection and did not affect the court’s
ability to preside over the case, but the judge, nevertheless, recused himself on January 25, 2017.
4 Before ordering the case transferred for reassignment, the judge vacated the partial summary
judgment and order denying the Motion to Strike.
The case was reassigned on January 26, 2017. On November 2, 2017, the court denied the
Motion to Strike and found after reviewing the pleadings that there was no issue of material fact
regarding Count VI, Respondent’s claim for breach of contract on the original guaranty. The court
granted Respondent’s motion for summary judgment as to Count VI only.
Thereafter, Respondent dismissed Counts I through V. On December 1, 2017, Respondent
filed a Motion for Entry of Final Judgment in which Respondent waived its claim for interest,
attorney’s fees, and costs available under the original guaranties. Respondent requested that the
$2,597,874 debt, which was the amount owed pursuant to the Deficiency Notes had they been
delivered, be declared the final judgment amount. Gundaker objection to the motion. Appellants
also filed motions to reconsider the partial summary judgment, which the court denied. Gundaker
then filed another motion to transfer venue. On January 8, 2018, the court entered an order denying
all pending motions and objections and setting for trial the remaining issues as to “interest,
attorneys’ fees, and court costs.”
On February 2, 2018, Respondent filed a Motion for Entry of Final Judgment on Count VI
citing Rule 74.04 and seeking final judgment on the amount of damages. Appellants did not
respond to this motion. On March 15, 2018, the circuit court entered final judgment. This appeal
follows.
Standard of Review
The standard of review for an appeal challenging the grant of a motion for summary
judgment is de novo. ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d
371, 376 (Mo. banc 1993). Accordingly, we do not defer to the trial court’s decision, but instead
5 use the same criteria that the trial court should have employed in initially deciding whether to grant
Respondent’s motion. Barekman v. City of Republic, 232 S.W.3d 675, 677 (Mo. App. 2007)
(internal citations omitted). Under Rule 74.04, the court considers the motion, the response, the
reply, and the sur-reply in making a ruling on motions for summary judgment. Rule 74.04(c)(6).
We review the record in the light most favorable to the party against whom judgment was entered
and accord that party the benefit of all inferences which may reasonably be drawn from the record.
Barekman, 232 S.W.3d at 677. Summary judgment is appropriate where the moving party has
demonstrated, on the basis of facts as to which there is no genuine dispute, a right to judgment as
a matter of law. ITT Commercial Fin. Corp., 854 S.W.2d at 376. “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.” Id.
Points on Appeal
Motions to Transfer – Hejna’s Point I, Gundaker’s Point V
Appellants argue that the circuit court erred in denying their motions to transfer venue
because no defendant resided in Jackson County and the Deficiency Notes containing the forum
selection clause were never delivered.
“To the extent that a court bases its venue ruling on factual matters and inferences, this
court reviews the trial court’s ruling under an abuse of discretion standard.” McCoy v. The
Hershewe Law Firm, P.C., 366 S.W.3d 586, 592 (Mo. App. 2012). “To the extent to which the
venue decision is governed by the interpretation of a statute, the ruling is a question of law, and
accordingly this court reviews the ruling to determine whether the trial court misinterpreted or
misapplied the law.” Id.
6 In disputing venue to the trial court, Appellants acknowledged that Deficiency Notes upon
which Respondent’s suit was founded contain a forum selection clause designating Jackson
County, Missouri as venue for suit. The Deficiency Notes specifically provide “that any litigation
initiated by Borrower or Lender in connection with this Note may be venued in either the state or
federal courts located in Jackson County, Missouri[.]” Appellants further acknowledged that the
Deficiency Notes were named in and were to be incorporated into the DIL entered into by
Appellants with Respondent. Appellants contended, however, that delivery of the Deficiency
Notes was contingent upon delivery of a “Developer Agreement” that was never created and,
consequently, the DIL did not close. Appellants argued that, because Appellants never delivered
the original notes, Respondent could not enforce the notes and, therefore, the forum selection
clauses within the notes were also unenforceable. We disagree.
First Motion to Transfer Venue
“Missouri has long held that freely negotiated forum selection agreements are enforceable
‘so long as doing so is neither unfair nor unreasonable.’” GP&W Inc. v. Daibes Oil, LLC, 497
S.W.3d 866, 869 (Mo. App. 2016) (quoting High Life Sales Co. v. Brown-Forman Corp., 823
S.W.2d 493, 497 (Mo. banc 1992)). “The party resisting enforcement of the forum selection clause
bears a heavy burden in convincing the court that he or she should not be held to the bargain
because it is unfair or unreasonable.” GP&W Inc., 497 S.W.3d at 869. “A forum-selection clause
is prima facie valid.” Hope’s Windows, Inc. v. McClain, 394 S.W.3d 478, 484 (Mo. App. 2013).
“Where the enforceability of a forum-selection clause is at issue, the proper approach for a court
to take is to enforce the clause specifically, unless the challenging party can clearly show that
enforcement would be unreasonable and unjust, or that the clause is invalid for such reasons as
fraud or overreaching.” Id. (internal quotation marks and citations omitted). Whether a forum
7 selection clause that by its terms applies to contract actions also reaches other claims depends on
whether resolution of the claims relates to interpretation of the contract. Reed v. Reilly Company,
LLC, 534 S.W.3d 809, 811 (Mo. banc 2017) (internal quotation marks and citations omitted).
“Missouri law recognizes and enforces incorporation clauses in contracts. Matters incorporated
into a contract by reference are as much part of the contract as if they had been set out in the
contract in haec verba.” Sabatino v. LaSalle Bank, N.A., 96 S.W.3d 113, 118 (Mo. App. 2003)
(internal quotation marks and citations omitted).
All of Respondent’s claims within its initial petition involved the DIL, which incorporated
the Deficiency Notes. Appellants signed the DIL, therein agreeing to deliver the notes. When
Respondent filed suit, Resolution of the claims of all parties necessarily required inquest into the
terms and enforceability of the DIL and the Deficiency Notes. Appellants never argued that they
did not agree to the forum selection clause or that venue in Jackson County was unfair or
unreasonable; Appellants sole contention was that they agreed in the DIL to deliver the signed
promissory notes (containing the forum clauses) but, because of an unmet contingency, never
followed through with that agreement.
The DIL states that “simultaneously” with execution of the DIL, Appellants were to execute
and deliver the Deficiency Notes. The DIL states that Appellants were to additionally provide at
closing other executed original documents, including “Developer Agreement in the form attached
hereto as Exhibit H.” Nothing within the DIL references the contingency Appellants claim existed;
Respondents disputed the existence of a contingency. Nonetheless, Appellants agreed to
incorporate the Deficiency Notes containing the forum selection clause into the DIL and allow any
litigation in connection with the notes to be venued in Jackson County. Resolution of the parties’
dispute as to whether the DIL ever closed required interpretation of that contract.
8 Whether Respondents were entitled to enforce the Deficiency Notes under Section 400.3-
3015 as non-holders of the instruments does not impact enforcement of the forum selection clause.
Pursuant to Section 400.3-104, a “negotiable instrument” that is a “note” is, with certain
requirements, an unconditional promise to pay a fixed amount of money. Hence, the inability to
enforce under Section 400.3-301 applies to enforcement of the promise to pay; an agreement as to
venue for disputes regarding the Deficiency Notes is a separate issue.
The circuit court did not abuse its discretion in refusing to transfer venue after Appellants’
first motion as allegations within Respondent’s petition pertained to enforceability of the contract
that contained the forum selection clause.
Second Motion to Transfer Venue
Prior to the court’s first ruling on venue, Respondent amended the petition to include an
alternate count based on Appellants’ contentions that the DIL was unenforceable; Respondent’s
First Amended Petition alleged in Count VI that if the DIL was “undone,” then Appellants were
liable under their original guaranties. After Respondent amended its petition, Appellant Gundaker
provided a supplemental statement in support of the requests to transfer venue. This statement
continued to argue that the forum selection clause incorporated into the DIL was ineffective
because Appellants never delivered the notes including that clause, and additionally argued that,
under Count VI, venue was proper in St. Louis County due to a forum selection clause in the
original guaranty.6
5 All statutory citations are to the Revised Statutes of Missouri as updated through 2018, unless otherwise stated. 6 Appellants never asked to sever the counts within Respondent’s petition.
9 After Appellants’ motions for change of venue were denied, the parties moved forward in
Jackson County with Appellants seeking affirmative relief therein and conducting discovery.
Appellants did not seek a writ of prohibition under Rule 97 alleging improper venue.7 Respondents
ultimately sought summary judgment on all counts within the petition -- the counts involving the
Deficiency Notes under the DIL and the count involving the original guaranties. After the court
granted partial summary judgment on the count involving the original guaranties, Respondent
dismissed the other counts.
Appellant Gundaker then filed a second motion to transfer venue arguing that the
guaranties sued upon in Count VI expressly provided that venue was proper only in St. Louis
County, Missouri, and Respondent’s dismissal of Counts I through V rendered the issue of the
original guaranty “the only civil action between the parties.” The court denied Gundaker’s motion.
Gundaker makes the same argument on appeal and contends the court erred in failing to transfer
the case under Rule 51.045.
Respondents requested summary judgment on all counts. The Partial Summary Judgment
provided, in pertinent part:
[T]his Court … finds that there is no issue of material fact regarding Count VI, Plaintiffs claim for breach of contract on the original guaranty. Under the original guaranty, Defendants owe a total of $2,597,874 as of September 9, 2016. The Defendants are jointly and severally liable up to the limit of each Defendant’s Guaranty, plus interest per the terms of the parties contract, attorney’s fees and costs of this action related to Count VI to be determined by this Court. Therefore, Plaintiff’s Motion is hereby GRANTED as to Count VI only.
However, with regard to Counts I-V, there are material issues of fact and, as a result, said Motion is DENIED as to those Counts.
7 Although Respondent argues Appellants waived their venue claim by proceeding and not pursuing a writ of prohibition, we note that Rule 51.045(a) states that, “If a timely motion to transfer venue is filed, the venue issue is not waived by any other action in the case.” Respondent makes no claim that Appellants’ motions were untimely.
10 Section 476.410 states that “[t]he division of a circuit court in which a case is filed laying
venue in the wrong division or wrong circuit shall transfer the case to any division or circuit in
which it could have been brought.” (Emphasis added). Here, the case was properly filed in Jackson
County, as discussed above. Respondent’s dismissal of the petition’s additional counts to allow
for final judgment did not alter the fact that venue was proper when the case was brought.
Regardless, “[e]ven assuming the circuit court erred by [] failing to transfer venue …, an error
does not warrant reversal on appeal unless the error results in prejudice.” Barron v. Abbott
Laboratories, Inc., 529 S.W.3d 795, 798 (Mo. banc 2017). Appellant Gundaker, the only appellant
making the second transfer request and appealing this specific issue, does not contend the court’s
decision resulted in prejudice and thereby fails to satisfy the prejudice requirement for reversal.
Id.
Appellant Hejna’s first and Appellant Gundaker’s fifth points on appeal are denied.
Affidavit of Mante Dzakuma – Hejna’s Point II and Gundaker’s Point I
Hejna asserts in their second point on appeal, and Gundaker in his first, that the circuit
court erred in denying Appellants’ motions to strike the affidavit of Mante Dzakuma. Appellants
assert that the Dzakuma affidavit was inadmissible for failure to comply with Rule 74.04(3)
because Dzakuma had no personal knowledge of the chain of title that led to Respondent becoming
holder of the note, and failed to set forth facts that would be admissible in evidence.
Rule 74.04(e) requires that supporting and opposing affidavits accompanying motions for
summary judgment “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.” See Scott v. Ranch Roy-L, Inc., 182 S.W.3d 627, 634-635 (Mo. App. 2005).
“Facts set forth by affidavit or otherwise to support the motion are taken as true unless contradicted
11 by the non-movant’s response to the summary judgment motion.” Juan v. Growe, 547 S.W.3d 585,
591 (Mo. App. 2018). We give the non-movant the benefit of all reasonable inferences from the
record. Id.
Mante Dzakuma states in the first page of his affidavit:
I, Mante Dzakuma, hereby declare upon my oath that the following statements are true:
1. I am an adult resident of California. I hold the position of Asset Manager with Sabal Financial Group, L.P. as agent for CADC/RADC VENTURE 2011-1, LLC.
2. My job responsibilities include working with our attorneys and assisting in litigation in which CADC/RADC VENTURE 2011-1, LLC, is involved.
3. As part of my job responsibilities, I am familiar with CADC/RADC VENTURE 2011-1, LLC’S assets including the loan at issue in this litigation.
4. I have personal knowledge of the facts contained in this affidavit by virtue of my employment at Sabal Financial Group, L.P., as agent for CADC/RADC VENTURE 2011-1, LLC and my review of business records.
Thereafter, Dzakuma attested to, among other things, various aspects of the loan, the chain of title,
default of the loan, and the DIL.
Dzakuma’s affidavit was not the only exhibit submitted by Respondents in support of their
motion for summary judgment. Respondent’s motion for summary judgment also included an
affidavit of Appellant Michael Hejna wherein he acknowledges involvement in negotiations
between Gunnett and CADC involving a promissory note Gunnett executed in favor of Premier
Bank. Michael Hejna’s affidavit does not question CADC’s authority to negotiate the terms of the
12 original guaranty and attests that Michael Hejna delivered an executed DIL to CADC. He also
attests to purposefully not delivering the signed Deficiency Notes referenced in the DIL.
Respondent also attached to the summary judgment motion interrogatories completed by
Michael Hejna. Therein, Michael Hejna states that in 2012 Dzakuma and his superior were part of
negotiations regarding the DIL, and that the DIL replaced the original loan and guarantees.
In opposition to Respondent’s motion for summary judgment, Michael Hejna submitted an
affidavit wherein he states that he was a member of Gunnett, which was a party to the loan with
Premier Bank. He states he was the primary individual who handled matters with Premier Bank;
he was also the primary individual who handled matters with Sabal and was advised in 2012 that
Sabal was a successor in interest to Premier Bank. Michael Hejna’s affidavit does not question
Sabal’s authority to act on Premier Bank’s loan and Michael Hejna states that “discussions with
Gunnett were primarily between me and Mante Dzakuma.” Michael Hejna states that he signed
the DIL. In the DIL, Appellants admit that CADC is the “successor by assignment to the Federal
Deposit Insurance Corporation, receiver for Premier Bank.” In Hejna’s interrogatories, attached
to Respondent’s motion, Hejna states that the DIL replaced the original loan and guarantees. In
Hejna’s admissions, attached to Respondent’s motion, Hejna admits that the signatures on the 2010
guaranty “appear to be those of Hejna Defendants.” Also in Hejna’s admissions, Hejna admits the
DIL attached to the Petition was a true and accurate copy and that Hejna signed the DIL attached
to the petition.
In answer to Respondent’s First Amended Petition, Gundaker admits entering into certain
agreements with Premier Bank. In response to Respondent’s uncontroverted statement of facts, an
affidavit of Gordon Gundaker was attached by Gundaker. Therein Gundaker states that, in 2012,
Gundaker was involved in negotiations regarding “an alleged obligation of Gunnett to Premier
13 Bank” and that during said negotiations the DIL was discussed. Gundaker states that he executed
the Gundaker Deficiency Note and delivered to Michael Hejna who was to deliver the same once
the DIL was completed. In Response to Respondent’s statement of facts, Gundaker attaches
Exhibit G which has the DIL attached.
In reply to Appellants’ suggestion that there was no proof CADC held the original note,
Respondent submitted the affidavit of Michelle Masoner, “legal counsel for Plaintiff
CADC/RADC VENTURE 2011-1, LLC, ACTING BY AND THROUGH Sabal Financial Group,
L.P.” Therein Masoner attests that the original note is located in her law firm’s vault and is
available for inspection. Masoner attached a copy of the original note along with copies of allonges
showing the note was ultimately assigned to CADC. No one disputes on appeal that CADC held
the original note at the time partial summary judgment was entered.
Appellants contend that the court erred in admitting the Dzakuma Affidavit because
Dzakuma’s recitation of chain of title did not come from Dzakuma’s personal knowledge because
Dzakuma was never an employee of Premier Bank, the FDIC, or of CADC. Gundaker Appellants
state that, without the Dzakuma Affidavit, “there is no evidence to support the trial court’s order
granting partial summary judgment.” Yet, documentation submitted by appellants themselves
shows at the very least that Dzakuma, an agent for CADC, had personal knowledge of CADC’s
status as note holder at the time the DIL was negotiated. Dzakuma averred that he had personal
knowledge of the facts contained within his affidavit and Appellants’ documentation supports that
Dzakuma had personal knowledge of the details of the DIL. Approximately eight of the nine pages
of Dzakuma’s affidavit reference the DIL. As all parties verified that Dzakuma was involved in
negotiation of that agreement, the court did not abuse its discretion in allowing those portions of
the Dzakuma affidavit.
14 With regard to the remaining portion of Dzakuma’s affidavit reciting chain of title, we need
not consider whether the court erred in admitting those statements because Appellants cannot prove
prejudice. Although Appellants argue Dzakuma’s affidavit was the only evidence before the court
allowing the court to conclude CADC had authority to enforce the original guaranty,8 the affidavit
of Michelle Masoner was also before the court. This affidavit states that CADC held the original
note. Appellants do not dispute that CADC possessed the original note or that the note had been
endorsed in blank, but appear to argue that the court could not have reached the conclusion that
Respondent was the “holder” of the note, such that the guaranties could be enforced, without the
Dzakuma affidavit. We disagree.
“When endorsed in blank, an instrument becomes payable to bearer and may be negotiated
by transfer of possession alone until specially endorsed.” § 400.3-205(b).
Missouri has adopted the Uniform Commercial Code (UCC), which governs commercial transactions. See Section 400, et seq. ‘Application of the UCC is straightforward regarding [the] question of who may enforce the Note.’ U.S. Bank Nat’l Ass’n v. Burns, 406 S.W.3d 495, 497 (Mo. App. 2013). Under Section 400.3- 301, the holder of a negotiable instrument is entitled to enforce it. Id. ‘A holder is one (1) who possesses the instrument, and (2) to whom the instrument is made payable.’ Id.; Section 400.1-201(20). An instrument may be endorsed in blank and such instrument then becomes payable to its bearer. Sections 400.3-205(a) and (b). A party that possesses a negotiable instrument containing a blank endorsement that does not identify the person to whom it is payable has standing to enforce the note[.]
Deutsche Bank National Trust Company v. Vaughn, 524 S.W.3d 193, 198 (Mo. App. 2017). A
personal guaranty follows assignment of a note. Federal Nat. Morg. Ass’n v. Bostwick, 414 S.W.3d
521, 526 (Mo. App. 2013).
8 Appellant Hejna asserts the “Dzakuma affidavit was Plaintiff’s only proof of its allegation in paragraph 47 of its motion that it is the holder of the original loan documents.” Hejna argues that, “[n]one of the assignment documents, however, were submitted to the court (other than the ultimate assignment to Cygnus), with Plaintiff and the court instead relying on Mr. Dzakuma’s legal opinion.”
15 Given the Masoner affidavit showing CADC as holders of the original note, even if
Appellants could prove Dzakuma’s statements regarding chain of title were improperly admitted,
Appellants cannot show admission of those statements resulted in prejudice.
Hejna’s second point on appeal, and Gundaker’s first, is denied.
Standing – Hejna’s Point III and Gundaker’s Point III
In Hejna’s third point on appeal and part of Gundaker’s third, the Appellants contend
CADC did not properly plead standing. Appellants argue that, although CADC purported to be a
“holder” of a promissory note with standing to sue on the underlying guaranty, Respondent makes
no attempt to address CACH, LLC v. Askew, 358 S.W.3d 58 (Mo. banc 2012). CACH held that, a
debt collector attempting to collect on a debtor’s outstanding credit card account was required to
show proof of assignment of the right to collect the debt to establish standing. Id. at 62. Appellants
argue that CADC failed to establish itself as “holder” of the original notes because the original
notes were made payable to Premier Bank and not CADC.
“A party has standing to sue when it has an interest in the subject matter of the suit that
gives it a right to recovery, if validated.” Portfolio Recovery Assocs., LLC v. Schultz, 449 S.W.3d
427, 434 (Mo. App. 2014). “Lack of standing cannot be waived and may be considered by the
court sua sponte.” Bellistri v. Ocwen Loan Servicing, LLC, 284 S.W.3d 619, 622 (Mo. App. 2009).
Respondent’s Consolidated Memorandum in Reply in Support of Plaintiff’s Motion for
Summary Judgment and in Opposition to Defendant’s Motions to Strike the Affidavit of Mante
Dzakuma included Exhibit B, an affidavit of Respondent’s attorney, Michelle Masoner. Therein
she states that the original note was in CADC’s possession and was physically located in a vault
at Masoner’s law firm. Attached to Masoner’s affidavit was a copy of that note and two allonges;
one allonge showed that the January 15, 2010 promissory note payable by Gunnett to Premier
16 Bank was assigned by the FDIC, in its capacity as receiver for Premier Bank, to CADC. The other
allonge was endorsed in blank by CADC. “An ‘allonge’ is a piece of paper annexed to a negotiable
instrument or promissory note on which to write endorsements for which there is no room on the
instrument itself.” Federal Nat. Mortg. Ass’n v. Conover, 428 S.W.3d 661, 664 n.3 (Mo App.
2014) (internal quotation marks and citations omitted).
Section 400.3-301 provides that a “Person entitled to enforce” includes “the holder of the
instrument.” Exhibit B to Respondent’s reply memorandum showed that CADC possessed the
note and that the allonges made the note payable to CADC specifically.
As “holder,” CADC was entitled to enforce the note and accompanying guaranties. “A transfer of
the principal obligation is held to operate as an assignment of the guaranty[.]” American First
Fedral, Inc. v. Battlefield Center, L.P., 282 S.W.3d 1, 5 (Mo. App. 2009).
Appellants’ reliance on CACH is misplaced; CACH involved assignment of the right to
collect credit card debt; it did not involve a promissory note or other negotiable instrument
governed by Article 3 of the UCC. Here, Gunnett signed the original note and the Guarantors
signed the guaranties. Therein the Guarantors agreed that the note and guaranties could be
assigned, with Guarantors indebted to the lender as well as the lender’s successors.
Appellants additionally contend the allonge pages should not have been considered by the
court because they were not part of the promissory notes attached to the petition, were not part of
the Motion for Summary Judgment, were not part of the Statement of Undisputed Facts, and were
not part of the Dzakuma Affidavit. Appellants contend that the existence of the allonges was
alleged only after Appellants filed responses to the Motion for Summary Judgment and Masoner
has no personal knowledge regarding CADC’s acquisition of the notes.
17 Rule 74.04(c)(3) allows for “Replies in Support of Motions for Summary Judgment” after
Responses to such motions are served. This rule provides that a movant for summary judgment
may respond to the adverse party’s additional material facts that remain in dispute and file a
statement of additional material facts as to which movant claims there is no genuine issue.
“Attached to the supplemental statement shall be a copy of any additional discovery, exhibits or
affidavits on which the supplemental statement relies.” Id. It was within this rule Respondent
filed Masoner’s affidavit and the allonges. Appellants never objected to Respondent’s Reply.
Although Appellants acknowledge that Rule 74.04(c)(3) “provides the procedure whereby
a movant may submit additional evidence in support of its motion,” Appellants argue that the court
was to consider nothing beyond Appellants’ response to Respondent’s motion for summary
judgment. Yet, the case law upon which Appellants rely interprets a prior version of Rule 74.04,
wherein replies and sur-replies were not provided for. See New Prime, Inc. v. Professional
Logistics Management Co., Inc., 28 S.W.3d 898, 904 (Mo. App. 2000); Missouri Rules of Civil
Procedure (2000).9 Rule 74.04 has since been amended to allow replies and sur-replies and Rule
74.04(c)(6) in the Missouri Rules of Civil Procedure (2018), states that “[a]fter the response, reply
and any sur-reply have been filed or the deadlines therefor have expired, the court shall decide the
motion.”
The circuit court did not err in concluding Respondents had standing to bring the action as
holder of the original note.
Appellants’ third points on appeal (as related to this issue) are denied.
9 This court stated in New Prime that the plain meaning of Rule 74.04(c)(3) requires that the trial court, in deciding whether to grant a motion for summary judgment, should consider only the motion and the response, and that a trial court’s decision on a motion for summary judgment should not be based on anything filed after the non- moving party files its response. New Prime, 28 S.W.3d at 904.
18 Validity of the DIL – Hejna’s Point IV and Gundaker’s Point III
In Hejna’s fourth point on appeal and part of Gundaker’s third, Appellants argue the trial
court erred in entering summary judgment on Count VI because the Judgment did not conform to
the pleadings. Appellants contend the court awarded damages on a claim that was expressly
contingent upon the DIL being invalidated, and the DIL was not invalidated; Appellants claim that,
the nature of Respondent’s pleadings required the court make an express finding that the DIL was
invalid before ruling in Respondent’s favor on Count VI. Appellants’ further claim that the DIL
released Appellants from their obligations under the original guaranty.
Count VI in Respondent’s First Amended Petition incorporated by reference all foregoing
paragraphs. Incorporated within those paragraphs were references to the DIL, including the DIL’s
provision for revival of the Defendants’ liability under the original loan if the DIL, or any related
documents, were subsequently invalidated. Count VI further alleged that, “In an alternative count
to Counts I through IV herein, and in the event the [DIL] is undone, then under such circumstances,
the Defendants remain obligated under their original Guaranty.”
We disagree that Respondent’s pleadings required the court to completely invalidate the
DIL before entering Judgment in favor of Respondents on Count VI. Appellants admitted to
executing the DIL, complying with certain terms therein, partially performing, and enjoying some
of its benefits. Appellants also admitted to failing to comply with certain terms, but alleged they
did so with good cause. Consequently, the court rightly determined that fact issues still existed
under the counts involving the DIL which precluded summary judgment on those counts. The
court would have had to delve into those fact issues before determining the DIL invalid.
Appellants also admitted, however, to defaulting under the original agreement and
executing the DIL to avoid the consequences of that default. By arguing the DIL never closed,
19 Appellants essentially agreed to resurrection of the original note and guaranties under Count VI.
Given the record, it was not necessary for the court to declare the DIL invalid before determining
Appellants’ liability under the original guaranties. The record shows there were no material facts
in dispute as to Appellants’ liability under the original guaranties where Appellants admitted to
executing the DIL after defaulting on the original guaranties, and then contended the DIL never
closed; by arguing the DIL never closed, Appellants could not also claim protection under the
DIL’s release provision regarding the original guaranties.
Hejna’s fourth point on appeal, and Gundaker’s third point (as related to this issue), are
denied.
Additional Evidence - Hejna’s Fifth Point and Gundaker’s Third and Fourth
In Hejna’s fifth point on appeal, part of Gundaker’s third, and Gundaker’s fourth,
Appellants contend the trial court erred in entering summary judgment on Count VI because
Respondent improperly attached new evidence to its Motion for Entry of Final Judgment.
Appellants suggest that Respondent’s Motion for Entry of Final Judgment on Count VI was
supplemental to its previous motion, and the documents attached to the motion were therefore
unauthorized.
On December 1, 2017, Respondent filed a Motion for Entry of Final Judgment, not
pursuant to Rule 74.04, wherein Respondent waived its claim for interest and attorneys’ fees and
costs under the original guaranty. Appellant Gundaker objected to this motion and Appellants filed
various other motions. On January 8, 2018, the circuit court entered an order denying all pending
motions and objections and setting for trial all issues remaining.
On February 2, 2018, Respondent filed a Motion for Entry of Final Judgment on the
Amount of Damages citing Rule 74.04, therein providing a statement of uncontroverted material
20 facts regarding damages and attaching two affidavits as allowed by Rule 74.04(c)(1). This was a
stand-alone motion. Appellants filed no response, and the court entered Final Judgment on March
15, 2018.
Rule 74.04(c)(2) requires a non-movant responding to a summary judgment motion to ‘set forth each statement of fact in its original paragraph number and immediately thereunder admit or deny each of movant’s factual statements.’ The rule also requires the non-movant to support each denial ‘with specific references to the discovery, exhibits or affidavits that demonstrate specific facts showing that there is a genuine issue for trial.’ Rule 74.04(c)(2). These requirements are mandatory. Cnty. Asphalt Paving, Co. v. Mosley Constr., Inc., 239 S.W.3d 704, 708 (Mo. App. 2007). A response that does not comply with Rule 74.04(c)(2)’s requirements ‘with respect to any numbered paragraph in movant’s statement is an admission of the truth of that numbered paragraph.’ Rule 74.04(c)(2).
Jordan v. Peet, 409 S.W.3d 553, 558 (Mo. App. 2013).
The affidavits attached to Respondent’s motion were filed under Rule 74.04 and Appellants
never challenged their propriety. By filing no response to Respondent’s motion, Appellants
admitted the facts contained within the motion and waived any claim on appeal that the court
improperly relied on those facts. As those facts involved the calculation of damages, Appellants
waived any claim that the court improperly calculated damages.
Hejna’s Fifth point and Gundaker’s third and fourth points (as related to this issue) are
Gundaker’s Liability – Gundaker’s Point II
Gundaker asserts in his second point on appeal that the circuit court erred in granting
summary judgment, contending Respondent failed to show Gundaker executed and delivered a
guaranty, that credit was extended in reliance upon a guaranty, or that amounts remain due under
an enforceable obligation.
21 Respondent’s First Amended Petition alleged that Gundaker, individually and as trustee,
executed and delivered guaranties which promised payment of Gunnett’s indebtedness up to a
specified amount. Respondent attached and incorporated signed copies of all guaranties to the
First Amended Petition. One guaranty, Exhibit J, was signed by Gordon Gundaker individually.
Another, Exhibit K, was signed by Gordon Gundaker in his capacity as trustee for the Gordon A.
Gundaker, Jr. Revocable Trust. Both were dated December 6, 2006. Exhibit L represented an
“Amended and Restated Continuing Unconditional Limited Guaranty” signed by Gordon
Gundaker individually and as trustee on March 22, 2010. The DIL, signed by all Guarantors,
including Gundaker individually and as trustee, was also attached to Respondent’s Petition.
Pursuant to Section 509.240, when any claim is founded upon a written instrument with a
copy attached to the pleading, “the execution of such instrument shall be deemed confessed unless
the party charged to have executed the same shall specifically deny the execution thereof.” In
answer to Respondent’s petition, Gundaker never denied executing the guaranties. To the contrary,
Gundaker admitted entering into agreements with Premier Bank and other entities but alleged “that
the terms and conditions of any binding agreements supersede any summary description thereof in
the Petition and [Gundaker] reserves the right to review the originals of any such agreements.” He
denied the allegations until “the original of any such agreement is provided.” Gundaker does not
dispute that originals were available for inspection. Gundaker presented no evidence controverting
his execution and delivery of the guaranties. Gundaker also admitted executing the DIL which
references the indebtedness under the guaranties.
“In a suit on a promissory note a prima facie case is made when the note, admittedly signed
by the makers, is introduced and evidence follows demonstrating the note is unpaid or that a
balance is due and owing.” Bank of Kirksville v. Small, 742 S.W.2d 127, 130 (Mo. banc 1987).
22 Here, although Gundaker suggests he never admitted executing a guaranty, under Section 509.240,
he admitted execution by making no specific denial. The guaranties incorporate the indebtedness
evidenced by the note. The original guaranties and note show that credit was extended in reliance
on the guaranties serving as collateral for the loan. It was uncontroverted that the note remained
Gundaker’s second point on appeal is denied.
Conclusion
We conclude that the circuit court did not err, 1) in denying Appellants’ motions to transfer
venue as resolution of the claims of all parties required inquest into the terms and enforceability
of the DIL and incorporated Deficiency Notes, which contained forum selection clauses
designating venue for “any litigation” in connection with the notes; 2) in denying Appellants’
motions to strike Mante Dzakuma’s affidavit as the record shows Dzakuma had personal
knowledge of matters attested to in his affidavit and, even if Appellants could prove the affidavit
was improperly admitted, Appellants fail to prove prejudice; 3) in finding Respondent had standing
to bring the action as holder of the original note; 4) in entering summary judgment on Count VI
without first finding the DIL invalid as such was not required to determine that no material facts
were in dispute and Respondent was entitled to judgment as a matter of law; 5) in accepting
affidavits allowed by Rule 74.04(c)(1) along with Respondent’s Rule 74.04 Motion for Entry of
Final Judgment, and; 6) in entering summary judgment on Count VI against Appellant Gundaker
as the record showed Gundaker executed and delivered guaranties, that credit was extended in
reliance, and that amounts remained due under an enforceable obligation.
23 We affirm the circuit court’s judgment.
____________________________________ Anthony Rex Gabbert, Judge
All concur.