BancorpSouth Bank v. Hazelwood Logistics Center, LLC
706 F.3d 888
| 8th Cir. | 2013Background
- BancorpSouth Bank sues Hazelwood Logistics Center, Hazelwood Commerce Redevelopment Corp., and Paul J. McKee Jr. for breach of contract and guaranty; MPT intervenes over tax refunds.
- Loans: HLC obtained up to $36,242,700 with a note of $35,197,500; HLC granted a security interest including general intangibles and tax deposits; McKee guaranteed obligations.
- Participation: bank sells 69% of the loan to four banks but retains control; participating banks are Missouri citizens; bank retains title to loan documents and near-exclusive control to foreclose after efforts to collect.
- Environmental remediation: part of Hazelwood property was a former landfill; methane contamination alleged due to contractors’ remediation work.
- Tax refunds: MPT arranged tax refunds for HLC totaling approx. $465,379; MPT contends bank knew and should pay out of refunds.
- Procedural posture: district court granted summary judgment to bank on contract, guaranty, and priority; Hazelwood and MPT appeal; court has diversity jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject matter jurisdiction and diversity | Hazelwood diversity challenged due to participation banks. | Participation banks may defeat diversity; yet not necessary parties. | District court properly exercised diversity jurisdiction. |
| Venue/forum selection enforcement | Forum clauses enforceable; bank could sue in Missouri courts. | Clauses require venue in St. Louis County exclusively. | Forum selection clauses are permissive and did not bar federal suit. |
| Commercial frustration doctrine | Methane contamination renders performance impracticable. | Methane risk foreseeable; no total destruction of purpose. | Missouri would not recognize commercial frustration; doctrine not applied. |
| Damages and Rule 59/60 motion | Amendment of judgment should reflect damages; timely under Rule 60(a). | Procedural defects and lack of pre-existing factual basis. | District court properly amended; no reversible error; evidence supports damages. |
| Priority of tax refunds: bank security vs MPT lien | MPT equitable lien has priority over bank due to labor; exceptions in U.C.C. priority. | U.C.C. priority favors bank’s perfected security interest; equitable lien subordinate. | Bank’s perfected security interest prevails; MPT’s lien subordinate. |
Key Cases Cited
- Associated Ins. Mgmt. Corp. v. Ark. Gen. Agency, Inc., 149 F.3d 796 (8th Cir. 1998) (diversity and Rule 17 applicability)
- Iowa Public Service Co. v. Medicine Bow Coal Co., 556 F.2d 400 (8th Cir. 1977) (fraudulent join theory and diversity jurisdiction)
- Navarro Savings Ass'n v. Lee, 446 U.S. 458 (1980) (trustee citizenship governs diversity in business trusts)
- Northport Health Servs. of Ark., LLC v. Rutherford, 605 F.3d 483 (8th Cir. 2010) (diversity jurisdiction and related principles)
- Underwriters at Lloyd’s, London v. Osting-Schwinn, 613 F.3d 1079 (11th Cir. 2010) (unincorporated association and citizenship relevance)
- Dexia Crédit Local v. Rogan, 629 F.3d 617 (7th Cir. 2010) (diverse plaintiff and nonparty participation not destroying jurisdiction)
- Gale & Co. v. Hooper, 330 S.W.2d 826 (Mo. 1959) (artisan’s lien priority in Missouri context)
- Geddes v. Reeves Coal & Dock Co., 20 F.2d 48 (8th Cir. 1927) (equitable liens before state code era)