561 S.W.3d 28
Mo. Ct. App.2018Background
- Vogel met Bank officer Shaun Hayes in June 2010; Hayes pitched a deal to buy promissory notes secured by Arizona real estate and represented the properties produced rental income and that their value exceeded loan balances.
- Vogel formed Lindworth Investments, LLC (borrower) and executed thirteen guaranties personally guaranteeing Lindworth's promissory notes; guaranties included broad waivers (including fraud) and provisions allowing the lender to collect from guarantor without first exhausting borrower remedies.
- Hayes and Bank did not disclose that Bank had previously purchased and resold the Eighteen notes, that rental income was not being paid to Bank, or that appraisals showed the properties were worth less than represented; Vogel said he would not have proceeded if given those reports.
- Lindworth defaulted; Bank sold the notes to Big A, which sued Lindworth and Vogel for the unpaid balances. Vogel asserted fraudulent inducement as an affirmative defense at trial.
- The jury found for Vogel on eight fraud/non‑disclosure theories; Big A moved for a JNOV, arguing Vogel could not reasonably rely on collateral/value representations given the unambiguous guaranties. The trial court denied JNOV and the appellate court affirmed.
Issues
| Issue | Plaintiff's Argument (Big A) | Defendant's Argument (Vogel) | Held |
|---|---|---|---|
| Whether Vogel made a submissible case of fraudulent inducement despite broad guaranty language | Vogel, as guarantor, accepted primary liability and therefore could not reasonably rely on representations about collateral value, management, or payments not reflected in the guaranties | Hayes' representations about existing facts (rental income, property value, prior ownership of notes, appraisals) induced Vogel to create Lindworth, execute the notes, and guaranties; those contemporaneous instruments should be construed together and permit reliance | Affirmed: Vogel made a submissible case; jury verdict supported because representations were specific, pertained to existing facts, and contemporaneous documents did not contradict them |
Key Cases Cited
- ITT Commercial Fin. Corp. v. Mid‑America Marine Supply Corp., 854 S.W.2d 371 (Mo. banc 1993) (guarantor generally cannot avoid liability based on representations about collateral or debtor's strength where guaranty unambiguously shifts primary liability)
- Hess v. Chase Manhattan Bank, 220 S.W.3d 758 (Mo. banc 2007) (nondisclosure can constitute actionable misrepresentation where a duty to speak exists)
- Newsome v. Kansas City, Mo. Sch. Dist., 520 S.W.3d 769 (Mo. banc 2017) (standard for reviewing denial of JNOV and submissibility of affirmative defenses)
- Dunn Indus. Group, Inc. v. City of Sugar Creek, 112 S.W.3d 421 (Mo. banc 2003) (guaranty is an independent contract but may be construed with contemporaneous agreements on the same subject)