Frontenac Bank v. T.R. Hughes, Inc.
2012 Mo. App. LEXIS 1181
Mo. Ct. App.2012Background
- Frontenac Bank sued Summit Point, L.C., Homebuilder, Thomas R. Hughes, and Carolyn Hughes to recover on seven promissory notes and related guaranties.
- Foreclosure sales in 2009 resulted in Frontenac acquiring the secured properties for specified sums, with three successor trustee deeds issued.
- Frontenac filed a 16-count petition in December 2009 seeking balance due on the notes; Defendants and Carolyn counterclaimed for breach, good faith and fraud.
- The circuit court granted summary judgment to Frontenac on most claims and held Carolyn’s guarantees void on ECOA grounds, reserving a trial on the ECOA defense.
- A May 2011 trial produced Findings of Fact and Conclusions of Law; the court ruled Carolyn’s guarantees invalid but entered summary judgment against others on several counts.
- On appeal, the court affirmed Carolyn’s ECOA-based voiding of her guarantees and reversed/ remanded the deficiency-related judgments against Summit, Homebuilder, and Thomas for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Deficiency by foreclosure sale price | Frontenac argues foreclosure price is proper; no genuine issue on deficiency. | Naysayers contend fair market value or higher price should govern. | Deficiency based on foreclosure sale price proper; no material dispute. |
| Breach/good faith in foreclosure | Frontenac contends no breach in handling sale process. | Defendants allege improper handling and reliance on insecurity. | Genuine disputes of material fact exist; summary judgment reversed on related counts. |
| Carolyn's ECOA status and guarantees | Frontenac argues ECOA does not void guarantees. | Carolyn asserts ECOA prohibits spousal guarantees for these loans. | Carolyn’s guarantees void under ECOA; ECOA protections apply. |
| Independent creditworthiness of Borrowers | Frontenac shows Summit/Homebuilder independently creditworthy per loan policy. | Creditworthiness contested; reliance on joint statements as guaranty offers. | Substantial evidence supports independent creditworthiness finding; issue unresolved on appeal. |
| Carolyn's status as officer/director or owner | Frontenac contends Carolyn held related roles justifying guarantees. | Carolyn was not an officer/director or owner; evidence disputed. | Defendant’s claim rejected; substantial evidence supports circuit court finding. |
Key Cases Cited
- First Bank v. Fischer & Frichtel, Inc., 364 S.W.3d 216 (Mo. banc 2012) (affirms use of foreclosure price for deficiency; sale inadequacy may be attacked by voiding sale)
- Boone National Savings and Loan Assoc. v. Crouch, 47 S.W.3d 371 (Mo. banc 2001) (ECOA spousal guaranty protections; tenants by the entireties treatment)
- White v. Director of Revenue, 321 S.W.3d 298 (Mo. banc 2010) (standard for review in court-tried civil cases; deference to factual findings)
- Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976) (summary of appellate review standard for civil judgments)