Phillips v. Missouri TLC, LLC
2015 Mo. App. LEXIS 698
Mo. Ct. App.2015Background
- Consolidated appeal interpreting a loan agreement between John Walter Phillips (Lender) and Missouri TLC, LLC (Borrower); Doyle and Dennis Frost are Borrower members; Brenda and Sandy Frost are spouses who signed as guarantors.
- Loan entered December 2010 for $5,943,000 secured by a deed of trust on Jack’s Fork Ranch/Monarch Place timber property; contract formed an integrated 11-page agreement with all parts executed the same day.
- Paragraph 2.B provides a 5% premium of net proceeds from collateral sales; Paragraph 3 (Timber Sales) provides timber payments to principal, creating potential ambiguity about treatment of the premium.
- Note includes a $5,000 late fee for default more than 30 days; Borrower defaulted and the note was accelerated; Lender sought damages including premiums, interest, and attorney fees.
- Trial court found Doyle and Dennis personally liable but Brenda and Sandy not; court awarded one $5,000 late fee and calculated other damages; this court affirms as to Doyle and Dennis, reverses for others, and remands for consistent judgment; attorney’s fees on appeal awarded to Lender.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal guaranty sufficiency | Phillips | Respondents | Spouses liable; language creates secondary liability. |
| 5% premium applied to principal or as extra | Phillips | Respondents | Premium is an extra obligation, not applied to principal. |
| Timber sale proceeds treatment | Phillips | Respondents | Timber payments are to principal but premium remains separate. |
| Late fee entitlement | Phillips | Respondents | Only one $5,000 late fee permitted. |
| Damages scope on appeal | Phillips | Respondents | Judgment affirmed on personal liability and single late fee; otherwise reversed and remanded; appellate fees awarded. |
Key Cases Cited
- Mercantile Trust Co. v. Carp, 648 S.W.2d 920 (Mo.App.E.D.1983) (guarantor liability independent of debtor’s interest in corporation)
- Jamieson-Chippewa Inv. Co. v. McClintock, 996 S.W.2d 84 (Mo.App.E.D.1999) (gives context on guaranty as secondarily liable)
- Bridge v. Welda State Bank, 292 S.W.1079 (Mo.App.K.C.D.1927) (guaranty language can create liability without explicit recitation of consideration)
- Springfield Television, Inc. v. Gary, 628 S.W.2d 398 (Mo.App.S.D.1982) (guaranty considerations when subsequent to loan transaction)
- City of Richmond Heights v. Waite, 280 S.W.3d 770 (Mo.App.E.D.2009) (liquidated damages analysis and reasonableness)