Reliance Bank v. Paramont Properties, LLC
2014 Mo. App. LEXIS 317
Mo. Ct. App.2014Background
- Paramont Properties executed a $750,000 promissory note in Feb 2008 secured by a deed of trust and guaranteed by Barket.
- The Note contains a mandatory non-forgeable oral agreements clause stating all terms are in writing and controlling.
- Maturity was Feb 20, 2010, with extensions later negotiated to 2011 by written modifications.
- In late 2009, Defendants requested an advance to pay taxes; Plaintiff allegedly urged delay and promised to extend the line absent a material value change.
- Appraisal dated Feb 3, 2010 valued the property at $1,580,000; subsequent modifications extended the loan maturity to Apr 20, 2010, Aug 20, 2010, and Apr 20, 2011; they defaulted in Apr 2011; foreclosure sale occurred Sept 22, 2011 for $498,000.
- Reliance Bank sued for balance ($174,353.08); Defendants raised defenses and counterclaims including good faith/constructive duties and wrongful foreclosure; circuit court struck defenses and dismissed counterclaims and later granted Plaintiff summary judgment.
- Plaintiff purchased foreclosure; Defendants’ pleadings asserted bad faith, but the court concluded no bad-faith facts supported a breach of the duty of good faith and fair dealing; sale price found not inadequate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether dismissal of good-faith-and-fair-dealing claims was correct | Bank is entitled to enforce the Note; no bad-faith evidence | Oral statements created a bad-faith breach | Dismissal affirmed; no bad-faith facts proven for breach of duty |
| Whether the wrongful foreclosure counterclaim was properly dismissed | Foreclosure sale price was adequate under case law | Sale price was below fair market value and conduct was wrongful | Dismissal affirmed; no inadequate sale price shown |
| Whether summary judgment on the Note and guaranty was proper | No genuine dispute on the Note/guaranty balance; defenses abandoned | Defense of good faith/constructive duties precludes summary judgment | Summary judgment affirmed; no material factual dispute |
Key Cases Cited
- T.R. Hughes, Inc. v. Frontenac Bank, 404 S.W.3d 272 (Mo.App. E.D.2012) (good-faith duty; factual disputes on bank's denial of advances when not clearly contemplated by contract)
- Koger v. Hartford Life Ins. Co., 28 S.W.3d 405 (Mo.App. W.D.2000) (duty of good faith and fair dealing; standard for dismissal on pleadings)
- Missouri Consol. Health Care Plan v. Cmty. Health Plan, 81 S.W.3d 34 (Mo.App. W.D.2002) (duty to cooperate to fulfill contract benefits; bad-faith conduct examples)
- State v. Nationwide Life Ins. Co., 340 S.W.3d 161 (Mo.App. W.D.2011) (no implied duty to renew contract beyond terms when contract ends)
- Frontenac Bank v. T.R. Hughes, Inc., 404 S.W.3d 272 (Mo.App. E.D.2012) (fact-specific application of good-faith doctrine to lending)
- First Bank v. Fischer & Frichtel, Inc., 364 S.W.3d 216 (Mo. banc 2012) (summary judgment standards and contract enforcement)
- Smith v. Equitable Life Assur. Soc. of the U.S., 448 S.W.2d 588 (Mo.1970) (general contract/insurance-law principles)
- Cockrell v. Taylor, 347 Mo. 1, 145 S.W.2d 41 (1940) (longstanding contract interpretation principles)
- McKnight v. Midwest Eye Institute of Kansas City, Inc., 799 S.W.2d 909 (Mo.App. W.D.1990) (implied duty of good faith and fair dealing)