S-24-0839 Henderson State Company (Appellee) v. Todd W. Garrelts and Nancy J. Garrelts (Appellants) v. Kevin D. Postier, Henderson State Bank, Eric B. Schnurer, Personal Representative of the Estate of David L. Lynn, Deceased, and Judy A. Lynn (Appellees)
Appeal from the District Court for York County, Judge James C. Stecker
Attorneys: Keith A. Harvat (Houghton Bradford Whitted PC, LLO for Appellants), Luke T. Deaver (Dewald Deaver & L’Heureux, PC, LLO for Appellants), and Lindsay K. Lundholm, Thomas O. Ashby, and James T. Schmidt (Baird Holm LLP for Appellee)
Civil: Breach of contract, breach of duty of good faith and fair dealing, fraudulent misrepresentation, fraudulent concealment, and civil conspiracy.
Proceedings Below: Appellants signed personal guarantees for the debts that Midwest Auger owed and when Appellants purportedly did not pay, Appellee sued them for breach of the guaranty. Appellants filed counterclaims for breach of duty of good faith and fair dealing, fraudulent misrepresentation, fraudulent concealment, and civil conspiracy. The district court entered judgment in favor of Appellee and dismissed Appellants’ counterclaims. On its own motion, the Supreme Court ordered this case to be transferred from the docket of the Court of Appeals to its docket.
Issues: Appellants assign the following errors: 1) The court erred in determining that “an assignment exists,” that it was valid and complete and, as a result, denying Appellant’s motion for summary judgment; 2) The court erred in determining that Appellants “did not directly request production of the assignment” when, in direct response to a motion to compel, it was represented that: Defendants ask the Court to order the production of categories of documents which do not exist or which have already been produced. HSC (which is not a bank, but which acquired Henderson State Bank (“HSB”)’s rights under the guarantees) produced all of HSB’s relevant records in the manner HSB maintains them in the ordinary course of business; 3) The court erred in failing to disregard the affidavits of Postier who made changes to meet the exigencies of the pending case without any rational or sufficient explanation for his change in testimony; 4) The court erred in granting the motion for summary judgment of HSC, HSB and Postier and adopting, virtually verbatim, a proposed order prepared and submitted by their attorney; 5) The court erred by relying upon the parole evidence rule when it is the banking practices, administration and monitoring of HSC, HSB and Postier which are at issue; 6) The court erred in failing to properly account for the affidavit and expert opinions of Ritzman who, in part, opined that: HSB allowed loan advances to occur without appropriate collateral pledged to support the loan advances and failed to administer or monitor the loan relationship with [Midwest Auger] as a secured loan transaction in customary banking practices; 7) The court erred entering a judgment against Appellants that they “are unconditionally and absolutely liable for the debt of Midwest Auger;” 8) The court erred in determining that “HSB had no ‘opportunity to disclose’ information about David Lynn or Peck Manufacturing to Appellants, because HSB was legally restricted from disclosing confidential banking information about its customers;” 9) The court erred in determining that: Appellants have not produced any evidence showing the existence of a genuine issue as to any material fact, and that the HSC parties are entitled to judgment as a matter of law on Appellants claims of fraudulent concealment, fraudulent misrepresentation, breach of the implied covenant of good faith and fair dealing, and civil conspiracy against each of them; 10) The court erred in determining that the “Guarantees are supported by consideration” and that there “was no failure of consideration” when there was evidence of failures to follow and abide by customary banking practices, administration and monitoring of the Midwest Auger loan; 11) The court erred in denying Appellants motion for new trial; and 12) The court erred in finding that the confession of judgment dated July 26, 2024, was a nullity and of no legal effect.