Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-05-01677/USCOURTS-ca8-05-01677-0/pdf.json

Nature of Suit Code: 430
Nature of Suit: Banks and Banking
Cause of Action: 

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United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 05-1677

___________

William E. Stricker, Pamela Hines *

Stricker, Ozark Management, Inc., *

Allergy & Asthma Consultants of *

the Ozarks, Ltd., *

*

Plaintiffs - Appellants, *

*

v. *

* Appeal from the United States

Union Planters Bank, N.A., Great * District Court for the

Plains Airline Holding Co., * Western District of Missouri.

*

Defendants, *

*

David A. Johnson, Steven R. Berlin, *

Tom Kimball, Tammie Maloney, *

Jeff Sullivan, Donald L. McCorkell, *

Burt B. Holmes, John H. Knight, *

*

Defendants - Appellees. *

___________

Submitted: November 16, 2005

Filed: February 3, 2006

___________

Before MURPHY, BOWMAN, and GRUENDER, Circuit Judges.

___________

BOWMAN, Circuit Judge.

Appellate Case: 05-1677 Page: 1 Date Filed: 02/03/2006 Entry ID: 2005611
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The Honorable Nanette K. Laughrey, United States District Judge for the

Western District of Missouri.

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William Stricker, Pamela Stricker, Ozark Management, Inc., and Allergy &

Asthma Consultants of the Ozarks, Ltd. (collectively, "the Strickers") appeal from the

District Court's1

 denial of their motion for leave to amend their complaint against the

appellees—each a current or former director of Great Plains Airlines Holding

Company ("Great Plains"). We affirm.

In September 1999, the Strickers obtained a $21,800,000 loan (the "Aircraft

Loan") from Union Planters Bank in Columbia, Missouri, to purchase airplanes for

Ozark Air Lines, a new regional airline they intended to operate out of Columbia.

Union Planters required that the Strickers execute an Unconditional Guaranty of

Payment and Performance on the Aircraft Loan. In early 2001, the Strickers sold the

majority of their interest in Ozark Air to Great Plains, a regional airline operating out

of Tulsa, Oklahoma, and accepted shares of Great Plains stock in the transaction.

Also in connection with the sale, Great Plains assumed responsibility for future

payments under the Aircraft Loan and agreed to request that Union Planters release

the Strickers from their personal guaranty on the loan. Union Planters, however, later

rejected a written request from Great Plains to release the Strickers from their

personal guaranty. 

In March 2003, Union Planters sent the first of four default notices to the

Strickers as guarantors on the Aircraft Loan, stating that Great Plains had failed to

make several payments. Although Great Plains and Union Planters eventually

restructured the loan agreement, Union Planters again refused to release the Strickers

from their personal guaranty on the Aircraft Loan. When Great Plains later defaulted

on the Aircraft Loan, the Strickers paid the outstanding loan balance pursuant to their

personal guaranty. 

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The Strickers do not challenge this ruling.

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The Strickers, as shareholders of Great Plains, filed a complaint alleging gross

negligence and breach of fiduciary duty by the appellees in their capacities as current

or former directors of Great Plains. The Strickers claimed that the appellees caused

Great Plains to default on the Aircraft Loan and, because the appellees failed to

obtain their release as guarantors, triggered the Strickers' obligation to pay the

outstanding balance of the loan. The District Court granted the appellees' motion to

dismiss the breach-of-fiduciary-duty and gross-negligence claims, reasoning that the

Strickers' alleged injuries arose out of their status as creditors of Great Plains and that

they could not base their claims on duties owed to them as shareholders of Great

Plains. Order of Sept. 7, 2004 at 7–8.2

 

The Strickers then sought leave to amend their complaint to assert a claim

against the appellees for gross negligence and for breach of fiduciary duty allegedly

owed to the Strickers not as shareholders but as creditors of Great Plains. The

District Court denied the Strickers leave to amend, concluding that in their capacity

as individual creditors of Great Plains, they did not have standing under Missouri law

to assert breach-of-fiduciary-duty and gross-negligence claims directly against the

appellees. The Strickers appeal, and we affirm.

The Strickers first argue that the District Court erred by applying Missouri law.

In a diversity action, a district court sitting in Missouri follows Missouri's choice-oflaw rules to determine applicable state law, and we review the court's conclusions

de novo. See Hill v. Burlington N. & Santa Fe Ry. Co. (In re Derailment Cases), 416

F.3d 787, 794 (8th Cir. 2005). When determining choice-of-law issues in tort actions,

Missouri courts apply the "most significant relationship" test. Goede v. Aerojet Gen.

Corp., 143 S.W.3d 14, 24 (Mo. Ct. App. 2004). This test requires a court to consider:

"(a) the place where the injury occurred, (b) the place where the conduct causing the

injury occurred, (c) the domicile, residence, nationality, place of incorporation and

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place of business of the parties, and (d) the place where the relationship, if any,

between the parties is centered." Id. n.6 (quoting Restatement (Second) of Conflict

of Laws § 145 (1971)). After considering these factors, the District Court concluded

that Missouri law applied to the Strickers' claims because the Strickers were Missouri

residents; the relationship between the litigants arose solely from an agreement

regarding the sale of Ozark Air, an airline carrier incorporated in and operating out

of Missouri; and the Strickers' claims stemmed from a loan secured in whole or in

part by property located in Missouri. For the reasons given by the District Court, we

agree that Missouri law applies to the Strickers' claims. 

The Strickers next argue that the District Court erred in denying their motion

for leave to file a second amended complaint. Although "leave to amend should be

granted freely 'when justice so requires,'" it may be denied if an amendment would

be futile. Migliaccio v. K-tel Int'l, Inc. (In re K-tel Int'l, Inc. Sec. Litig.), 300 F.3d

881, 899 (8th Cir. 2002) (quoting Fed. R. Civ. P. 15(a)). When a district court

concludes that an amendment would be futile because "no actual amendments to the

complaint are possible, we review the denial of leave to amend for abuse of

discretion." Campagnuola v. Cerner Corp. (In re Cerner Corp. Sec. Litig.), 425 F.3d

1079, 1086 (8th Cir. 2005) (citing K-tel, 300 F.3d at 899–900). On the other hand,

when a district court concludes that an amendment would be futile because "a specific

allegation, even if amended, would fail to state a claim as a matter of law, we review

the denial de novo." Id. (citing K-tel, 300 F.3d at 899); see also Batt v. Acceptance

Ins. Cos., Inc. (In re Acceptance Ins. Cos. Sec. Litig.), 423 F.3d 899, 904 (8th Cir.

2005) (noting that while we generally review the denial of a motion to amend for

abuse of discretion, "for the narrow issue of futility, we review de novo"). Although

the parties disagree about the applicable standard of review, we conclude that under

either standard the Strickers have not shown that an amendment would save their

claims. 

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The District Court denied the Strickers' motion to amend based on its

conclusion that "an individual creditor does not have standing to assert a breach of

fiduciary duty claim against corporate directors." Order of Nov. 16, 2004 at 4. In

Drummond Co. v. St. Louis Coke & Foundry Supply Co., No. ED 84884, 2005 WL

2648443 (Mo. Ct. App. Oct. 18, 2005), a decision published after the District Court

issued its order in this case, the Missouri Court of Appeals considered and rejected

a claim similar to the fiduciary-duty claim asserted by the Strickers. Drummond sued

St. Louis Coke's directors, claimed that the directors caused St. Louis Coke to default

on payments due to Drummond and thereby breached a fiduciary duty owed to

Drummond as a creditor of St. Louis Coke. In rejecting Drummond's claim, the

Missouri Court of Appeals observed that "no Missouri case has held there to be a

cause of action for breach of fiduciary duty by a corporate director to a creditor of the

corporation." Id. at *4. The court acknowledged, however, that "in the limited

situation where . . . it is conclusively established that [the corporation] is insolvent,"

a director may be liable to creditors of the corporation because "[i]n such cases the

corporation [is] effectively de facto dissolved, placing the directors . . . in a trusteelike position for the equal benefit of all creditors." Id. at *5 (emphasis added). 

The Strickers are not suing on behalf of all creditors of Great Plains—they seek

only an individual recovery. Accordingly, even if they "conclusively established"

that Great Plains was insolvent, thus triggering the appellees' "trustee-like" duty to

all creditors of Great Plains, they do not have standing to sue for a full individual

recovery of the outstanding balance on the Aircraft Loan. We conclude that the

District Court did not err, much less abuse its discretion, in denying the Strickers'

motion for leave to amend their complaint. We affirm the judgment of the District

Court. 

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