Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-13-03607/USCOURTS-ca8-13-03607-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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United States Court of Appeals

For the Eighth Circuit

___________________________

No. 13-3607

___________________________

Robl Construction, Inc., a Kansas Corporation

lllllllllllllllllllll Plaintiff - Appellant

v.

Andrew G. Homoly

lllllllllllllllllllll Defendant - Appellee

____________

Appeal from United States District Court 

for the Western District of Missouri - St. Joseph

____________

 Submitted: September 8, 2014

Filed: April 1, 2015

____________

Before RILEY, Chief Judge, SMITH and KELLY, Circuit Judges.

____________

RILEY, Chief Judge.

In this diversity case, see 28 U.S.C. § 1332(a)(1), (c)(1), Robl Construction,

Inc. (Robl Construction), a Kansas citizen, appeals the adverse grant of summary

judgment to Andrew Homoly, a Missouri citizen, on Robl Construction’s claim that

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Homoly breached an agreement personally to guarantee 40% of a $431,544.02 loan1

Robl Construction made to Homoly & Robl, L.L.C. (Company). The district court

found Homoly did not personally guarantee any loan from Robl Construction. 

Because the record and the parties’ submissions reveal Robl Construction and

Homoly genuinely dispute whether Homoly—by word and deed—authorized Robl

Construction’s loan to the Company and personally guaranteed repayment in

accordance with the terms of the Company’s agreements, we reverse and remand for

further proceedings.

I. BACKGROUND

On October 29, 2002, Robl Construction, through its president Steve Robl, and 

Homoly formed the Company to purchase and develop residential real estate. Robl

Construction and Homoly executed an operating agreement and a separate Buy-Sell,

Option, and Financing Agreement (buy-sell agreement). Both agreements govern the

Company’s financial affairs and define the members’ rights and dutiesin accordance

with Kansas law. The buy-sell agreement controls in the event of an inconsistency. 

As the only members of the Company, RoblConstruction held a 60% share and

Homoly held a 40% share. Steve Robl was the Company’s tax matters partner, and

his wife, accountant Vera Robl, assisted with the Company’s financial records. 

Homoly primarily worked as a project manager in the field. 

 

In 2004, the Company began to have financial problems. From 2006 to 2011,

the Company operated at a loss and needed additional capital to continue operations. 

The parties varyingly refer to a revolving loan with multiple advances and

1

multiple loans. Deferring to what we understand is Robl Construction’s preferred

characterization, we use the singular. See Young v. Allstate Ins. Co., 685 F.3d 782,

783, 784 (8th Cir. 2012) (explaining at summary judgment, we must “view[] the

evidence and draw[] all reasonable inferences in the light most favorable to [Robl

Construction], the non-moving party”). 

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Robl Construction was periodically advancing money to the Company, and Steve

Robl, Vera Robl, and Homoly discussed whether the Company should make a capital

call or treat the advances as a revolving loan. 

As relevant to this appeal, § 6.03 of the operating agreement required the

consent of both Robl Construction and Homoly before

D) The creation of any obligation or commitment of the Company,

including the borrowing of funds, in excess of $10,000; [and]

. . . .

I) Any act which would cause a Member, absent such Member’s written

consent, to become personally liable for any debt or obligation of the

Company[.]

On July 31, 2006, Vera Robl notified Homoly by email that the Company

needed “to make a capital call or increase loans on existing inventory.” She advised

that Robl Construction had “put in $71,500 so if you go the route of capital call, your

share to get caught up would be $47,666.” She asked Homoly to “[l]et [her] know

what to do.” When Homoly asked whether the $47,666 included $34,900 Homoly

previously contributed, Vera Robl explained,

No, the 71,000 is new money we’ve put in to cover all the carrying costs

of the inventory. To match it, you would need to put in 47,666. . . . I’ve

been treating the 71,000 like a loan from Robl Const, but I need to know

what the plans are—will it be capital and you will match it, or will it be

a loan and be repaid?

On August 2, 2006, Homoly responded,

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Wow, if my portion is $82,566, does this mean we are in the hole by

$206,400? . . . I could put in that much money, but it would be a good

sized hit for my liquidity. . . . With that in mind, I guess I would prefer

the money from Robl to be considered a loan and then you guys get

repaid with interest. If Steve would rather me put in a capital call,

however, I will go ahead and write the check.

Vera Robl replied she would not “make any journal entries until [Homoly] and Steve

talk this over.” On appeal, Homoly—conceding he left the decision to Steve Robl’s

discretion—characterizes his response as “ask[ing] Steve Robl, the [Company’s] tax

matters and financial partner, to clarify which route the [Company] wishes to take.” 

Relying in part on this email exchange, Robl Construction avers the parties

agreed to treat Robl Construction’s periodic advancesto the Company as a revolving

loan. As Robl Construction sees it, Homoly not only requested the loan, but also

agreed to be personally liable for 40% of the $431,544.02 debt pursuant to § 8 of the

buy-sell agreement, under which Robl Construction and Homoly each “agree[d] to

personally guarantee [their proportionate share of] any and all loans” to the Company

at the request of the Company and the lender. See Kan. Stat. Ann. § 17-7688(b)

(allowing membersto opt out of the state’s default non-liability rule and “agree to be

obligated personally for any or all of the debts, obligations and liabilities of the

limited liability company” “under an operating agreement or under another

agreement”). 

On March 29, 2011, Robl Construction formally demanded that Homoly repay

his share of the unpaid loan. When Homoly refused, Robl Construction sued Homoly

for breach of contract, seeking $172,617.61 in damages—Homoly’s share ofthe debt. 

Homoly moved for summary judgment, arguing (1) if the advances to the Company

were failed capital calls, Robl Construction could seek, at most, dilution of Homoly’s

interest in the Company, and (2) if the advances were a loan, Robl Construction failed

to meet the conditions precedent in the parties’ agreements and to satisfy the statute

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of frauds with respect to Homoly’s alleged guarantee. In response, Robl

2

Construction insisted the advances were a loan and argued genuine factual disputes

precluded summary judgment. 

Ostensibly accepting Robl Construction’s characterization of the advances as

a loan, the district court granted Homoly’s motion, “find[ing] the money Robl gave

the Company was not a personally guaranteed loan.” Robl Construction appeals.

II. DISCUSSION

Robl Construction and Homoly agree on little, but they do agree Kansas law

governs their dispute. See H & R Block Tax Servs. LLC v. Franklin, 691 F.3d 941,

943-44 (8th Cir. 2012) (applying state substantive law as specified by contract

because Missouri, the forum state in a diversity case, generally enforces contractual

choice-of-law provisions). We review de novo the district court’s application ofstate

law and its grant of summary judgment. See Bannister v. Bemis Co., 556 F.3d 882,

884 (8th Cir. 2009). Summary judgment is required “if the movant shows that there

is no genuine dispute as to any material fact and the movant is entitled to judgment

as a matter of law.” Fed. R. Civ. P. 56(a). 

A. Judgment as a Matter of Law

In granting summary judgment to Homoly, the district court decided “there

[wa]s nothing in the record showing that Robl [Construction] requested Homoly

personally guarantee any such loan asthe Buy-Sell Agreement clearly contemplates.” 

Rejecting Robl Construction’s proposed interpretation of the 2006 email exchange

between Homoly and Vera Robl, the district court found Homoly’s email “may show

Though he equivocates some, for purposes of appeal Homoly concedes the

2

money was a loan, stating “[t]he District Court recognized that Robl Construction

selected to pursue its claims as only a loan and not as a capital contribution” and

“[n]o material fact dispute exists concerning whether or not the monies were loans or

capital contributions.” We thus do not consider that issue. 

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that Homoly wanted Robl [Construction] to loan the Company money, but it does not

indicate that Robl [Construction] requested for Homoly to personally guarantee the

loan. Rather, the email communication shows a failed capital call attempt, and

Homoly’s preference—not request—that Robl loan the money to the Company.”

Robl Construction contendsthis was error because the district court “premised

its holding exclusively on the email exchange and failed to consider other evidence

that Homoly” authorized and “personally guarantee[d] the loan.” Robl Construction

further asserts “[t]he District Court erroneously stepped into the role of fact finder

and failed to resolve all facts and inferences in” Robl Construction’s favor. See

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 249 (1986) (“[A]t the summary

judgment stage the judge’s function is not . . . to weigh the evidence and determine

the truth of the matter but to determine whether there is a genuine issue for trial.”);

Henrickson v. Drotts, 548 P.2d 465, 468 (Kan. 1976) (“A court should be cautious

in granting a motion for summary judgment when resolution of the dispositive issue

necessitates a determination of the state of mind of one or both of the parties.”). Robl

Construction’s points are well taken.

B. Kansas Contract Law

Under Kansas law, “[t]he question whether a binding contract was entered into

depends on the intention of the parties and is a question of fact.” Reimer v.

Waldinger Corp., 959 P.2d 914, 916 (Kan. 1998); see also Hays v. Underwood, 411

P.2d 717, 720-21 (Kan. 1966) (explaining that conflicting evidence and competing

inferences as to the existence and terms of a contract present fact questions). 

“[W]hether a party’s duty under a contract was based on a condition precedent is”

also a fact question, Cravotta v. Deggingers’ Foundry, Inc., 215 P.3d 636, 642 (Kan.

Ct. App. 2009), as is the question of breach, see Wichita Clinic, P.A. v. Louis, 185

P.3d 946, 959 (Kan. Ct. App. 2008). “[I]nterpretation of the written terms of a

contract, however, [is] a question of law.” Reimer, 959 P.2d at 916.

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A contract may be oral, written, or a mixture of both. See, e.g., Chilson v.

Capital Bank of Miami, 701 P.2d 903, 907 (Kan. 1985). “Whether an ambiguity

exists in a written instrument is a question of law for the court.” Hollenbeck v.

Household Bank, 829 P.2d 903, 906 (Kan. 1992). “[W]here ambiguity or uncertainty

is involved, the parties’ intent may be determined from all the language used in the

contract, the circumstances existing when the agreement was made, the object sought

to be obtained, and other circumstances, if any, which tend to clarify the intention of

the parties.” Id. “The terms of an oral contract and the consent of the parties may be

proven by the parties’ acts and by the attending circumstances, as well as by the

words that the parties employed.” Unified Sch. Dist. No. 446, Independence, Kan.

v. Sandoval, 286 P.3d 542, 546 (Kan. 2012).

C. Genuine Disputes of Material Fact

1. Consent and Personal Liability

Robl Construction credibly contends Homoly’s words and deeds under the

attending circumstances—considered in the light most favorable to Robl

Construction—would enable a reasonable jury to find Homoly not only consented to

the Robl Construction loan, but also agreed to be personally liable for 40% of the

debt. In addition to the 2006 email indicating Homoly “would prefer the money from

Robl [Construction] be considered a loan” to be repaid with interest, Robl

Construction proposes the following evidence supports its breach-of-contract claim: 

• Sworn testimony from Steve Robl indicating (1) Homoly requested the

loan, (2) Steve requested, on behalf of Robl Construction and the

Company, that Homoly personally guarantee the loan, (3) Homoly

agreed to do so as required by the buy-sell agreement, and (4) Steve and

Homoly frequently discussed the loan and the amount Homoly owed;

• Sworn testimony from Vera Robl that Homoly requested Robl

Construction make a loan to cover the Company’s shortages, rather than

a capital call, and “constant[ly] communicat[ed]” with Robl

Construction about the loan;

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• Sworn testimony from Vera Robl and bookkeeper Sarah Lauffer

indicating Homoly agreed to Robl Construction charging interest on the

loan, and Homoly thought the interest rate was fair;

• Evidence the Company treated the advances from Robl Construction as

a loan on its financial statements and attributed 40% of the debt to

Homoly as it did with other outstanding loans;

• Evidence that for more than four years Homoly received those financial

statementsindicating he wasliable for 40% of the loan at issue yet never

objected or denied liability; 

• Sworn testimony from Lauffer that upon receiving the financial

statements, Homoly expressed “panic” about his growing losses; and

• Evidence that Homoly benefitted from the loan in that he avoided a

capital call and maintained a 40% interest in the Company, and the loan

“allowed himto offset the Company’s losses against ordinary income on

his individual tax returns.”3

Predictably unswayed by Robl Construction’s evidence, Homoly urges a

different interpretation. Having disputed most of Robl Construction’s “Additional

Material Facts,” Homoly maintains “nothing in the materials offered” shows the

advances were a loan or that the conditions of the parties’ agreements were met,

including Homoly’s consent to the loan and his assent to personal liability for the

Company’s debt. 

Homoly’s claim that tax amendments he filed in 2011 “resolve[] any claim as 3

to alleged tax benefits” and moot Robl Construction’s argument that he received a

benefit from the loan is without merit. That Homoly amended his taxes after denying

liability for the loan does not deprive his prior actions of evidentiary value at trial.

See Fed. R. Evid. 401.

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Homoly, in his appellate brief, claims his intent in agreeing and consenting to

personal liability in the buy-sell agreement waslimited to a specific loan froma bank. 

Homoly also disputesthe meaning and import ofthe pivotal 2006 email exchange and

challenges Robl Construction’s understanding of the parties’ frequent

communications about the loan and Homoly’s personal liability for the debt. For

example, in response to Vera Robl’s testimony that Homoly’s periodic requests for

Robl Construction to “cover” Company shortages constituted “a loan in every way,”

Homoly contends his request to “cover” is “at best, an oral request for money and not

a request for a loan”—arguably a distinction without a difference.

But questions ofintent and whether the parties’ statements and actionssatisfied

the conditions precedent in their agreements are precisely the type of factual disputes

a jury must decide. See, e.g., First Nat’l Bank of Hutchinson v. Kaiser, 564 P.2d 493,

496-97 (Kan. 1977); M West, Inc. v. Oak Park Mall, L.L.C., 234 P.3d 833, 845-46

(Kan. Ct. App. 2010); Cherryvale Grain Co. v. First State Bank of Edna, 971 P.2d

1204, 1209 (Kan. Ct. App. 1999).

Further, under Kansas law, Homoly cannot avoid contractual liability “merely

by claiming the conditions [precedent] have not been met.” Barbara Oil Co. v.

Patrick Petroleum Co., 566 P.2d 389, 393 (Kan. Ct. App. 1977). A party hoping to

avoid liability “must affirmatively show that (1) the condition precedent actually

failed and (2) because of such failure, the contract will not be performed.” Id. 

Whether Homoly refused to perform based on “a genuine and good faith claim that

a condition precedent failed is a question for the jury.” Id.; accord JDN Dev. Co. v.

Terra Venture, Inc., 265 F. Supp. 2d 1239, 1250-51 (D. Kan. 2003) (denying

summary judgment where a party flatly asserted conditions precedent were not met).

Without addressing Homoly’s burden and the jury’s role in deciding questions

of failed conditions under Barbara Oil Co., 566 P.2d at 393, the dissent concludes we

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should not allow a jury to resolve this contract dispute because, in the dissent’s view,

Robl Construction waived any argument that Robl Construction “fulfilled § 6.03(D)

and (I) of the operating agreement by loaning money to the Company with Homoly’s

prior consent.” Post at 19. Leaving aside the incongruity of Homoly agreeing to

guarantee the loan personally without consenting to the loan itself, the dissent’s

conclusion that Robl Construction “essentially ignores” § 6.03(D) and (I) is at odds

with the record. Post at 18. 

Rather than ignore the conditions precedent in § 6.03(D) and (I), Robl

Construction, challenging the district court’s determination that Homoly expressed

a “preference—not request” for a loan, explicitly and repeatedly asserted in its

appellate brief that the conditions were met. The dissent acknowledges as much,

noting Robl Construction specifically asserted “Homoly consented to” the loan. Post

at 20 n.6. Yet the dissent summarily dismisses that assertion because it “addresse[d]”

a different argument. Id. The dissent’s belief that this statement is the “only place

in which Robl Construction even hints to argue that it fulfilled § 6.03(D),” id.,

conflicts with the record and the dissent’s own analysis. In framing Robl

Construction’s arguments, the dissent admits RoblConstruction asserted the loanmet

the requirements of the parties’ agreements—which would unequivocally include

§ 6.03(D) and (I)—but concludes such a “general denial” is inadequate to preserve

the issue. Post at 17.

Drawing a fine distinction between Homoly authorizing the loan and requesting

it, the dissent concedes Robl Construction stated Homoly “requested” the loan and

presumes Robl Construction was “arguing that such a request constituted the

necessary ‘prior consent of a Super-Majority-in-Interest’ to fulfill § 6.03(D).” Post

at 17. Yet this presumption apparently is not enough to prevent waiver. In claiming

“Robl Construction waive[d]” its arguments, post at 19-20, the dissent overlooks,

among other things, Robl Construction’s assertions that (1) “Robl Construction

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presented direct and circumstantial evidence . . . Homoly consented to the Robl

Construction loans,” and (2) the 2006 email exchange indicated “Homoly request[ed]

Robl Construction make a loan and Robl Construction ‘would get repaid.[’]” 

(Emphasis added). We are satisfied Robl Construction did not waive its argument

that Homoly consented to the loan as required by § 6.03(D). 

The same istrue for § 6.03(I). Despite claiming RoblConstruction “essentially

ignore[d]” § 6.03(I), the dissent later explains Robl Construction did not ignore

§ 6.03(I) at all but instead “argue[d] § 8 of the buy-sell agreement acts as Homoly’s

written consent,” which satisfies § 6.03(I). Post at 18, 21. Robl Construction

adequately preserved this issue as well.

2. Additional Writing and Timing Requirements

We also question some of Homoly’s proposed interpretations ofthe writing and

timing requirements in the parties’ agreements. For example, Homoly does not

provide any support for his assertions that § 6.03(D) of the operating agreement

requires “signed written consent” for loans in excess of $10,000, or that the parties

cannot designate the money from Robl Construction as a loan or request a guarantee

after the receipt of funds. (Emphasis added). In Homoly’s view, the Company had

to obtain his consent before receiving any money from Robl Construction, even

though he and Robl Construction had not yet decided whether the Company would

treat the initial advances as a capital contribution or a loan. 

As we read it, § 6.03(D) prohibits only “[t]he creation of any obligation or

commitment of the Company, including the borrowing of funds, in excess of

$10,000” without super-majority consent. (Emphasis added). At the least, the

language is open to an interpretation under which the parties intended to require

super-majority consent only before the Company was bound, and an undesignated

advancement of funds does not necessarily impose any obligation on the Company. 

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A reasonable jury could find there was no such binding obligation or commitment

from the Company unless and until the parties decided to treat the advances as a loan. 

At that point, the jury could reasonably find the requisite consent.

Even if the timing of the advances—as opposed to the obligation to repay—is

unambiguously relevant, Homoly’s analysis is incomplete. Most of the advances

occurred after the 2006 email exchange and after disputed communications about the

alleged loan. Homoly argues the evidence does not establish the Company “complied

with the Super-Majority-in-Interest requirements necessaryto even allowsuch loan(s)

to be authorized prior to each being made.” But if the parties agreed to a single

revolving loan, as Robl Construction contends, with support from the email, we

would not expect a separate consent before each advance. 

To the extent the parties intended a series of smaller loans, record testimony

from Vera Robl, Steve Robl, and Homoly describing frequent discussions about such

loans plausibly suggests multiple loan requests from Homoly. Even absent direct

evidence of consent for each advance, some of Robl Construction’s alleged advances

do not run afoul of § 6.03(D) because they do not exceed $10,000. Homoly does not

account for these obvious inconsistencies and conceptual gaps.

3. Ratification

The facts also suggest Homoly may have ratified at least part of the loan to the

Company by knowingly accepting the benefit. See Cherryvale Grain, 971 P.2d at

1208 (“‘The acceptance and retention of the proceeds of a loan or of the benefits

thereof, although made without authority, amount to an implied ratification of the

loan.’” (quoting Allison v. Borer, 293 P. 769, 772 (Kan. 1930)));see also Sunflower

Bank, N.A. v. Airport Red Coach Inn of Wichita, L.L.C., 175 P.3d 883, 2008 WL

360641, at *4 (Kan. Ct. App. Feb. 8, 2008) (per curiam) (unpublished table decision)

(evaluating whether the members of a limited liability company impliedly ratified a

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loan that was not authorized by the operating agreement based on the receipt of loan

proceeds and other evidence of the members’ intent). 

Homoly testified he knew the Company “was getting a loan from Robl

Construction, and they just kept getting more,” and he understood that the money

allowed the Company to operate without selling assets or making a capital call. Yet

Homoly never told his business partner to stop loaning money to the Company. Robl

Construction has adduced sufficient evidence of implied consent by ratification to

create genuine disputes of material fact at least with respect to part of the loan.

4. Separate Guarantee

Nor can we accept Homoly’s suggestion that written personal guarantees he

and Robl Construction once executed at the request of a bank in connection with a

construction loan indicate § 8 of the buy-sell agreement requires a separate “written

consensual personal guarantee” before Homoly became personally liable. Neither the

contract language nor the record supports Homoly’s proposed separate guarantee

requirement. 

First, pursuant to § 8, Homoly expressly and unambiguously “agree[d] to

personally guarantee any and all loans by any such lender to Company” “[i]f

requested by the Company and any lender.” (Emphasis added). See Stauth v. Brown,

734 P.2d 1063, 1069 (Kan. 1987). Section 8 says nothing about a separate written

guarantee. If Robl Construction and Homoly truly intended to require a separate

guarantee as Homoly suggests, they could have easily written that requirement into

§ 8, just as they expressly required a promissory note in § 7. They did not. “‘Words

cannot be read into the agreement which impart an intent wholly unexpressed when

it was executed.’” Mears v. Hartford Fire Ins. Co., 667 P.2d 902, 905 (Kan. Ct. App.

1983) (quoting In re Estate ofJohnson, 452 P.2d 286, 291 (Kan. 1969)). “[T]he more

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logical conclusion is that the contract imposes no such obligation.” Boos v. Nat’l

Fed’n of State High Sch. Assocs., 889 P.2d 797, 802 (Kan. Ct. App. 1995).

Second, assuming we found § 8 ambiguous as to the parties’ intent regarding

a separate guarantee, Homoly is still unable to establish he is entitled to summary

judgment as a matter of law. “[I]f the language of a contract is ambiguous and the

intent of the parties cannot be ascertained from undisputed extrinsic or parol

evidence, summary . . . judgment is inappropriate.” Waste Connections of Kan., Inc.

v. Ritchie Corp., 298 P.3d 250, 265 (Kan. 2013) (emphasis added); see also

Nungesser v. Bryant, 153 P.3d 1277, 1288 (Kan. 2007) (“When the evidence

pertaining to the existence of a contract or the content of its terms is conflicting or

permits more than one inference, a question of fact is presented.”); First Nat’l Bank,

564 P.2d at 496 (“Whether the guaranty waslimited by a concurrent agreement of the

parties . . . was . . . an issue of fact which could not be resolved as a matter of law.”).

Finally, even if we could consider extrinsic evidence, see Butts v. Lawrence,

919 P.2d 363, 367 (Kan. Ct. App. 1996) (explaining that, absent ambiguity, it is

“error to consider . . . extrinsic evidence of the parties’ intent”), and resolve the

alleged ambiguity in § 8, Homoly fails to adduce any competent evidence that the

parties intended to include an unexpressed separate guarantee requirement in § 8. 

The fact the members once separately documented personal guarantees at the request

of a third-party lender does not indubitably and forever establish the members’ intent

to require a separate guarantee for every loan. Indeed, the record is completely

devoid of any evidence regarding the members’ motive for executing the written

guarantees on which Homolyrelies—depriving those guarantees of evidentiary value. 

See, e.g., Canyon Creek Dev., LLC v. Fox, 263 P.3d 799, 801 (Kan. Ct. App. 2011)

(recognizing courts must “view the evidence in the light more favoring the

nonmoving party” and refusing to “speculate about the existence, motivating

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influence, or possible consequence of any [personal] guaranties” because “there

[we]re no facts whatsoever on th[e] issue” in the record). 

Homoly has failed to show he is entitled to judgment as a matter of law under

the parties’ agreements.

5. Statute of Frauds

Although the district court did not reach this issue, Homoly argues Robl

Construction’s failure to satisfy the statute of frauds with respect to Homoly’s

purported guarantee provides an alternative basis to affirm summary judgment. See

Kan. Stat. Ann. § 33-106 (“No action shall be brought whereby to charge a party upon

any special promise to answer for the debt . . . of another person . . . unless the

agreement upon which such action shall be brought, or some memorandum or note

thereof, shall be in writing and signed by the party to be charged therewith.”). We

disagree. 

Robl Construction contends Homoly’s personal guarantee falls outside the

scope of the statute of frauds because Homoly’s main purpose was not to answer for

the Company’s debt, but to avoid a capital call that would have been a “good sized

hit for [his] liquidity.” Under Kansas law, when

the main purpose and object of the promisor is not to answer for another,

but to subserve some purpose of his own, his promise is not within the

statute [of frauds], although it may be in form a promise to pay the debt

of another, and although the performance of it may incidentally have the

effect of extinguishing the liability of another.

Allen v. Turner, 106 P.2d 715, 719 (Kan. 1940) (quotation omitted); accord Davis v.

Patrick, 141 U.S. 479, 488 (1891) (“[C]ases sometimes arise in which, though a third

party is the original obligor, the primary debtor, the promisor has a personal,

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immediate, and pecuniary interest in the transaction, and is therefore himself a party

to be benefited by the performance of the promisee. In such cases the reason which

underlies and which prompted this statutory provision fails, and the courts will give

effect to the promise.”). 

The Kansas Supreme Court has “held that whether such a promise was original

or collateral [i]s ordinarily one of fact” to be determined from the surrounding

circumstances. Allen, 106 P.2d at 719; accord Owensboro Wagon Co. v. D.A.

Wilson & Co., 101 P. 4, 6 (Kan. 1909). That question of intent precludes summary

judgment on this issue. 

III. CONCLUSION

Robl Construction and Homoly have dramatically different views of the

evidence. At this stage, the only question we must answer is whether “the evidence

is such that a reasonable jury could return a verdict for” Robl Construction on its

breach of contract claim “or whether it is so one-sided that [Homoly] must prevail as

a matter of law.” Anderson, 477 U.S. at 248, 252 (emphasis added). After careful

review, we conclude the evidence is not so one-sided as to justify taking this case

from the jury.

When viewed in the light most favorable to Robl Construction, the record

“evidence is such that a reasonable jury could,” id. at 248, find Homoly authorized

and personally guaranteed at least part of the loan in accordance with the parties’

agreements. This is not to say the jury would have to believe Robl Construction’s

account, but a reasonable jury could. At trial, Homoly may challenge Robl

Construction’s witnesses and its interpretation ofthe evidence; however, at this point,

Homoly has fallen short of proving no genuine dispute of material fact exists on this

record and that Homoly is entitled to summary judgment as a matter of law. We

reverse the district court’s judgment and remand for further proceedings.

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SMITH, Circuit Judge, dissenting.

I respectfully dissent. In my review of this case, I believe the majority

somewhat misses the mark by focusing on disputes of fact regarding Homoly's

consent to be personally bound. The contract language requires focus on an

antecedent inquiry: whether the loan(s) themselves are enforceable debts. If Robl

Construction violated the operating agreement by improperly loaning the Company

money without meeting the requisite conditions precedent, then neither the Company

nor Homoly would be liable for their respective debts under the invalid loan. 

I.

The majority not only liberally construes Robl Construction's arguments but

raises arguments that Robl Construction did not. When Homoly moved for summary

judgment, he argued five points: (1) the operating agreement did not provide for a

direct cause of action for failing to meet a capital contribution; (2) the necessary

preconditions to trigger liability under a capital contribution were not met; (3) the

necessary preconditions to trigger a personal guarantee under § 8 of the buy-sell

agreement were not met; (4) the loan wasinvalid because Robl Construction violated

§ 6.03(D) of the operating agreement; and (5) any alleged oral agreement of Homoly

to be personally bound did not satisfy the statute of frauds. In its opposition, Robl

Construction only addressed issues (1), (2), (3), and (5). Robl Construction

sidestepped issue (4) with a general denial by asserting that "RoblConstruction'sloan

and Homoly's personal guarantee and authorization do not violate the Operating

Agreement or the Buy-Sell Agreement." Elsewhere, Robl Construction stated in

passing that Homoly "requested" the loan. Although this argument was not clearly

outlined, Robl Construction was presumably arguing that such a request constituted

the necessary "prior consent of a Super-Majority-in-Interest" to fulfill § 6.03(D). 

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After resolving issues (1) and (2) by finding the advanced monies should be

considered as a loan rather than a failed capital contribution, the district court granted

summary judgment in favor of Homoly based on issue (3). The district court stated

that "there is nothing in the record showing that Robl [Construction] requested

Homoly personally guarantee any such loan as the Buy-Sell Agreement clearly

contemplates." The court concluded that Robl Construction was only "rel[ying] on

one email exchange between Vera Robl and Homoly" and found that, at best, the

email exchange "may show that Homoly wanted Robl [Construction] to loan the

Company money, but it does not indicate that Robl requested for Homoly to

personally guarantee the loan." As the majority has indicated above, Robl

Construction did not merely rely upon the 2006 email string, but also pointed to other

pieces of evidence that raised a genuine dispute of material fact on whether Homoly

agreed to personally guarantee the loan orally and in writing. Nevertheless, we need

not adopt the district court's reasoning to affirm its grant of summary judgment.4

Robl Construction's argument avoids issue (4), that is, whether Robl

Construction violated the operating agreement by advancing the Company monies

without the "prior consent of a Super-Majority-in-Interest" under § 6.03(D). Further,

§ 6.03(I) requires either the prior consent of a Super-Majority-in-Interest to impose

personal liability on any Member "for any debt or obligation of the Company," or the

"written consent" of that Member to be personally bound. Robl Construction

essentially ignores these contractual provisions.

Even if the district court erred, this court is not constrained by the district

4

court'srationale. It is wellsettled that "this court may affirmfor any reason supported

in the record, even if that reason is different from the rationale of the district court."

Wierman v. Casey's Gen. Stores, 638 F.3d 984, 1002 (8th Cir. 2011) (citation

omitted). Further, "[t]his court may affirm the district court even if it committed legal

error in reaching the correct result." Id. (citations omitted). 

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Homoly argues on appeal that he is entitled to judgment as a matter of law

because Robl Construction broke the very rules that governed the operation of the

Company. His points are well taken. As stated above, Robl Construction has not

advanced an argument as to Homoly's authorization of the loan, but it has submitted

evidence on his personal guarantee. Thus, my disagreement with the majority rests

in Robl Construction's waiver of arguing that it fulfilled § 6.03(D) and (I) of the

operating agreement by loaning money to the Company with Homoly's prior consent. 

In Kansas, "[t]he general rule is that the extinguishment, release or discharge

of the principal's contract relieves the guarantor of his or her obligation to pay." Hill

Petroleum Co. v. Pathmark Int'l, Inc., 759 F. Supp. 722, 725 (D. Kan. 1991) (citing

Iola State Bank v. Biggs, 662 P.2d 563, 570 (Kan. 1983)). "The guaranty is an

obligation collateral to another contractual duty to perform. . . . It is in the nature of

a warranty by the guarantor that the thing guaranteed to be accomplished by the

principal shall be done, and is not an engagement jointly with the principal to do the

act." Biggs, 662 P.2d at 567 (citing Trego WaKeeney State Bank v. Maier, 519 P.2d

743 (Kan. 1974)). "As the extent of the liability of the principal debtor generally

measures and limits the liability of the guarantor, and a guaranty is dependent on the

existence of a principal obligation, if the principal contract is invalid for reasons

inherent in itself, the guaranty generally is also invalid." 38A C.J.S. Guaranty § 15

(footnotes omitted); see also 38 Am. Jur. 2d Guaranty § 51 (1968) ("The guaranty

promise is a promise to answer for the debt or the default of the principal debtor

under his contract with the creditor. Therefore, unless the debtor is bound under the

principal contract, there is no obligation which is guaranteed and the guarantor is not

liable to the creditor if the debtor failsto perform."), quoted in Precision Sawing, Inc.

v. Cane Creek Concrete Servs., Inc., No. 5:13CV00054 JLH, 2014 WL 1154125, at

*3 (E.D. Ark., May 20, 2014).

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Whether Homoly personally guaranteed the loan only becomes a material

question of fact for a jury after the loan's validity has been established. The former

is built on the latter; if Robl Construction's loan to the Company is unenforceable

because Robl Construction violated the Company's own operating agreement, then

Homoly would not have a duty to personally repay the invalid loan amount. Thus,

Homoly's personal guarantee would be of no effect and there would be no enforceable

contract for Homoly to breach.

5

Robl Construction did not show Homoly actually authorized the loan as is

required by § 6.03(D) and (I) of the operating agreement. Addressing subsection (D),

Robl Construction does not argue that Homoly gave his prior consent to the over

$10,000 loan before the Company assumed the debt. When a contract is 6

unambiguous, "[t]he interpretation and legal effect of a contract is a question of law

A breach-of-contract claim for a personal guarantee fails when the loan to be 5

personally guaranteed is not valid. It fails because most jurisdictions (including

Kansas) require a valid contract to exist as a necessary element of the claim. See

Stechschulte v. Jennings, 298 P.3d 1083, 1098 (Kan. 2013) (citing Commercial

Credit Corp. v. Harris, 510 P.2d 1322, 1325 (Kan. 1973)). If the personal guarantee

is invalidated because the principal loan contract is invalid, an enforceable contract

does not exist between the guarantor and the lender.

The only place in which Robl Construction even hints to argue that it fulfilled 6

§ 6.03(D) isin § II.A of its Appellant's Brief, entitled "The monies Robl Construction

loaned to the Company were loans Homoly consented to, not capital contributions."

(Emphasis added.) If Homoly indeed consented to the loan, this would fulfill the

required prior consent of a Super-Majority-in-Interest because both he and Robl

Construction consented to the Company taking on this debt. Upon closer

examination, however, it is apparent that § II.A addresses the district court's finding

that the money advanced by Robl Construction was a loan and not a failed capital

contribution. Thus, Robl Construction does not argue that Homoly gave his prior

consent to the loan itself. Instead, it argues that Homoly considered treating the

monies as a loan rather than capital contributions. 

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for the court to decide, not a jury." Wolfe Elec., Inc. v. Duckworth, 266 P.3d 516, 534

(Kan. 2011) (citing Osterhaus v. Toth, 249 P.3d 888, 896 (2011)). Section 6.03(D)

prohibits the creation of an obligation of the Company, which includes taking on a

debt of over $10,000. Robl Construction contends Homoly agreed to personally

guarantee the loan but ignores the antecedent inquiry of whether he authorized the

loan in the first place. Logically, these are distinct legal questions. Whether Homoly

agreed to personally guarantee the loan only becomes a material fact dispute if the

debt itself is legally enforceable. As a result, I would affirm the district court's grant

of summary judgment on the basis that Robl Construction has failed to show a

genuine dispute of material fact that Homoly gave his prior consent to the loan, and

due to Robl Construction's violation of § 6.03(D), Homoly is entitled to judgment as

a matter of law. 

Second, § 6.03(I) requires the "prior consent of a Super-Majority-in-Interest"

when the Company takes "[a]ny act which would cause a Member, absent such

Member's written consent, to become personally liable for any debt or obligation of

the Company." Homoly asserts that he never gave such written consent. Robl

Construction does not dispute that but argues that § 8 of the buy-sell agreement acts

as Homoly's written consent. Both Robl Construction and the majority note that in

cases ofinconsistencies between the operating agreement and the buy-sell agreement,

the latter controls. According to Kansas law, however, we must consider the two

agreementstogether. See First Nat'l Bank of Hutchinson v. Kaiser, 564 P.2d 493, 496

(Kan. 1977) ("Where two instruments are executed by the same parties at or near the

same time in the course of the same transaction, and concerning the same subject

matter, they will be read and construed together." (citing Amortibanc Inv. Co. v.

Jehan, 551 P.2d 918 (Kan. 1976); Place v. Place, 486 P.2d 1354 (Kan. 1971);

Skinner v. Skinner, 270 P. 594 (Kan. 1928))). It is undisputed that the buy-sell

agreement and the operating agreement were both executed on the same day by the

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same parties and concern the same subject matter of the governing rules of the

Company. Therefore, the two documents should be construed together.

Taking this into account, Robl Construction's interpretation of § 8 is contrary

to Kansas law. Robl Construction argues that § 8 of the buy-sell agreement is in fact

the very written consent required by § 6.03(I). This interpretation effectively reads

§ 6.03(I) out of the operating agreement. Why require the prior written consent of a

member to be personally liable for Company debts in § 6.03(I) if such a section is

unnecessary because § 8 of the buy-sell agreement acts assuch prior written consent?

Such an interpretation would lead to the absurd result of reading language out of the

operating agreement in violation of Kansas contract interpretation principles. See

Garvey Ctr., Inc. v. Food Specialties, Inc., 519 P.2d 646, 649–50 (Kan. 1974)

("Results which vitiate the purpose or reduce the terms of the contract to an absurdity

should be avoided. The meaning of a contract should always be ascertained by a

consideration of all the pertinent provisions and never be determined by critical

analysis of a single or isolated provision." (quotation and citation omitted)); Johnson

Cnty. Bank v. Ross, 13 P.3d 351, 353 (Kan. Ct. App. 2000) ("The law favors

reasonable interpretations [of contracts], and results which vitiate the purpose of the

terms of the agreement to an absurdity should be avoided." (citing City of Manhattan

v. Galbrath, 945 P.2d 10, 14 (Kan. Ct. App. 1997))).

Themore reasonable interpretation that harmonizesthe two contract provisions

understands that § 6.03(I) requires a written consent from a Member to be personally

bound for any debt of the Company, but § 8 highlights a subset of these types of debts

in which a lender would want added security of the Company's debt in the form of a

member's personal guaranty. Presumably, a written personal guaranty under § 8

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would also fulfill the requirements of § 6.03(I). Section 8 is not meant to fulfill §

7

6.03(I) and consequently write it out of the operating agreement; rather, § 8 is meant

to provide a separate mechanism for the Company to acquire loans when the lender

requires additional security to guarantee the loans. 

Therefore, I would hold that Robl Construction has failed to present specific

facts to show a triable issue for a jury as to whether § 6.03(I) was fulfilled. Further,

as a matter of law, § 8 should not be interpreted as fulfilling § 6.03(I). Accordingly,

I would affirm the district court's grant of summary judgment on this basis.

______________________________

The record offers an example of such a transaction. Both Homoly and Robl 7

Construction signed personal guarantees for loans to the Company from the lender

North American Savings Bank, F.S.B. This example is not meant to prove the intent

of the parties. Instead, it shows how a written personal guaranty can satisfy both § 8

and § 6.03(I). 

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