# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

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No. 1 3- 36 07

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Ro bl Co ns tru ct io n, In c., a Kan sa s C or po rat io n

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el la nt

v.

And rew G. Hom ol y

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll ee

__ __ __ __ __ __
App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Weste rn Dis tri ct of M is so ur i - St . Jo se ph

__ __ __ __ __ __

Su bm it te d: Sep te m

be r 8, 2 01 4
Fi le d: Apri l 1 , 20 15

__ __ __ __ __ __

Befo re RI LEY, Chi ef J ud ge , SMITH an d KELLY, Circ ui t J ud ge s.

__ __ __ __ __ __

RILEY, Chi ef J ud ge

.

In th is di ve rs it y cas e, se e 28 U.S.C. § 13 32 (a)( 1 ), (c)( 1)

, Ro bl Co ns tru ct io n,

I n c

. (Ro bl Co ns tru ct io n)

, a Kan sa s ci ti zen , ap pe al s th e ad ve rs e gr an t of su mm a r y jud gm en t to And rew Hom ol y , a Mi ss ou ri ci ti zen , on Ro bl Co ns tru ct io n’s cl ai m th atHom ol y br each ed an ag reem en t p ers on al ly to g ua ran te e 4 0% o f a $431,544.02 lo an 1

R o b l C o n st ru ct io n m ad e to Hom ol y & Ro bl , L.L.C. (Co m pa ny). The di st ric t co ur t

fo un d Hom ol y di d no t pe r s on al ly gu aran te e an y lo an fro m Ro bl Co ns tru ct io n.

B e c a u s e th e reco rd an d th e pa rti es ’ su bm is si on s rev eal Ro bl Co ns tru ct io n an d

Hom ol y ge nu in el y di sp ut e whe th er Hom ol y —b y wor d an d d e e d —au th or iz ed Ro bl

Co ns tru ct io n’s lo an to th e Co m pa ny an d pe rs on al l y g u a r an te ed rep ay m en t in

acco rd an ce wit h th e te rm s of th e Co m pa ny’ s ag reem en ts

, we rev ers e an d rem an d fo r

fu rth er p ro ceed in gs

.

I. BACKGRO UND

On Octo be r 29

, 20 02

, Ro bl Co ns tru ct io n, th ro ug h it s pr es id en t St ev e Ro bl

, an d

Hom ol y fo rm ed th e Co m pa ny to pu rch as e an d dev el op res id en ti al real est at e. Ro bl

Co ns tru ct io n an d Hom ol y ex ecu te d an op erat in g ag reem en t an d a se pa rat e Bu y -Sel l,
Opt io n, an d Fi na nc in g Agr eem en t (b uy-sel l ag reem en t). Bo th ag reem en ts go ve rn th e

Co m pa ny’ s fin an ci al affa irs an d de fin e th e m em be rs ’ rig ht s an d du ti es in acco rd an ce

wit h Kans as la w. The bu y -s el l ag reem en t co nt ro ls in th e ev en t of an inc on si st en cy

.

As th e on ly m em

be rs of th e Co m

pa ny, Ro bl Co ns tru ct io n he ld a 60 % sh are an d

Hom ol y he ld a 40 % sh are. St ev e Ro bl was th e Co m pa ny’ s tax m at te rs pa rtn er, an d

hi s wife

, acco un ta nt Vera Ro bl

, as si s t e d wit h th e Co m pa ny’ s fin an ci al reco rd s.

Hom ol y pri m ari ly w or ke d a s a p ro ject m an ag er i n t he fie ld

.

In 20 04

, th e Co m

pa ny be ga n to ha ve fin an ci al pr ob le m s. Fro m 20 06 to 20 11

, th e Co m pa ny op erat ed at a lo ss an d ne ed ed ad di ti on al cap it al to co nt in ue op erat io ns

.

The pa rti es va ry in gl y ref e r to a rev ol vi ng lo an wit h m ul ti pl e ad va nc es an d 1

m ul ti pl e lo an s. Defer rin g to wha t we u n d e r s ta nd is Ro bl Co ns tru ct io n’s pr efer red
ch arac te riz at io n, we us e th e si ng ul ar. See You ng v. All st at e In s. Co

., 68 5 F.3 d 78 2,
78 3, 78 4 (8 th Ci r. 20 12 ) (ex pl ai ni ng at su m m ary jud gm en t

, w e must “ vi ew[] th e

ev id en ce an d dr aw[] al l reas on ab le in fere nc es in t h e li gh t m os t fav or ab le to [Ro bl

Co ns tru ct io n], th e n on -m ov in g p art y ”).

-2

-Ro bl Co ns tru ct io n was pe rio di cal ly ad va nc in g m on ey to th e Co m pa ny, an d St ev e

Ro bl

, Vera Ro bl

, an d Hom ol y di sc us se d whe th er th e Co m pa ny sh ou ld m ak e a cap it al

cal l o r tr eat th e ad va nc es as a rev ol vi ng lo an

.

As rel ev an t to th is ap pe al

, § 6.0 3 of th e op erat in g ag reem en t req ui red th e

co ns en t o f bo th Ro bl Co ns tru ct io n a nd Hom ol y be fo re

D) The crea ti on of an y ob li ga ti on or co m m it m en t of th e Co m

pa ny, in cl ud in g t he bo rro win g o f fu nd s, i n e xc es s o f $1 0,0 00 ; [a nd ]

. . . .

I) Any act whi ch wou ld cau se a Mem be r, ab se nt su ch Mem

be r’s writ te n

co ns en t, to be co m e pe rs o n a ll y li ab le fo r an y de bt or ob li ga ti on of th e Co m pa ny[.]

On Ju ly 31

, 2 0 0 6

, Vera Ro bl no ti fie d Hom ol y by em ai l th at th e Co m pa ny

ne ed ed “ to m ak e a cap it al cal l or in crea se lo an s on ex is ti ng in ve nt or y .” Sh e ad vi se d

th at Ro bl Co ns tru ct io n ha d “ pu t in $7 1,5 00 so if y ou go th e ro ut e of cap it al cal l, y ou r

sh are to ge t cau gh t up wou ld be $4 7,6 66 .” Sh e as ke d Hom ol y to “ [l]et [h er] kn ow

wha t to do .” W he n Hom ol y as ke d whe th er th e $4 7,6 66 in cl ud ed $3 4,9 0 0 H o moly

pr ev io us ly con tri bu te d, Ver a Ro bl ex pl ai ne d,

No, th e 71 ,00 0 is ne w m on ey we’ve pu t in to co ve r al l th e carr y in g co st s of th e in ve nt or y

. To m at ch it

, y ou wou ld ne ed to pu t in 47 ,66 6.

. . . I’ve
be en tre at in g th e 71 ,00 0 li ke a lo an fro m Ro bl Co ns t, bu t I ne ed to kn ow wha t th e pl an s are— wil l it be cap it al an d y ou wil l m at ch it

, or wil l it be
a lo an an d b e rep ai d?

On Au gu st 2, 2 00 6, Ho m ol y res po nd ed

,

-3

-W ow, if m y po rti on is $8 2,5 66

, do es t h i s mean we are in th e ho le by $2 06 ,40 0?

. . . I co ul d pu t in th at m uc h m on ey , b ut it wou ld be a g o o d
si zed hi t fo r m

y li qu id it y

. . . . W it h th at in m in d, I gu es s I wou ld pr efer
th e m o n e y f

r o m Ro bl to be co ns id ered a lo an an d th en y ou gu y s ge t

rep ai d wit h in te res t. If St ev e wou ld rat he r m e pu t in a c a p i t a l cal l,
ho wev er, I wil l g o a he ad an d wri te th e ch eck

.

Vera Ro bl rep li ed sh e wou ld no t “ m ak e an y jou rn al en tri es un ti l [Ho m ol y ] an d St ev e

ta lk th is ov er.” On ap pe al

, Hom ol y —co nc ed in g he le ft th e de ci si on to St ev e Ro bl ’s

di sc ret io n— ch arac te riz es hi s res po ns e as “ as k[ in g] St ev e Ro bl

, th e [Co m pa ny’ s] ta x

m at te rs an d fin an ci al pa rtn er, to cl ari fy whi ch ro ut e th e [Co m pa ny] wis he s to ta ke .”

Rel y in g i n pa rt on th is em ai l ex ch an ge , Ro bl Co ns tru ct io n av ers th e pa rti es

ag reed to tre at Ro bl Co ns tru ct io n’s pe rio di c ad va nc es to th e Co m pa ny as a rev ol vi ng

lo an

. As Ro bl Co n s t r u c t i o n se es it

, Hom ol y no t on ly req ue st ed th e lo an , bu t al so

ag reed to be pe rs on al ly li ab le fo r 40 % of th e $4 31 ,54 4.0 2 de bt pu rs ua nt to § 8 of th e

bu y -s el l ag reem en t, u n d e r whi ch Ro bl Co ns tru ct io n an d Hom ol y each “ ag ree[ d] to

pe rs on al ly gu aran te e [th ei r pr op or ti on at e sh are of ] an y an d al l lo an s” to th e Co m pa ny

a t th e req ue st of th e Co m pa ny an d th e le nd er. See Kan

. St at

. Ann

. § 17 -7 68 8 ( b )
(al lo win g m em

be rs to op t ou t of th e st at e’s de fau lt no n- li ab il it y ru le an d “ ag ree to be

ob li ga te d pe rs on al ly fo r an y or al l of th e de bt s, ob li ga ti on s an d li ab il it i e s o f th e

li m it ed li ab il it y co m

pa ny” “und er an op erat in g ag reem en t or un de r an ot he r

ag reem en t” ).

On Mar ch 29

, 20 11

, Ro bl Co ns tru ct io n fo rm al ly de m an de d th at Hom ol y rep ay

hi s sh are of th e un pa id lo an

. W he n Hom ol y refu se d, Ro bl Co ns tru ct io n su ed Hom ol y

fo r br each of co nt ract

, se ek in g $1 72 ,61 7.6 1 in da m ag es —Ho m ol y ’s sh are of th e de bt

. Hom ol y m ov ed fo r su m

m ary jud gm en t, arg ui ng (1 ) if th e ad va nc es to th e Co m pa ny

were fai le d cap it al cal ls

, Ro bl Co ns tru ct io n co ul d se ek

, at m os t, di lu ti on of Hom ol y ’s

in te res t in th e Co m

pa ny, an d (2 ) if th e ad va nc es were a lo an , Ro bl Co ns tru ct io n fai le d

to m eet th e co nd it io ns pr eced en t in th e pa rti es ’ ag reem en ts an d to sa ti sf y th e st at ut e

-4

-o f f

r a ud s wit h res pe ct to Hom ol y ’s al le ge d gu aran te e. In res po ns e, R o b l 2

Co ns tru ct io n in si st ed th e ad va nc es were a lo an an d arg ue d ge nu in e fact ua l di sp ut es

pr ecl ud ed su m

m ary jud gm en t.

Ost en si bl y acce pt in g Ro bl Co ns tru ct io n’s ch arac te riz at io n of th e ad va nc es as

a lo an , th e d is tri ct co ur t gran te d Hom ol y ’s m ot io n, “ fin d[ in g] th e m on ey Ro bl ga ve

th e Co m pa ny was n ot a pe rs on al ly gua ran te ed lo an .” Ro bl Co ns tru ct io n a pp eal s.

II

. DISCUSS IO N

Ro bl Co ns tru ct io n an d Hom ol y ag ree on li tt le , b ut th ey do ag ree Kan sa s la w

go ve rn s th ei r di sp ut e. See H & R Bl oc k Tax Serv s. LL C v. Fran kl in

, 69 1 F.3 d 94 1,

94 3- 44 (8 th Ci r. 20 12 ) (ap pl y in g s t a t e s u bs ta nt iv e la w as sp eci fie d by co nt ract

be cau se Mi ss ou ri, th e fo ru m st at e in a di ve rs it y cas e, ge ne ral ly en fo rces co nt ract ua l

ch oi ce-o f-l aw pr ov is io ns ). W e rev ie w de no vo th e di st ric t co ur t’s ap pl ic at io n of st at e

la w an d it s gr an t of su m

m ary jud gm en t. See Ban ni st er v. Bem is Co

., 55 6 F.3d 88 2,

88 4 (8 th Ci r. 20 09 ). Su m m ary jud gm en t is req ui red “ if th e m ov an t sh ows th at th ere

is no ge nu in e d is pu te as t o a ny m at eri al fact an d t he m ov an t is en ti tl ed to jud gm en t

as a m at te r of

law.” Fe d. R. C iv . P. 56 (a).

A. Ju dg m ent a s a Mat ter o f La w

In gr an ti ng su m

m ary jud gm en t to Hom ol y , th e di st ric t co ur t de c i d e d “t he re [wa]s no th in g in th e reco rd sh owi ng th at Ro bl [Co ns tr uc ti on ] req ue st ed Hom ol y

pe rs on al ly gu aran te e an y su ch lo an as th e Bu y -Sel l Agr eem en t cl earl y co nt em pl at es .”
Reject in g Ro bl Co ns tru ct io n’s pr op os ed in te rp r et at io n of th e 20 06 em ai l ex ch an ge

be twee n Hom ol y an d Vera Ro bl

, th e di st ric t co ur t fo un d Hom ol y ’s em ai l “ m ay sh ow

Tho ug h he eq ui vo cat es so m e, fo r pu rp os es of ap pe al Hom ol y co nc ed es th e 2

m on ey was a l o a n , st at in g “ [t]he Dis tri ct Co ur t reco gn iz ed th at Ro bl Co ns tru ct io n

se l e c t e d t o p u r su e it s cl ai m s as on ly a lo an an d no t as a cap it al co nt rib ut io n” an d

“ [n ]o m at eri al fact di sp ut e ex is ts co nc ern in g whe th er or no t th e m on ie s were lo an s or

cap it al co nt rib ut io ns .” W e th us do no t co ns id er t ha t i ss ue

.

-5

-th at Hom ol y wan te d Ro bl [Co ns tru ct io n] to lo an th e Co m pa ny m on ey , bu t it do es no t

in di cat e th at Ro bl [Co ns tru ct io n] req ue st ed fo r Hom ol y to pe rs on al ly gua ran te e th e

lo an

. Rat he r, th e em ai l co m m un ic at io n sh ows a fai le d cap it al cal l at te mp t

, a n d

Hom ol y ’s pre fere nc e—n ot req ue st —t ha t Ro bl lo an th e m on ey to th e Co m

pa ny.”

Ro bl Co ns tru ct io n co nt en ds th is was erro r be cau se th e di st ric t co ur t “ pr em is ed

it s ho ld in g exc lu si ve ly on th e em ai l ex ch an ge an d fail ed to co ns id er oth er evi de nc e

th at Hom ol y ” au th or iz ed an d “ pe rs on al ly gu aran te e[d ] th e lo an .” Ro bl Co ns tru ct io n

fu rth er as se r t s “[t ]h e Dis tri ct Co ur t erro ne ou sl y st ep pe d in to th e ro le of fact fin de r

an d fai le d to res ol ve al l fact s an d in fere nc es in ” Ro bl Co ns t r u c t io n’s fav or

. See

And ers on v. Lib ert y Lob by, In c., 47 7 U.S. 24 2, 24 8, 24 9 (1 98 6) (“ [A]t th e su m m ary jud gm en t s ta ge th e jud ge ’s fun ct io n i s n ot

. . . to weig h th e ev id en ce an d d et erm in e

th e tr ut h of th e m at te r bu t to de te rm in e whe th er th ere is a ge nu in e is su e fo r tri al .”);

Hen ric ks on v. Dro tt s, 54 8 P.2 d 46 5, 46 8 (Kan

. 19 76 ) (“ A co ur t sh ou ld be cau ti ou s

in gr an ti ng a m ot io n fo r su m m ary jud gm en t whe n res ol ut io n of th e di sp os it iv e is su e

ne ces si ta te s a de te rm in at io n of th e st at e of m in d of on e or bo th of th e pa rti es .”). Ro bl

Co ns tru ct io n’s p oi nt s ar e wel l t ak en

.

B. Ka ns as Cont ra ct La w

Und er Kan sa s la w, “ [t]he qu es ti on whe th er a bi nd in g co nt ract was en te red in to

de pe nd s on th e in te nt io n of th e pa rti es an d is a qu e s t i o n o f fact .” Rei m er v.

W al di ng er Co rp ., 95 9 P.2 d 91 4, 91 6 (Kan

. 19 98 ); se e al so Hay s v. Und erwo od

, 41 1

P.2 d 71 7, 72 0- 21 (Kan . 1 96 6) (ex p l ai ni ng th at co nf li ct in g ev id en ce an d co m pe ti ng

in fere nc es as to th e ex is te nc e a n d t e r m s of a co nt ract pr es en t fact qu es ti on s)

.

“ [W] he th er a pa rty’ s du ty un de r a co nt ract was ba se d on a co nd it io n p r e c ed en t is ”

al so a fact qu es ti on , Crav ot ta v. Deg gi ng ers ’ Fo un dr y , In c., 21 5 P.3 d 63 6, 64 2 (Kan

. Ct . Ap p. 20 09 ), as is th e qu es ti on of br each

, s e e Wic hi ta Cl in ic , P .A. v . Lo ui s, 18 5

P.3 d 94 6

, 9 5 9 ( K a n

. Ct

. App

. 20 08 ). “ [I]nt erp ret at io n of th e writ te n te rm s of a

co nt ract , ho wev er, [i s] a qu es ti on of l aw.” Rei m er, 9 59 P.2d at 9 16

.

-6

-A c o n t r a c t may be or al

, writ te n, or a m ix tu re of bo th

. See, e.g ., Ch il so n v.

Cap it al Ban k of Mi am i, 70 1 P.2 d 90 3, 9 0 7 (Kan

. 19 85 ). “ W he th er an am bi gu it y

ex is ts in a w r i t te n in st ru m en t is a qu es ti on of la w fo r th e co ur t.” Hol le nb eck v.

Hou se ho ld Ban k, 82 9 P.2 d 90 3, 90 6 (Kan

. 19 92 ). “ [W] he re am bi gu it y or un cert ai nt y

is in vo lv ed , th e p art ie s’ in te nt m ay be de te rm in ed fro m al l th e la ng ua ge us ed in th e

co nt ract

, th e ci rcu m st an ces ex is ti ng whe n th e ag reem en t was m ad e, th e ob ject so ug ht

to be ob ta in ed

, an d ot he r ci rcu m st an ces , if an y , whi ch te nd to cl ari fy th e in te nt io n of

th e pa rti es .” Id

. “ The te rm s of an or al co nt ract an d th e co ns en t of th e pa rti es m ay be

pr ov e n b y t h e p a rti es ’ act s an d by th e at te nd in g ci rcu m st an ces , as well as by th e

wor ds th at th e p a rti es em pl oyed.” Uni fie d Sch . Di st . No . 4 46 , I nd ep en de nc e, Kan

. v. Sa nd ov al , 28 6 P .3d 54 2, 5 46 (Kan . 20 12 ).

C. Gen ui ne Di sp utes of Ma teri al Fact

1. Con se nt a nd Pers on al Lia bi li ty

R o b l Co ns tru ct io n cred ib ly co nt en ds Hom ol y ’s wor ds an d de ed s un de r t h e

at te nd in g ci rcu m st an ces —co ns i d e r ed in th e li gh t m os t fav or ab le to Ro bl

Co ns tru ct io n— wou ld en ab le a reas on ab le jury to fin d Hom ol y no t on ly co ns en te d to

th e Ro bl Co ns tru ct io n lo an , bu t al so a g r e e d t o be pe rs on al ly li ab le fo r 40 % of th e

de bt

. In ad di ti on to th e 20 06 em ai l in di cat in g Hom ol y “ wou ld pr efer th e m on ey fro m

Ro bl [Co ns tru ct io n] be co ns id ered a lo an ” to be r e p a i d w it h in te res t, Ro bl

Co ns tru ct io n pr op os es th e fo ll owi ng ev id en ce su pp or ts it s br each -o f-co nt ract cl ai m :

• Swo rn te st im on y fro m St ev e Ro bl in di cat in g (1 ) Hom ol y req ue st ed th e lo an , (2 ) St ev e req ue st ed

, o n b e h a lf of Ro bl Co ns tru ct io n an d th e C om pa ny, th at Hom ol y pe rs on al ly gu aran te e th e lo an , (3 ) Homo l y

ag reed to do so as req ui red by th e bu y -s el l ag reem en t, an d (4 ) St ev e an d

Hom ol y freq ue nt ly dis cu ss ed th e lo an an d t he am ou nt Hom ol y owed ;

• Swo rn te st im on y fro m Vera Ro bl th at Ho mo l y req ue st ed Ro bl

Co ns tru ct io n m ak e a lo an to co ve r th e Co m pa ny’ s sh or ta ge s, rat he r th an

a cap it al cal l, an d “ co ns ta nt [ly] co m m un ic at [ed ]” wit h Ro bl

Co ns tru ct io n a bo ut th e lo an ;

-7

-• Swo rn t es ti m on y fro m Vera Ro bl an d bo ok ke ep er Sara h Lau ffer
in di cat in g Hom ol y ag reed to Ro bl Co ns tru ct io n ch arg in g in te res t on th e lo an , and Hom ol y

th ou gh t t he in te res t ra te was fa ir;

• Evi de nc e th e Co m

pa ny tre at ed th e ad va nc es fro m Ro bl Co ns tru ct io n as

a lo an on it s f

i n an ci al st at em en ts an d at tri bu te d 40 % of th e de bt to
Hom ol y as i t d id wit h o th er o ut st an di ng lo an s;

• Evi de nc e th at fo r m or e th an fo ur y ears Hom ol y rece iv ed th os e fin an ci al

st at em en ts in di cat in g he was li ab le fo r 40 % of th e lo an at is su e y et ne ve r ob jecte d o r de ni ed li ab il it y ;

• Swo r n t es ti m on y fro m Lau ffer th at up on rece iv in g th e fin an ci al

st at em en ts , Hom ol y

ex pr es se d “ pa ni c” ab ou t h is gro win g l os se s; an d

• Evi de nc e th at Homo l y be ne fit te d fro m th e lo an in th at he av oi de d a

cap it al cal l an d m ai nt ai ne d a 40 % in te res t in th e Co m pa ny, an d th e lo an

“ al lo wed hi m to of

fs et th e Co m

pa ny’ s lo ss es ag ai ns t or di na ry in co m e on hi s i nd iv id ua l t ax ret ur ns .” 3

Pred ic ta bl y un swa y ed by Ro bl Co ns tru ct io n’s ev id en ce, Hom ol y ur ge s a

d i f fere nt in te rp ret at io n. Hav in g di sp ut ed m os t of Ro bl Co ns tru ct io n’s “ Add it io n a l

Mat eri al Fact s,” Hom ol y m ai nt ai ns “ no th in g in th e m at eri al s of fere d” sh ow s th e

ad va nc es were a lo an or th at th e co nd it io ns of t h e p a r t i e s ’ ag reem en ts were m et

, in cl ud in g Hom ol y ’s co ns en t to th e lo an an d hi s as se nt to pe rs on al li ab il it y fo r th e

Co m pa ny’ s d eb t.

Hom ol y ’s cl ai m th at ta x am en dm en ts he fil ed in 20 11 “ res ol ve [] an y cl ai m as 3

to al le ge d t a x be ne fit s” an d m oo t Ro bl Co ns tru ct io n’s arg um en t th at he rece iv ed a be ne fit fro m th e lo an is wit ho ut m eri t. Tha t Hom ol y am en de d hi s ta xe s aft er de nyin g li ab il it y fo r th e lo an do es no t de pr iv e h i s p r i o r act io ns of ev id en ti ary va lu e at tri al

. See F ed . R. Evi d. 4 01

.

-8

-Hom ol y , in hi s ap pe ll at e br ie f, cl ai m s hi s in te nt in ag reei ng an d co ns en ti ng to

pe rs on al li ab il it y in th e bu y -s el l ag reem en t was li m it ed to a sp eci fic lo an fro m a ba nk

. Hom ol y al so di sp ut es th e m ean in g an d im po rt of th e pi vo ta l 20 06 em ai l ex ch an ge an d

ch al le ng es Ro bl Co ns tru ct io n’ s u n d e r s t a n d i n g of th e pa rti es ’ freq ue nt

c o mm un ic at io ns ab ou t th e lo an an d Hom ol y ’s pe rs on al li ab il it y fo r th e de bt

. F o r

ex am pl e, in res po ns e to Vera Ro bl ’s tes ti m on y th at Hom ol y ’s p eri od ic req ue st s fo r

Ro bl Co ns tru ct io n to “ co ve r” Co m pa ny sh or ta ge s co ns ti tu te d “ a lo an in ev ery way ,”

Hom ol y co nt en ds hi s req ue st to “ co ve r” is “ at be st

, an or al req ue st fo r m on ey an d no t

a req ue st for a lo an ”—a rg ua bl y a di st in ct io n wi th ou t a d iff eren ce.

Bu t qu es ti on s of in te nt an d w heth er th e pa rti es ’ st at em en ts an d act io ns sa ti sf ie d

th e co nd it io ns pr eced en t in th ei r ag reem en ts are pr eci se ly th e type of fact ua l di sp ut es

a jury m us t de ci de

. See, e.g ., Fi rs t Nat’l Ban k of Hut ch in so n v. Kais er, 56 4 P.2 d 49 3,

49 6- 97 (Kan . 1 97 7) ; M W es t, In c. v. Oak Park Mal l, L.L.C., 2 3 4 P

. 3d 83 3, 84 5- 46
(Kan

. Ct

. App

. 20 10 ); Ch e r r yv a l e G r a in Co

. v. Fi rs t St at e Ban k of Edn a, 97 1 P.2 d

12 04 , 12 09 (Kan . Ct. Ap p. 1 99 9)

.

Fu rth er, un de r Kan sa s la w, Hom ol y can no t av oi d co nt ract ua l li ab il it y “ m erel y by cl ai m in g th e co nd i t i o n s [p rece de nt ] ha ve no t be en m et .” Barb ara Oil Co

. v.

Pat ric k P et ro le um

Co ., 56 6 P .2d 38 9, 3 93 (Kan . Ct. Ap p. 1 97 7) . A part y ho pi ng to

av oi d li ab il it y “ m

us t affi rm at iv el y sh ow th at (1 ) th e co n d i t io n pr eced en t act ua ll y

fai le d an d (2 ) be cau se of su ch fai lu re, t h e c o n t r a ct wil l no t be pe rfo rm ed .” Id

. W he th er Ho m ol y refu se d to pe rfo rm ba se d on “ a g en ui ne an d g oo d fa it h c la im th at

a co nd it io n pr eced en t fai le d is a qu es ti on fo r th e jury.” Id .; acco rd JDN Dev

. Co

. v.

Terra Ven tu r e , I n c

. , 26 5 F. Su pp

. 2d 12 39

, 12 50 -5 1 (D. Kan

. 20 03 ) (d en y in g

su m m ary jud gm en t whe re a pa rty fla tl y as se rte d co nd it io ns pr eced en t were no t m et ).

W it ho ut ad dr es si ng Hom ol y ’s bu rd en an d th e jury’ s ro le in de ci di ng qu es ti on s

of fai le d co nd it io ns un de r Barb ara Oil Co

., 56 6 P.2 d at 39 3, th e di ss en t co nc lu de s we

-9

-sh ou ld no t al lo w a jury to res ol ve th is co nt ract di sp ut e be cau se , in th e di ss en t’s vi ew,

Ro bl Co ns tru ct io n waiv ed an y arg um en t th at Ro bl Co ns tru ct io n “ fu lfi ll ed § 6.0 3( D)

an d (I) of th e op erat in g ag reem en t by lo an in g m on ey to th e Co m pa ny wit h Hom ol y ’s

pr io r co ns en t.” Po st at 19

. Leav in g as i d e th e in co ng ru it y of Hom ol y ag reei ng to

gu aran te e th e lo an pe rs on a l l y wit ho ut co ns en ti ng to th e lo an it se lf, th e di ss en t’s

co nc lu si on th at Ro bl Co ns tru ct io n “ es se nt ia ll y ig no res ” § 6.0 3( D) an d (I) is at od ds

wit h t he reco rd . Pos t at 18

.

Rat he r th an ig no re t h e c o n d it io ns pr eced en t in § 6.0 3( D) an d (I), Ro bl

Co ns tru ct io n, ch al le ng in g th e di st ric t co ur t’s de te rm in at io n th at Hom ol y ex pr es se d

a “ pr efer en ce— no t req ue st ” fo r a lo an , ex pl ic it ly an d rep eat e d l y a s s ert ed in it s

ap pe ll at e br ie f th at th e co nd it io ns were m et

. The di ss en t ack no wled ge s a s m uc h,

no ti ng Ro bl Co ns tru ct io n sp eci fic al ly as se rte d “ Hom ol y co ns en te d to ” th e lo an

. Po st

at 20 n.6

. Yet th e di ss en t su m m ari ly di sm is se s th at as se rti on be cau se it “ ad dr es se [d ]”

a di ffer en t arg um en t. Id

. The di ss en t’s be li ef t h a t t h is st at em en t is th e “ on ly p la ce

in whi ch Ro bl Co ns tru ct io n ev en hi nt s to arg ue th at it fu lfi ll ed § 6

. 0 3 ( D )

, ” i d

.,

co nf li ct s wit h th e reco rd an d th e di ss en t’s own an a l ys is

. In fram in g Ro bl

Co ns tru ct io n’s argum en ts

, th e di ss en t ad m it s Ro bl Co ns tru ct io n as se rte d th e lo an m et

t he req ui rem en ts of th e pa rti es ’ ag reem en ts —wh ic h wou ld un eq ui vo cal ly in cl ud e § 6.0 3( D) an d (I)—

bu t c o n c lu de s su ch a “ ge ne ral de ni al ” is in ad eq ua te to pr es erv e

th e is su e. Po st at 1 7.

D ra w ing a fi ne dis tin ct ion be twee n Hom ol y au th or iz in g th e lo an an d re que sti ng

it , t he di ss en t co nc ed es Ro bl Co ns tru ct io n st at ed Hom ol y “ r e q u e s t e d” th e lo an an d

pr es um es Ro bl Co ns tru ct io n was “ arg ui ng th at su ch a req ue st co ns ti tu te d th e

ne ces sa ry ‘prio r co ns en t o f a Su pe r-M ajor it y -in -In te res t’ to ful fil l § 6.0 3( D).” Po st

at 17

. Yet th is pr es um

pt io n ap pa ren tl y is no t en ou gh to pr ev en t waiv er. In cl ai m in g

“ Ro bl Co ns tru c t i on waiv e[d ]” it s arg um en ts

, po st at 19 -2 0, th e di ss en t ov erl oo ks

,

am on g ot he r th in gs , Ro bl Co ns tru ct io n’s as se rti on s th at (1 ) “ Ro bl Co ns tru ct io n

-1 0-pr es en te d di rect an d ci rcu m st an ti al ev id en ce

. . . H o m ol y co ns en te d to th e Ro bl

Co ns tru ct io n lo an s,” an d (2 ) th e 20 06 em ai l ex ch an ge in di cat ed “ Hom ol y req ue st [ed ]

Ro bl Co ns tru ct io n m ak e a lo an an d Ro bl Co ns tru ct io n ‘w ou ld ge t rep ai d.[’]”
(Em ph as is ad de d)

. W e are sa ti sf ie d Ro bl Co ns tru ct io n di d no t w a iv e it s arg um en t

th at Hom ol y

co ns en te d t o t he lo an as r eq ui red by § 6.0 3( D).

The sa m e is tru e fo r § 6.0 3( I). Des pi te cl ai m in g Ro bl Co ns tru ct io n “ es se nt ia ll y ig no re[d ]” § 6.0 3( I), th e di ss en t la te r ex pl ai ns Ro bl Co ns tru ct io n di d no t ig no re § 6.0 3( I) at al l bu t in st ead “ arg ue [d ] § 8 of th e bu y -s el l ag reem en t act s as Hom ol y ’s

writ te n co ns en t,” whi ch sa ti sf ie s § 6.0 3( I). Po s t a t 18

, 21

. Ro bl Co ns tru ct io n

ad eq ua te ly pres erv ed th is is su e as well

.

2. Addi tio na l W ri tin g a nd Ti m in g Req ui rements

W e al so qu es ti on so m e of Hom ol y ’s pr op os ed in te rp ret at io ns of th e writi ng an d

ti m in g re qu ire m en ts in th e pa rti es ’ ag reem en ts

. Fo r ex am pl e, Hom ol y do es no t

pr ov id e an y su pp or t fo r hi s as se rti o n s t h a t § 6.0 3( D) of th e op erat in g ag reem en t

req ui res “ si

gn ed wr it te n co ns en t” fo r lo an s in ex ces s of $1 0,0 00 , o r th at th e pa rti es

can no t de si gn at e th e m on ey fro m Ro bl Co ns tru ct io n as a lo an or req ue st a gu aran te e

aft er t he rece ip t o f fu nd s. (Em ph as is ad de d)

. In Hom ol y ’s vi ew, th e Co m pa ny had

to ob ta in hi s co n s e n t be fo re rece iv in g an y m on ey fro m Ro bl Co ns tru ct io n, ev en

th ou gh he an d Ro bl Co ns tru ct io n ha d no t y et de ci de d whe th er t he Co m pa ny woul d

tre at th e in it ia l ad va nc es as a cap it al co nt rib ut io n o r a l oa n.

A s w e r e a d it

, § 6.0 3( D) pr oh ib it s on ly “ [t]he cr ea ti on of an y ob li ga ti on or

co mmit men t of th e Co m pa ny, in cl ud in g th e bo rr ow in g of fu nd s, in ex ces s of

$1 0,0 00 ” wit ho ut su pe r-m ajor it y co ns en t. (Em ph a s i s a d de d)

. At th e le as t, th e

la ng ua g e i s op en to an in te rp ret at io n un de r whi ch th e pa rti es in te nd ed to req ui re

s u p e r

- majorit y co ns en t on ly be fo re th e Co m pa ny was bo un d

, an d an un de si gn at e d

ad va nc em en t of fun ds do es no t ne ces sa ril y im po se an y ob li ga ti on on th e Co m pa ny.

-1 1-A reas on ab le jury co ul d fin d th ere was no su ch bi nd in g ob li ga ti on or co m m it m en t

fro m th e Co m

pa ny un le ss an d un ti l th e pa rti es de ci de d to tre at th e ad va nc es as a lo an

. At t ha t p oi nt , th e jury cou ld reas on ab ly find th e req ui si te co ns en t.

Eve n if th e ti m in g of th e ad va nc es —as op po se d to th e ob li ga ti on to rep ay —i s

un am bi gu ou sl y rel ev an t, Hom ol y ’s an al y si s is in co m pl et e. M o st of th e ad va nc es

oc cu rred aft er th e 20 06 em ai l ex ch an ge an d aft er di sp ut ed co m m un ic at io ns ab ou t th e

al le ge d lo an

. Hom ol y arg ue s th e ev id en ce do es no t es ta bl is h th e Co m pa ny “ co m

pl ie d

wit h th e Su pe r-M ajor it y -in -In te res t req ui rem en ts ne ce ssa ry to ev en al low suc h loa

n( s)

to be au th or iz ed pr io r to each be in g m ad e.” Bu t if th e pa rti e s a g reed to a si ng le

rev ol vi ng lo an , as Ro bl Co ns tru ct io n co nt en ds

, wit h su pp o rt fro m th e em ai l, we

wou ld no t ex pe ct a se pa rat e co ns en t b efo re ea ch ad va nc e.

To th e ex te nt th e pa rti es in te nd ed a se rie s of sm al le r lo an s, reco rd te st im on y

fro m Vera Ro bl

, St ev e Ro bl

, an d Hom ol y de sc rib in g freq ue nt di sc us si on s ab ou t su ch

lo an s pl au si bl y su gg es ts m ul ti pl e l o a n r e q u es ts fro m Hom ol y

. Eve n ab se nt di rect

ev id en ce of co ns en t fo r each ad va nc e, so m e of Ro bl Co ns tru ct io n’s al le ge d ad va nc es

do no t ru n afo ul of § 6.0 3( D) be cau se th ey do no t ex ceed $1 0,0 00

. Hom ol y do es no t

acco un t fo r th es e o bv io us in co ns is te nc ie s an d c on cep tu al ga ps

.

3. Rat ifi ca tio n

The fact s al so su gg es t Hom ol y m ay ha ve rat ifi ed at le as t pa rt of th e lo an to th e

Co m pa ny by kn owi ng ly acce pt in g th e be ne fit

. Se e C h e r r yv a le Grai n, 97 1 P.2 d at

12 08 (“ ‘T he acce pt an ce an d r e t e n ti on of th e pr oc eed s of a lo an or of th e be ne fit s

th ereo f, al th ou gh m ad e wit ho ut au th or it y , am ou nt to a n im pl ie d rat ifi cat io n of th e

lo an .’ ” (q uo ti ng All is on v. Bo rer, 29 3 P. 76 9, 77 2 (Kan

. 19 30 ))); se e al so Su nf lo wer

Ban k, N.A. v. Airp or t Red C o a c h I n n of W ic hi ta

, L.L.C., 17 5 P.3 d 88 3, 20 08 W L

36 06 41

, at *4 (Kan

. Ct

. App

. Feb

. 8, 20 08 ) (p er cu ria m ) (u np ub li sh ed ta bl e de ci si on )
(ev al ua ti ng whe th er the m em be rs of a li m it ed li ab il it y co m pa ny im pl ie dl y rat ifi ed a

-1 2-lo an th at was no t au th or iz ed by th e op erat in g ag reem en t ba se d on th e rece ip t of lo an

pr oc eed s an d o th er ev id en ce o f th e m em be rs ’ in te nt ).

Hom ol y te st ifi ed he kn ew th e Co m pa ny “ was ge tt in g a lo an fro m Ro bl

C o ns tru ct io n, an d th ey jus t ke pt ge tt in g m or e,” an d he un de rs to od th at th e mo n e y

al lo wed th e Co m

pa ny to op erat e wit ho ut se ll in g as se ts or m ak in g a cap it al cal l. Yet

Hom ol y ne ve r to ld hi s bu si ne ss pa rtn er to st op lo an in g m on ey to th e Co m pa ny. Ro bl

Co ns tru ct io n ha s ad du ced su ffi ci en t ev id en ce of i mp l i e d co ns en t by rat ifi cat io n to

crea te ge nu in e d is pu te s o f m at eri al fact at l eas t wi th res pe ct to pa rt o f th e lo an

.

4. Sepa ra te Gu ar an tee

Nor can we acce pt Hom ol y ’s su gg es ti on th at writ te n pe r s o n a l gu aran te es he

an d Ro bl Co ns tru ct io n on ce ex ecu te d at th e req ue st of a ba nk in co nn ect io n wit h a

co ns tru ct io n lo an in di cat e § 8 of th e bu y -s el l ag reem en t req ui res a se pa rat e “ writ te n

co ns en su al pe rs on al gu aran te e” be fo re Hom ol y be cam e pe rs ona lly li ab le

. Neit he r th e

co nt ract la ng ua ge no r th e reco rd su pp or ts Hom ol y ’s pr o p o s e d se pa rat e gu aran te e

req ui rem en t.

Fi rs t, pu rs ua nt to § 8, Hom ol y ex pr es sl y an d un am bi gu ou sl y “ a g r e e [d

] to

pe rs on al ly gu aran te e an

y an d al l lo an s by an

y su ch le nd er to C o mpan y ” “ [i]f

req ue st ed by th e Co m

pa ny an d an

y le nd er.” (Em

ph as is ad de d)

. See St au th v. Bro wn,

73 4 P.2 d 10 63

, 10 69 (Kan

. 19 87 ). Sect io n 8 sa y s no th in g ab ou t a se pa rat e writ te n

gu aran te e. If Ro bl Co ns tru ct io n a nd Hom ol y tru ly in te nd ed to req ui re a se pa rat e

gu aran te e as Hom ol y

su gg es ts , th ey

co ul d h av e eas il y writ te n th at req ui rem en t i nt o § 8, jus t as th ey ex pr es sl y req ui red a pr om is so ry no te in § 7. The y di d no t. “ ‘W or ds

can no t be read in to th e ag reem en t whi ch im pa rt an in te nt who ll y un exp re ss ed whe n

it was ex ecu te d.’” Mea rs v. Hart fo rd Fi re In s. Co

., 66 7 P.2 d 90 2, 90 5 (Kan

. Ct

. App

. 19 83 ) (q uo ti ng In re Est at e of Jo hn so n, 45 2 P.2 d 28 6, 29 1 (Kan

. 19 69 )). “ [T]he m or e

-1 3-lo gi cal co nc lu si on is th at th e co nt ract im po se s no su ch ob li ga ti o n

. ” B o o s v

. Nat’l

Fed ’n of S ta te Hig h S ch . Ass oc s., 8 89 P.2d 79 7, 8 02 (Kan . Ct. Ap p. 1 99 5)

.

Seco nd

, as su m in g we fo un d § 8 am bi gu ou s as to th e pa rti es ’ in te nt reg ard in g

a s e p a r a t e g ua ran te e, Hom ol y is st il l un ab le to es ta bl is h he is en ti tl ed to su m m ary jud gm en t a s a m at te r of la w. “ [I]f th e la ng ua ge of a co nt ract is am bi gu ou s an d th e

in te nt of th e pa rti es can no t be as cert ai ne d fro m un di sp ut ed ex tri ns ic or p a r o l

ev id en ce, su m

m ary

. . . jud gm en t is in ap pr op ria te .” W as te Co nn ect io ns of Kan

., In c.

v. Ri tc hi e Co r p

. , 29 8 P.3 d 25 0, 26 5 (Kan

. 20 13 ) (em ph as is ad de d) ; se e al so

Nun ge ss er v. Bryant

, 15 3 P.3 d 12 77

, 12 88 ( K a n

. 20 07 ) (“ W he n th e ev id en ce

pe rta in in g to th e ex is te nc e of a co nt ract or th e co nt en t of it s t e r ms is co nf li ct in g or

pe rm it s m or e th an on e in fere nc e, a qu es ti on of fact is pr es en te d.” ); Fi rs t Nat’l Ban k,

56 4 P.2 d at 49 6 (“ W he th er th e gu aran ty was li m it ed by a co nc ur ren t ag reem en t of th e

pa rti es

. . . was

. . . an is su e of fact whi ch co ul d no t be res ol ve d as a m at te r of la w.”).

Fi na ll y , eve n i f we co ul d c on si de r ex tri ns ic ev id en ce, s ee Bu tt s v . Lawren ce,

91 9 P.2 d 36 3, 36 7 (Kan

. Ct

. App

. 19 96 ) (ex pl ai n i n g t ha t, ab se nt am bi gu it y , it is

“ erro r to co ns id er

. . . ex tri ns ic ev id en ce of th e p a r t i e s ’ in te nt ”), an d res ol ve th e

al le ge d am

bi gu it y in § 8, Hom ol y fai ls to ad du ce an y co m pe te nt ev id e nc e th at th e

pa rti es in te nd ed to in c l u d e an un ex pr es se d se pa rat e gu aran te e req ui rem en t in § 8.

The fact th e m em

be rs on ce se pa rat el y do cu m en te d pe rs on al gu aran te es at th e req ue st

of a th ird -p art y le nd er do es no t in du bi ta bl y an d fo rev er es ta bl is h th e m em be rs ’ in te nt

to req ui re a se pa rat e gu aran te e fo r ev ery lo an

. I n d eed

, th e reco rd is co m pl et el y

de vo id of an y ev i d e n c e r e g ard in g th e m em be rs ’ m ot iv e fo r ex ecu ti ng th e writ te n

guar an te es on w hic h H om oly re lie s—d ep riv in g th os e gu aran te es of ev id en ti ary va lu e. See, e.g ., Can y on Cree k Dev., LLC v. Fo x, 26 3 P.3 d 79 9, 80 1 (Kan

. Ct

. App

. 20 11 )
(rec og ni zi ng co ur ts m

us t “ vi ew th e ev id en ce in th e li gh t m or e fav or in g th e

no n mo v i ng pa rty” an d refu si ng to “ sp ecu la te ab ou t th e ex is te nc e, m ot iv at in g

-1 4-in flu en ce, or po ss ib le co ns eq ue nc e of an y [p er s o n a l ] gu aran ti es ” be cau se “ th ere

[we]re no fact s wh at so ev er o n t h[ e] iss ue ” in th e rec or d)

.

Hom ol y ha s fai le d to sh ow he is en ti tl ed to jud gm en t as a m at te r of la w un de r

th e p art ie s’ agr eem en ts

.

5. Sta tute of Fra uds

Alt ho ug h th e di st ric t co ur t di d no t reac h th is is su e, Hom ol y a r gu es Ro bl

Co ns tru ct io n’s fai lu re to sa ti sf y th e s t a t u t e o f frau ds wit h res pe ct to Hom ol y ’s

pu rp or te d gu aran te e pr ov id es an al te rn at iv e ba si s to affi rm su m m ary jud gm en t. See

Kan

. St at

. Ann

. § 33 -1 06 (“ No act io n sh al l be br ou gh t whe reb y to ch arg e a pa rty up on

an y sp eci al pr om is e to an swe r fo r th e d e b t

. . . of an ot he r pe rs on

. . . un le ss th e

ag reem en t up on whi ch su ch act io n sh al l be br ou gh t, o r s o m e m em or an du m or no te

th ereo f, sh al l be in writ in g an d si gn ed by th e pa rty to be ch arg ed th erewi th .”). W e

di sa gr ee.

Ro bl Co ns tru ct i o n c o nt en ds Hom ol y ’s pe rs on al gu aran te e fal ls ou ts id e th e

sc op e of th e st at ut e of frau ds be cau se Hom ol y ’s m ai n pu rp os e was no t to an swe r fo r

th e Co m pa ny’ s de bt , b ut to av oi d a cap it al cal l th at wou ld ha ve be en a “ go od si zed

hi t fo r [h is ] li qu id it y .” Und er Kan sa s l aw, when

th e m ai n pu rp os e an d ob

ject of th e pr om is or is no t to an swe r fo r an ot he r, bu t to su bs erv e so m e p ur po se of h is own , hi s pro m is e is no t with in th e

st at ut e [o f frau ds ], al th ou gh it m ay be in fo rm a pr om is e to pa y th e de bt
of an ot he r, an d al th ou gh th e pe rfo rm an ce of it m ay in ci de nt al ly ha ve th e effe ct of e xt in gu is hi ng th e li ab il it y of a no th er.

All en v. Turn er, 10 6 P.2 d 71 5, 71 9 (Kan

. 19 40 ) (q uo ta ti on om it te d) ; acco rd Dav is v.

Pat ric k, 14 1 U.S. 47 9, 48 8 (1 89 1) (“ [C]ase s so m et im es ari se in whi ch

, th ou gh a th ird

pa rty is th e or ig i n a l ob li go r, th e pr im ary de bt or , th e pr om is or ha s a pe rs on al

,

-1 5-im m ed ia te

, an d pe cu ni ary in te res t in th e tra ns act io n, an d is th eref or e hi m se lf a pa rty

to be be ne fit ed by th e pe rfo rm an ce of th e pr om is ee. In su ch cas es th e reas on whi ch

un de rli es an d whi ch pr om pt ed th is st at ut or y pr ov is io n fai ls

, an d th e co ur ts wil l gi ve

effe ct to th e p ro m is e.”).

The Kan sa s Su pr em e Co ur t ha s “ he ld th at whe th er su ch a pr om is e was or ig in al

or co ll at eral [i ]s or di na ril y on e of fact ” to be de te rm in ed fro m th e su rro un di ng

ci rcu m st an ces

. All en , 10 6 P.2 d at 71 9; acco rd Owens bo ro W ag on Co

. v

. D

. A

. W il so n & Co ., 10 1 P . 4, 6 (Kan

. 19 09 ). Tha t qu es ti on of in te nt pr ecl ud es su m m ary jud gm en t o n t hi s i ss ue

.

II I. CONCLUSI ON

Ro bl Co ns tru ct io n an d Hom ol y ha ve dr am at ic al ly di ffer e n t v i ews of th e

ev id en ce. At th is st ag e, th e on ly qu es ti on we m us t an swe r is whe th er “ th e ev id en ce

is su ch th at a reas on ab le jury co ul d ret ur n a ve rd ic t f o r ” Ro bl Co ns tru ct io n on it s

br each of co nt ract cl ai m “ or whe th er it is so on e-s id ed th at [Ho m ol y ] mus t pr ev ai l as

a m at te r of la w.” And ers on , 47 7 U.S. at 24 8, 25 2 (em ph as is ad de d)

. Afte r care fu l

rev ie w, we co nc lu de th e ev id en ce is no t so on e-s id ed as to jus ti fy ta k i n g th is cas e

fro m th e jury.

W he n vi ewed in th e li gh t m os t fav or ab le to Ro bl Co ns t r u c ti on , th e reco rd

“ ev id en c e i s su ch th at a reas on ab le jury co ul d,” id . a t 24 8, fin d Hom ol y au th or iz ed

an d pe rs on al l y gu aran te ed at le as t pa rt of th e lo an in acco rd an ce wit h th e pa rti es ’

a gr eem en ts

. Thi s is no t to sa y th e jury wou ld ha ve to be li ev e Ro bl Co ns tru ct io n ’s

acco un t, bu t a r e a s o na bl e jury co ul d

. At tri al

, Hom ol y m ay ch al le ng e Ro bl

Co ns tru ct io n’s wit ne ss es an d it s in te rp ret ation of th e ev id en ce; ho wev er, at th is po in t,

Hom ol y ha s fal le n sh or t of pr ov in g no ge nu in e di sp ut e of m at eri al fact ex is ts on th is

re c o r d a n d t h a t Hom ol y is en ti tl ed to su m m ary jud gm en t as a m at te r of la w. W e

rev ers e th e d is tri ct co ur t’s jud gm en t an d re m an d fo r fu rth er p ro ceed in gs

.

-1 6-SMI TH, Circ ui t J ud ge , di ss en ti ng

.

I res pe ct fu ll y di ss en t. In m y rev ie w of th is c a s e , I b e li ev e th e m ajor it y

so m ewh at m is se s th e m ar k by fo cu si ng on di sp ut es of fact reg ard in g Hom ol y 's

co ns en t to be pe rs on al ly bo un d. The co nt ract la ng ua ge req ui res fo cu s o n a n

an te ced en t in qu iry: whe th er th e lo an (s ) th em se lv es are en fo r c e a b l e de bt s. If Ro bl

Co ns tru ct io n vi ol at ed th e op erat in g agr eem en t by im pr op erl y lo an in g th e Co m pa ny

m on ey wit ho ut m eet in g th e req ui si te co nd it io ns pr eced en t, th en ne it he r th e Co m pa ny

no r Hom ol y

wou ld be li ab le for th ei r res pe ct iv e d eb ts un de r th e in va li d l oa n.

I.

The m ajor it y no t on ly li be ral ly co ns tru es R o b l Co ns tru ct io n's arg um en ts bu t

rai se s arg um en ts th at Ro bl Co ns tru ct io n di d no t. W he n Hom ol y m ov ed fo r su m m ary jud gm en t, he arg ue d fiv e po in ts : (1 ) th e op erat in g ag reem en t di d no t pr ov id e fo r a

di rect c a u se of act io n fo r fai li ng to m eet a cap it al co nt rib ut io n; (2 ) th e ne ces sa ry

pr eco nd it io ns to tri gg er li ab il it y un de r a cap it al co nt rib ut io n were no t m et ; (3 ) th e

ne ces sa ry pr eco nd it io ns to tri gg er a pe rs on al gu aran te e un de r § 8 of th e bu y

- s e ll

ag reem en t were no t m et ; (4 ) th e lo an was in va li d be cau se Ro bl Co ns tru ct io n vi ol at ed
§ 6.0 3( D) of th e op erat in g ag reem en t; an d (5 ) an y al le ge d or al ag reem en t of Hom ol y

to be pe rs on al ly bo un d di d no t sa ti sf y th e st at ut e of f

r au ds

. In it s op po si ti on , Ro bl

Co ns tru ct io n on ly a d d r es se d is su es (1 ), (2 ), (3 ), an d (5 ). Ro bl Co ns tru ct io n

si de st ep pe d is su e (4 ) wit h a ge ne ral de ni al by as se rti ng th at "Ro bl Co ns tru ct io n's lo an

an d Hom ol y 's pe rs on al gu aran te e an d au th or iz at io n do no t vi ol at e th e Ope rat in g Agr eem en t or th e Bu y -Sel l Agr eem en t." Els ewh ere, Ro bl Co ns tru ct io n st at ed in

pa ss in g th at Hom ol y "re qu es te d" th e lo an

. Alt ho ug h th i s a rg um en t was no t cl earl y

ou tl in ed

, Ro bl Co ns tru ct io n was pr es um ab ly arg ui ng th at su ch a req ue st co ns ti tu te d

th e n eces sa ry

"p rio r co ns en t o f a Su pe r-M ajor it y -in -In te res t" to ful fil l § 6.0 3( D).

-1 7-Afte r res ol vi ng is su es (1 ) an d (2 ) b y f i n di ng th e ad va nc ed m on ie s sh ou ld be

co ns id ered as a lo an rat he r th an a fai le d cap it al co nt rib ut io n, th e di st ric t co ur t gr an te d

su m m ary jud gm en t in fav or of Homo l y ba se d on is su e (3 ). The di st ric t co ur t st at ed

th at " t h e r e is no th in g in th e reco rd sh owi ng th at Ro bl [Co ns tru ct io n] req ue st ed

Hom ol y pe rs on al ly gu aran te e an y su ch lo an as th e Bu y -Sel l Agr eem en t cl earl y

co nt e mp l a t es ." The co ur t co nc lu de d th at Ro bl Co ns tru ct io n was on ly "re l[yin g] on

on e em ai l ex ch an ge be twee n Vera Ro bl an d Hom ol y " an d fo un d th at

, at be st

, th e

em ai l ex ch an ge "m ay sh ow th at Ho m ol y wan te d Ro bl [Co ns tru ct io n] to lo an th e

Co m pa ny m on ey , bu t it do es no t in di cat e th at Ro bl r e q u e st ed fo r Hom ol y to

pe r s o na ll y gu aran te e th e lo an ." As th e m ajor it y ha s in di cat ed ab ov e, Ro bl

Co ns tru ct io n di d no t m erel y rel y up on th e 20 06 em ai l st rin g, bu t al so po in te d to ot he r pi eces of ev id en ce th at rai se d a ge nu in e di sp ut e of m at eri al fact on whe th er Hom ol y

ag reed to pe rs on al ly gu ar an te e th e lo an or al ly an d in writ in g. Nev ert he le ss , we ne ed

no t ad op t t he di st ric t co ur t's reas on in g t o a ffi rm it s g ran t o f su m

m ary jud gm en t. 4

R o bl Co ns tru ct io n's arg um en t av oi ds is su e (4 ), th at is

, whe th er Ro b l

Co ns tru ct io n vi ol at ed th e op erat in g ag reeme n t by ad va nc in g th e Co m pa ny m on ie s

wit ho ut th e "p rio r co ns en t of a Su pe r-M ajor it y -in -In te res t" un de r § 6.0 3( D). Fu rth er, § 6.0 3( I) requ ire s eit he r th e p rio r co ns en t o f a Su pe r-M ajor it y -in -In te res t to im po se

pe rs on al li ab il it y on an y Mem be r "fo r an y de bt or ob li ga ti on of th e Co m pa ny," or th e

" writ te n co ns en t" of th at Mem be r to be pe rs on al ly bo un d. Ro bl Co ns tr u c t i o n

es se nt ia ll y

ig no res th es e co nt ract ua l p ro vi si on s.

Eve n if th e di st ric t co ur t erre d, th is co ur t is no t co ns tra in ed by th e di st ric t 4

co ur t's rat io na le

. It is well se tt le d th at "t hi s co ur t m ay affi rm fo r an y reas on su pp or te d
in th e reco rd

, ev en if th at reas on is di ffer en t fro m th e rat io na le of th e di st ric t co ur t."

W ie rma n v

. C

as ey's Gen

. St or es , 63 8 F.3 d 98 4, 10 02 (8 th Ci r. 20 11 ) (ci ta ti on

om it te d)

. Fu rth er, "[t ]his co ur t m ay affi rm th e di st ric t co ur t ev en if it co m m it te d le ga l

erro r in reac hi ng th e co rrec t re su lt ." Id

. (ci ta ti on s o m it te d)

.

-1 8-Hom ol y arg ue s on ap pe al th at he is en ti tl ed to jud gme n t a s a mat te r of la w

be cau se Ro bl Co ns tru ct io n br ok e th e ve ry ru le s th at go ve rn ed th e op erat io n of th e

Co m pa ny. His p o i n t s a re well ta ke n. As st at ed ab ov e, Ro bl Co ns tru ct io n ha s no t

ad va nc ed an arg um en t as to Hom ol y 's au th or iz at io n of th e lo an , bu t it ha s su bm it te d

ev id en ce on hi s pe rs on al gu aran te e. Thu s, m y di sa g r eem en t wit h th e m ajor it y res ts

in Ro bl Co ns tru ct io n's waiv er of arg ui ng th at it fu lfi ll ed § 6.0 3( D) an d (I) of th e

op erat in g ag reem en t by lo an in g m on ey to th e Co m pa ny wit h Hom ol y 's pr io r co ns en t.

In Kan sa s, "[t]he ge ne ral ru le is th at th e ex ti ng ui sh m en t, relea se or di sc ha rg e

of th e pr in ci pa l's co nt ract rel ie ve s th e gu aran to r of hi s or he r ob li ga ti on to pa y ." Hil l

Petr ol eu m Co

. v. Pat hma rk In t'l

, In c. , 75 9 F. Su pp

. 72 2, 72 5 (D. Kan

. 19 91 ) (ci ti ng

Io la St at e Ban k v. Big

gs , 66 2 P.2 d 5 63

, 57 0 (Kan

. 19 83 )). "Th e gu aran ty is an

ob li ga ti on co ll at eral to an ot he r co nt ract ua l du ty to pe rfo rm

. . . . It is in th e na tu re of

a warra nt y by th e gu aran to r th at th e th in g gu aran te ed to be acco m pl is he d by th e

pr in ci pa l sh al l be do ne , an d is no t an en ga ge m en t joi nt ly wit h th e pr in ci pa l to do th e

act ." Big gs , 66 2 P.2d at 56 7 (cit in g Tr eg o W aK een ey Sta te Ban k v. Mai er , 51 9 P.2 d

74 3 (Kan

. 19 74 )). "As th e ex te nt of th e li ab il it y of th e pr in c i p a l d eb to r ge ne ral ly

m eas ur es an d li m it s th e li ab il it y of th e gu aran to r, an d a gu aran ty is de pe nd en t on th e

ex is te nc e of a pr in ci pa l ob li ga ti on , if th e pr in ci pa l c o n t ract is in va li d fo r reas on s

in he ren t in it se lf, th e gu aran ty ge ne ral ly is al so in va li d." 38 A C.J .S. Gua ran ty § 15
(fo ot no te s om it te d) ; se e al so 38 Am

. Ju r. 2d Gua ran ty § 51 (1 96 8) ("Th e gu aran ty

pr om is e is a pr om is e to an swe r fo r th e de bt or th e de fau lt of t h e p r in ci pa l de bt or

un de r hi s co nt ract wit h th e cred it or

. The refo re, un le ss th e de bt or is bo un d un de r th e

pr in ci pa l co nt ract

, th ere is no ob li ga ti on whi ch is gu aran te ed an d th e gu aran to r is no t

li ab le to th e cred it or if th e de bt or fai ls to pe rfo rm ."), qu ot ed in Prec is io n Sa wi ng
, In c.

v. Ca ne Cr eek Con cr et e Se rv s., In c. , No. 5: 13 CV0 00 54 JLH, 20 14 W L 11 54 12 5, at

*3 (E.D. Ark., May 20, 2 01 4)

.

-1 9-Wh e t h e r Hom ol y pe rs on al ly gu aran te ed th e lo an on ly be co m es a m at eri a l

qu es ti on of fact fo r a ju r y a fte r th e lo an 's va li di ty h as be en es ta bl is he d. The fo rm er

i s bu il t on th e la tt er; if Ro bl Co ns tru ct io n's lo an to th e Co m pa ny is un en f

o r c e a b l e

be cau se Ro bl Co ns tru ct io n vi o la te d th e Co m pa ny's own op erat in g ag reem en t, th en

Hom ol y wou ld no t ha v e a du ty to pe rs on al ly rep ay th e in va li d lo an am ou nt

. Thu s,

Hom ol y 's pe rs on al gu aran te e wou ld be of no effe ct an d th ere wou ld be no en fo rcea bl e

co nt ract for

Hom ol y to bre ach

. 5

Ro bl Co ns tru ct i on di d no t sh ow Hom ol y act ua ll y au th or iz ed th e lo an as is

req ui red by § 6.0 3( D) an d (I) of th e op erat in g ag reem en t. Add res si ng su bs ect io n (D),

Ro bl Co ns tru ct io n do es no t arg ue th at Hom ol y ga ve hi s pr io r co ns en t to th e ov er $1 0,0 00 lo an be fo re th e Co m pa ny as su m ed th e de bt

. W he n a co nt ract is 6

un am bi gu ou s, "[t ]he in te rp ret at io n an d le ga l effe ct of a co nt ract is a qu es ti on of la w

A br each -o f-co nt ract cl ai m fo r a pe rs on al gu aran te e fai ls whe n th e lo an to be 5

pe rs on al ly gu aran te ed is no t va li d. It fai ls be cau se m os t juri sd i c t i o n s (in cl ud in g Kan sa s) req ui re a va li d co nt ract to ex i s t a s a ne ces sa ry el em en t of th e cl ai m

. Se e St ech sc hu lt e v

. J

e nn in gs , 29 8 P.3 d 10 83

, 10 98 (Kan

. 20 13 ) (ci ti ng Co mmerc ia l

Cr ed it Co rp

. v. Har ri s , 51 0 P.2 d 13 22

, 13 25 (Kan

. 19 73 )). If th e pe rs on al gu aran te e is in va li da te d be cau se th e pr in ci pa l lo an co nt ract is in va li d, an enfo rcea bl e co nt ract do es no t ex is t b et ween th e g ua ran to r an d t he len de r.

The on ly pl ace in whi ch Ro bl Co ns tru ct io n ev en hi nt s to arg ue th at it fu lfi ll ed 6 § 6.0 3( D) is in § II.A of it s App el la nt 's Bri ef, en ti tl ed "Th e m on ie s Ro bl Co ns tru ct io n lo an ed to th e Co m

pa ny were lo an s Hom ol y co ns en te d to

, no t cap it al co nt rib ut io ns ." (Em ph as is ad de d.) If Hom ol y in de ed co ns en te d to th e l o a n , t h i s wou ld fu lfi ll th e

req ui red pr io r co n se nt of a Su pe r-M ajor it y -in -In te res t be cau se bo th he an d Ro bl

Co ns tru ct io n co ns en te d to th e Co m pa ny ta ki ng on th is de bt

. Upo n cl o s er

ex am in at io n, ho wev er, it is ap pa ren t th at § II.A ad dr es se s th e di st ric t co ur t's fin di ng th at th e m on ey ad va nc ed by Ro bl Co ns tru c t i o n w a s a lo an an d no t a fai le d cap it al

co nt rib ut io n

. Th u s , R ob l Co ns tru ct io n do es no t arg ue th at Hom ol y ga ve hi s pr io r

co ns en t t o th e lo an it se lf. In st ead

, it arg ue s th at Hom ol y co ns id ered tre at in g th e

m on ie s as a lo an rat he r th an cap it al co nt rib ut io ns

.

-2 0-fo r th e co ur t to de ci de

, no t a jury." W ol fe Elec

., In c. v. Duc kwo rt h

, 26 6 P.3 d 51 6, 53 4
(Kan . 2 01 1) (ci ti ng Ost e r h a u s v . T ot h , 2 49 P.3 d 88 8, 89 6 (2 01 1) ). Sect io n 6.0 3( D)

pr oh ib it s th e c r e a t i o n of an ob li ga ti on of th e Co m pa ny, wh ic h in cl ud es ta ki ng on a

d e b t of ov er $1 0,0 00

. Ro bl Co ns tru ct io n co nt en ds Hom ol y ag reed to pe rs on al l y

gu aran te e th e lo an bu t ig no res th e an te ced en t in qu iry of whe th er he au th or iz ed th e

lo an in th e fir st pl ace. Log ic al ly, th es e are di st in ct le ga l qu es ti on s. W he th er Hom ol y

ag reed to pe rs on al ly gu aran te e th e lo an on ly be co m es a m at eri al fact di sp ut e if th e

de bt it se lf is le ga ll y en fo rcea bl e. As a res ul t, I wou ld affi rm th e di st ric t co ur t's gr an t

of su m m ary jud gm en t on th e ba si s th at Ro bl Co ns tru ct io n ha s fai le d to sh ow a

ge nu in e di sp ut e of m at eri al fact th at Hom ol y ga ve hi s pr io r co ns en t to th e lo an , an d

du e to Ro bl Co ns tru ct io n's vi ol at io n of § 6.0 3( D), Hom ol y is en ti tl ed to jud gm en t as

a m at te r of

law.

Seco nd

, § 6.0 3( I) req ui res th e "p rio r co ns en t of a Su pe r-M ajor it y -in -In te res t"

whe n th e Co m

pa ny ta ke s "[a ]ny act whi ch wou ld cau se a M em be r, ab se nt su ch

Mem be r's writ te n co ns en t, to be co m e pe rs on al ly li ab le fo r an y de bt or ob li ga ti on of

th e Co m pa ny." Hom ol y as se rts th at he ne ve r ga ve su c h w r i t t e n co ns en t. Ro bl

Co ns tru ct io n do es no t di sp ut e th at bu t arg ue s th at § 8 of th e bu y -s el l ag reem en t act s

as Hom ol y 's wr it te n co ns en t. Bo th Ro bl Co ns tru ct io n an d th e m ajor it y no te th at in

cas es of in co ns is te nc ies be tween th e op erat in g ag reem en t an d th e bu y -s el l ag reem en t,

th e la tt er co nt ro ls

. Acco rd in g to Kan sa s la w, ho wev er, we m us t co ns id e r t h e t wo

ag reem en ts to ge th er. Se e Fir st Na t'l Ban k of

Hut ch in so n v. Ka is er , 56 4 P.2 d 49 3, 49 6
(Kan

. 19 77 ) ("Wher e two in st ru m en ts are ex ecu te d by th e sa m e pa rti es at or ne ar th e

sa m e ti m e in th e co ur se of th e sa m e tra ns ac t i o n , an d co nc ern in g th e sa m e su bjec t

m at te r, th ey wil l be read an d co ns tru ed to ge th er." (ci ti ng Amor ti ba n c I nv

. Co

. v.

Jeh an , 55 1 P.2 d 91 8 (Kan

. 19 76 ); Pl a ce v. Pla ce , 48 6 P.2 d 13 54 (Kan

. 19 71 );

S k i n n e r v. Sk in ne r , 27 0 P. 59 4 (Kan

. 19 28 ))). It is un di sp ut ed th at th e bu y

- s e l l

ag reem en t an d th e op erat in g ag reem en t wer e b ot h e xe cu te d o n t he same day by t he

-2 1-sa m e pa rti es an d co nc ern th e sa m e su bjec t m at te r of th e go ve rn i ng ru le s of th e

Co m pa ny. T he refo re, t he two do cu m en ts sh ou ld be co ns tru ed to ge th er.

Tak in g th is in to acco un t, Ro bl Co ns tru ct io n's in te rp ret at io n of § 8 is co nt rary

to Kan sa s la w. Ro bl Co ns tru ct io n arg ue s th at § 8 of th e bu y -s el l ag reem en t is in fact

th e ve ry writ te n co ns en t req ui red by § 6

. 0 3( I). Thi s in te rp ret at io n effe ct iv el y read s § 6.0 3( I) out of th e op erat in g agr eem en t. W hy req ui re the pr io r writ te n co ns en t of a

m em be r to be pe rs on al ly li ab le fo r Co m pa ny de bt s i n § 6.0 3( I) if su ch a se ct io n is

un ne ces sa ry be cau se § 8 of th e bu y -s el l ag reem en t act s as su ch pr io r writ te n co ns en t?

Su ch an in te rp ret at io n wou ld le ad to th e ab su rd res ul t of read in g la ng ua ge ou t of th e

op erat in g ag reem en t in vi ol at io n of Kan sa s co nt ract in te rp ret at io n p r i n c i pl es

. Se e

Gar vey Ct r., In c. v. Foo d Sp eci al t i e s
, I n c

. , 51 9 P.2 d 64 6, 64 9– 50 (Kan

. 19 74 )
("R es ul ts whi ch vi ti at e th e pu rp os e or red uc e th e te rm s of th e co nt ract to an ab su rd it y

sh ou ld be av oi de d. The mea ni ng of a co nt ract sh ou ld al way s be as cert ai ne d by a

co ns id erat io n of al l th e pe rti ne nt pr ov is io ns an d ne ve r be d e t e r mi n ed by cri ti cal

an al y si s of a si ng le or is ol at ed pr ov is io n." (q uo ta ti on an d ci ta ti on om it te d) ); Jo hn so n

Cn ty

. Ban k v. Ros s , 13 P.3 d 35 1, 35 3 (Kan

. Ct

. App

. 2 0 0 0 ) ("Th e la w fav or s

reas on ab le in te rp ret at io ns [o f co nt ract s], an d res ul ts whi ch vi ti at e th e pu rp os e of th e

te rm s of th e ag reem en t to an ab su rd it y sh ou ld be av oi de d." (ci ti ng Ci ty of Man ha tt an

v. Gal br at h , 94 5 P .2d 10 , 14 (Kan . Ct. Ap p. 1 99 7) )).

T he m or e reaso na bl e in te rp ret at io n th at ha rm on iz es th e two co nt rac t pr ovi sio ns

un de rs ta nd s th at § 6.0 3( I) req ui res a writ te n co ns en t fro m a Mem be r to be pe rs on al ly

bo un d fo r an

y de bt of th e Co m

pa ny, bu t § 8 hi gh li gh ts a su bs et of th es e types of de bt s

in whi ch a le nd er wou ld wan t ad de d se cu rit y of th e Co m pa ny's de bt in th e fo rm of a

m em be r's pe rs on al gu aran ty. Pres um ab ly, a w r i tt en pe rs on al gu aran ty un de r § 8

-2 2-wou ld al so fu lfi ll t h e r eq ui rem en ts of § 6.0 3( I). Sect io n 8 is no t m ean t to fu lfi ll § 7

6.0 3( I) an d co ns eq ue nt ly writ e it ou t of th e op erat in g ag reem en t; rat he r, § 8 is m ean t

to pr ov id e a se pa rat e m ech an is m fo r th e Co m pa ny to acq ui re loa ns when th e le nd er

req ui res ad di ti on al sec ur it y to gu aran te e th e lo an s.

The refo re, I wou ld ho ld th at Ro bl Co ns tru ct io n h as fai le d to pr es en t sp eci fic

fact s to sh ow a tri ab le is su e fo r a jury as t o wh et he r § 6 .03 (I) was ful fil le d. Furt he r,

as a m at te r of la w, § 8 sh ou ld no t be in te rp ret ed as fu lfi ll in g § 6.0 3( I). Acco rd in gl y , I wou ld affi rm

th e d is tri ct co ur t's gra nt of s um m ary jud gm en t o n t hi s b as is

.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __

The reco rd of

fers an ex am

pl e of su ch a tr a n s a c t i o n. Bo th Hom ol y an d Ro bl 7

Co ns tru ct io n si gn ed pe rs on al gu aran te es fo r lo an s to th e Co m pa ny fro m th e le nd er Nor th Am eri can Sav in gs Ban k, F.S.B. Thi s ex am pl e is no t m ean t to pr ov e th e in te nt of th e pa rti es

. In st ead

, it sh ows ho w a writ te n pe rs on al gu aran ty can sa ti sf y bo th § 8

an d § 6.0 3( I).

-2 3-