United States Court of Appeals

For the Eighth Circuit

___________________________

No. 11-3611

___________________________

BancorpSouth Bank, a Mississippi Banking Corporation

lllllllllllllllllllll Plaintiff - Appellee

v.

Hazelwood Logistics Center, LLC, formerly known as Hazelwood Commerce

Center LLC; Hazelwood Commerce Redevelopment Corporation; Paul J. McKee

Jr., Individually; Paul J. McKee Jr., in his capacity as Trustee of the Paul J. McKee

Jr. Revocable Trust

lllllllllllllllllllll Defendants - Appellants

___________________________

No. 11-3741

___________________________

Murphy Property Tax

lllllllllllllllllllllIntervenor - Appellant
BancorpSouth Bank, a Mississippi Banking Corporation

lllllllllllllllllllll Plaintiff - Appellee

v.

Hazelwood Logistics Center, LLC, formerly known as Hazelwood Commerce

Center LLC; Hazelwood Commerce Redevelopment Corporation; Paul J. McKee,

Jr., Individually; Paul J. McKee, Jr., in his capacity as Trustee of the Paul J.

McKee Jr. Revocable Trust

lllllllllllllllllllll Defendants

____________

 Appeal from United States District Court 

for the Eastern District of Missouri - St. Louis

____________

 Submitted: September 19, 2012

 Filed: February 14, 2013

____________

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

____________

RILEY, Chief Judge

BancorpSouth Bank (bank), successor by merger to The Signature Bank, sued

Hazelwood Logistics Center, LLC and Hazelwood Commerce Redevelopment

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Corporation (collectively, HLC), and Paul J. McKee, Jr., both individually and in his

capacity as Trustee of the Paul J. McKee, Jr. Revocable Trust, (McKee and,

collectively with HLC, Hazelwood), alleging breach of contract against HLC, breach

of guaranty against McKee, and asserting a security interest in some of HLC’s

property. Hazelwood raised lack of subject matter jurisdiction, improper venue and

choice of forum, and a state law contract defense. Murphy Property Tax (MPT)

intervened, claiming priority over real property tax refunds owed to HLC and attached

by the bank. The district court1

 found jurisdiction and venue were proper and granted

summary judgment to the bank on the breach of contract, breach of guaranty, and

priority issues. Hazelwood and MPT appeal. 

I. BACKGROUND

A. Factual Background 

1. Financing

HLC was formed to implement a commercial real estate development project,

known as the Hazelwood Logistics Center, in the City of Hazelwood, Missouri. To

finance the development, HLC and the bank entered into a Land Acquisition Loan

Agreement (acquisition agreement) on October 7, 2005, and a Development Loan

Agreement (development agreement) on August 11, 2006 (collectively, as amended

loan agreements). All Hazelwood parties are Missouri citizens, and the bank is a

Mississippi citizen.

Under the loan agreements, the bank agreed to loan HLC up to the maximum

principal amount of $36,242,700. The loan was evidenced by a promissory note in

the principal amount of $35,197,500, as amended. HLC granted the bank a security

interest in its assets relating to the property, including “all general intangibles” and

1

The Honorable Henry E. Autrey, United States District Judge for the Eastern

District of Missouri.

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“all Tax . . . Deposits.” McKee guaranteed HLC’s obligations under the loan

agreements (guaranty).

On August 11, 2006, the bank entered into a participation agreement with four

other banks, whereby the bank sold the participating banks undivided interests in the

loan. At the time this lawsuit was filed, the four participating banks were Heartland

Bank, Centrue Bank, Excel Bank, and Sun Security Bank (participating banks). The

participating banks collectively held approximately 69% of the loan, and the bank

retained the balance. At least three of the participating banks were citizens of

Missouri.

Under the participation agreement, the bank retained primary authority to

administer the loan, subject to a few minor exceptions. The bank “h[e]ld in its name

(as payee, endorsee or assignee), and ha[d] title to and retain[ed] possession or control

of, the Loan Documents and all other security documents, papers and other items

provided for or required under the Loan Documents.” The agreement provided that,

in dealing with Hazelwood and with third parties, the bank was “considered to be the

sole owner and holder of the Loan,” and the bank, after reasonable efforts to collect,

“without the consent of the [participating banks], [could] proceed to foreclose upon

the collateral securing the Loan by appropriate proceedings.” The bank could not

decrease the interest rate under the loan, increase the amount of the loan, or extend the

maturity of the loan, without the participating banks’ prior written consent.

2. Development

Part of the Hazelwood property (property or Hazelwood property) was a former

landfill site and required environmental remediation before it could be put to

commercial use. Hazelwood hired contractors to prepare and implement a remedial

action plan to address the property’s environmental issues. Hazelwood and the bank

contend the contractors negligently caused methane gas to spread “across portions of

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the [p]roperty previously uncontaminated by methane.” Hazelwood’s expert witness

reported: 

In its present condition the . . . property cannot be developed for

commercial use. The presence of landfill gas, specifically methane, in

the subsurface soil at the property is impairing development at the

property. Extensive additional investigation is needed before developing

remedial alternatives for addressing methane concerns at the site.

On October 30, 2009, the loan matured, and Hazelwood failed to pay the

amount owed.

3. Tax Refunds

MPT is a commercial property tax consulting firm. On July 1, 2009, HLC and

MPT entered into an agreement for MPT to review HLC’s property tax liability “for

the 2007/2008 and 2009/2010 assessment years.” HLC agreed to pay MPT a

contingency “fee of thirty five percent (35%) of the tax savings for each of the 2007

thru 2009 assessment years.” MPT contends the bank was aware of HLC’s contract

with MPT and “underst[ood] that MPT’s fee was to be paid out of any tax refunds

procured.” MPT successfully obtained tax refunds for HLC in the amount of

$465,379, plus interest.

B. Procedural History

On April 7, 2010, the bank sued the various Hazelwood parties for respective

breaches of contract, breaches of the guaranty, and related claims, invoking the district

court’s diversity jurisdiction. See 28 U.S.C. § 1332(a)(1). Hazelwood moved to

dismiss the action based on the loan agreements’ and guaranty’s choice of venue

provisions and Hazelwood’s claim the district court lacked subject matter jurisdiction. 

The district court denied these motions.

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The bank moved for a prejudgment writ of attachment on HLC’s expected real

property tax refunds. The district court granted the motion on August 6, 2010. The

Missouri State Tax Commission disbursed tax refunds of $466,128.37 to the bank

pursuant to the writ of attachment. MPT moved to intervene, asserting an interest in

the tax refunds. The district court granted MPT’s motion to intervene.

The bank moved for summary judgment against Hazelwood and MPT, and

MPT moved for summary judgment against the bank. Hazelwood resisted the bank’s

motion for summary judgment, arguing the various loan contracts were not

enforceable under the doctrine of commercial frustration. The district court denied

MPT’s motion for summary judgment, and granted the bank’s motions for summary

judgment against Hazelwood and MPT.

The district court’s order granting summary judgment on the bank’s claims

against Hazelwood did not enter a damages amount. The bank moved pursuant to

Federal Rule of Civil Procedure 59(e) for an amended judgment entering an amount

of damages. The bank filed the motion on November 28, 2011, five days after the

district court’s entry of judgment and three days after Hazelwood filed its notice of

appeal to this court. Hazelwood opposed the bank’s motion to amend, arguing (1) the

motion was procedurally improper under Federal Rule of Civil Procedure 60(a), and

(2) the bank’s motion for summary judgment was not supported by sufficient evidence

and suffered from a procedural defect. The district court granted the bank’s motion.

Hazelwood and MPT appeal. Having jurisdiction under 28 U.S.C. § 1291, we

affirm.

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II. DISCUSSION

A. Standard of Review and Choice of Law

“We review de novo a district court’s grant of summary judgment, viewing all

facts and making all reasonable inferences in the light most favorable to the nonmoving party.” Cent. Platte Natural Res. Dist. v. U.S. Dep’t of Agric., 643 F.3d 1142,

1146 (8th Cir. 2011). We affirm summary judgment if “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); see also Cent. Platte Natural Res. Dist., 643 F.3d at 1146.

In this diversity case, we apply the substantive law that would be applied by a

Missouri state court. See Schwan’s Sales Enters. v. SIG Pack, Inc., 476 F.3d 594,

595-96 (8th Cir. 2007). The loan agreements and guaranty provide Missouri law

governs the interpretation and application of the contracts. Under Missouri law, “[a]

valid choice of law provision in a contract binds the parties,” State ex rel. McKeage

v. Cordonnier, 357 S.W.3d 597, 600 (Mo. 2012) (en banc), and the parties

here—including MPT, whose contract with HLC was made and performed in

Missouri—do not contend any law other than Missouri law applies. The loan

agreements each additionally provide the “Loan Agreement and other Loan

Documents shall not be construed against [the bank] merely because of the

involvement of [the bank] in the preparation of such documents and agreements.” 

B. Subject Matter Jurisdiction

We first address whether the district court had subject matter jurisdiction over

this case. See, e.g., Associated Ins. Mgmt. Corp. v. Ark. Gen. Agency, Inc., 149 F.3d

794, 796 (8th Cir. 1998). “‘[D]iversity of citizenship is determined by reference to

the parties named in the proceeding before the district court, as well as any

indispensable parties who must be joined pursuant to Rule 19’” of the Federal Rules

of Civil Procedure. Northport Health Servs. of Ark., LLC v. Rutherford, 605 F.3d

483, 486 (8th Cir. 2010) (quoting Doctor’s Assocs., Inc., v. Disatajo, 66 F.3d 438, 445

(2d Cir. 1995); see also Little v. Giles, 118 U.S. 596, 603 (1886) (explaining “where

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the interest of the [named] party is real, the fact that others are interested who are not

necessary parties, and are not made parties, will not affect” diversity jurisdiction)

(quoted in Lincoln Prop. Co. v. Roche, 546 U.S. 81, 93 (2005)). Hazelwood asserts

a lack of complete diversity of citizenship because both Hazelwood and (at least some

of) the participating banks are Missouri citizens. The participating banks were not

named parties in the action below, and Hazelwood has not demonstrated the

participating banks were necessary parties to the suit under Rule 19. We therefore

reject Hazelwood’s argument.2

Hazelwood invokes Iowa Public Service Co. v. Medicine Bow Coal Co., 556

F.2d 400 (8th Cir. 1977). In Iowa Public Service, individual utility companies sued

individual coal companies in state court. See id. at 401-02. Some plaintiffs were

diverse from the defendant coal companies, but the others were not. See id. at 402.

The coal companies sought to remove the case to federal court, arguing the nondiverse plaintiffs were not real parties to the controversy and had been fraudulently

joined to defeat federal jurisdiction. See id. We disagreed, holding the dismissed

non-diverse plaintiffs were real parties in interest and removal from state court was

not proper. See id. at 406. Contrary to Hazelwood’s arguments, Iowa Public Service

does not demonstrate the participating banks—who were not made parties in the

action below—are necessary parties to the suit merely because they hold an interest

in the loan.

2

Hazelwood asserts the district court improperly relied on Fed. R. Civ. P. 17 to

determine the Bank was a real party in interest capable of bringing suit in its own

capacity, arguing “[t]he Federal Rules of Civil Procedure have no bearing on the

requirements of federal diversity jurisdiction.” Associated Ins. Mgmt. Corp., 149 F.3d

at 796-97. For reasons later discussed, Hazelwood has not established the

participating banks were necessary parties for diversity purposes, irrespective of Rule

17.

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Hazelwood argues the bank and the participating banks function as an

unincorporated business organization, and as such the citizenship of each member of

the organization is relevant for diversity purposes. See Underwriters at Lloyd’s,

London v. Osting-Schwinn, 613 F.3d 1079, 1086, 1088 (11th Cir. 2010) (holding a

British insurance syndicate is an unincorporated business organization and therefore

has the citizenship of each of its members). Underwriters also is distinguishable. In

Underwriters, the syndicate itself was the party bringing suit. In the instant case, the

bank sued in its individual capacity and, at most, on behalf of the participating banks

in a representative capacity. That the participating banks are alleged to be in a

business relationship with the bank similar to an insurance syndicate is not dispositive.

We believe a better analogy is Navarro Savings Association v. Lee, 446 U.S.

458 (1980). In Navarro, the Supreme Court recognized a trustee may sue on behalf

of a business trust, and only the trustee’s citizenship is relevant for diversity purposes. 

See id. at 462 (citing Chappedelaine v. Dechenaux, 8 U.S. (4 Cranch) 306, 308

(1808)). Navarro recognized “a trustee is a real party to the controversy for purposes

of diversity jurisdiction when he possesses certain customary powers to hold, manage,

and dispose of assets for the benefit of others.” Id. at 464. “That the trust may depart

from conventional forms in other respects has no bearing upon this determination.” 

Id. at 465. 

In this case, the bank “ha[s] legal title; . . . manage[s] the assets; [and] . . .

control[s] the litigation.” Id. The participating banks are “‘not necessary parties and

their citizenship [is] immaterial.’” Id. at 464 (quoting Bullard v. Cisco, 290 U.S. 179,

190 (1933)); see also Dexia Crédit Local v. Rogan, 629 F.3d 617, 619-20 (7th Cir.

2010) (deciding a participation agreement between a diverse plaintiff and a nondiverse non-party did not divest the court of subject matter jurisdiction where the

named corporate plaintiff was a real party in interest); Oscar Gruss & Son, Inc. v.

Hollander, 337 F.3d 186, 193-95 (2d Cir. 2003) (determining a business entity was a

real party in interest for diversity purposes where the entity held an 11.53% interest

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in the subject of the lawsuit, had a genuine financial stake in the outcome of the

lawsuit, and also held an express power to act on behalf of other interested persons). 

The district court properly exercised jurisdiction under 28 U.S.C. § 1332(a)(1).3

C. Venue

Hazelwood also maintains the action in federal court violated the loan

agreements’ and the guaranty’s choice of venue provisions. We disagree.

The loan agreements provide: 

Any legal action or proceeding with respect to this Loan Agreement or

any of the other Loan Documents may be brought in the Courts of the

County of St. Louis, State of Missouri, and . . . [HLC] and [the bank]

consent[], for itself and in respect of its property, to the jurisdiction of

those Courts. . . . Nothing in this [s]ection . . . shall . . . limit the right

of [the bank] to bring any action or proceeding against [HLC] or its

property in the Courts of any other jurisdiction.

(Emphasis added). The guaranty also contained a choice of venue provision. This

provision stated, “at [the bank’s] sole and absolute election, all legal and other

proceedings of any kind arising out of or related to this Guaranty shall be litigated in

courts having sites in the County of St. Louis, Missouri.” 

Under Missouri law, a forum selection clause is enforceable so long as “the

clause [was] obtained through freely negotiated agreements absent fraud and

3

In comparing the participation agreement to a business trust for purposes of

jurisdiction, we in no way imply the agreement created a fiduciary relationship

between the bank and the participants, or that other state law trust doctrines might

apply. See First Citizens Fed. Sav. & Loan Ass’n v. Worthen Bank & Trust Co., 919

F.2d 510, 513 (9th Cir. 1990) (explaining the existence of a fiduciary relationship

between participants in a participation agreement depends on the terms of the

agreement and intent of the parties).

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overreaching and its enforcement must not be unreasonable and unjust.” Chase Third

Century Leasing Co. v. Williams, 782 S.W.2d 408, 411 (Mo. Ct. App. 1989). The

dispute in this case involves the proper interpretation of the clauses, not whether

enforcement of the clauses would be unreasonable. “An unambiguous contract must

be enforced according to its terms.” Turner v. Sch. Dist. of Clayton, 318 S.W.3d 660,

670 (Mo. 2010) (en banc) (per curiam). “‘A contract is only ambiguous, and in need

of a court’s interpretation, if its terms are susceptible to honest and fair differences.’” 

Ethridge v. TierOne Bank, 226 S.W.3d 127, 131 (Mo. 2007) (en banc) (quoting State

ex rel. Vincent v. Schneider, 194 S.W.3d 853, 860 (Mo. 2006) (en banc)).

In this case, the forum selection clauses are unambiguous and will be enforced

as written. The loan agreements simply provide an action may be brought in the

courts of St. Louis County, but do not indicate such actions must be brought there. 

This clause is permissive, not mandatory. Cf. Dunne v. Libbra, 330 F.3d 1062, 1063

(8th Cir. 2003) (noting the distinction between permissive and mandatory forum

selection clauses).

Hazelwood contends the forum selection provision in the guaranty is

mandatory, because it provides “all legal . . . proceedings . . . shall be litigated in

courts having sites in the County of St. Louis, Missouri.” This provision is applicable

“at [the bank’s] sole and absolute election,” and does not limit the bank’s ability to

select an alternative forum. Hazelwood asserts the provision is ambiguous, suggesting

the clause “grants [the bank] discretion to choose among the courts sited in St. Louis

County, Missouri.” (Underlining in original). We reject this interpretation. 

Hazelwood has not identified any federal courts situated in St. Louis County,

Missouri, nor shown there are multiple courts in St. Louis County with jurisdiction

over this action in which the bank could have exercised its discretion.

Hazelwood further argues, if the clause were construed as permissive, “there

was no need for the clause . . . because the Loan was made in St. Louis County and

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the Property is located in St. Louis County.” Hazelwood’s argument fails because the

clause is permissive with respect to the bank only. The bank could enforce the choice

of venue provision against Hazelwood were Hazelwood to bring suit elsewhere. 

We hold the forum selection clauses are permissive and did not prohibit the

bank from bringing suit in the United States District Court for the Eastern District of

Missouri.

D. Commercial Frustration

Hazelwood claims the doctrine of commercial frustration relieves Hazelwood

of its obligations under the loan agreements and guaranty. We disagree.

The Supreme Court of Missouri has not expressly adopted the doctrine of

commercial frustration, see Ellis Gray Mill. Co. v. Sheppard, 222 S.W.2d 742, 748

(Mo. 1949) (recognizing the doctrine had not been adopted in Missouri as of 1949),

although the doctrine has been applied by one of Missouri’s intermediate appellate

courts, see Howard v. Nicholson, 556 S.W.2d 477, 481-82 (Mo. Ct. App. 1977). The

Howard court explained, “if the happening of an event not foreseen by the parties and

not caused by or under the control of either party has destroyed or nearly destroyed

either the value of the performance or the object or purpose of the contract, then the

parties are excused from further performance.” Id. 

We assume for the sake of discussion the Supreme Court of Missouri would

recognize the commercial frustration doctrine as expounded by Howard. Cf.

Friedberg v. Chubb & Son, Inc., 691 F.3d 948, 951 (8th Cir. 2012) (“We must predict

how the Supreme Court of [Missouri] would rule, and we follow decisions of the

intermediate state court when they are the best evidence of [Missouri] law.”). 

Applying the Howard standard, Hazelwood is not entitled to relief. We suspect

methane gas contamination during environmental remediation of a landfill is a

foreseeable risk. See Conlon Grp., Inc. v. City of St. Louis, 980 S.W.2d 37, 40-41

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(Mo. Ct. App. 1998) (concluding the loss was foreseeable and the commercial

frustration doctrine did not apply when a real estate developer discovered severe

structural defects in a 100-year-old building the developer had planned to refurbish). 

We need not address this contingency directly. Even if the methane gas

contamination were an unforeseeable occurrence, the contamination did not result in

“a total or practically total destruction of the purpose or object of the transaction.” 

Howard, 556 S.W.2d at 483. In its statement of facts, Hazelwood declares “[t]he Loan

was made for the stated purpose of the environmental remediation by third-parties and

the commercial real estate development of the Property by” HLC. HLC already has

acquired the property and can still pursue “environmental remediation” and ultimately

“commercial real estate development of the Property.” Hazelwood’s plan may have

“become less profitable,” or Hazelwood may even “sustain a loss,” Restatement

(Second) of Contracts (Restatement) § 265 cmt. a (1981), but loss of profit is not a

sufficient ground to cancel a contract under the commercial frustration doctrine, which

requires the “total or practically total destruction of the purpose or object of the

transaction,” Howard, 556 S.W.2d at 483. See also Restatement § 265 cmt. a.

The district court did not err in granting summary judgment to the bank on its

breach of contract claim against HLC, or the breach of guaranty claim against McKee.

E. Damages

Hazelwood insists the district court erred in amending its judgment to include

a specific damage award. We disagree. 

First, Hazelwood asserts the district court lacked jurisdiction to amend the

judgment because the bank’s motion should have been made under Federal Rule of

Civil Procedure 60(a). Under Rule 60(a), the district court generally must seek leave

of this court to correct an error in the judgment once an appeal of the judgment has

been docketed, and no such leave was sought in this case. Federal Rule of Appellate

Procedure 4(a)(4) clarifies that no leave is necessary if the Rule 60(a) motion is filed

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within twenty-eight days of entry of judgment. See Fed. R. App. P. 4(a)(4)(A)(vi),

(B)(i) (providing a notice of appeal does not take effect until the district court disposes

of any Rule 59 or Rule 60 motions, provided such motions are filed within twentyeight days of entry of judgment); see also id., Advisory Committee Notes to paragraph

(a)(4) for the 1993 Amendment (“A notice filed before the filing of [a Rule 59 or Rule

60] motion[] . . . is, in effect, suspended until the motion is disposed of.”). The bank’s

motion was filed five days after entry of judgment; therefore, the district court had

authority to amend its judgment without leave of this court, regardless of whether the

motion was made under Rule 59 or Rule 60.

Second, Hazelwood proposes the bank failed to comply with the Eastern

District of Missouri’s Local Rule 7-4.01(E), requiring a summary judgment movant

to set forth each material fact in separately numbered paragraphs. The bank did not

list the damages calculation in its statement of material facts. Instead, the bank stated

“all principal and interest outstanding became due and owing,” and cited to an

affidavit from a bank representative with knowledge of the basis for the damages

claim. The affidavit calculated the total amount due and was attached to and cited in

the bank’s motion for summary judgment. The bank also included the damages

calculation in the bank’s prayer for judgment, although the prayer did not explicitly

cite the affidavit in support of the amount of damages claimed.

Even if the bank procedurally erred in drafting its motion for summary

judgment and supporting materials, Hazelwood suffered no prejudice. See 28 U.S.C.

§ 2111 (“On the hearing of any appeal . . . , the court shall give judgment after an

examination of the record without regard to errors or defects which do not affect the

substantial rights of the parties.”); Fed. R. Civ. P. 61; Taylor v. Dickel, 293 F.3d 427,

430 (8th Cir. 2002) (“‘To constitute reversible error, it must be established that the

error complained of affected the substantial rights of the objecting party’” (quoting

Gilliam v. City of Omaha, 524 F.2d 1013, 1015 (8th Cir. 1975))). Hazelwood actually

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was aware of the amount of damages claimed and the factual basis for the calculation. 

Hazelwood is entitled to no relief on this proposition.

Third, Hazelwood contends the bank’s calculation is not supported by sufficient

evidence, and speculates the total includes sums not properly chargeable to

Hazelwood. Hazelwood first raised these contentions in opposition to the bank’s Rule

59(e) motion to amend the judgment, and Hazelwood has not provided any evidence

to support its factual contentions. The bank offered an affidavit listing the total

damages assessment and explaining the basis for the calculation. This factually

uncontroverted evidence is sufficient to support summary judgment. Hazelwood

submitted no evidence to challenge the calculation, so there is no genuine dispute of

fact on this matter. Hazelwood failed factually to contest the bank’s damages

assessment before the district court, and is not entitled to relief on appeal. Cf.

Winthrop Res. Corp. v. Eaton Hydraulics, Inc., 361 F.3d 465, 471 n.11 (8th Cir. 2004)

(affirming summary judgment on damages where the opposing party failed to

challenge the factual basis for the damages calculation at the summary judgment

stage).

F. Tax Refunds

MPT challenges the district court’s ruling granting summary judgment to the

bank on MPT’s claim against HLC’s real property tax refunds. We agree with the

district court’s ruling.

In connection with the loan agreements, the bank acquired a security interest

in some of HLC’s assets, including “all Tax . . . Deposits,” “all general intangibles”

and “all other property, rights, interests, estates, or claims of any name, kind, character

or nature or properties now owned or hereafter acquired in the other properties and

interests comprising the Premises.” Noting the bank filed a UCC-1 financing

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statement, the district court concluded the bank had a valid, perfected security interest

in the tax refunds.4

The district court determined MPT’s contingency fee agreement with HLC

created an equitable lien for MPT on any tax refunds received by HLC. We assume,

without deciding, MPT has an equitable lien on the tax refunds. We then must

determine whether MPT’s lien in the refunds has priority over the bank’s perfected

security interest.

MPT asserts the bank’s security interest does not encompass the tax refunds,

arguing the agreement’s reference to “all Tax . . . Deposits” does not include tax

refunds. Whatever the meaning of “all Tax . . . Deposits,” the bank’s security interest

in “general intangibles” relating to the Hazelwood property does encompass tax

refunds. See In re Don Connolly Const. Co., 110 B.R. 976, 978 (Bankr. M.D. Fla.

1990) (“‘It is now well established that the right to receive a tax refund and the

anticipated tax returns [sic] themselves are general intangibles.’” (quoting Lazere Fin.

Corp. v. Palmetto Pump & Irrigation, Inc., 81 B.R. 109, 111 (Bankr. M.D. Fla.

1987))); see also In re Metric Metals Int’l, Inc., 20 B.R. 633, 636 (Bankr. S.D.N.Y.

1981) (“Although there is little authority with respect to whether a tax refund is a

general intangible, the cases and commentators that have addressed the question agree

that tax refunds constitute general intangibles as defined in the [Uniform Commercial]

Code” (Code)). We are not aware of any jurisdiction that has concluded a tax refund

is not a general intangible under the Code, and we anticipate the Supreme Court of

Missouri would reach the same conclusion. Cf. Friedberg, 691 F.3d at 951.

MPT argues its equitable lien in the tax refunds has priority over the bank’s

security interest because permitting the bank to profit from MPT’s labor in obtaining

4

Because MPT does not challenge the district court’s express finding, we accept

the district court’s finding that the bank validly perfected its security interest in HLC’s

property, although the record is unclear.

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the tax refunds would be “unjust and inequitable.” MPT’s arguments are inconsistent

with Article 9 of Missouri’s Uniform Commercial Code—Secured Transactions, Mo.

Rev. Stat. § 400.9-101, et seq. (U.C.C.), which establishes a comprehensive system

of priorities for competing claims of this nature. Mo. Rev. Stat. § 400.9-301. Cf.

Lone Oak Farm Corp. v. Riverside Fertilizer Co., 428 N.W.2d 175, 180 (Neb. 1988)

(explaining under Nebraska’s Code Art. 9, an equitable lien is an unperfected security

interest and subordinate to a perfected security interest).

Regardless of whether MPT’s equitable lien is an unperfected security interest,

see Mo. Rev. Stat. § 400.9-102(71); see also Lone Oak Farm Corp., 428 N.W.2d at

180, or a lien, see Mo. Rev. Stat. § 400.9-102(52), the bank’s perfected security

interest takes priority. The U.C.C. “determine[s] the law governing . . . the priority

of a security interest in collateral.” Id. § 400.9-301. “A perfected security interest . . .

has priority over a conflicting unperfected security interest,” id. § 400.9-322(a)(2), or

an after-acquired lien, see id. § 400.9-317(a), except as otherwise provided by law, see

id. § 400.9-322(a); cf. Gale & Co. v. Hooper, 323 S.W.2d 824, 826-27 (Mo. Ct. App.

1959).

MPT suggests its equitable lien is equivalent to a common law artisan’s lien,5

which under Missouri law has priority over “all other secured interests,” citing Gale

& Co., 323 S.W.2d at 826-27. Gale & Co. decided a mechanic who serviced an

automobile acquired a common law first priority lien in the vehicle for the value of

5

It is not clear whether Missouri recognizes such a lien. Compare Gale & Co.

v. Hooper, 330 S.W.2d 826, 827 (Mo. 1959) (per curiam) (affirming the Missouri

Court of Appeals’ judgment “that the chattel mortgage on an automobile was

subordinate to the common law artisan’s lien” in favor of an automobile mechanic),

with Fleming-Gilchrist Const. Co. v. McGonigle, 89 S.W.2d 15, 18 (Mo. 1935)

(“Mechanics’ liens were neither recognized at common law nor allowed in equity” and

must be determined “almost exclusively [by] the construction of statutes.”). We need

not determine how the Supreme Court of Missouri would resolve this apparent

conflict.

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services rendered. See id. at 826-27, 830. The Supreme Court of Missouri, with little

explanation, transferred the case and affirmed Gale & Co. “in the agreed but precisely

limited circumstances.” Gale & Co., 330 S.W.2d at 827. The common law artisan’s

lien recognized in Gale & Co. applies where the artisan “has enhanced the value of [a]

chattel” “while . . . in [the artisan’s] possession,” Gale & Co., 323 S.W.2d at 826, and

exclusively is “dependent upon possession,” Ozark Fin. Serv., a Div. of Ozark

Kenworth, Inc. v. Turner, 735 S.W.2d 374, 375 (Mo. Ct. App. 1987). MPT’s

professional services obviously did not enhance the value of any chattel in MPT’s

possession.

MPT proposes our 1927 decision in Geddes v. Reeves Coal & Dock Co., 20

F.2d 48 (8th Cir. 1927), indicates we can disregard Missouri’s statutory priority

scheme in the interest of fairness and equity. In MPT’s words, “this Court [in Geddes]

did not focus on any one particular state’s law . . . in applying the well recognized

doctrine of equitable liens.” The Geddes case was decided before the adoption of the

Code and more than ten years before Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78

(1938), established, “[e]xcept in matters governed by the Federal Constitution or by

acts of Congress, the law to be applied in any case is the law of the state.” We are not

free to disregard Missouri’s express statutory law, and instead follow our general

perceptions of equity.6

MPT repeatedly emphasizes its assertion the bank was aware of and acquiesced

to MPT’s expectation it could collect its fees from the tax refunds. Besides arguing

6

MPT cites two bankruptcy cases applying the laws of other states. In re Reda,

Inc., 54 B.R. 871, 880-82 (Bankr. N.D. Ill. 1985), turns on the application of federal

bankruptcy law, 11 U.S.C. § 506(c), and is inapplicable to MPT’s claim. The second

case, In re Alston, 322 B.R. 265, 270-71 (Bankr. D.N.J. 2005), considered the public

policy underlying the state’s statutory super priority provisions to craft a nonstatutory, equitable super priority right in the equitable lienholder. This result is

contrary to U.C.C. §§ 400.9-301, 400.9-317, and 400.9-322, and we decline to follow

it. See Lone Oak Farm, 428 N.W.2d at 180.

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injustice and public policy, MPT has not explained how the bank’s purported

knowledge of MPT’s agreement with HLC is relevant to the issue of statutory priority. 

We need not decide whether these purported facts would affect our analysis in this

case, because MPT has not offered sufficient evidence for us to conclude, for purposes

of summary judgment, the bank knew of and acquiesced in MPT’s claim for the

refunds. See Fin. Timing Publ’ns, Inc., v. Compugraphic Corp., 893 F.2d 936, 942

(8th Cir. 1990) (reiterating, “[a] party may not rely solely on inadmissible hearsay in

opposing a motion for summary judgment”). 

In support of its position, MPT presented an e-mail exchange between the bank

and Hazelwood in January 2010. In the e-mail, the bank’s vice president recognized

MPT had performed services for HLC and asserted MPT should not be paid out of the

refunds. In its response, HLC claimed MPT, Hazelwood, and the bank shared a

“general understanding” at the time the agreement was made that MPT would be paid

from the refund proceeds. Hazelwood’s e-mailed statement regarding the bank’s

“general understanding” is speculation and hearsay, and MPT did not argue the

statements were admissible under any relevant exception to the hearsay rule. See, e.g.,

Fed. R. Evid. 801(c) (defining hearsay as an out of court statement offered “to prove

the truth of the matter asserted”). The bank vice president’s statements may not be

hearsay. See Fed. R. Evid. 801(d)(2) (explaining an out of court statement made by

a party and offered into evidence against that party is not hearsay). Even construed

favorably for MPT, the bank vice president’s statements do not show the bank was

aware of MPT’s contract with HLC before MPT performed its services, so the

statements do not prove the bank acted unfairly toward MPT.

MPT is understandably upset that its labor produced the tax refunds at issue,

and the bank arguably is receiving a windfall—but for MPT’s efforts, there would be

no tax refunds for the bank to recover. MPT suggests the result in this case is poor

public policy, as it will create a disincentive for similarly situated professionals to

provide these services in the future. However, MPT had notice of the bank’s security

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interest and could have protected itself by having the bank agree in advance to

subordinate the bank’s security interest, in whole or in a compromised part, in

exchange for MPT’s services. We decline MPT’s invitation to disregard state law and

craft an “equitable” solution designed to protect a party who fails to take reasonable

steps to protect itself and assumes a known risk.

III. CONCLUSION

We affirm the district court’s entry of summary judgment in favor of the bank.

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