Opinion ID: 820514
Heading Depth: 3
Heading Rank: 1

Heading: Financing

Text: 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. -3- “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.