Client is a family owned fast food restaurant.  In August, 2013, several of restaurant’s employees struck as a part of the nation-wide fast food workers’ strike.  Following the one day strike, one striker, with union assistance, brought a NLRB unfair labor practices charge against restaurant.  Employee claimed that restaurant cut his hours and changed his duties as a result of his participation in the strike. 

Gorman and restaurant answered the charge, providing evidence that disproved employee’s claim, including proof that employee’s change in hours resulted from the seasonal nature of restaurant’s business. At Gorman's direction, restaurant's owner and two management employees also submitted to interviews by, gave affidavits to, the NLRB. Shortly therafter, the NLRB dismissed the charge in a one-sentence Decision to Dismiss, stating "(t)here is insufficient evidence to establish a violation of the Act."

This year, McDowell Rice committed to a record-breaking number of adoptions, surpassing our former record. McDowell Rice also collected over $5,000 in donations during the 2013 United Way Campaign, slightly higher than last year's donations.

Effective August 28, 2013, the Missouri statute relating to commercial credit agreements, Section 432.047, has been changed to add the requirement that any credit agreements must be executed by both the debtor and the lender.

Under the prior version of Section 432.047, Subsection 2, a debtor could not maintain an action or defense relating to a credit agreement unless the agreement was in writing, afforded for the payment of interest or for other consideration and set forth the relevant terms and conditions. The new law adds the requirement that “the credit agreement [be] executed by the debtor and the lender.”

However, in order for a lender to be protected by Subsection 2 of the newly revised statute, the lender must include certain language in the signed credit agreement. As of August 28, 2013, the following must be included in written commercial credit agreements in boldface 10-point font:

Oral or unexecuted agreements or commitments to loan money, extend credit or to forbear from enforcing repayment of a debt, including promises to extend or renew such debt, are not enforceable, regardless of the legal theory upon which it is based that is in any way related to the credit agreement. To protect you (borrower(s)) and us (creditor) from misunderstanding or disappointment, any agreements we reach covering such matters are contained in this writing, which is the complete and exclusive statement of the agreement between us, except as we may later agree in writing to modify it.

For background, the credit agreement statute of frauds was originally enacted as Section 432.045 in 1990. The first reported decisions addressing the statute were issued by federal courts which predicted that Missouri appellate courts would interpret and apply the statute broadly to exclude all claims, including those claims or defenses based on fraud See Horseshoe Entertainment, L.P., v. General Electric Capital Corp., 990 F.Supp. 737 (E.D.Mo. 1997); Cavalier Homes of Alabama, Inc. v. Security Pacific Housing Services, 5 F.Supp.2d 712 (E.D.Mo. 1997). However, in Mika v. Central Bank of Kansas City, 112 S.W.3d 82 (Mo.App. 2003), the Missouri Court of Appeals instead recognized certain common law equitable exceptions (including partial performance and fraud) to the prior credit agreement statute of frauds. As a result, the Mika court limited the scope of the original statute to contract law claims and excluded from its coverage claims or defenses based on allegations of fraud or other equitable claims or defenses.

Immediately following the Mika decision, the Missouri legislature passed RSMo. Section 432.047 using specific language that the Mikacourt had stated would indicate clear legislative intent to make the common law equitable exceptions inapplicable to Missouri's credit agreement statute of frauds and to extend the credit agreement statute of frauds to also bar tort claims. As a result, following the passage of RSMo. Section 432.047, the common law exceptions to the general statute of frauds do not apply to Missouri's credit agreement statute of frauds, RSMo. Section 432.047 and both contract and tort claims are barred by RSMo. Section 432.047.

Notwithstanding the Missouri legislature’s effort to follow the specific guidance offered by the Mika court to indicate legislative intent to bar all claims, courts have continued to issue conflicting interpretations of the statute. See U.S. Bank National Association v. Canny, No. 4:10CV421 CDP, 2011 WL 226965, at *2 (E.D. Mo. Jan. 24, 2011); BancorpSouth Bank v. Paramont Properties, 349 S.W.2d 363, 367 (Mo.App. 2011); Smithville 169 v. Citizens Bank & Trust Co., No. 4:11-CV-0872-DGK, 2013 WL 434028, at *2-3 (W.D.Mo. 2013); BancorpSouth Bank v. RWM Properties II, LLC, No. 4: 11CV000373 JCH, 2011 WL 4435271, at *2-3 (E.D.Mo. 2011).

Recently, Section 432.047 was the subject of a limiting interpretation in Bailey v. Hawthorn Bank, 382 S.W.3d 84 (Mo.App. W.D. 2012). The Bailey court held that a loan commitment letter and an internal written loan summary together constituted a written credit agreement as the term is used in the statute even though the loan summary was never delivered to the borrower until after the litigation was pending. In so holding, the Court noted as follows:

Nowhere does Section 432.047 contain any requirement that the "credit agreement" must be delivered to the other party. Where the words are clear and unambiguous, rummaging among the statutory cannons of construction to devise a different meaning is impermissible. (Citations omitted). Here, the lack of such a delivery requirement in the statute is dispositive of the issue.

Id. at 94-95. The recent legislative amendment of Section 432.047 is the legislative response to the Bailey decision. As a result, Section 432.047 now provides that as long as the mandatory disclosure is included in the written commercial credit agreement, borrowers will have to present a credit agreement that has been executed by both the borrower and the lender in order to maintain an action or assert a defense based on a credit agreement.

Submitted by Kristie Orme, Member of McDowell Rice’s Banking and Financial Services Group.

*This information is intended only to provide general information in summary form on legal and business issues. The contents do not constitute legal advice and should not be relied on as such.

McDowell Rice Smith & Buchanan is distinguished as a Winner (Small Company category) in Ingram's 2013 "Best Companies to Work For" competition.

Congratulations to the following attorneys who have been selected to the 2013 Missouri & Kansas Super Lawyers List in their primary practice area, and are featured in the 2013 Super Lawyers Magazine for Missouri & Kansas:

R. Pete Smith - Business Litigation 
Thomas R. Buchanan - Construction Litigation
Michael J. Gorman - Business Litigation 
Louis J. Wade - Bankruptcy 
Jonathan A. Margolies - Bankruptcy 
Greg T. Spies - Business Litigation

McDowell Rice Smith & Buchanan co-sponsored Ingram’s 2013 Annual Legal Industry Outlook Assembly on Tuesday, May 7, 2013.  The discussion focused heavily on corporate and business law. Senior Partner and Chairman Pete Smith co-chaired the assembly; Jonathan Margolies was also a participant.  More than ten of the most prominent law firms in Kansas City participated in the assembly. 

McDowell Rice successfully defended two appeals in a dissolution of marriage action. The first appeal centered around the Platte County, Missouri Circuit Court’s classification of a business entity as marital property and award of $2,750,000 in equity from the business entity to our client. The Missouri Court of Appeals, Western District upheld the Circuit Court’s classification of the business entity and equity award to our client because the business entity was started in contemplation of marriage, was intended to be marital property and both parties contributed to the increased value of the business entity throughout the course of the marriage. The second appeal involved the Circuit Court granting an attorney’s lien. The Missouri Court of Appeals, Western District upheld the Circuit Court’s ruling regarding the attorney’s lien. R. Pete Smith was lead counsel and argued the appeals before the Missouri Court of Appeals, Western District; Tiffany A. McFarland wrote the briefs.

Best Law Firms list by U.S. News & World Report and Best Lawyers 2011 - Present

McDowell Rice Smith & Buchanan, PC has been named to the Best Law Firms list by U.S. News & World Report and Best Lawyers.  U.S. News & World Report and Best Lawyers, the leading survey of lawyers worldwide, have joined to rank more than 10,000 law firms in 118 practice areas in 170 metropolitan areas and eight states. The top ranked U.S. Law firms by practice area includes a breakdown of firms ranked nationally in both state and metropolitan areas. The rankings are based on a rigorous evaluation process that includes the collection of client and lawyer evaluations, peer-reviews from leading attorneys in their field, and review of additional information provided by U.S. law firms as part of the formal submission process.  McDowell Rice Smith & Buchanan, PC, has been recognized in the practice areas of Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law, and Litigation.

Top Ranked Law Firm by Martindale- Hubbell 2012 - Present

McDowell Rice Smith & Buchanan, PC, has been distinguished as one of the Top Ranked Law Firms by LexisNexis® Martindale-Hubbell®. The Firm appeared in Fortune’s “2012 Investor’s Guide” and was one of 965 firms out of 254,000 to receive this honor. This first-time list of Top Ranked Law Firms features U.S. law firms with 21 or more attorneys in which at least one in three of their lawyers earned the AV® Preeminent™ Peer Review Rating, the highest possible rating. An AV® Preeminent™ certification is a significant accomplishment – a testament to the fact that a lawyer’s peers rank him or her at the highest level of ethical standards, professional conduct, and legal ability.

McDowell Rice Smith & Buchanan – “Ingram’s Best Companies to Work For”

McDowell Rice Smith & Buchanan, PC is distinguished as a Winner (“Small Company” category) in Ingram’s 2013 “Best Companies to Work For” competition.

 Ingrams Best Companies to Work For May 2013.pdf

On May 7, 2009, McDowell, Rice attorney Tom Buchanan won a $16,738,500 victory for ICE Corp., a small Kansas manufacturer of aircraft de-icing controllers. ICE sued corporate giant Hamilton Sundstrand and its French affiliate, Ratier Figeac, for misappropriation of ICE’s trade secrets. The lawsuit involved development and sale to Airbus of de-icing controllers to be used on military aircraft.

After a month-long trial, a federal jury in Topeka, Kansas found in favor of ICE and awardedcompensatory damages of $4,795,300 under the Kansas Uniform Trade Secrets Act. In addition, the jury found the misappropriation was willful and that punitive damages should be awarded in the amount of $10 million against Ratier and $2.5 million against Hamilton Sundstrand. Following a subsequent bench trial, the United States District Court independently evaluated the punitive damages and imposed punitive damages of $9,590,600 against Ratier and $2,397.650 against Hamilton Sunstrand. Judgment has been entered in ICE's favor, and the case remains pending for the Court’s decision on the defendants’ post-trial motions.

Jason Buchanan second-chaired the trial, and Linda McFee assisted throughout the litigation.

ICE Corp. v. Hamilton Sundstrand Corp., 615 F. Supp. 2d 1266 (D. Kan. 2009).