A Barton County couple has filed multiple civil charges against the area’s largest U.S. Small Business Administration lender stemming from a 1998 SBA loan for $425,000.
Rick and Doris Fast filed a petition for damages in Greene County Circuit Court earlier this year, claiming fraudulent misrepresentation or concealment, negligent representation, civil conspiracy and negligent infliction of emotional distress and loss of consortium against Springfield-based Liberty Bancshares Inc., holding company for Liberty Bank, and Executive Vice President Garry Robinson.
The action comes after a Sept. 13 ruling by the SBA in favor of the Fasts, finding the terms of the SBA note and amended SBA note “were not personally enforceable.”
“The Fasts had their wages and tax refunds garnished for two years while this was all sorted out by the [U.S. Department of] Treasury,” said plaintiffs’ attorney Greg Aleshire of Aleshire Robb PC. “The Fasts were under no obligation for the loan, and the SBA proved it.”
Liberty Bank President Gary Metzger deferred all comment on the case to Husch Blackwell LLP partner Virginia Fry. Fry declined to comment on the pending litigation.
The petition hinges on the so-called “waiver of a waiver of rights” and investigates possible “self-dealing” by Robinson, who the Fasts claim had an independent stake in the company that purchased the disputed land at a possible discount.
The original loanAccording to court documents, the Fasts entered into a commercial loan agreement on Aug. 28, 1998, for construction of a building and purchase of real estate in Barton County for what would later become Fast Truck Service in Lamar. The SBA-guaranteed loan was issued through Sac River Bank, where Robinson worked as president.
At the time, Robinson required Rick Fast obtain $800,000 in life insurance and Doris Fast obtain a $250,000 policy, with any lender notified of any failure to pay or a lapse in coverage.
In December of the same year, Liberty Bank acquired Sac River Bank and Robinson as an employee. The following July, the Fasts signed an amended note with Liberty Bank, which among other things, provided the “borrower waives all suretyship defenses.”
According to USLegal.com, a surety is a person obligated by a contract under which one person agrees to pay a debt or perform a duty if the other person who is bound to pay the debt or perform the duty fails to do so. Typically, the party receiving the surety’s performance will first try to collect or obtain performance from the debtor before trying to collect from the surety.
The saleThe Fasts put the property up for sale in 2001. Enter Orlan and Mary Kellenberger, who took the lease with an option to purchase and exercised the option less than a year later, purchasing the property for $500,000.
“The Kellenbergers liked the loan rate on the Fasts’ SBA loan and asked to assume the loan,” Aleshire said. “Liberty approved the transaction.”
According to court documents, the Kellenbergers assumed $406,435, with the difference paid in cash to the Fasts.
“During those discussions, nobody ever informed the Fasts they would have any continuing obligation to the loan,” Aleshire said. “The Fasts signed a consent to assumption in December 2003 which contained no reference to their having any continued obligation on the loan. In January, they signed a general warranty deed with the Kellenbergers and around the same time canceled their life insurance policies.
"The Kellenbergers were not asked to purchase life insurance.”
Because Liberty Bank did not notify the Fasts they needed to maintain their life insurance policies, Aleshire claims the cancellation was the first key step in a series of contract changes the Fasts were not notified of.
“If in fact the Fasts were still responsible for the loan, there would have been red flags when canceling the life insurance policy,” he said. “The Fasts signed the documents and were glad to be done with it. It wasn’t until six years later, the first time they heard from Liberty since, that they were notified they were still on the hook for the loan.”
Aleshire also claims Liberty Bank’s Feb. 23, 2004, report to credit bureaus showing a zero balance on the original note by the Fasts resulted in a waiver, “because it was an intentional relinquishment of any ability of Liberty Bank to rely upon such provision,” the petition reads.
Shift in responsibility On June 23, 2010, Orlan and Mary Kellenberger died in a plane crash.
According to court documents, the Fasts had no communication with Liberty Bank from 2004 until following the crash in October 2010.
On Oct. 29, 2010, the Fasts received a letter from Liberty Bank calling for $309,000 due on the loan.
Liberty Bank foreclosed on the property Dec. 14 of the same year, purchasing the property for $250,000 without an appraisal, the maximum allowed under Missouri’s code of regulations.
On Feb. 28, 2011, the property was sold to Redneck Manufacturing LLC – a company that builds hunting blinds – for $270,000 and in October that same year, the Fasts received a deficiency letter from the Department of Treasury seeking $122,488.
“The Fasts requested an SBA investigation and were cleared, but Liberty Bank did not act in good faith as required by Missouri law in this deal,” Aleshire said.
The 39-page petition claims – based on public documents – Robinson engaged in self-dealing in that he had an independent stake in companies which own, lease, manage or finance Redneck Manufacturing. Robinson is a member of Redneck Properties LLC, owner of two other Barton County properties which house Redneck Manufacturing facilities, and he is shareholder, president, vice president and secretary of GLR Investments Inc., which financed $286,000 for the property purchase, among other connections.
The petition claims, “Liberty Bank and its other officers and/or directors were aware of, involved in, and/or approved or ratified Robinson’s self-dealing.”
Where it standsThe Fasts have requested a jury trial seeking unspecified damages in the case, which was recently moved to Barton County on a change of venue request.
Defendants’ attorney Fry filed a motion to dismiss on March 28. Fry wouldn’t speak to reasons behind the motion, but said it was the first of many steps.
“It’s important to remember these are merely allegations and are not yet proven true or false,” she said. “This is what the litigation process is for and it’s important to take place.”
Aleshire said he was unsure if a case of this nature involving an SBA loan was common, but noted request for similar SBA assumption agreements is part of the Fasts’ request for records from Liberty Bank.
According to Springfield Business Journal research, Liberty Bank handles the most SBA loans in the southwest Missouri area, issuing 131 loans in 2013 totaling $36.5 million.
The $1.1 billion financial services company has entered a
purchase agreement with Pine Bluff, Ark.-based Simmons First National Corp.
