Former Hammer Collections’ owners ask court to vacate SBA judgment

The former owners of Hammer Collections LLC have fought The Bank of Missouri for six years on a defaulted U.S. Small Business Administration-backed loan they say led to the 2010 closure of their business.

On Dec. 22, the owners took their prolonged civil matter to the criminal level, when they say they filed formal complaints of fraud, felony theft and perjury against the bank with the Greene County Sheriff’s Office for efforts to collect money related to the loan.  

At a civil hearing regarding the defaulted loan held yesterday in Greene County Circuit Court, Charlotte and Mike Dawley of Hammer Collections asked Judge Jason Brown to reconsider a Dec. 3 ruling against them, and presented evidence they are participating in a federal program to pay back their debt. The judge had ruled earlier this month the SBA demands for money owed were to be suspended.

“They are not the party of interest,” Mike Dawley told the judge, speaking of The Bank of Missouri. “You didn’t know all the facts. The judgment should be voided.”

In 2012, The Bank of Missouri secured a judgment against South Creek Properties LLC –  the entity the Dawleys established as the land owner for their 8,700-square-foot office building east of West Bypass and West Battlefield Road – and Hammer Collections.

The Dawleys built the office space with a $1.05 million SBA-backed loan secured through The Bank of Missouri in 2008. The Dawleys defaulted on their loan in November 2009, according to court records. The Dawleys charge they had never missed a payment before their bank accounts were allegedly unjustly frozen, which led to a missed payment.

In September, the judge sustained the Dawleys’ motion to vacate the 2012 judgment in part, as the ruling related to damages to the Dawleys.

At the heart of the Dawleys’ case is prior to the 2012 judgment, the SBA purchased the loan in July 2010, and the SBA charged off this loan in December 2011, sending it to the Treasury Department for collections. Because of this, they believe they owe the government and not the bank and have since made payments to the Treasury. However, on Dec. 3, the court ruled any payments by the SBA to the bank “would not serve as a credit against or reduction of the amounts owed to the plaintiff.”

Further, the court ruled, “although said payments may have logical relevance to defendants, they do not have legal relevance.”

Yesterday, as part of their request for a rehearing, the Dawleys provided documentation to the court the SBA has certified the debt in the form of a Nov. 20 letter from the Treasury Department.

“The Nov. 20 letter we got was the first time that any government-agency letter we had gotten that clearly stated our debt was non-tax Treasury debt,” Mike Dawley said in a phone interview this morning.
 
Springfield attorney Raymond Plaster, representing the bank, said at the hearing the Dawleys’ arguments amounted to extraneous attacks on the judgment.

“This has been briefed to death,” Plaster said, adding the couple was rehashing old arguments. “What happens between the SBA and the bank is between us all. It’s one debt and one debt only.”

Judge Brown said he would consider the new evidence and make a determination.

Following yesterday’s hearing, the Dawleys said they are encouraged by the judge’s move to consider documentation from the SBA.

“(The bank) had no authority to bring a lawsuit to the state of Missouri, but they did, and they did it by making fraudulent claims and hiding information in order to be double-paid, basically,” Charlotte Dawley said, adding the federal government has garnished their wages. “They made the claim that we haven’t paid one dime on this account, but we brought the evidence that we’ve paid over $23,000 at this point.”

After the hearing, Plaster said by email he would not comment on the pending litigation without being able to confer with his client. He added, “the docket and judgment speak for themselves.”