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Heartland Bank v. Parsley

United States District Court, E.D. Arkansas, Western Division

September 25, 2017

HEARTLAND BANK, PLAINTIFF
v.
RANDAL B. PARSLEY, et al., DEFENDANTS RANDAL B. PARSLEY, THIRD-PARTY PLAINTIFF
v.
L. WALTER QUINN, THIRD-PARTY DEFENDANT

          ORDER

          BILLY ROY WILSON, UNITED STATES DISTRICT JUDGE

         Pending are Third-party Defendant's Motion for Summary Judgment (Doc. No. 61) and Plaintiff's Motion for Summary Judgment (Doc. No. 63). Responses and replies have been filed.[1] For the reasons set out below, Third-party Defendant's Motion for Summary Judgment (Doc. No. 61) is DENIED and Plaintiff's Motion for Summary Judgment (Doc. No. 63) is GRANTED.

         I. BACKGROUND [2]

         In 2011, Third-party Defendant Walter Quinn and a man named John Lewis owned Rock Exploration, LLC, which was involved in the oil-and-gas business. Looking for another investor, Mr. Quinn offered to sell Mr. Randal Parsley a 10% stake in Rock Exploration. The agreement between Mr. Quinn and Mr. Parsley was never reduced to writing. Based on a report supplied by Mr. Quinn, Rock Exploration had $30 million in oil-and-gas reserves, which meant Mr. Parsley needed to pay $3 million to obtain the 10% stake. On December 19, 2011, Plaintiff Heartland Bank loaned Mr. Parsley and Ambassador Energy, LLC (“Defendants”) $3 million, (at 7% annual interest) to invest in Rock Exploration. Defendants have not timely repaid the loan, and, as of August 30, 2017, a little over $1.7 million was outstanding on the loan, with interest accruing daily.

         Heartland Bank filed the Complaint seeking repayment of the loan. Defendants responded by claiming they were duped by Mr. Quinn, and that Heartland Bank has unclean hands because it was owned by Mr. Quinn and knew what was going on with the loan. Mr. Quinn contends that Defendants' claims are subject to the statute of limitations.

         II. SUMMARY JUDGMENT STANDARD

         Summary judgment is appropriate only when there is no genuine issue of material fact, so that the dispute may be decided on purely legal grounds.[3] The Supreme Court has established guidelines to assist trial courts in determining whether this standard has been met:

The inquiry performed is the threshold inquiry of determining whether there is the need for a trial -- whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.[4]

         The Court of Appeals for the Eighth Circuit has cautioned that summary judgment is an extreme remedy that should only be granted when the movant has established a right to the judgment beyond controversy.[5] Nevertheless, summary judgment promotes judicial economy by preventing trial when no genuine issue of fact remains.[6] This court must view the facts in the light most favorable to the party opposing the motion.[7] The Eighth Circuit has also set out the burden of the parties in connection with a summary judgment motion:

[T]he burden on the party moving for summary judgment is only to demonstrate, i.e., “[to point] out to the District Court, ” that the record does not disclose a genuine dispute on a material fact. It is enough for the movant to bring up the fact that the record does not contain such an issue and to identify that part of the record which bears out his assertion. Once this is done, his burden is discharged, and, if the record in fact bears out the claim that no genuine dispute exists on any material fact, it is then the respondent's burden to set forth affirmative evidence, specific facts, showing that there is a genuine dispute on that issue. If the respondent fails to carry that burden, summary judgment should be granted.[8]

         Only disputes over facts that may affect the outcome of the suit under governing law will properly preclude the entry of summary judgment.[9]

         III. DISCUSSION

         A. Plaintiff's Motion for Summary Judgment

         Plaintiff asserts that it is entitled to summary judgment because it is undisputed that Defendants took out a loan that is now overdue. Defendants do not deny this, but argue that Plaintiff may not recover based on the unclean-hands doctrine.[10] “[T]he clean-hands doctrine bars relief ...


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