Carmody v. Byline Bank

1

Aaron Carmody, Plaintiff-Co-Appellant, v. Byline Bank, Defendant-Third-Party Plaintiff-Respondent, Dylan Esterling, Defendant-Respondent, v. Nicole Elizabeth Carmody, Thtrd-Party Defendant-Appellant.

No. 2022AP1660

Court of Appeals of Wisconsin, District III

April 16, 2024

This opinion will not be published. See WIS. STAT. RULE 809.23(1)(b)5.

APPEAL FROM AN ORDER OF THE CIRCUIT COURT FOR DOOR COUNTY, NO 2018CV88 DAVID L. WEBER, JUDGE.

Before Stark, P. J., Hruz and Gill, JJ.

Per curiam opinions may not be cited in any court of this state as precedent or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).

PER CURIAM

¶1 Aaron Carmody and Nicole Elizabeth Carmody,^[1]both pro se appeal from the circuit court's order, entered after a bench trial, dismissing Aaron's claims and Nicole's third-party counterclaims against Byline Bank and Dylan Esterling^[2] and granting or dismissing as moot Byline's counterclaims and third-party claims against Aaron and Nicole, respectively. The Carmodys also challenge the court's decision on the parties' cross-motions for summary judgment, which denied Aaron's and Nicole's motions in their entirety and granted in part Byline's motions as to Nicole's third-party counterclaims and several of Aaron's claims. The Carmodys' main contention is that Aaron did not sign loan documents with Byline, including mortgages on two parcels of real property, used to obtain a $2,255,000 loan from Byline to purchase a commercial business. For the reasons that follow, we reject the Carmodys' arguments and affirm.

BACKGROUND

¶2 In 2015, Aaron and his friends, Adam Komoroski and Nathan Price, (collectively, the Partners) submitted a letter of intent to DAB Drilling, Inc. and CJs Construction &amp Seeding, Inc. (hereinafter, DAB) to purchase its business located in Commerce City, Colorado, for $3,500,000. The Partners then began communicating with Esterling, the then-Vice President of Business Development for Byline in Appleton, Wisconsin, to obtain a loan through the 7(a) Loan Program of the United States Small Business Administration (SBA). Byline eventually approved a loan to the Partners for $2,255,000, secured by DAB's business assets as well as mortgages against two of the Carmodys' real properties. During negotiations, Byline made clear that the loan was conditioned on the Partners' personal guarantees of the loan and the Carmodys' securing the loan by granting mortgages on their properties.

¶3 On February 18, 2016, Byline issued a commitment letter to the Partners, which summarized the terms and conditions for the expected loan. The commitment letter appeared to be signed by the Partners, and the Partners returned it to Byline along with checks for payment of a refundable deposit.^[3] Thereafter, Byline's closing agent^[4] worked to obtain the necessary documentation and information to close on the loan pursuant to the SB A and Byline's underwriting requirements.^[5]

¶4 During this time, according to the record, numerous emails were exchanged between the Partners and Byline. Aaron responded to some of the emails. At trial, however, Aaron testified that "there [were] emails that were forwarded to me from [Price]. But I never received any direct communication from Byline. I never got, for instance, a phone call. No one wrote me specifically an email. Everything, I think, was forwarded from [Price] or from [Komoroski] or something."

¶5 By July 2016, the Partners began pressuring Esterling about closing on the loan quickly because they were anxious to purchase DAB. For example, Price told Esterling on July 18 "If we wait till Thursday vs closing today, we will lose $190,000 in revenue. We lose $46,000 each day we put off the closing. We also lose a day in free insurance coverage each day we delay." On July 20, Byline's closing agent sent an email to Komoroski and Esterling explaining that the loan documents^[6] required by Byline would need to be signed "in front of a notary" and that "[tentative closing for you has been set in the Brookfield office this Friday." Komoroski forwarded that email to Aaron and Price, and Aaron responded:

Guys. We will screw this up if not on same page. I thought closing was set for Thursday. I won[']t be able to sign anything on [F]riday. Nicole is only available to sign stuff today. And we only have about 2 hours to get that done. What is she needing to sign? I thought we were going down on [T]hursday?

It appears that Komoroski then called the closing agent to inquire if Nicole's documents could be sent earlier because the closing agent responded to the Partners and Esterling by email that she "spoke with [Komoroski] a little while ago" and explained that "[s]ince Nicole is a limited guarantor on the loan, due to the mortgages, her documents cannot be sent out without" getting the "clear to close" from Byline. Pursuant to the record, Aaron did not further question why Nicole would need to sign for the mortgages.

¶6 Then, on July 21, 2016, the closing agent sent an update that "[a]t this point, we have to move the closing to Monday since ... the bank requires the clear to close to be given at least 24 hours before closing." Komoroski replied in an email stating that "Aaron ... was pretty upset. It is his wish[] that if it's Monday[,] it needs to be first thing in the morning at [8:00] as he's getting pretty impatient." That email was also sent to Aaron, Price, and Esterling. About an hour later, Price responded,

We need to try and stick with a tomorrow closing if at all possible. I understand the bank has a 24 hour policy, but this is special circumstance and everyone has had a lot of time to work thru things. The lawyers, buyers and sellers have rearranged their[] schedules several times throughout this week in anticipation for a closing and it's getting harder and harder to stay fluid. [Komoroski] is set to go to Colorado sometime Saturday. He has already set up appointments with customers, vendors and professionals in the drilling industry. It will not look well if the "new guy" from DAB Drilling is having to reschedule many of these appointments.

[Esterling], is there anyway we could try and push this thru and stick with the plan[?] We would consider signatures on Saturday morning [(July 23)] if need be. Monday is the beginning of a new cycle. We feel it's important to be the owners at the start of this cycle. Please advise.

¶7 According to Esterling's testimony at trial, in an effort to accommodate the Partners' desire to close on the loan by Monday, July 25, 2016, Esterling obtained the loan documents in the morning on Friday, July 22. Esterling explained that the loan documents required notarized signatures "for pretty much all of the documents," which, he noted, was "not typical" but was necessary because it was "a remote closing" that was not occurring at a Byline location. Esterling met Komoroski at a gas station halfway between their respective locations. There, they exchanged the loan documents, and Esterling confirmed that Komoroski "was tasked with taking the documents and circulating them [to the necessary parties], having all the respective parties sign, [and] get[ting] them notarized."

¶8 According to Price's testimony at trial, Komoroski brought the loan documents to the Carmodys' home where Nicole, Price, and Komoroski signed them. Price then left, leaving Komoroski and Nicole with the loan documents. Aaron was not home at the time, but the record suggests that he planned to return that evening.

¶9 The following morning, Komoroski informed Esterling that he had the loan documents and wished to return them. According to Esterling's testimony, after the exchange and upon review of the loan documents, he realized that "all the signature blocks were completed"-including Aaron's signatures- "but it looked like nothing had been notarized." Knowing that Komoroski was leaving for Colorado that day and knowing how insistent the Partners were about avoiding any delays in closing on the loan, Esterling decided to notarize the loan documents, despite the fact that it is undisputed that Esterling did not witness any of the signatures. That same day, Esterling sent an email to the Partners that said, "Thanks for taking time to go through all of those documents. Everything looked good to me but I have sent everything to [Byline's closing agent] for her review." Esterling testified that Aaron did not respond to this email or Esterling's subsequent email-sent four days later, stating that he had Aaron's signature on a different document-to "allege that he never received any documents[.]"

¶10 The Partners received the funds from the loan to purchase DAB by July 27, 2016. Additionally, funds for working capital were also available to the Partners through the loan, and Komoroski sent an email to Esterling on July 28, requesting that $250,000 be wired to the Partners. Aaron was copied on that email, but he did not respond to question why the funds had been distributed without his signature.

¶11 Almost a year later, in June 2017, Aaron and Price contacted Byline regarding a dispute with the sellers of DAB over equipment that was to be included in the acquisition. Byline provided them with a copy of the equipment certification which had been signed by Aaron twice-both personally and as the president of DAB-on July 25, 2016, and notarized by Esterling. According to Aaron's testimony, he did not "respond ... immediately" to argue that he did not sign that document, but he did have "a discussion with [Price] about this document," during which Aaron claimed he asked Price, "How the hell is my signature on there?" Aaron testified that he "made the conscious decision not to advise [Byline] of [his] accusation of fraud at [that]...