Court of appeals sides with couple in judgment dispute

By Sam Knef | May 10, 2017

ST. LOUIS — The Missouri Court of Appeals Eastern District has sided with a couple who had been subject to a bank's default judgment award that totaled more than $125,000 with interest.

In an order issued on May 2, the court reversed and remanded to St. Louis County Circuit Court a charging order and receiver requested by Gaol Holdings LLC. Gaol had been assigned the interest in an $80,877.07 default judgment against Michael E. and Catherine K. Kohn by St. Louis Bank in 2009.

The order indicates that St. Louis Bank assigned its interest in the judgment to Gaol in February 2015.

It also states that in June 2015, Gaol sought to collect on the judgment, and in its motion for charging order, it calculated 9 percent interest on a monthly basis totaling $44,421.73.

That charging order included a statement of "probable interest" in a number of entities in which the Kohns have interests, including Brentmoor 1 LP, Funny Bone Holdings LP, The Kohn Partnership LLP, Jilia III LP and Brentmoor Capital Partners LP, according to the ruling.

The appeals panel, which included Judges Roy Richter, Robert Dowd Jr. and Mary Hoff, found that the attorney for Gaol did not "express a basis on which he had personal knowledge of any interest of the Kohns in any of the entities sought to be charged."

"Respondent's Counsel further stated only in his Motion for Charging Order that he has personal knowledge of the facts set forth and is the custodian of records for Respondent and the records of the plaintiff in the action in connection with the Judgment in this case," the panel said.

The panel further found that Gaol's attorney did not indicate personal knowledge "an agreed upon interest rate or any other evidence as to how the rate of 9 percent was determined." 

In reversing and remanding the case, the appeals panel found that the 2009 default judgment was "silent" as to post-judgment interest.

"Because this application for charging order was not properly based on personal knowledge, nor did it contain proof of the facts pleaded in the application, we find that the charging order was not valid and enforceable. Point I is granted,” the ruling states. “Without a valid charging order, the receivership cannot exist."

The panel held that the record contained "insufficient evidence" to support a charging order and instructed the trial court to deny the bank's motion for charging order and appointment of a receiver. 

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