                      United States Court of Appeals
                             FOR THE EIGHTH CIRCUIT
                                     _____________

                                      No. 97-3345
                                     _____________

First Bank of Marietta,                    *
                                           *
              Appellant,                   *
                                           * Appeal from the United States
       v.                                  * District Court for the Western
                                           * District of Missouri.
Robert L. Hogge,                           *
                                           *
              Appellee.                    *
                                     _____________

                                   Submitted: January 22, 1998
                                       Filed: November 6, 1998
                                    _____________

Before McMILLIAN, FLOYD R. GIBSON, and BOWMAN,1 Circuit Judges.
                          _____________

FLOYD R. GIBSON, Circuit Judge.

        First Bank of Marietta ("First Bank") appeals the summary judgment that the
district court2 entered against it in First Bank's fraudulent misrepresentation case against
Robert L. Hogge, the presiding commissioner of Moniteau County, Missouri. For the
reasons set forth below, we affirm.


       1
       The Honorable Pasco M. Bowman became Chief Judge of the United States
Court of Appeals for the Eighth Circuit on April 18, 1998.
       2
        The HONORABLE NANETTE K. LAUGHREY, United States District Judge
for the Eastern and Western Districts of Missouri.
I.    BACKGROUND

       The following summary is based largely upon the district court's statement of
facts and the parties' Agreed Statement as the Record on Appeal.

       On December 10, 1990, Moniteau County, Missouri ("County") entered into a
lease-purchase agreement with Pioneer Leasing Corporation ("Pioneer") in which the
County agreed to lease certain emergency radio equipment. The lease-purchase
agreement stated that the lessor makes no warranties regarding the condition, quality,
or fitness of the equipment. Pioneer subsequently assigned all of its rights, titles and
interests in the lease to Consolidated Financial Services ("Consolidated"). On June 14,
1991, Robert Hogge, the presiding commissioner of the County, executed a Certificate
of Acceptance in which he represented that the individual pieces of equipment received
pursuant to the lease-purchase agreement were in good working order, were suitable
for the County's purposes, and were unconditionally received for all purposes of the
lease-purchase agreement.

       On June 26, 1991, Consolidated and First Bank signed a bill of sale and
assignment in which Consolidated assigned all of its rights, titles and interests in the
lease to First Bank. Alan N. Shind, the vice-president of First Bank, stated that First
Bank relied upon Hogge's Certificate of Acceptance in purchasing the lease.

       Thereafter, Hogge acknowledged that "the equipment described in [the lease-
purchase agreement] was not operational on June 14, 1991." Agreed Statement As The
R. On Appeal at Ex. 3. Hogge stated that he signed the Certificate of Acceptance at
the request of an individual who informed Hogge that "the document was a formality
required in order to receive payment, and that the said equipment would be properly
installed and made fully functional." Id. Moreover, Hogge indicated that the radio
equipment "has never been properly installed and made fully operational." Id. Shind


                                          -2-
countered that First Bank would not have purchased the lease or disbursed funds had
it known that these allegations in Hogge's Certificate of Acceptance were false.

       The County's first payment to First Bank of $11,690.72 was due on December
10, 1991. The County did not pay this payment but, instead, rejected the equipment
by correspondence to Consolidated,3 dated December 3, 1991, which claimed that the
system was not operational and that much of the equipment was non-conforming.
Thereafter, by a letter dated August 21, 1992, the County informed First Bank's counsel
that the County did not believe that the lease-purchase agreement was enforceable
under the Missouri Supreme Court ruling in Mercantile Bank of Illinois v. School Dist.
of Osceola, 834 S.W.2d 737 (Mo. 1992).4 In particular, the County explained that

      [b]ecause [it] has now been forced to operate on a deficit budget, this
      contract does not appear to be enforceable under the recent Missouri
      Supreme Court ruling in Mercantile Bank. . . .

      As the situation stands, we cannot use the equipment, the equipment is sitting
      in boxes depreciating every day and a lot of economic waste is occurring.

Agreed Statement As The R. On Appeal at 4-5.




      3
      Although not pertinent to this appeal, the parties' Agreed Statement As The R.
On Appeal states that this letter was sent to Consolidated despite the fact that, on
December 3, 1991, Consolidated already had assigned all of its rights in the lease-
purchase agreement to First Bank.
      4
        The Missouri Supreme Court, in Mercantile Bank, interpreted Article VI,
Section 26(a) of the Constitution of the State of Missouri. Article VI, Section 26(a)
provides that "[n]o county . . . shall become indebted in an amount exceeding in any
year the income and revenue provided for such year plus any unencumbered balances
from previous years."

                                          -3-
      In a second letter dated November 6, 1992, the County again wrote to First
Bank's counsel and stated that

       [a]s you may have heard in the news, our County Commission has been
       publicly criticized by State Auditor Margaret Kelly's office because of our
       budget deficit situation. We were in poor condition prior to having to
       face the multiple capital murder cases which are now pending. Without
       a doubt our situation falls squarely within the Missouri Supreme Courts
       [sic] ruling in Mercantile Bank. . . . Please be advised that Moniteau
       County asserts the additional defense that the contract is voided for the
       reason that Moniteau County lacks sufficient unencumbered fiscal
       resources to pay any additional funds as due. . . .

       The situation remains that we cannot make the system work and that we are
       not using any part of it.

Id. at 5.

       On February 26, 1993, First Bank filed a petition5 in Moniteau County Circuit
Court seeking damages against the County under the lease-purchase agreement. This
petition alleged, in pertinent part, as follows:

              7. Pursuant to the lease Moniteau County agreed to pay three equal
       installments of Eleven Thousand, Six Hundred Ninety and 72/001 [sic]
       ($11,690.72) Dollars with the first payment due December 10, 1991, an
       additional payment due December 10, 1992, and a final payment due
       December 10, 1993, for a total of Thirty-five Thousand, Seventy-two and
       16/100 ($35,0072.16) (sic) Dollars.




       5
        First Bank later dismissed this petition against the County without prejudice;
however, allegations contained within this petition are relevant to issues raised on
appeal.

                                          -4-
             8. Moniteau County has defaulted in making the December 10,
       1991 and December 10, 1992 payments.

             9. By virtue of Moniteau County's default, [First Bank] has
       accelerated all payments and the same are now due and payable but
       Moniteau County has failed and refused, despite demand, to perform its
       obligations under the lease.

              10. By virtue of [the County's] entry into and breach of the lease,
       First Bank of Marietta is legally entitled to receive the payments referred
       to in paragraph 7, totaling $35,072.16, along with interest at the highest
       lawful rate from the due date of each installment payment, and late fees
       as provided by the lease.

                                         ***

             WHEREFORE, [First Bank] prays this judgment against [the
       County] in the amount of Thirty-five Thousand, Seventy-two and 16/100
       ($35,072.16) Dollars, plus interest at the highest legal rate from
       December 10, 1991, for late charges as provided in the lease, reasonable
       attorney's fees, court costs and costs of collection as provided by the
       agreement, and for such other and further relief as this court deems just
       and proper.

Id. at 5-6.

      The County's answer to First Bank's state court petition, in pertinent part,
responded that the lease-purchase agreement "violates on its face Article VI, Section
26(a) of the Constitution of the state of Missouri. . . . [and that the County] timely
informed [First Bank] . . . that its obligations, if any, under the lease purchase
agreement were voided by inability to constitutionally pay the same." Id. at 6.




                                          -5-
       On December 10, 1993, the County did not make the third payment to First Bank
that was originally due on that date. The total income and revenue received by the
County during fiscal year 1991 was greater than the amount of the payment due under
the lease-purchase agreement on December 10, 1991, $11,690.72. However, Anita
Groepper, the County Clerk, stated that the County did not have available
unencumbered funds to pay the entire balance on the lease-purchase agreement,
$35,072.16, in fiscal years 1991, 1992, and 1993.6

       Later, First Bank voluntarily dismissed its state court action against the County
without prejudice. First Bank, then, filed its action claiming damages against Hogge
based upon his alleged fraudulent misrepresentation in the Certificate of Acceptance
in the United States District Court for the Western District of Missouri, on the basis of
diversity jurisdiction.7 After discovery was completed, First Bank and Hogge each
filed motions for summary judgment. The district court denied First Bank's motion for
summary judgment but granted Hogge's motion for summary judgment. The district

      6
          First Bank and the County dispute the timing of First Bank's acceleration of the
payments due under the lease-purchase agreement as well as the amount of
unencumbered funds the County had available from 1991-93. First Bank claims that
it first demanded payment of all amounts due under the lease when it filed its state court
petition in February of 1993. Prior to that time, First Bank had made no such demand
against Moniteau County. In addition, First Bank's vice-president Shind stated that
"First Bank never accelerated payments under the lease to Moniteau County." Agreed
Statement As The R. On Appeal at 10.

      However, the County cites to First Bank's own February 1993 state court petition
and argues that the petition shows that First Bank accelerated payments to the date of
default -- December 11, 1991. The petition states that "[b]y virtue of Moniteau
County's default, [First Bank] has accelerated all payments and the same are now due
and payable." Id. Moreover, in the petition's prayer for relief, First Bank requested
damages "in the amount of . . . $35,072.16 . . . , plus interest at the highest legal rate
from December 10, 1991." Id. at 10-11.
      7
       See 28 U.S.C. § 1332 (1994).

                                           -6-
court held that (1) First Bank accelerated all payments back to December 10, 1991, the
date of default; (2) Hogge's representations were not the proximate cause of First
Bank's damages; (3) First Bank had no right to rely on Hogge's representations in the
Certificate of Acceptance; and (4) First Bank was unable to present facts which created
a triable issue on injury. First Bank appeals.

II.   DISCUSSION

       We review a grant of summary judgment de novo. Summary judgment is
appropriate when the evidence, viewed in the light most favorable to First Bank,
demonstrates that there is no genuine issue of material fact and that Hogge is entitled
to judgment as a matter of law. See United States v. Dico, Inc., 136 F.3d 572, 578 (8th
Cir. 1998). Sitting in diversity, we apply the substantive law of the applicable state,
in this case, Missouri. See Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). We
review de novo the district court's application of state law. See First Colony Life Ins.
Co. v. Berube, 130 F.3d 827, 829 (8th Cir. 1997). Where state law is ambiguous, we
predict how the state's highest court would resolve the issue. See id.

A.    Acceleration

       On appeal, First Bank contends that the district court erred in finding that First
Bank had accelerated all three of the County's lease payments when the County
defaulted on the 1991 payment. In particular, First Bank argues that the only evidence
of an acceleration was its statements in the state court pleadings and that the district
court erred in finding that these statements were binding on First Bank as judicial
admissions. First Bank notes that other evidence existed which showed that no
acceleration had occurred.8


      8
        For instance, in its Answer in the state court case, the County denied that
acceleration occurred. Also, affidavits from First Bank's president and vice-president

                                          -7-
       Missouri law provides that acceleration clauses are not "self-operative." Spires
v. Lawless, 493 S.W.2d 65, 73 (Mo. Ct. App. 1973). Rather, acceleration clauses
confer upon the holder an option to treat the entire debt as due upon default. See id.
"In order to effectuate the acceleration and render the entire debt due, the [holder] must
perform some affirmative, overt act evidencing [its] intention to take advantage of the
accelerating provision." Id. The Missouri Supreme Court has held that "[t]he filing of
[a claim] seeking full payment is wholly sufficient as notice of acceleration." Audsley
v. Allen, 774 S.W.2d 142, 145 (Mo. 1989).

      In the present case, First Bank stated in its state court petition that "[b]y virtue
of Moniteau County's default, [First Bank] has accelerated all payments and the same
are now due and payable." Agreed Statement As The R. On Appeal at 5 (emphasis
added). Moreover, in First Bank's prayer for relief, First Bank requested damages "in
the amount of . . . $35,072.16 . . . , plus interest at the highest legal rate from December
10, 1991." Id. at 6 (emphasis added). Although these statements from First Bank's
abandoned state court pleadings do not constitute binding judicial admissions,9 these
statements are admissible evidence that can be weighed like any other admission
against interest of First Bank. See Bledsoe, 429 S.W.2d at 730. Under Missouri law,
First Bank's petition which declared that it had accelerated and further demanded full
payment under the lease-purchase agreement clearly constitutes a notice of
acceleration. See Audsley, 774 S.W.2d at 145. First Bank's subsequent denials by its
president and vice-president that no acceleration occurred are wholly inconsistent with
First Bank's unambiguous statements claiming an acceleration in its state court
pleadings. Therefore, we conclude that no reasonable juror could find that First Bank



stated that no acceleration had occurred.
       9
       See Bledsoe v. Northside Supply & Dev. Co., 429 S.W.2d 727, 730 (Mo. 1968)
("An admission in an abandoned pleading is not conclusive.") See also Evans v. Eno,
903 S.W.2d 258, 260 (Mo. Ct. App. 1995).

                                            -8-
did not accelerate all three payments due under the lease-purchase agreement back to
the original date of default on December 10, 1991.10

B.    Proximate Causation

       Next, First Bank argues that the district court erred in determining that Hogge's
misrepresentations were not the proximate cause of First Bank's damages. Rather, First
Bank contends that, if Hogge had not misrepresented the County's satisfaction with the
equipment, First Bank would not have advanced funds and purchased the lease. Thus,
First Bank would not have been in a position to be harmed because First Bank would
have owned no rights to payment under the lease as it would not have bought the lease-
purchase agreement and would not have lost its original investment in the lease. We
disagree.

      To state a valid fraudulent misrepresentation claim, First Bank must show the
following elements:

      (1) a representation, (2) its falsity, (3) its materiality, (4) the speaker's
      knowledge of its falsity or ignorance of its truth, (5) the speaker's intent
      that the representation should be acted upon by the hearer and in the
      manner reasonably contemplated, (6) the hearer's ignorance of the falsity
      of the representation, (7) the hearer's reliance on the representation being


      10
        However, even if we were to assume that by filing its state court petition First
Bank only accelerated the final December 10, 1993 payment, the evidence nonetheless
reveals that the County still lacked sufficient unencumbered resources at any time
between December 10, 1991 and December 30, 1993 to pay the $35,072.16 balance
due. See Agreed Statement Of The R. On Appeal at 7-8. Additionally, the record
reveals that the County did not have sufficient funds available in 1991 (remaining
balance of $7,300.38) or in 1992 (remaining balance of $10,486.87) to make even a
single year's payment of $11,690.72. See Agreed Supplemental Statement As The R.
On Appeal at Ex. S1.

                                          -9-
true, (8) the hearer's right to rely thereon, and (9) the hearer's consequent and proximate
injury.

Midwest Printing, Inc. v. AM Int'l, Inc. 108 F.3d 168, 170 (8th Cir. 1997); see also
Clark v. Olson, 726 S.W.2d 718, 719 (Mo. 1987). The failure to establish any element
is fatal to the entire fraud claim. See id. Hogge argues that First Bank has failed to
establish, at least, two of the nine elements of a fraudulent misrepresentation claim:
proximate causation and First Bank's right to rely on Hogge's representations.

         Missouri courts have articulated the causation prong of a fraudulent
misrepresentation claim, stating that "[f]or false representations to be actionable, there
must exist a causal connection between the misrepresentation and the harm allegedly
sustained." Stoup v. Robinson, 933 S.W.2d 935, 938 (Mo. Ct. App. 1996) (internal
quotation and citation omitted). In addition, proximate causation must be present. That
is, "[i]t must appear in an appreciable sense that the damage flowed from the fraud as
the proximate and not the remote cause, and the damage must be such as is the natural
and probable consequence of the fraud." Heberer v. Shell Oil Co., 744 S.W.2d 441,
443-44 (Mo. 1988) (internal quotation and citations omitted); see also Mackey &
Assoc. v. Russell & Axon Int'l Eng'r-Architects, LTD., 819 S.W.2d 49, 50 (Mo. Ct.
App. 1991) ("It is not enough that damage follow upon misconduct, but the tort must
be the legal cause of the damage. Tortious conduct is a legal cause of damage if it is
a substantial factor in the production of the harm.")

       The Missouri Court of Appeals's application of the principle of proximate
causation in Mackey, 819 S.W.2d at 50, is particularly salient to this appeal. In
Mackey, the respondent was an engineering firm which proposed to the plaintiff, an
architectural firm, that the two companies collaborate on a bid project in Saudi Arabia.
The respondent allegedly represented to the plaintiff that it had a "large staff in Saudi
Arabia" and had arrangements with a local firm which made the respondent acceptable
to the Saudis. Id. at 49. In reality, the respondent had a total staff of only four persons

                                           -10-
in Saudi Arabia. Although the firms prepared and presented all the necessary
documents to bid on the desired projects, the firms were not awarded the contracts.
The plaintiff alleged that it would not have entered into the agreement with the
respondent had it known the true size of the respondent's staff and that the respondent,
therefore, should pay for the plaintiff's expenses incurred during the failed arrangement.
However, the court found that:

       [t]here is no causal effect between the alleged misrepresentation and
       losses which plaintiff sustained on the projects. Plaintiff's loss occurred
       proximately from the failure to obtain the contracts. If the alleged
       representations had been true the same loss would have been incurred.
       In that posture plaintiff failed to establish its consequent and proximately
       caused injury.

Id. at 51.

       Similarly, in the present case, any loss suffered by First Bank would have been
the same regardless of the condition of the equipment. The lease-purchase agreement
was voidable, and voided, pursuant to Article VI, Section 26(a) of the Constitution of
the State of Missouri which states that "[n]o county . . . shall become indebted in an
amount exceeding in any year the income and revenue provided for such year plus any
unencumbered balances from previous years." See also Mercantile Bank of Illinois v.
School Dist. Of Osceola, 834 S.W.2d 737, 741 (Mo. 1992) (holding that a lease-
agreement is voidable upon a showing that the subdivision of the state entered an
agreement to pay more than its "income and revenue provided for such year plus any
unencumbered balances from previous years") (internal citation and quotation omitted).

     Here, we find that the County did not have sufficient unencumbered resources
on December 10, 1991, the date of default, to pay the accelerated amount of




                                          -11-
$35,072.16.11 See Agreed Statement Of The R. On Appeal at 7-8; Agreed
Supplemental Statement As The R. On Appeal at Ex. S1. Therefore, we conclude that
the lease-purchase agreement was voidable under Article VI, Section 26(a) of the
Missouri Constitution. The County further adequately notified First Bank that it had
voided the lease-purchase agreement by its letters of August 21, 1992 and November
6, 1992 which cited Mercantile Bank, 834 S.W.2d at 737, and the County's belief that
the agreement was unenforceable under this decision. Consequently, the County's
voiding of the lease-purchase agreement pursuant to Article VI, Section 26(a), rather
than Hogge's misrepresentations in the Certificate of Acceptance, was the proximate
cause of any injury to First Bank. See Mackey, 819 S.W.2d at 50. That is, even if
Hogge's representations that the equipment was properly functioning were true, First
Bank still would have incurred the same loss based on the County's lack of sufficient
unencumbered funds to pay the debt. See id. at 51.

C.    Reliance Issue

       As an alternative ground, we find that First Bank's fraudulent misrepresentation
claim also fails because First Bank had no right to rely on Hogge's statements in the
Certificate of Acceptance regarding the condition of the equipment. The lease-
purchase agreement stated that the lessor made no warranties regarding the condition,
quality, or fitness of the equipment. See Agreed Statement As The R. On Appeal at Ex.
1, page 2. The practical effect of this clause denied the County, as a defense to non-
payment on the lease, the claim that the equipment was not performing properly.
Consequently, regardless of the condition of the equipment, First Bank possessed the
same rights to payment under the lease-purchase agreement. The County could not
validly refuse payment in the event that the equipment did not work. As such, we
conclude that this provision in the lease-purchase agreement made First Bank's reliance


      11
        See also n.10 supra discussing variations in the timing of First Bank's
acceleration and the status of the County's unencumbered funds for 1991-1993.

                                         -12-
on Hogge's statements regarding the equipment's condition misplaced. See Empire Gas
Corp. v. Small's LP Gas Co., 637 S.W.2d 239, 244 (Mo. Ct. App. 1982) ("In legal
effect, [this provision] amounted to a contractual agreement that [Buyer] was not to rely
on the representations made by [Seller].") As "[r]eliance upon representations is an
essential element in an action for fraud," First Bank's fraudulent misrepresentation claim
must fail. Id. at 243.

D.     Proximate Injury

        As a related point to its proximate causation argument, First Bank submits that
it clearly was damaged by Hogge's representations and that the appropriate measure of
damages is a question for the jury. Under Missouri law, a plaintiff is generally entitled
to damages equal to the difference between what it actually received and what it would
have received had no fraud occurred. See Kerr v. First Commodity Corp. of Boston,
735 F.2d 281, 285 (8th Cir. 1984).

       Here, First Bank has suffered no injury because First Bank's right to receive
payment was unaffected by the truth or falsity of Hogge's representation. Thus, even
if First Bank did rightfully rely on this representation, First Bank was not injured
because it had a right to proceed against the County under the lease-purchase
agreement regardless of whether the equipment worked. As we noted above,12 the
County's constitutional defense pursuant to Article VI, Section 26(a) was the proximate
cause of any harm First Bank may have suffered.

III.   CONCLUSION

     In conclusion, we find that (1) First Bank accelerated all payments back to
December 10, 1991, the date of default; (2) Hogge's representations were not the

       12
        See Section II.B. of this Opinion discussing proximate causation.

                                          -13-
proximate cause of First Bank's damages; (3) First Bank had no right to rely on Hogge's
representations in the Certificate of Acceptance; and (4) First Bank was unable to
present facts which created a triable issue on injury. For the reasons stated, we affirm
the judgment of the district court which granted summary judgment to Hogge on First
Bank's fraudulent misrepresentation claim.

AFFIRMED.

      A true copy.

             Attest:

                     CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




                                         -14-
