Coastal Credit, LLC v. Howard. Coastal Credit, LLC.

357 Ga.App. 118

850 S.E.2d 232

COASTAL CREDIT, LLC

v.HOWARD.

Coastal Credit, LLC.

v.Mainer.

A20A0940

A20A0941

Court of Appeals of Georgia.

October 15, 2020

Poole Huffman, Todd Jonathan Poole, Scott Buchanan McMahan, Decatur, for Appellant.

Renee Howard, for Appellee in A20A0940.

Gregory Mainer, for Appellee in A20A0941.

Gobeil, Judge.

Coastal Credit, LLC has appealed from final judgments entered in favor of Renee Howard and Gregory Mainer, borrowers on vehicle loans who were both in default for failing to answer complaints filed by Coastal Credit to collect on the debts owed. Because we agree with Coastal Credit that the trial court erred in failing to grant default judgments to Coastal Credit, we reverse the trial court's judgments in both of these cases.

Case No. A20A0940¹

On August 31, 2012, Howard applied for and received an $18,000 loan from Southern Motors of Savannah, Inc., for the purchase of a vehicle. She co-signed a "Retail Installment Sale Contract, Simple Finance Charge" document, which outlined the terms of repayment and assigned the loan to Coastal Credit. Howard breached this contract by failing to make payments as required, and the note was placed in default. The vehicle was repossessed and sold at auction for $6,700, and the auction proceeds were applied to the loan balance.

Thereafter, on March 20, 2019, Coastal Credit filed a complaint against Howard for the deficiency owed under the note. Specifically, Coastal Credit sought a total of $14,404.16, consisting of $8,570.99 in principal, $116.40 in late and collection fees, and $5,716.77 in pre-judgment interest, with interest continuing to accrue at the rate of 15.25 percent per annum. Coastal Credit also sought attorney fees in the amount of 15 percent of the principal and interest to be collected. The complaint gave notice of Coastal Credit's intention to rely on business records, and attached a business records affidavit along with the relevant records showing the basis of the debt, as well as providing the numbers that would allow for calculation of the amount owed.

Howard was served with the summons and complaint on March 22, 2019, but did not file an answer. Coastal Credit moved for default judgment. Rather than enter a default judgment, the trial court set the case down for a damages hearing on July 29, 2019. Coastal Credit and Howard appeared at the hearing to prove damages. Howard did not contest signing the note, but explained that the car had belonged to her ex-husband and she did not have the money to pay the deficiency on the note. Coastal Credit informed the court it was relying on the business records affidavit and the records attached to the complaint to prove its damages.

On August 2, 2019, the trial court issued its final judgment in favor of Howard. Noting first that Howard was indeed in default and had not contested the complaint or the amount of damages pled by Coastal Credit, the trial court nonetheless concluded that "because the vehicle in this case was repossessed pursuant to the security agreement in the contract, and because the resale price was credited to the debt under the agreement, the damages are unliquidated." Next, the court found it "not necessarily ... appropriate for [Coastal Credit] to simply rely on the record ... in order to prove its case." The court found that Coastal Credit fell "short of the burden of proof ... to establish that the vehicle was sold in a commercially reasonable value and/or for a reasonable amount." Thus, Coastal Credit was "not entitled to recover any amounts on the contract deficiency against [Howard]." This appeal followed.

Case No. A20A0941²

On January 29, 2014, Mainer applied for and received a $15,595 loan from Team Vaden Imports for the purchase of a vehicle. He signed a "Retail Installment Sale Contract, Simple Finance Charge" document, which outlined the terms of repayment and assigned the loan to Coastal Credit. Mainer breached this contract by failing to make payments as required, and the note was placed in default. The vehicle was repossessed and sold at auction for $2,800, and the auction proceeds were applied to the loan balance.

Thereafter, on January 14, 2019, Coastal Credit filed a complaint against Mainer for the deficiency owed under the note. Specifically, Coastal Credit sought a total of $18,974.36, consisting of $14,327.85 in principal, $345.78 in late and collection fees, and $4,300.73 in pre-judgment interest, with interest continuing to accrue at the rate of 18.9 percent per annum. Coastal Credit also sought attorney fees in the amount of 15 percent of the principal and interest to be collected. The complaint gave notice of Coastal Credit's intention to rely on business records, and attached a business records affidavit along with the relevant records showing the basis of the debt, as well as providing the numbers that would allow for calculation of the amount owed.

Mainer was served with the summons and complaint on March 26, 2019, but did not file an answer. Coastal Credit moved for default judgment. Rather than enter a default judgment, the trial court set the case down for a damages hearing on July 29, 2019. Coastal Credit appeared at the hearing to prove damages, but Mainer did not appear. Coastal Credit informed the court it was relying on the business records affidavit and the records attached to the complaint to prove its damages.

On August 2, 2019, the trial court issued its final judgment in favor of Mainer. Noting first that Mainer was indeed in default and had not contested the complaint or the amount of damages pled by Coastal Credit, the trial court nonetheless concluded that "because the vehicle in this case was repossessed pursuant to the security agreement in the contract, and because the resale price was credited to the debt under the agreement, the damages are unliquidated." Next, the court found it "not necessarily ... appropriate for [Coastal Credit] to simply rely on the record ... in order to prove its case." The court found that Coastal Credit fell "short of the burden of proof ... to establish that the vehicle was sold in a commercially reasonable value and/or for a reasonable amount." Thus, Coastal Credit was "not entitled to recover any amounts on the contract deficiency against [Mainer]." This appeal followed.

1. Coastal Credit has raised identical enumerations of error in both appeals. First, Coastal Credit asserts that the trial court erred by finding that it was Coastal Credit's obligation to affirmatively prove the commercial reasonableness of the vehicle sales, as the defendants’ default in his or her respective action foreclosed any defenses to liability. We agree.

Pursuant to OCGA § 9-11-55 (a), when a defendant fails to file an answer, the case goes into default, and "the plaintiff at any time [after 15 days after default] shall be entitled to verdict and judgment by default ... as if every item and paragraph of the complaint or other original pleading were supported by proper evidence[.]" "On appeal, we review a trial court's order denying a motion for default judgment for an abuse of discretion." H. N. Real Estate Group v. Dixon , 298 Ga. App. 124, 124, 679 S.E.2d 130 (2009).

Here, there is no dispute that Howard and Mainer were both in default for failing to file an answer to their respective complaint, and neither defendant sought to open the default within 15 days. As defaulting defendants, Howard and Mainer were each in a position as having admitted each and every material allegation of the complaint against them, and they were estopped "from offering any defenses which would defeat the right of recovery." Azarat Mktg. Group v. Dept. of Admin. Affairs , 245 Ga. App. 256, 257 (1) (b), 537 S.E.2d 99 (2000) (citation and punctuation omitted). Specifically, the defense of a lack of a commercially reasonable sale of collateral is an absolute defense to liability in actions seeking to recover on a deficiency judgment. Clay v. Presidential Financial Corp. , 175 Ga. App. 226, 226-227 (1), 332 S.E.2d 924 (1985), overruled on other grounds by Branan v. Equico Lessors , 255 Ga. 718, 342 S.E.2d 671...