Patrick Malloy Cmtys., LLC v. Cmty. & S. Bank

334 Ga.App. 76

778 S.E.2d 242

PATRICK MALLOY COMMUNITIES, LLCet al.

v.COMMUNITY & SOUTHERN BANK.

No. A15A1383.

Court of Appeals of Georgia.

Oct. 2, 2015.

David Allen Luzum, Carrollton, Charles Samuel Conerly, for Appellant.

Bryan Edward Busch, Shane Patton Stogner, Laura Hadit Mirmelli, Atlanta, for Appellee.

Opinion

BARNES, Presiding Judge.

Patrick Malloy Communities, LLC (“PMC”) and J. Patrick Malloy, Jr. appeal the trial court's grant of summary judgment in favor of Community & Southern Bank (“CSB”) on CSB's claims for breach of a promissory note and guaranty. The appellants contend that CSB failed to prove, through competent evidence, that CSB had been assigned the rights to the note and guaranty by the Federal Deposit Insurance Corporation (“FDIC”), as receiver for the failed bank that previously held those debt instruments. Consequently, the appellants contend that CSB failed to demonstrate its status as the real party in interest with authority to enforce the note and guaranty. The appellants further argue that discrepancies between an affidavit submitted by CSB and a payment history for the loan account precluded the grant of summary judgment as to the amount of damages owed to CSB.

Because the uncontroverted, competent evidence of record demonstrate that CSB was the assignee of the note and guaranty, we affirm the trial court's grant of summary judgment to CSB on its claim that the appellants were liable for breach of those debt instruments. However, because material discrepancies between the affidavit submitted by CSB and the payment history for the loan create a factual issue over the amount of unpaid principal, interest, and contractual attorney fees owed on the note and guaranty, we reverse the trial court's grant of summary judgment to CSB as to the amount of damages.

“[S]ummary judgment is appropriate when the moving party can show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law.” (Punctuation and footnote omitted.) Citrus Tower Boulevard Imaging Center v. David S. Owens, MD, PC,325 Ga.App. 1, 1–2, 752 S.E.2d 74 (2013). See OCGA § 9–11–56(c). “On appeal from a trial court's grant of summary judgment, we conduct a de novo review, construing all reasonable inferences in the light most favorable to the nonmoving party.” (Citation and punctuation omitted.) Bobick v. Community & Southern Bank,321 Ga.App. 855, 856, 743 S.E.2d 518 (2013).

So viewed, the records shows that PMC was a residential real estate developer. On July 22, 2008, in connection with a loan for the purchase and development of a subdivision, PMC entered into a commercial promissory note with First National Bank of Georgia in the principal amount of $3,500,000, plus interest (the “Note”). Malloy, the sole manager and member of PMC, had previously signed an unlimited commercial guaranty in favor of West Georgia National Bank, which later merged into First National Bank (the “Guaranty”). Under the Guaranty, Malloy was obligated to repay all current or future debts owed by PMC to West Georgia National Bank and “its successors and assigns.” Following execution of the Note and Guaranty, the loan proceeds were released by First National Bank and properly disbursed.

In January 2010, First National Bank failed and was closed by the Office of the Comptroller of the Currency, and the FDIC was appointed as receiver. On January 29, 2010, the FDIC, acting as receiver, entered into a Purchase and Assumption Agreement under which it transferred assets of First National Bank to CSB, including “Loans” owed to or held by the failed bank (the “P & A Agreement”).

The FDIC as receiver later executed an “Assignment of Security Instruments and other Loan Documents” that was recorded in the deed book records of Cherokee County (the “Assignment Agreement”). Under the Assignment Agreement, the FDIC assigned and transferred to CSB all

rights, title, and interests in and to all those certain Mortgages, Security Deeds, Deeds to Secure Debt, Deeds of Trust, Assignments of Rents and Leases, UCC–1 financing statements, judgment liens, and all such other instruments and security agreements securing loans owned by First National Bank of Georgia and held of record by First National Bank of Georgia or any of its predecessors (including West Georgia National Bank which was merged into First National Bank of Georgia) as of January 29, 2010 ... and all modifications, extensions, amendments and renewals thereto (collectively, the “Security Instruments”) [,] TOGETHER with all of the underlying debts described in such Security Instruments.

The FDIC further assigned and transferred to CSB all

rights, title and interests in and to the promissory notes, loan documents and all other indebtedness secured by the Security Instruments, as evidenced by related promissory notes, any and all loan agreements, pledges, security agreements and UCC financing statements and all modifications, extensions, amendments and renewals to said documents and instruments together with any and all other loan documents, title policies and casualty insurance policies evidencing, securing or relating to any of the foregoing all of which have been delivered to ... [CSB].

In accordance with the P & A Agreement and the Assignment Agreement, CSB came into possession of the Note and Guaranty.

PMC failed to pay all of the amounts due under the Note, and Malloy failed to meet his repayment obligations under the Guaranty. CSB then accelerated the amounts due and sent a notice of default to PMC and Malloy (hereinafter, the “appellants”). When the appellants failed to cure the default, CSB sued them for breach of the Note and Guaranty,¹seeking to recover unpaid principal, interest, late fees, and attorney fees. The appellants answered and alleged, among other things, that CSB was not the real party in interest with authority to enforce the Note and Guaranty.

Following discovery, CSB moved for summary judgment. CSB argued that it had established its prima facie right to recover under the Note and Guaranty, and that the appellants had failed to come forward with any evidence in support of their affirmative defenses or to raise a question of fact challenging the bank's right to recover unpaid principal, interest, and attorney fees.²The appellants opposed the motion, arguing that CSB had not established that it was the assignee of the Note and Guaranty or proven the amount of damages it was owed under the loan documents. After conducting a hearing where the parties presented oral argument, the trial court granted summary judgment in favor of CSB on its claims for breach of the Note and Guaranty and awarded the amount of unpaid principal, interest, and contractual attorney fees sought by CSB in its motion. This appeal followed.

1. In two related enumerations of error, the appellants contend that CSB was not entitled to summary judgment because it failed to establish, through admissible evidence, that it had been assigned the Note and Guaranty by the FDIC as receiver for First National Bank, and thus failed to demonstrate its status as the real party in interest.³We disagree.

“Every action shall be prosecuted in the name of the real party in interest.”OCGA § 9–11–17(a). See Greenstein v. Bank of Ozarks,326 Ga.App. 648, 650(2), 757 S.E.2d 254 (2014). And, under the law of contracts,

the doctrine of privity of contract requires that only parties to a contract may bring suit to enforce it. A party may assign to another a contractual right to collect payment, including the right to sue to enforce the right, and the assignment must be in writing in order for the contractual right to be enforceable by the assignee.

(Citation and punctuation omitted.) Bobick,321 Ga.App. at 859(2), 743 S.E.2d 518.

In support of its motion for summary judgment, CSB submitted the amended affidavit of John Harvey, a CSB employee who was appointed as an attorney in fact by the FDIC, which authorized him to execute assignment documents that evidenced the sale and transfer of assets of First National, including all loans held by the failed bank, to CSB pursuant to the P & A Agreement. Harvey stated that the Note and Guaranty had been assigned and transferred to CSB by the FDIC, in its capacity as receiver, pursuant to the P & A Agreement and the Assignment Agreement. Attached as exhibits to the affidavit were the Limited Power of Attorney granted to Harvey by the FDIC as receiver, the P & A Agreement, and the Assignment Agreement.

CSB also submitted the affidavit of Patrick Dowling, a “Senior Workout Specialist for the Resolution Workout Group” with CSB who was familiar with CSB's books and records and maintained its loan files related to the present case. Dowling stated that all the business records associated with the Note and Guaranty had been transferred and delivered to CSB by the FDIC, as receiver for First National Bank, and had been obtained and maintained by CSB as part of the regular course of its business. Dowling further stated that the originals of the Note and Guaranty, copies of which were attached to his affidavit, were currently in the possession of CSB.

Contending that CSB failed to prove through competent evidence that it was the assignee of the Note and Guaranty, the appellants maintain that the trial court should have disregarded the P & A Agreement and the Assignment Agreement because those documents constituted hearsay, and Harvey failed in his affidavit to lay a proper foundation for their admission under the business record exception to hearsay. See OCGA § 24–8–803(6)(business record exception). We disagree.

“Admissibility of evidence on motion for summary judgment is governed by the rules relating to form and admissibility of evidence generally.” (Citation and punctuation omitted.) Maloof v. MARTA,330 Ga.App. 763, 765(1), 769 S.E.2d 174 (2015). “All hearsay evidence, unsupported conclusions, and the like, must be stricken or eliminated from consideration in a motion for summary judgment...