Synovus Bank v. Summerford, Case No.: 2:12-CV-3598-VEH

SYNOVUS BANK, Plaintiff, v. RALPH Q. SUMMERFORD, Defendant.

Case No.: 2:12-CV-3598-VEH

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

DONE and ORDERED: July 2, 2014

MEMORANDUM OPINION AND ORDER

On October 15, 2012, the plaintiff, Synovus Bank, filed this action for breach of a promissory note, and alternatively for unjust enrichment, against the defendants, Ralph Q. Summerford and Tarrie Hyche. (Doc. 1). On December 26, 2012, after Hyche filed a notice of bankruptcy, the court severed the plaintiff's claim against Hyche and dismissed that claim without prejudice. (Doc. 15).¹ The action continued as to defendant Summerford.

The case comes before the court on the motion for summary judgment filed by Synovus (doc. 36), and the motion to amend the motion for summary judgment filedby Synovus (doc. 42). For the reasons stated herein, the motion to amend will be DENIED, the motion for summary judgment will be GRANTED in part and DENIED in part, and the case will be set for trial.

I. STANDARD

Under Federal Rule of Civil Procedure 56, summary judgment is proper if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) ("[S]ummary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.") (internal quotation marks and citation omitted). The party requesting summary judgment always bears the initial responsibility of informing the court of the basis for its motion and identifying those portions of the pleadings or filings that it believes demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. Once the moving party has met its burden, Rule 56(e) requires the non-moving party to go beyond the pleadings in answering the movant. Id. at 324. By its own affidavits - or by the depositions, answers to interrogatories, and admissions on file - it must designate specific facts showing that there is a genuine issue for trial. Id.

The underlying substantive law identifies which facts are material and which are irrelevant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). All reasonable doubts about the facts and all justifiable inferences are resolved in favor of the non-movant. Chapman, 229 F.3d at 1023. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Anderson, 477 U.S. at 248. A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. If the evidence presented by the non-movant to rebut the moving party's evidence is merely colorable, or is not significantly probative, summary judgment may still be granted. Id. at 249.

How the movant may satisfy its initial evidentiary burden depends on whether that party bears the burden of proof on the given legal issues at trial. Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993). If the movant bears the burden of proof on the given issue or issues at trial, then it can only meet its burden on summary judgment by presenting affirmative evidence showing the absence of a genuine issue of material fact - that is, facts that would entitle it to a directed verdict if not controverted at trial. Id. (citation omitted). Once the moving party makes such an affirmative showing, the burden shifts to the non-moving party to produce "significant, probative evidence demonstrating the existence of a triable issue of fact."Id. (citation omitted) (emphasis added).

For issues on which the movant does not bear the burden of proof at trial, it can satisfy its initial burden on summary judgment in either of two ways. Id. at 1115-16. First, the movant may simply show that there is an absence of evidence to support the non-movant's case on the particular issue at hand. Id. at 1116. In such an instance, the non-movant must rebut by either (1) showing that the record in fact contains supporting evidence sufficient to withstand a directed verdict motion, or (2) proffering evidence sufficient to withstand a directed verdict motion at trial based on the alleged evidentiary deficiency. Id. at 1116-17. When responding, the non-movant may no longer rest on mere allegations; instead, it must set forth evidence of specific facts. Lewis v. Casey, 518 U.S. 343, 358 (1996). The second method a movant in this position may use to discharge its burden is to provide affirmative evidence demonstrating that the non-moving party will be unable to prove its case at trial. Fitzpatrick, 2 F.3d at 1116. When this occurs, the non-movant must rebut by offering evidence sufficient to withstand a directed verdict at trial on the material fact sought to be negated. Id.

II. FACTS

Synovus made a commercial loan to Summerford and Hyche to acquire certain property located on Smith Lake in Walker County, Alabama (the "Loan"). (Doc. 1-1at 2).² The most recent promissory note regarding this loan is dated December 19, 2011 (the "Note"). (Doc. 1-1 at 11).³ In this document, Summerford and Hyche, jointly and severally, agree to pay to Synovus the principal amount of $3,424,766.86. (Doc. 1-1 at 11). The Note set the maturity date of the loan to April 17, 2012. (Doc. 1-1 at 11). It also provided that:

- the borrowers agreed "to pay interest on the outstanding principal balance from December 19, 2011[,] at the rate of 5.0% per year until the interest rate changes" (doc. 1-1 at 11);

- the new rate, called the "index rate" in the promissory note, would be 1.0 % above "Lender's prime, which is the rate used by Lender to set interest rates at which loans are made to various customers. Loan may be made at, above[,] or below said prime rate" (doc. 1-1 at 11);- the rate could change as often as "daily," but would change "when the index rate changes" (doc. 1-1 at 11);

- the rate would never be below 5.0% (doc. 1-1 at 11);

- after the maturity date of the loan, the borrowers would continue to pay the same variable rate of interest "on the unpaid balance of the [N]ote owing after maturity, and until paid in full" (doc. 1-1 at 11);

- the borrowers would pay late fees "on the portion of any payment not made within 10 days after it is due equal to 5% of the unpaid amount with a minimum of $100" (doc. 1-1 at 11);

- accrued interest would be paid monthly "beginning January 17, 2012" (doc. 1-1 at 11);

- the principal would be paid back by the maturity date of April 17, 2012 (doc. 1-1 at 11); and

- the borrowers agreed "to pay all costs of collection, replevin or any other similar type of cost if [they] are in default. In addition, if [Synovus] hire[s] an attorney to collect this [N]ote, [the Borrowers] also agree to pay any fee [Synovus] incur[s] with such attorney plus court costs . . ." (Doc. 1-1 at 12).

The defendant does not dispute the fact that he entered into this agreement, nor does he dispute the terms of same. (Doc. 36 at 3-8; doc. 39 at 5-10).

On April 17, 2012, the Note was modified by a Note Modification Agreement executed by and among Synovus, Hyche, and Summerford (the "Note Modification Agreement"). (Doc. 1-1 at 13). At the time the Note Modification Agreement was executed, the loan was secured by mortgages on three separate pieces of property. (Doc. 1-1 at 13; doc. 42-1 at 3; doc. 42-2 at 1-19). The Note Modification Agreement refers to this property as "the Mortgaged Property." (Doc. 1-1 at 13). The modification provided, in pertinent part:

2. Amounts Owing on the Loan. [Summerford and Hyche] confirm with the Lender and agree that:

(a) as of March 26, 2012, the principal amount owing on the Loan is $3,424,766.86; and

(b) as of March 26, 2012, the Borrowers owe $26,279.91 in accrued but unpaid interest on the Loan, with additional interest accruing at the rate of $380.53 per diem, and $11,048.69 in unpaid late fees on the Loan.

3. Extension of the Loan.

(a) The Note is hereby modified so that the Maturity Date is hereby extended from April 17, 2012, until July 1, 2012, at which time the Loan will be due and payable in full.

(b) If on June 30, 2012 (by or before the close of business) the conditions set forth in Section 3(c) have been met, the Maturity Date will be further extended for an additional term of two (2) years, until July 1, 2014 (the "Additional Extension").

(c) Without limitation, in order for the Lender to Agree to theAdditional Extension, the following conditions must be satisfied:

. . .

b. The ratio of the principal balance of the Loan divided by old and new collateral acceptable to the Lender in its sole discretion must not exceed one hundred percent (100%). Collateral acceptable to the Lender shall mean the following: (i) the Mortgaged Property, in which the Lender holds a first priority mortgage security interest, and the value of which shall be based on a current appraisal reviewed by and accepted by the Lender, and (ii) all other collateral agreed upon by the Parties to be mortgaged or pledged to the Lender by the Borrowers, subject to the Lender's normal underwriting standards and guidelines for such collateral, including appraisal, security documentation, survey, title insurance and customary requirements for collateral of the type provided, and with the acceptability of such collateral to be in the sole judgment and discretion of the Lender;

. . .

d. The Borrowers shall have paid or reimbursed the Lender for all expenses ("Loan Expenses") associated with this Agreement and with the transactions contemplated by the Extension Loan Documents or required by the Lender in connection with the Additional Extension, including but not limited to, appraisal fees, appraisal review fees . . ..

. . .

(f) ALTHOUGH THE BORROWERS AND THE LENDER

HAVE REACHED SUBSTANTIAL

...