770 F.2d 1566 (11th Cir. 1985), 84-8687, Henson v. Columbus Bank & Trust Co.

Docket Nº:84-8687.
Citation:770 F.2d 1566
Party Name:Kenneth M. HENSON, Plaintiff-Appellant, v. COLUMBUS BANK & TRUST COMPANY, Defendant-Appellee.
Case Date:September 17, 1985
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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Page 1566

770 F.2d 1566 (11th Cir. 1985)

Kenneth M. HENSON, Plaintiff-Appellant,

v.

COLUMBUS BANK & TRUST COMPANY, Defendant-Appellee.

No. 84-8687.

United States Court of Appeals, Eleventh Circuit

September 17, 1985

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Tom W. Daniel, Perry, Ga., Ken Henson, Jr., Columbus, Ga., Carlton M. Henson, II, Atlanta, Ga., for plaintiff-appellant.

W.M. Page, Columbus, Ga., W. Rhett Tanner, Atlanta, Ga., for defendant-appellee.

Appeal from the United States District Court for the Middle District of Georgia.

Before TJOFLAT and VANCE, Circuit Judges, and ATKINS [*], District Judge.

VANCE, Circuit Judge:

This case comes to us following a grant of summary judgment in favor of the defendant, Columbus Bank & Trust (CB & T). On appeal Henson alleges that the district court: (1) erred in granting summary judgment in favor of CB & T on the state law usury claim; (2) abused its discretion in refusing to allow Henson to amend his complaint to include claims for conversion, outrage, civil RICO, malicious use of process, and abuse of process; and (3) abused its discretion in denying Henson discovery of the hours spent and rates charged by the defendant's attorneys in this litigation and in setting his fees award at $12,715. We affirm the district court's denial of Henson's motions to amend, reverse its grant of summary judgment in favor of CB & T and grant summary judgment in favor of Henson, and remand for further discovery and hearings on Henson's attorneys' fees petition.

Between 1968 and 1971 Kenneth Henson, a lawyer, borrowed money from CB & T on eleven different occasions. In each instance, Henson executed a demand note in favor of CB & T. In July 1971, the total principal balance represented by the eleven notes was $117,122.25. This balance remained unchanged until the spring of 1975. Each of the eleven notes was secured by a security deed on Henson's residence, and

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some were also secured by Henson's stock holdings.

CB & T set the interest on each note at one-half point over its then current prime interest rate. Whenever the prime rate changed, CB & T notified Henson by mail that the interest rate on each of his notes had been altered accordingly. Henson was not sent a separate notice as to each note, but rather, received a single notice as to all eleven notes. Henson paid the quarterly interest on all eleven notes with one check.

On July 5, 1973, the interest rate on the notes exceeded nine percent for the first time. On July 5, 1974, the rate peaked at thirteen percent. In April 1975 the rate dropped back to nine percent. During the time period in which the rate on the notes exceeded nine percent, Georgia law specified that nine percent was the maximum rate generally applicable to loans secured by real estate. See Ga.Code Ann. Sec. 57-101.1 (repealed 1983). 1 Section 57-119 of the Georgia Code 2 was also in effect at that time. It removed the nine percent rate ceiling on loans or forbearances exceeding $100,000 in certain situations.

Until December 1974, Henson at all times made his quarterly interest payments in a timely fashion. On December 31, 1974, he did not make his quarterly interest payment. He also failed to make the March 31, 1975, payment when due. At some point during those three months, Henson notified CB & T that the interest rate being charged on the notes was usurious.

On May 23, 1975, CB & T demanded that Henson pay the notes by filing suit in the Superior Court of Muscogee County, Georgia. On May 30, 1975, Henson paid CB & T the principal and accumulated interest on all eleven demand notes without responding to the lawsuit. On June 25, 1975, Henson filed this suit against CB & T in federal district court. The complaint alleged that CB & T had: (1) violated the Truth-in-Lending Act (TIL), 15 U.S.C. Secs. 1601-1693; (2) knowingly charged and received a rate of interest in excess of the maximum rate allowed by Congress; (3) knowingly charged and received a rate of interest in excess of the maximum rate allowed by Georgia; (4) breached the contract as to all eleven notes by charging a rate of interest on the notes in excess of the initial contracted rate without Henson's consent; and (5) done all the alleged acts in bad faith. The district court chose not to exercise pendent jurisdiction over the state law claims and dismissed them without prejudice.

Henson then filed suit raising essentially the same claims in the Superior Court of Muscogee County, Georgia. CB & T moved for summary judgment on several grounds. The superior court granted that motion, finding that the statute of limitations had run on Henson's TIL and state usury claims and that CB & T was entitled to a judgment on the merits on the remaining

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claims. This decision was affirmed on appeal. Henson v. Columbus Bank & Trust Co., 144 Ga.App. 80, 240 S.E.2d 284 (1977).

After the unsuccessful appeal, Henson returned to federal district court and moved the court to reconsider its refusal to exercise pendent jurisdiction over his state usury claim. Henson asserted that the district court should not have dismissed the usury claim when it did because the state statute of limitations had already run, thereby barring its subsequent litigation in the Georgia courts. Henson argued that under the circumstances the district court was duty-bound to exercise pendent jurisdiction over the claim. The district court denied the motion without stating its reasons.

The case proceeded to trial on the TIL claims and a jury found in favor of Henson on seven of the eleven violations alleged. In compliance with the statute, the district court assessed seven $1,000 penalties against CB & T. During the course of the litigation Henson had employed two different law firms and, counting himself, six attorneys. The six petitioned for attorneys' fees and submitted affidavits showing that they had spent almost 1000 hours litigating the federal aspects of the case. They requested $50 an hour as compensation. After refusing to hold a hearing on the issue, the district court set the total fees at $4,773.

Henson appealed to this court contending, among other things, that the district court should have exercised pendent jurisdiction over his state law usury claim, and that the district court should have held a hearing on the attorneys' fees issue. We held that the district court erred in refusing to grant Henson's motion for reconsideration on the pendent jurisdiction issue and in refusing to hold a hearing on attorneys' fees. Henson v. Columbus Bank and Trust Co., 651 F.2d 320 (5th Cir. Unit B 1981). We remanded the case with instructions that the district court exercise its pendent jurisdiction over Henson's state law usury claim, id. at 323-25, and hold a hearing to determine fees, id. at 329-30.

After the remand, Henson attempted to amend his complaint to allege theories of recovery based on conversion, intentional infliction of emotional distress, malicious use of process, abuse of process, and civil RICO. The trial court refused to allow any amendments. In preparation for the...

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