RES–GA SCL, LLC. v. Stonecrest Land, LLC, s. A15A0458

• Decision Date: 16 July 2015
• Docket Number: Nos. A15A0458,A15A1438.,s. A15A0458
• Citation: 776 S.E.2d 489,333 Ga.App. 289
• Parties: RES–GA SCL, LLC. v. STONECREST LAND, LLC et al. Stonecrest Land, LLC et al. v. Res–Ga SCL, LLC.
• Court: Georgia Court of Appeals

333 Ga.App. 289
776 S.E.2d 489

RES–GA SCL, LLC.
v.
STONECREST LAND, LLC et al.

Stonecrest Land, LLC et al.
v.
Res–Ga SCL, LLC.

Nos. A15A0458
A15A1438.

Court of Appeals of Georgia.

July 16, 2015.
Certiorari Denied Oct. 19, 2015.

776 S.E.2d 492

Schulten, Ward & Turner, Andrea Lynn Pawlak, Kevin L. Ward, Atlanta, for Appellant.

Levenson & Associates, Louis Levenson, Atlanta, The Barnes Law Group, Roy E. Barnes, John F. Salter, James Cameron Tribble, Marietta, Andersen, Tate & Carr, Graham Keith Brantley, Robert Matthew Reeves, Duluth, for Appellees.

Opinion

BRANCH, Judge.

333 Ga.App. 289

In this suit on a loan agreement, including a promissory note and associated personal guaranties, the trial court granted summary judgment in favor of the creditor, RES–GA SCL, LLC. The debtor and a guarantor appeal; RES–GA cross-appeals. For the reasons stated below, we affirm summary judgment in favor of RES–GA but reverse the trial court's decision not to award attorney fees in favor of RES–GA against one of the guarantors.

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. OCGA § 9–11–56(c). We review a grant or denial of summary judgment de novo and construe the evidence in the light most favorable to the nonmovant. Home Builders Assn. of Savannah v. Chatham County, 276 Ga. 243, 245(1), 577 S.E.2d 564 (2003).

So construed, the record shows that in March 2007, Stonecrest Land, LLC entered into a commercial promissory note with Integrity Bank in the original principal amount of $15,937,000 (with funds to be advanced as necessary) and that Thomas Brock and Wayne H. Mason agreed to guarantee Stonecrest's obligations under the note. Stonecrest obtained the two-year-term loan in order to add infrastructure and other improvements to a 63–acre tract of raw land in DeKalb County near Stonecrest Mall so that a residential community could be developed on the site. Under the “balloon” note, Stonecrest was required to make only monthly interest payments until March 30, 2009, at which time a balloon payment of all advanced principal, interest, and other loan obligations was due. But because the project was not designed to be income producing during construction, Integrity agreed in the loan documents¹ to make advances under the loan to fund the interest payments; the loan had a pre-funded “interest carry” of $1.5 million earmarked for this purpose. During the term of

333 Ga.App. 290

the loan, Integrity advanced $11,937,690.58 of principal to Stonecrest, and Integrity made monthly interest advancements for the first year of the loan.

By early 2008, Integrity apparently was experiencing some financial distress, and by May 2008, it may have had concerns about Stonecrest's progress with the development. Ultimately, Integrity decided to reverse the interest advancement that it made in April 2008 and not to make any further interest advancements thereafter even though sufficient funds remained in the pre-funded “interest carry.” After Integrity ceased making interest advancements, Stonecrest failed to make any interest payments required by the promissory note. And ultimately, neither Stonecrest nor the guarantors made a single payment to any of the holders of the loan documents.

In August 2008, Integrity was placed into receivership with the Federal Deposit Insurance Corporation (FDIC). On September 25, 2008, in a letter to Stonecrest, the FDIC accelerated the note “because of [Stonecrest's] failure to make timely payments.” FDIC also published notice of the Integrity closure in the Atlanta Journal Constitution on September 5, 2008, October 6, 2008, and November 4, 2008. The notices are titled “FDIC NOTICE TO CREDITORS AND DEPOSITORS OF INTEGRITY BANK ALPHARETTA, GA,” and they provide that “All creditors having claims against the Failed Institution must submit their claims in writing, together with proof of the claims, to the [FDIC] by December 04, 2008 (the ‘bar date’).” As further explained below, Stonecrest did not make such a claim. FDIC later assigned all its rights in the loan documents to Multibank 2009–1RES–ADC Venture, LLC, and on May 10, 2010, Multibank sent a

776 S.E.2d 493

demand letter to Stonecrest, Brock and Mason in an attempt to collect on the debt. Multibank later assigned all its rights in the loan documents to appellee RES–GA.

In February 2012, RES–GA filed suit against Stonecrest and the guarantors for breach of the loan documents and guaranties. Both Stonecrest and Brock (hereinafter “the defendants”) answered and raised certain defenses; the claims against Mason were transferred to Gwinnett County and are therefore not before us. Following discovery, RES–GA and the defendants filed cross-motions for summary judgment; following a hearing, the trial court denied both motions. After additional discovery, RES–GA renewed its motion for summary judgment and argued that the defendants' defenses to the suit were barred by federal law, namely the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), 12 USC § 1821. RES–GA also argued that the defendants failed to raise an issue of fact regarding their defenses even if they were not so barred. On July

333 Ga.App. 291

23, 2014, the trial court granted summary judgment without providing specific grounds and entered final judgment in favor of RES–GA. The court entered judgment “in the amount of $18,245,115.21, plus per diem interest in the amount of $2,652.82 and, if appropriate, post-judgment interest in accordance with the applicable statutes.”² In Case No. A15A1438, Stonecrest and Brock appeal the judgment entered against them. In Case No. A15A0458, RES–GA appeals the trial court's failure to award attorney fees against Brock based on his guaranty. These two cases have been consolidated in this Court for purposes of appeal.

Case No. A15A1438

1. On appeal, the defendants do not dispute that RES–GA established a prima facie right to recover under the loan documents and guaranty. Instead they contend the trial court erred by granting summary judgment in favor of RES–GA because that court failed to consider their “affirmative defenses” to RES–GA's suit. Because they are challenging the grant of summary judgment, we interpret the defendants' argument to be that their defenses are not barred by FIRREA and that there are issues of fact regarding these defenses. We conclude that the defendants have abandoned many of their defenses on appeal and that FIRREA bars the remaining defenses. Accordingly, we affirm.

(a) The defendants have abandoned consideration of many of their defenses. In their separate answers to the complaint, the two defendants raise the same 16 defenses.³ In their appellate briefs, the defendants do not specifically refer to these numbered defenses,

333 Ga.App. 292

making it difficult for this Court to determine which specific defenses the trial court allegedly overlooked. Construing these arguments in their favor, we find that the defendants mention, at most, ten of the sixteen defenses asserted in their answers. As numbered in Stonecrest's answer, these are defense Nos. 3, 4, 7 through 13, and 15. Thus, any argument regarding defense Nos. 1, 2, 5, 6, 14, and 16 have been abandoned. See Court of Appeals Rule 25(c)(2).

776 S.E.2d 494

Next, several of the ten defenses that were referred to in Stonecrest and Brock's initial brief are redundant or so similar that they can be combined and treated as one. For the purposes of this opinion, we find that the defenses arguably being pursued on appeal can be summarized as follows: (1) failure of Integrity to fund the interest advancements under the terms of the loan documents, constituting a failure of consideration and a breach of the terms of those documents thereby causing the defendants to default on their obligation to make payments on the note (hereinafter the breach of contract/failure of consideration defense); (2) failure of Integrity to perform its obligations under the loan documents in good faith, as well as breach by Integrity of an implied covenant of good faith and fair dealing, by preventing Stonecrest from performing under the loan documents (hereinafter the breach of duty of good faith defense); and (3) failure to mitigate damages. With regard to failure to mitigate damages, however, the defendants have not attempted to show that they raised an issue of fact in the trial court, and accordingly, any assertion of error regarding that defense is also waived. Rule 25(c)(2).

Thus, as the defendants essentially admit in their brief, the only remaining defenses are breach of contract/failure of consideration and breach of the duty of good faith. As the defendants further admit, moreover, “[s]uch defenses all stem from the failure to fund the interest reserve.” Accordingly, what remains for consideration are the defendants' assertions that Integrity breached the loan documents, failed to provide consideration, or breached a duty of good faith in...