Bank of Am., N.A. v. Teryl Emery DDS, LLC

• Decision Date: 28 July 2016
• Docket Number: No. 15-CV-00778-JWD-EWD,15-CV-00778-JWD-EWD
• Parties: BANK OF AMERICA, N.A., Plaintiff, v. TERYL EMERY DDS, LLC, and TERYL EMERY, Defendants.
• Court: U.S. District Court — Middle District of Louisiana

BANK OF AMERICA, N.A., Plaintiff, v. TERYL EMERY DDS, LLC, and TERYL EMERY, Defendants.

No. 15-CV-00778-JWD-EWD

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF LOUISIANA

July 28, 2016

RULING AND ORDER ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

I. INTRODUCTION

Before the Court is the Motion for Summary Judgment ("Plaintiff's MSJ"), (Doc. 8), filed by Bank of America, N.A. ("Bank of America," "BOA," "Lender," or "Plaintiff"), and the Defendants' Opposition to and Cross Motion for Summary Judgment ("Defendants' MSJ"), (Doc. 11), submitted by Doctor Teryl K. Emery ("Dr. Emery" or "Guarantor") and Teryl Emery DDS, LLC ("Emery DDS" or "Borrower") (collectively, "Defendants"). In support of its motion and in response to Defendants' MSJ, Plaintiff tendered the Reply Memorandum in Further Support of Plaintiff's Motion for Summary Judgment and in Opposition to Defendants' Cross-Motion for Summary Judgment ("Plaintiff's Reply"). (Doc. 18.) Similarly, to counter Plaintiff's Reply and to strengthen their own dispositive motion, Defendants filed the Reply Memorandumin Support of Defendants' Cross Motion for Summary Judgment ("Defendants' Reply"). (Doc. 19.)

In these four motions, Defendants and Plaintiff (collectively, "Parties") dispute a single issue: whether Defendants are bound by the Amended and Restated Loan Agreement ("Amended Loan Agreement"), as well as the Security Agreement ("Security"), and Continuing and Unconditional Guaranty ("Guaranty") (collectively, "Amended Loan Documents"), that modified the financial and security particulars of the Parties' prior loan arrangement and that Defendants indisputably executed in the summer of 2015. For their part, Defendants deny this contract's validity, raising sundry defenses to its enforcement, including a lack of consent, an offer's revocation, and duress. However, once well-established principles of contract law are employed, not one of these defenses withstands scrutiny,¹ and the Amended Loan Documents must be upheld as a matter of plain and unambiguous contract law. For this reason, as more fully explained below, this Court GRANTS Plaintiff's MSJ and DENIES Defendants' MSJ.

II. BACKGROUND

A. RELEVANT FACTS

1. Original Contract and First Default

On September 17, 2010, Dr. Emery formally incorporated Emery DDS, a limited liability company domiciled at 5555 Essen Lane, Suite D, Baton Rouge, Louisiana 70809, and began as—and remains—this corporation's only member. LA. SEC'Y OF STATE, https://coraweb.sos.la.gov/CommercialSearch/CommercialSearchDetails.aspx?CharterID=904668_YBF52 (last visited on July 27, 2016).² On July 1, 2010, Emery DDS executed a Project Finance Term Loan Agreement ("Loan Agreement"³) with Bank of America, a national banking association headquartered in Charlotte, North Carolina. (Doc. 1 at 1-2), in the principal amount of $350,000, and described itself as a "promissory note, security agreement and guaranty, all of which [were] to be construed together and binding upon the parties." (Doc. 8-1 ¶¶ 1-2 at 1; Doc. 8-4 at 1; see Doc. 11-2 ¶ 1 at 1.) The Loan Agreement provided that Bank of America would make advances to Emery DDS up to the loan amount of $350,000 for the purpose of financing the refurbishment and operation of Emery DDS's professional dental project, explicitly defined in the Loan Agreement as the "Project." (Doc. 8-1 ¶ 4 at 2; Doc 8-4 at 3, 12.) The Loan Agreement contemplated a closing date for the Project and specified that if any monthly payment was "not paid on or before the ninth (9^th) day after the Payment Date a late charge [would] be assessed on the account of [Emery DDS] for the indebtedness in an amount equal to the greater of: (a) $0.15 per dollar of any late Monthly Payment, or (b) $15.00." (Doc. 8-1 ¶ 4 at 2; Doc. 8-4 at 4.) Emery DDS signed the Loan Agreement on July 14, 2010. (Doc. 1-1 at 12; Doc. 8-4 at 13.)

The Loan Agreement contained several other relevant provisions. According to its seventeenth paragraph, Emery DDS granted Bank of America "a security interest in the Collateral and the proceeds of the Collateral to secure payment and performance of indebtedness." (Doc. 1-1 at 3; Doc. 8-4 at 4.) Later, "Collateral" is defined as "all of the business [and] personal property and business assets of Borrower[, Emery DDS], and, if applicable, any Guarantor[, Dr. Emery], wherever located, and now or hereafter acquired." (Doc. 1-1 at 10; Doc.8-1 ¶ 5 at 2; Doc. 8-4 at 11.) In great detail, the Loan Agreement identified several events as triggering its default, including the "failure to make any payment of the Indebtedness and, except for a failure to pay at the maturity date, such failure continues for 10 days after it first becomes due." (Doc. 8-1 ¶ 7 at 3; Doc. 8-4 at 6-7.) Additionally, as stated in paragraph 24.A, it provided that "upon the occurrence of an Event of Default, [Emery DDS] and/or [Dr. Emery] shall have thirty (30) days from the date of Lender's written notice of default . . . to cure the event of default(s) set forth by [Bank of America] in the Notice of Default." (Doc. 8-1 ¶ 7 at 3; Doc. 8-4 at 6-7.)

In its final two pages, the Loan Agreement further specified the Guarantor's duty: "To the extent applicable, all of the terms and conditions of the foregoing sections of the Agreement apply to each Guarantor . . . ." (Doc. 1-1 at 13-14; Doc. 8-4 at 14-15.) As it clarifies, "[e]ach Guarantor is absolutely, unconditionally, jointly and severally guarantees the prompt payment when due of all Indebtedness," bound to "immediately pay to Lender[, Bank of America,] the outstanding balance of all Indebtedness" upon the Borrower's failure to "pay all or any of any Indebtedness when due." (Doc. 1-1 at 13; Doc. 8-4 at 14.) Dr. Emery signed this guarantee portion of the Loan Agreement on July 14, 2010. (Doc. 1-1 at 14; Doc. 8-4 at 15.)

To perfect its security interest, Bank of America filed a UCC Financing Statement with respect to the Collateral specified in the Loan Agreement. (Doc. 1-2 at 1-3; Doc. 8-1 ¶ 6 at 2; Doc. 8-5 at 2-4.) The amount covered by the Loan Agreement was increased to $370,000 on May 11, 2011, and to $401,500 on November 9, 2011. (Doc. 1-3 at 1-2; Doc. 8-1 ¶ 8 at 3; Doc. 8-6 at 2-3; Doc. 8-7 at 2.) On November 28, 2011, Dr. Emery signed an additional guaranty "[f]or the purpose of inducing Bank of America . . . to make, extend, and renew a loan or loans, other extensions of credit or financial accommodations of any kind or nature whatsoever for theaccount of each Borrower . . . ." (Doc. 1-4 at 1; Doc. 8-1 ¶ 10 at 3; Doc. 8-8 at 2.) On December 1, 2011, the project loan was converted to a permanent loan in the principal amount of $424,264.61, with a term of 180 months at a fixed rate of interest of 8.45%. (Doc. 8-1 ¶ 9 at 3; Doc. 8-7 at 2-3.) Both Emery DDS, via Dr. Emery, and Bank of America, via its representative, affixed their signature to this final disbursement, change, and repayment schedule on that day. (Doc. 8-7 at 3

Emory DDS defaulted under the Loan Agreement by failing to pay the monthly installment due March 1, 2014 and each payment due thereafter. (Doc. 1-5 at 1; Doc. 8-1 ¶ 11 at 4; Doc. 8-9 at 2.) Subsequently, invoking paragraph 24.A, Bank of America provided Dr. Emery, in his capacity as Guarantor, and Emery DDS, in its role as Borrower, with a written notice of default. (Doc. 8-1 ¶¶ 11-12 at 4; Doc. 8-9 at 2.) Plaintiff gave Defendants an opportunity to cure the total payment default of $75.246/40 by June 1, 2015. (Doc. 8-1 ¶ 12 at 4; Doc. 8-9 at 2.) As this letter warned Defendants, "[i]f you fail to pay th[is] Past Due Amount on or before the Cure Date [of June 1, 2015], Bank of America may exercise any of its rights and remedies under the [Loan] Agreement, including its right to accelerate all amounts due under the [Loan] Agreement and enforcement of any and all security interests." (Doc. 1-5 at 1; Doc. 8-9 at 2.) This missive is dated May 1, 2015. (Doc. 1-5 at 2; Doc. 8-9 at 3.) Neither Emory DDS nor Dr. Emory tendered any payments to cure the default.⁴ (Doc. 8-1 ¶ 13 at 4.)

2. Post-Default Negotiations: Events Leading to the Execution of the Amended Loan Documents

On July 17, 2015, in an effort to address this default status, Dr. Emery proposed a modification of the Loan Agreement. (Doc. 1-6 at 1; Doc. 8-10 at 2.) Having "looked at areas that . . . [he] could cut back," the proposal would require a monthly payment of $3,200 per month. (Doc. 8-1 ¶ 14 at 4; Doc 1-6 at 1; Doc 8-10 at 2.) Bank of America, represented by Ms. Brenda R. Temple, Vice President ("Temple"), accepted this proposed scheme. (Doc. 8-1 ¶ 15 at 4.) Accordingly, the Amended Loan Agreement, embodying the modified payment schedule that Dr. Emery had proposed, was promptly executed by Bank of America. (Id.; see also Doc. 11-4 at 1.)

Dated and mailed on August 3, 2015, Dr. Emery received the Amended Loan Agreement on August 4, 2015. (Doc. 8-11 at 2; Doc. 11-4 at 1, 3, 7.) The Amended Loan Agreement set forth the principal amount of the new loan as $458,759.71, and stated that the amended loan documents were intended to "restate and replace all Original Loan Documents in all respects except to the extent that any of the Original Loan Documents were executed for the purpose of granting the Bank a security interest in any collateral owned by any Obligor, granting a subordinated interest in a loan, or guaranteeing the indebtedness and obligations of Borrower to Bank." (Doc. 1-7 at 1; Doc. 8-1 ¶ 16 at 4-5; Doc. 8-11 at 2.) By design, with the Amended Loan Agreement, Plaintiff consented to the amended terms that Dr. Emery had first proposed, (Doc. 8-1 ¶ 15 at 4), in his July email, (Doc. 1-6 at 1; Doc. 8-10 at 2.) Significantly, the Amended Loan Agreement identifies the date of its creation and execution as August 3, 2015, a date to which Dr. Emery acceded on his own and Emery DDS' behalf. (Doc. 1-7 at 1, 11; Doc. 8-11 at 2, 12.) On that same date, Dr. Emery signed an authorization to borrow in the name of Emery DDS, (Doc.1-7 ...