Cumberland Contractors, Inc. v. State Bank & Trust Co.

• Decision Date: 03 November 2014
• Docket Number: A13A2222.,Nos. A13A2221,s. A13A2221
• Citation: 755 S.E.2d 511,327 Ga.App. 121
• Court: Georgia Court of Appeals
• Parties: CUMBERLAND CONTRACTORS, INC., et al. v. STATE BANK AND TRUST COMPANY, INC.; and vice versa.

327 Ga.App. 121

755 S.E.2d 511

CUMBERLAND CONTRACTORS, INC., et al.

v.STATE BANK AND TRUST COMPANY, INC.; and vice versa.

Nos. A13A2221, A13A2222.

Court of Appeals of Georgia.

March 18, 2014.

Reconsideration Denied April 11, 2014.

Certiorari Denied Nov. 3, 2014.

Walter Douglas Adams, Brunswick, David Guy Carter, Atlanta, for Appellants.

Busch, Slipakoff & Schuh, Christopher Michael Porterfield, Alpharetta, Bryan Edward Busch, Shane Patton Stogner, Atlanta, Tawana B. Johnson, Jamie Lynn Cohen, Laura H. Mirmelli, for Appellee.

MILLER, Judge.

State Bank and Trust Company, Inc. (“State Bank”), as successor to the original lender, sued Cumberland Contractors, Inc. and Michael and Lucy Thomas (collectively, the “Defendants”) to recover amounts owing on several promissory notes and guarantees. The Thomases filed counterclaims for invasion of privacy and intentional infliction of emotional distress. The trial court dismissed these counterclaims and also denied the Defendants' motion to enforce a settlement agreement. At trial, the Defendants moved for a directed verdict, and the trial court denied their motions. The trial court entered a judgment in State Bank's favor following the jury's verdict. After the Defendants filed a notice of appeal, State Bank filed a motion for supersedeas bond, which the trial court denied.

In Case No. A13A2221, the Defendants contend that the trial court erred in: (1) granting State Bank's motion in limine ruling that State Bank was the real party in interest to sue on the notes and guarantees; (2) dismissing the Thomases' counterclaims; (3) denying their motion to enforce a settlement agreement; (4) denying their motion for a directed verdict on collection of the promissory notes; (5) denying their motion for a directed verdict as to State Bank's claim for attorney fees; and (6) charging the jury on the doctrine of holder in due course. In Case No. A13A2222, State Bank contends that the trial court erred in denying its motion for supersedeas bond.

Since the evidence shows that the parties entered into a binding settlement agreement prior to trial, we reverse the trial court's judgment in Case No. A13A2221. We affirm the trial court's denial of State Bank's motion for supersedeas bond in Case No. A13A2222.

[O]n appeal from the denial of a motion for a directed verdict ..., we construe the evidence in the light most favorable to the party opposing the motion, and the standard of review is whether there is any evidence to support the jury's verdict. However, we review questions of law de novo[.]

(Punctuation and footnotes omitted.) Southland Propane, Inc. v. McWhorter, 312 Ga.App. 812, 813, 720 S.E.2d 270 (2011).

So viewed, the evidence shows that Michael and Lucy Thomas owned and were officers of Cumberland Contractors. Michael served as the Chief Executive Officer and Chief Financial Officer, and Lucy served as the company's secretary. From the time of the formation of Cumberland Contractors, Michael borrowed money from several banks. Beginning in 2005, Michael borrowed money from Security Bank of Bibb County (“Security Bank”) to purchase lots in the Youngwood subdivision. By June 2009, the Thomases had not repaid all of the money they borrowed from Security Bank.

On June 26, 2009, the Defendants entered into four different loan agreements with Security Bank. Michael and Lucy executed a renewed promissory note (“Note 1”) in the principal amount of $650,000 plus interest. Cumberland Contractors renewed a promissory note (“Note 2”) with Security Bank for the principal amount of $1,075,000 plus interest. Michael and Lucy signed Note 2 on behalf of Cumberland Contractors, and they also executed personal guarantees on that note. The Defendants also entered into an additional loan agreement and executed a promissory note in the principal amount of $100,000 plus interest (“Note 3”), while Michael and Lucy executed a fourth promissory note in the amount of $200,000 plus interest (“Note 4”). All four notes had a maturity date of July 26, 2010.

In July 2009, Security Bank closed, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver for Security Bank. Through a purchase agreement, FDIC assigned its interests in the subject notes, the related guarantees, and other related loan agreements to State Bank. State Bank also acquired Security Bank's loan accounting system, which provided loan histories on the subject notes. After the Defendants defaulted on the four promissory notes, State Bank accelerated the amounts due, sent notices of default, and then filed the instant lawsuit seeking to enforce the promissory notes and related guarantees. At trial, State Bank presented the testimony of one of its portfolio managers, who testified as custodian of the business records relating to the four notes and to the amounts owing on the same. The jury returned a verdict in favor of State Bank. These appeals followed.

Case No. A13A2221

1. The Defendants contend that the trial court erred in granting State Bank's motion in limine on the issue of whether State Bank was entitled to enforce and collect on the notes. Specifically, the Defendants argue that State Bank did not introduce evidence showing that there was a valid assignment of the loans to State Bank. We disagree.

We review a trial court's ruling on a motion in limine for abuse of discretion. See Forsyth County v. Martin, 279 Ga. 215, 221(3), 610 S.E.2d 512 (2005).

The doctrine of privity of contract requires that only parties to a contract may bring suit to enforce it. An exception to this requirement of contractual privity occurs when a party assigns another the contractual right to collect payment, including the right to sue to enforce the right. However, to be enforceable by the assignee, such an assignment must be in writing.

(Punctuation and footnotes omitted.) Level One Contact, Inc. v. BJL Enterprises, LLC, 305 Ga.App. 78, 80(1)(a), 699 S.E.2d 89 (2010). Furthermore, promissory notes are negotiable instruments as defined in OCGA § 11–3–104(a), which can be transferred “when ... delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.” OCGA § 11–3–203(a). Such a transfer, “whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course[.]” OCGA § 11–3–203(b); see also Titshaw v. Northeast Ga. Bank, 304 Ga.App. 712, 715(1), n. 10, 697 S.E.2d 837 (2010) (“Assignment of a note means transfer of the title to the instrument so that the recipient may bring an action thereon.”) (citation and punctuation omitted).

Here, at the hearing on the motion in limine, State Bank presented a January 27, 2010 notice from the Federal Register showing that the Security Bank failed and FDIC was appointed as the receiver for Security Bank. The trial court took judicial notice of the Federal Register notice, which it was required to do.¹Sims v. Southern Bell Telephone & Telegraph Co., Inc., 111 Ga.App. 363, 364, 141 S.E.2d 788 (1965); see also 44 USC § 1507.

The evidence further shows that the FDIC was acting as receiver for Security Bank when it assigned the loan documents to State Bank. This evidence includes an affidavit from State Bank's portfolio manager, who testified that she was the records custodian for the bank, the subject notes and guarantees were kept by the bank in its regular course of business, and it was the regular practice of the bank to make records at or near the time of an event or reasonably soon thereafter. The portfolio manager also testified that State Bank had the notes and guarantees in its possession, and that it received these instruments when the FDIC assigned and transferred them pursuant to a Purchase and Assumption Agreement. Moreover, contrary to the Defendants' claims, the written assignment was produced and identified. A copy of that agreement was attached to the portfolio manager's affidavit, and the agreement identifies the FDIC as receiver of Security Bank. Liberally interpreting and applying the provisions of former OCGA § 24–3–14(b),² we hold that State Bank established that the affidavit and attached exhibits were admissible as business records. See Melman v. FIA Card Servs., N.A., 312 Ga.App. 270, 271–272(1)(a), 718 S.E.2d 107 (2011) (business documents attached to affidavit, which stated that the affiant was familiar with the company's business records and that the company's regular course of business was to make records at or near the time of event, were admissible). As a result, the trial court did not err in finding that State Bank is the real party in interest, because there was a valid assignment of the loans to State Bank. See Kensington Partners, LLC v. Beal Bank Nevada, 311 Ga.App. 196, 197(1), 715 S.E.2d 491 (2011) (valid assignment of loan from FDIC to bank where evidence showed that FDIC acted as receiver when it assigned loan documents to bank). Accordingly, the trial court did not abuse its discretion in granting State Bank's motion in limine on this issue.

2. The Defendants also contend that the trial court erred in dismissing the Thomases' counterclaims for invasion of privacy and intentional infliction of emotional distress based upon the publication of their social security numbers in an exhibit attached to the complaint.³ We disagree.⁴

A motion to dismiss pursuant to OCGA § 9–11–12(b)(6) will not be sustained unless (1) the allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof; and (2) the movant establishes that the claimant could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought. The main consideration of such a motion to dismiss is whether, under the assumed set of facts, a right to some form of...