Dixie Diners Atlanta, Inc. v. Gwinnett Federal Bank, FSB
| Decision Date | 29 November 1993 |
| Docket Number | No. A93A1470,A93A1470 |
| Citation | 211 Ga.App. 364,439 S.E.2d 53 |
| Parties | DIXIE DINERS ATLANTA, INC. et al. v. GWINNETT FEDERAL BANK, FSB. |
| Court | Georgia Court of Appeals |
George E. Butler II, Dailey, Mattox, Chambliss & Bradley, Michael A. Dailey, for appellants.
Webb, Tanner & Powell, Anthony O.L. Powell, R. Jack Wilson, for appellee.
This is a suit on a promissory note. Defendants, the borrower corporation and two individual guarantors, appeal from the trial court's grant of final summary judgment to the plaintiff bank on its main claim and on defendants' counterclaim.
On January 8, 1990, Dixie Diners Atlanta, Inc. d/b/a Uncle Sam's Diners executed a promissory note in favor of Gwinnett Federal Savings and Loan Association, later known as Gwinnett Federal Bank, FSB, for a loan in the principal amount of $60,025. On the same day, Jones and Crawford each executed an individual guaranty of the loan. Dixie Diners received the $60,025. No payments were ever made on the loan. On June 21, 1991, Gwinnett Federal made demand on Dixie Diners, Jones, and Crawford for $69,341.72, the total principal and interest due under the note as of May 31, 1991. The money was not paid and the present action against Dixie Diners, Jones, and Crawford was filed on August 1, for the amount of the demand plus attorney fees in an amount to be proven at trial.
The three defendants counterclaimed, alleging in pertinent part as set out in the next three paragraphs:
The promissory note and guarantees were part of a larger guaranteed loan arrangement involving Gwinnett Federal, the defendants, and the U.S. Small Business Administration (SBA). On August 31, 1988, The Merchant Bank of Atlanta made a $500,000 SBA guaranteed loan to Dixie Diners for a restaurant venture. This loan was guaranteed by Crawford and Jones. In the transaction, the defendants dealt with Merchant Bank's agent, Barnes. In their "zeal" to make the loan and obtain the SBA guarantee, Merchant Bank and Barnes negligently failed to adhere to "prudent lending practices and basic loan principles" required by certain agreements executed in connection with the SBA loan and specific federal statutes and regulations.
Approximately three months into the life of the SBA loan, Merchant Bank transferred the loan "without recourse" to Gwinnett Federal, prompted by Barnes' move to Gwinnett Federal. Barnes continued in charge of the loan, with the "negligent and imprudent loan management practices" continuing. Defendants paid approximately $12,000 to have the loan transferred from Merchant Bank to Gwinnett Federal. After the transfer, Barnes continued to make disbursements under the SBA loan even though he had full knowledge of adverse changes in the loan's status. Due to Gwinnett Federal and Barnes' mismanagement of the loan and their failure to provide defendants with the contemplated "aid, counsel, assist[ance], and protect[ion]," the restaurant was not opened for almost a year after the SBA loan was consummated.
Gwinnett Federal made the loan at issue to cover cost overruns, unanticipated site improvement costs, and acute shortage of operating capital, all of the problems being directly attributable to the negligence of Barnes and Gwinnett Federal. SBA apparently was not notified of the loan at issue. Because of inadequate capital and management problems, the restaurant closed after one year of operation and six months after the present loan was made. Defendants were entitled to recover against Gwinnett Federal for ordinary negligence and negligence per se in that the bank violated various statutory, regulatory, and contractual standards of care.
The three defendants also raised defenses: the bank was estopped to collect the balance on the note because the note was unenforceable, as the circumstances of its creation rendered it illegal and void as against public policy; the bank was estopped to collect the balance on the note because of representations made by the bank to defendants at the time the note was made in the context of a "confidential" relationship between defendants and the bank's agent Barnes, namely that such debt would not be separately collected but would be a part of the overall SBA loan arrangement; the bank treated both loans as a "package" and released the individual guarantors by its repeated offers of "de facto extensions" to Dixie Diners on both debts; defendants had a right of recoupment against the bank for damages suffered from its alleged negligence.
In challenging the grant of summary judgment, defendants assert six separate enumerations of error. The common assertion is that the court improperly rejected their affirmative defenses and counterclaim. The reason given is that it erroneously accepted the bank's theory that the affirmative defenses and counterclaim arose out of facts surrounding an earlier and separate SBA loan and did not constitute a legally cognizable defense to the suit on the note at issue. Defendants also complain that "[n]otwithstanding the non-applicability of OCGA § 9-11-52(a) to motions for summary judgment," the trial court erred "in failing to articulate for the benefit of the Defendants any meaningful explanation for why their defenses and [c]ounterclaim failed to raise any material issue of disputed fact," and by its silence, the court contravened the 1983 Georgia Constitution, Art. I, Sec. I, Par. I and Art. I, Sec. I, Par. XI.
1. Defendants fail to show how the lack of elaboration in the court's ruling contravenes...
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