Kopp v. FIRST BANK OF GEORGIA
| Decision Date | 17 November 1998 |
| Docket Number | No. A98A0846.,A98A0846. |
| Citation | 509 S.E.2d 384,235 Ga. App. 520 |
| Parties | KOPP v. FIRST BANK OF GEORGIA. |
| Court | Georgia Court of Appeals |
OPINION TEXT STARTS HERE
Albert B. Wallace, Stephen B. Wallace II, Jonesboro, for appellant.
Eidson & Associates, James A. Eidson, Hapeville, for appellee.
Plaintiff-appellee First Bank of Georgia ("FBG") brought this action for damages, alleging that defendants Jesse T. Hendrix, Jesse T. Hendrix Builders, Inc. ("Builders"), Joseph T. Pecora, and Gerald A. Kopp, individually and as attorney-in-fact for Joseph A. Pecora, acting in concert, fraudulently induced FBG to extend a construction loan secured by two lots of real property while concealing that the property was already subject to unrecorded security deeds. On March 3, 1989, defendant Builders purchased two lots receiving warranty deeds from defendant Joseph T. Pecora, grantor, who simultaneously took back as grantee security deeds to each lot ("the Pecora security deeds"). Builders and defendant Jesse T. Hendrix then obtained from FBG two $75,-000 construction mortgages, each secured by one lot respectively. Upon the default of defendants Jesse T. Hendrix and Builders, FBG accepted on July 20, 1990, a warranty deed to the property in lieu of foreclosure, but also on July 20, 1990, defendant Gerald A. Kopp filed the Pecora security deeds, whereas FBG's warranty deed was not filed until July 24, 1990. FBG ultimately sold each lot, subject to the Pecora security deeds.
After discovery, FBG moved for partial summary judgment as to liability against all defendants. This motion was granted, and in a prior appeal, a majority of this Court affirmed as to defendant Jesse T. Hendrix and defendant Builders, while concluding whether defendants Joseph T. Pecora and Gerald A. Kopp conspired with Jesse T. Hendrix to defraud future potential creditors of Builders was a question of intent for the trier of fact. Pecora v. First Bank of Ga., 217 Ga.App. 190(1), 457 S.E.2d 200.
The case was ultimately tried before the superior court without the intervention of a jury. It is undisputed that defendant Gerald A. Kopp did not immediately record the Pecora security deeds executed on March 3, 1989, and it is uncontradicted that FBG exercised due diligence in searching the public records both prior to its extension of credit to defendant Builders and prior to accepting the warranty deed from Builders in lieu of foreclosure. In support of its contention that defendant Gerald A. Kopp conspired to defraud, FBG adduced the following evidence: Gerald A. Kopp is a developer/builder who has taken out as many as 1,500 construction loans. Pursuant to a written power of attorney, Kopp was the attorney-in-fact for defendant Joseph T. Pecora, authorized to sell lots in a particular residential development. Kopp also claimed an interest in the lots through a partnership with defendant Joseph T. Pecora. Through his position as past president of the state home builders' association, Kopp has known defendant Jesse T. Hendrix for about 20 years. Kopp orally agreed to sell Hendrix two lots, at but Kopp ultimately accepted promissory notes for the entire purchase price. The terms of the notes were: "one installment of $9900.00 plus interest sixty days from the date of this instrument and the balance ... plus all remaining accrued interest ... due and payable at closing of permanent loan ... and in no event later than one year...." Hendrix "asked [Kopp] that they [the Pecora security deeds] not be filed immediately ... [because Hendrix] would like a few days in order to get his supplier contracts lined up, his credit lined up with various suppliers before [Kopp] recorded [the security deeds]...." Kopp conceded that, were he to file the security deeds, "it would show he [Hendrix] did not own those lots free and clear but, instead, would reflect that he owed the full purchase price of the $33,000.00 upon which he was seeking credit to build...." Kopp understood that Hendrix was "slow on his cash supply at the time...." When the $9,900 installment came due in May 1989, Kopp inquired Accordingly, Kopp waited for payment until Hendrix and Builders actually received a draw. Hendrix subsequently tendered two checks dated June 9, 1989, drawn on the Builders' account to the order of Joseph T. Pecora, each in the amount of $9,900, with the notation "Part payment per contract." Kopp "[knew] that the money was coming from the construction loan for the building of the houses on [the] lots, ... [and that] a deed to secure debt securing that construction loan had been recorded." His 20 years' experience gave him reason to "suspect that the bank [which] made the construction loan was unaware the [Kopp's partner, defendant Joseph T. Pecora] held a deed to secure debt or that [Builders] owed the seller money on that property." He further knew that, if Builders had obtained an "acquisition and development" loan, where the developer "borrow[s] the money both to buy the property and to build on it, ... then [the seller] would have been paid up front...." In July 1990, Hendrix told Kopp "he was not going to be able to finish those houses[;] ... that he was going to give them back to the bank[;] and that he offered to give [Kopp] the houses if [the latter] would assume the construction debt to the bank ... [but Kopp] refused...." On July 20, 1990, Kopp was informed by friendly real estate agents that Hendrix and Builders had given FBG a deed in lieu of foreclosure. The Pecora security deeds were filed that same day.
Jesse T. Hendrix testified that "[i]t was [mutually] understood that [Kopp] would not [file the Pecora security deeds] ... so [Hendrix or Builders] could obtain the construction loans...." They both understood that "if [Builders] didn't own the lots that more likely than not in the ordinary course of business that a bank or other financial lending institution would not have made a construction loan...." Hendrix confirmed that Kopp "knew that [he, Hendrix,] intended to obtain construction loans from [FBG] at the time ... [of] the closing ... on March 3 of 1989, ... when [Kopp executed] the warranty deeds [to Builders] ... [and that Kopp] knew that the purpose of withholding the security deeds from filing [was] so it would appear to [FBG] that [Builders] owned [the] lots ... free and clear...." In March 1990, when Hendrix informed FBG that Builders would be unable to...
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