Lavista v. Cumming, A10A2000.

• Citation: 709 S.E.2d 336,308 Ga.App. 791,11 FCDR 1129
• Decision Date: 25 March 2011
• Docket Number: No. A10A2000.,A10A2000.
• Parties: CORE LaVISTA, LLC et al.v.CUMMING et al.
• Court: United States Court of Appeals (Georgia)

308 Ga.App. 791

709 S.E.2d 336

11 FCDR 1129

CORE LaVISTA, LLC et al.

v.CUMMING et al.

No. A10A2000.

Court of Appeals of Georgia.

March 25, 2011.

Stone & Bellus, John Edward Bellus, Jr., Atlanta, for appellants.Schulten, Ward & Turner, Dean Richard Fuchs, Atlanta, for appellees.DOYLE, Judge.

In this suit on a promissory note and an unconditional personal guaranty of the note, Core LaVista, LLC and Steven Delonga appeal from the trial court's order granting summary judgment to plaintiffs James Cumming and Clear Development, Inc. and awarding them $891,338.45 in principal, $228,721.50 in pre-judgment interest, and $5,803 in attorney fees, plus post-judgment interest and court costs. On appeal, Delonga contends that the trial court erred by finding that he is personally liable for the debt on the note pursuant to the personal guaranty he executed, arguing that the note was subsequently modified by the parties to increase the amount of debt and, as a result, his risk under the guaranty also increased.¹ Both Core LaVista and Delonga also challenge the court's award of attorney fees to the appellees. For the reasons that follow, we conclude that the trial court did not err by finding Delonga personally liable on the note, but we reverse the award of attorney fees made pursuant to the terms of the note.

“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. We review the grant of summary judgment de novo, construing the evidence in favor of the nonmovant.” ² The relevant facts of this case are straightforward and undisputed.

In August 2007, Core LaVista executed a promissory note in favor of Cumming in the amount of $650,000, with a maturity date of August 31, 2008. Delonga signed the note on behalf of Core LaVista as the company's managing member. The note included, inter alia, the following provision:

The Security Deed, together with this Promissory Note, any guaranty executed in conjunction with this Promissory Note, and all other documents to or of which Lender is a party or beneficiary now or hereafter evidencing, securing or otherwise relating to the indebtedness evidenced hereby, are hereinafter collectively referred to as the “Loan Documents.” ³

Contemporaneously with the execution of the note, Delonga signed, in his personal capacity, an “Unconditional Guaranty of Payment and Performance” for the repayment of the note.⁴ The guaranty contained the following relevant provisions:

Guarantor does hereby unconditionally guarantee to Lender and its successors, successors-in-title and assigns: (a) the full and prompt payment when due, whether by acceleration or otherwise, with such interest as may accrue thereon, either before or after maturity thereof, of the indebtedness payable under that certain Promissory Note dated on or about even date herewith made by Borrower to the order of Lender in the original principal amount of SIX HUNDRED FIFTY THOUSAND AND NO/100THS ($650,000) DOLLARS, together with any renewals, modifications, consolidations and extensions thereof (hereinafter referred to as the “Note”)[.]

Guarantor hereby covenants and agrees that Lender may at any time, and from time to time, without notice to or further consent from Guarantor, either with or without consideration, ... modify the terms of the Note or the Loan Documents; [or] extend or renew the Note for any period [.] ... No such action which Lender shall take or fail to take in connection with any of the Loan Documents, ... nor any course of dealing by Lender with Borrower or any other person, shall release Guarantor's obligations hereunder, affect this Guaranty in any way or afford Guarantor any recourse against Lender. The provisions of this Guaranty shall extend and be applicable to all renewals, amendments, extensions, consolidations or modifications of the Note or the Loan Documents and shall be deemed to include any such renewals, extensions, amendments, consolidations or modifications thereof.⁵

In addition, in the guaranty, Delonga waived any defenses related to the “creation or incurring of any new or additional indebtedness or obligation ... in connection with the obligation hereby guaranteed,” to notices to which he might otherwise be entitled, or to the sale or assignment by the lender of the loan documents. He also expressly agreed to pay the lender all expenses, including reasonable attorney fees, paid or incurred by the lender in trying to collect on the note, to enforce the obligations of the borrower under the note, or to enforce the guaranty.

Core LaVista did not pay the note when it matured on August 31, 2008. Instead, on September 25, 2008, Delonga (on behalf of Core LaVista) and Cumming executed a modification to the promissory note in which the parties agreed (a) to modify the principal amount of the note from $650,000 to $812,500 (the difference representing the outstanding accrued interest on the original principal amount); (b) to change the note's maturity date from August 31, 2008, to February 28, 2009; and (c) to substitute “modified loan amount” for “principal” in Section 1(a) of the note and reflect that the interest rate on the modified loan amount would be 25 percent per annum. The modification agreement further stated that “[a]ll other terms and conditions of the Note remain in full effect and are not modified by this agreement.”

Ultimately, Core LaVista defaulted on the note, and Cumming notified Core LaVista and Delonga of the default and his intention to “avail himself of all remedies available to him under the terms of the Note, the Security Deed, as well as the Unconditional Guaranty of Payment and Performance signed by you in connection with the extension of credit by Lender to Borrower.” When neither Core LaVista nor Delonga cured the default, Cumming and Clear Development ⁶ filed the instant suit against them on the note and the guaranty, seeking the principal, pre- and post-judgment interest, court costs, and attorney fees pursuant to either the terms of the note and the guaranty or OCGA § 13–6–11. Following a hearing on the plaintiffs' motion for summary judgment, the trial court granted the motion, finding that the unambiguous language of the original note authorized the parties to modify the terms of the note without modifying, preempting, or altering the remaining terms. Further, the court found that

the absence of the Unconditional Guaranty or Mr. Delonga's name in the Modification to Promissory [Note] does not extinguish his liability, but invokes the provisions of the Unconditional Guaranty that state that the guaranty applies to any “renewals, modifications, consolidations and extensions of the [Promissory Note] thereof[,]” thereby not releasing Defendant Delonga's obligations under the Unconditional Guaranty, but [instead] imputing Core [LaVista], LLC's obligation under the Modification to the Promissory Note upon Defendant Delonga [as guarantor]. Finally, the court awarded the plaintiffs attorney fees, pursuant to the terms of the note and the guaranty, after finding that the plaintiffs had provided the defendants with timely notice under OCGA § 13–1–11(a)(3).

1. On appeal, Delonga contends that the trial court erred by granting summary judgment to the appellees as to his personal liability on the note under the guaranty. We disagree.

(a) Delonga argues that the trial court improperly construed the terms of his unconditional personal guaranty against him by concluding that the guaranty applied to the Modification to Promissory Note.⁷ “Contract disputes are particularly well suited for adjudication by summary judgment because construction of contracts is ordinarily a matter of law for the court.” ⁸ Because the essential, relevant facts in this case were plain and undisputed, the interpretation of the guaranty executed by Delonga was a matter of law for the trial court to resolve.⁹

In this case, the trial court correctly found that the language of the Promissory Note, the Unconditional Guaranty, and the Modification to Promissory Note was unambiguous. Because the documents' provisions are clear, the court's proper role was to apply the terms as written. “[I]f no ambiguity appears, the trial court enforces the contract according to its terms irrespective of all technical or arbitrary rules of construction. That is, where the terms of a written contract are clear and unambiguous, the court will look to the contract alone to find the intention of the parties.” ¹⁰ Thus, Delonga has failed to show that, in reaching its conclusions, the trial court impermissibly construed the unambiguous language of the documents in a manner that relied upon evidence outside the documents or in a manner that was contrary to the plain meaning of the language.

(b) According to Delonga, because the appellees failed to present any evidence that he personally guaranteed the Modification to Promissory Note, the trial court erred by finding him liable under the guaranty.

“A plaintiff seeking to enforce a promissory note establishes a prima facie case by producing the note and showing that it was executed. Once that prima facie case has been made, the plaintiff is entitled to judgment as a matter of law unless the defendant can establish a defense.” ¹¹ Here, attached to the appellees' complaint were copies of the August 31, 2007 Promissory Note; Delonga's Unconditional Guaranty of the note, which was executed the same day; and the September 25, 2008 Modification to Promissory Note. By affidavit, Delonga admitted that he executed all three documents. Thus, the appellees presented a prima facie case entitling them to judgment as a matter of law unless Delonga established a defense to his liability on the guaranty.

In the guaranty, however, Delonga expressly waived all notices or defenses to which he might be entitled under the guaranty, to the extent permitted by law. As established above, the language of the waiver is...