Lovell v. Ga. Trust Bank

• Decision Date: 28 November 2012
• Docket Number: No. A12A1234.,A12A1234.
• Parties: LOVELL v. GEORGIA TRUST BANK.
• Court: Georgia Court of Appeals

734 S.E.2d 847

LOVELL

v.GEORGIA TRUST BANK.

No. A12A1234.

Court of Appeals of Georgia.

Nov. 28, 2012.

Sherri G. Buda and Simon Howard Bloom, Atlanta, for Lovell.

Paul G. Durdaller and Amy K. Woo Weber, Atlanta, for Georgia Trust Bank.

MILLER, Presiding Judge.

Georgia Trust Bank sued Virgil E. Lovell to recover the principal and interest due on a promissory note (the “Note”), along with contractual and statutory attorney fees and expenses Georgia Trust filed a motion for summary judgment. Lovell responded, contending that Georgia Trust failed to work with him on the loan pursuant to the parties' oral agreement. Lovell also filed a motion to compel the production of documents in support of his affirmative defenses of estoppel and waiver. The trial court held a hearing on Lovell's motion to compel and on Georgia Trust's motion for summary judgment. The trial court denied the motion to compel and granted Georgia Trust's motion for summary judgment.

Lovell appeals from that order, contending that (1) the trial court erred in denying the Motion to Compel, and finding that the parole evidence rule barred admission of documents sought under that motion; (2) the trial court erred in granting Georgia Trust's motion for summary judgment, and in finding that Georgia Trust's oral promise to work with Lovell was inconsistent with the written terms of the Note; and (3) the trial court erred in finding that Lovell did not establish an affirmative defense. Finding no error, we affirm.

“On review of a grant of summary judgment, we apply a de novo standard of review and view the evidence in the light most favorable to the nonmovant. If there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law, summary judgment is proper.” (Footnotes omitted.) Georgia Real Estate Properties v. Lindwall, 303 Ga.App. 12, 692 S.E.2d 690 (2010).

So viewed, the evidence shows that on January 30, 2007 Lovell executed a promissory note payable to Georgia Trust in the principal amount of $1,000,000. The parties renewed the note on February 1, 2008, and again on February 9, 2009, both in the principal amount of $1,000,000. The parties then executed a third and final renewal on March 9, 2010, in the principal amount of $996,706.93. Prior to executing the final renewal of the Note, then President and CEO of Georgia Trust, J. Michael Allen, had a series of phone conversations with Lovell, concerning Lovell's loan with Georgia Trust. Allen discussed with Lovell that Georgia Trust wanted a principal reduction on the loan, considering the value of the secured real estate, and Allen asked Lovell to pay down the loan balance. Allen told Lovell that Georgia Trust would “make every effort, within reasonable business expectations, to work out an amicable resolution.” Allen also informed Lovell that Georgia Trust would retain its contractual rights in the event that Lovell could not cure a default.

At the time of the note renewal, Lovell paid the past due interest. He made no further payments on the Note. Lovell's representative contacted Georgia Trust to ask if it would accept a deed in lieu of foreclosure on the secured property. Georgia Trust declined to accept the deed in lieu. On June 28, 2010, Georgia Trust sent Lovell a Notice of Default, demanding immediate payment in full of the entire outstanding balance due on the note, along with accrued and unpaid interest and other fees. When Lovell failed to pay the amounts due, Georgia Trust filed suit against him for breach of the contract, unjust enrichment, attorney fees, costs and expenses.

During discovery in this case, Lovell sought production of non-privileged documents relating to Georgia Trust's underwriting and approval process of the loan and renewals, internal communications regarding the loan, documents relating to Georgia Trust's willingness or unwillingness to modify the terms of the loan, and documents reflecting any actions Georgia Trust took to mitigate its damages. Georgia Trust objected to these document requests on the basis that the documents sought were not relevant and not reasonably calculated to lead to the discovery of admissible evidence. After good faith efforts to resolve the dispute in accordance with Uniform Superior Court Rule 6.4, Lovell moved to compel production of these documents pursuant to OCGA § 9–11–37(a). The trial court denied Lovell's motion to compel, finding that the documents he requested were irrelevant, outside the scope of discovery and barred from admission by the parol evidence rule. The trial court also granted summary judgment to Georgia Trust, finding that Georgia Trust established a prima facie case for enforcement of the Note, there were no genuine issues of material fact, and Lovell failed to establish an affirmative defense.

1. Lovell challenges the trial court's denial of his motion to compel, contending that the documents he sought relating to the oral promise are not barred from admission by the parole evidence rule because Georgia Trust's oral promise to work with him in the event of a default was not inconsistent with the terms of the Note. We disagree.

“[A]s a general rule, we review the denial of a motion to compel discovery only for an abuse of discretion.” (Citation omitted.) Martin v. Hamilton State Bank, 314 Ga.App. 334, 337, 723 S.E.2d 726 (2012); see also Hickey v. Kostas Chiropractic Clinics, 259 Ga.App. 222, 223(3), 576 S.E.2d 614 (2003) (the standard of review on rulings involving discovery disputes is abuse of discretion.)

Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action.... It is not ground for objection that the information sought will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.

(Punctuation omitted) OCGA § 9–11–26(b)(1). In this case, as more fully set forth in Division 2, the documents sought are inadmissible under the parol evidence rule because Georgia Trust's oral promise to work with Lovell in the event of a default was inconsistent with the written terms of the Note. Therefore, the information sought was not reasonably calculated to lead to the discovery of admissible evidence, the documents would add nothing of substance to Lovell's claim, and the trial court did not abuse its discretion in denying Lovell's motion to compel. See Latimore v. Vatacs Group, Inc., 317 Ga.App. 98, 102(3), 729 S.E.2d 525 (2012) (disputed discovery items would not add to appellant's claim and would not create a genuine issue of material fact); see also Martin, supra, 314 Ga.App. at 337, 723 S.E.2d 726 (trial court did not abuse its discretion in denying motion to compel discovery of evidence showing bank's motivation in declaring default and ultimately refusing to restructure debt).

2. Lovell challenges the trial court's order granting summary judgment, contending that Georgia Trust failed to honor its oral promise to work with him in the event of default. Lovell further alleged that the trial court erred in finding that Georgia Trust's promise was inconsistent with the written terms of the Note. We disagree.

A promissory note is an unconditional contract whereby the maker engages that he will pay the instrument according to its tenor ... It is well established that a promissory note may not be modified by the imposition of conditions not apparent on its face ... The note being an unconditional promise, the contract is complete as written[.] [P]arol evidence may not be used to impose conditions which are not apparent from the face of the note. An oral agreement between the parties, made contemporaneously with the execution of the note or prior thereto relating to a condition not expressed in the note is incompetent to change the contract as represented on the face of the note.

(Citations and punctuation omitted) Devin Lamplighter, Ltd. v. American Gen. Finance, Inc., 206 Ga.App. 747, 749(2), 426 S.E.2d 645 (1992).

“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 an affirmative defense” (Footnote omitted) Core LaVista, LLC v. Cumming, 308 Ga.App. 791, 795(1)(b), 709 S.E.2d 336 (2011). Georgia Trust produced the Note and its representative submitted an affidavit, which laid the proper foundation for admission of the loan documents as...