Moore v. Bank of Fitzgerald

• Decision Date: 04 March 1997
• Docket Number: No. A97A0490,A97A0490
• Parties: , 97 FCDR 1173 MOORE v. BANK OF FITZGERALD.
• Court: Georgia Court of Appeals

Page 135

483 S.E.2d 135

225 Ga.App. 122, 97 FCDR 1173

MOORE v. BANK OF FITZGERALD.

No. A97A0490.

Court of Appeals of Georgia.

March 4, 1997.

Anthony J. Solari, III, Marietta, for appellant.

Mills & Chasteen, Ben B. Mills, Jr., Robert W. Chasteen, Jr., Fitzgerald, for appellee.

ELDRIDGE, Judge.

Appellant Sharon S. Moore appeals the trial court's grant of summary judgment to appellee, the Bank of Fitzgerald. We affirm the trial court's grant of summary judgment.

This case involves 935 acres of farm land located in Dodge and Coffee Counties which was owned and operated by appellant's husband, Pettice Lee Moore ("Lee Moore"), and mother-in-law, Edna Moore. In addition to the farming operation, appellant raised cattle on the land through her corporation, TASL Farms, Inc. ("TASL"). In an effort to consolidate their land debt, Lee and Edna Moore secured a $700,000 secured loan on the property through appellee on December 20, 1989, giving appellee a Deed to Secure Debt on the entire 935 acres.

When Lee and Edna Moore defaulted on the loan, appellee initiated foreclosure proceedings. Prior to the June 4, 1991 sale of the property, appellee agreed to loan appellant funds, in an amount roughly the equivalent to the outstanding indebtedness plus one dollar, in order to buy the property at foreclosure if she was the successful bidder. The terms of the oral agreement between appellant and appellee were reduced to writing in a letter dated May 30, 1991. The letter specifically noted that "[t]he terms of this letter will supersede any other verbal agreements made between the parties." Appellant was the successful bidder at the foreclosure sale and signed appellee's secured mortgage note in the amount of $737,635 on June 25, 1991.

Eighteen months later, on December 1, 1992, appellant filed a Chapter 12 bankruptcy petition in the United States Bankruptcy Court, Southern District of Georgia. As part of this proceeding, appellant/debtor was required to file with the court a list of all creditors and any property in which the secured creditors had an interest; appellant also was required to provide a current valuation of the security property. Further, if this valuation was challenged by a secured creditor, appellant/debtor and the creditor were "required to provide all appraisals or other available information concerning valuation."

On January 12, 1993, appellee filed a proof of claim setting forth the amount of indebtedness owed by appellant to appellee in the amount of $880,026.39. ¹ Although appellant originally filed an objection to the amount of indebtedness listed in the proof of claim, such objection was subsequently withdrawn by appellant. At that time, appellant did not assert any existing or potential claims against appellee in her bankruptcy petition, even though she was specifically required to disclose all of her assets and liabilities. 11 U.S.C. § 521.

After appellant filed a valuation of 851 acres of the security property at $450,000, appellee contested the valuation and asserted that the land should be valued at $772,000 instead; appellee requested a hearing on the valuation issue, which was held on February 2, 1993. Following the hearing, the bankruptcy court ruled that, for the purposes of a Plan of Arrangement, the value of the property with improvements thereon was $557,450.

After establishing the amount of indebtedness and the valuation of security property, appellant filed a Plan of Arrangement with the bankruptcy court pursuant to 11 U.S.C. § 506(b) and the Federal Rule of Bankruptcy Procedure 3012. Appellee objected to several provisions of the Plan of Arrangement; appellee also filed a motion to dismiss or convert the case and a motion for relief from the automatic stay. After negotiations between the parties concerning the specifics of the plan, a Recast Plan of Arrangement was drafted and filed; appellee's objection and motions were withdrawn. The bankruptcy court confirmed appellant's Recast Plan of Arrangement on July 29, 1993.

On April 25, 1994, appellee moved for relief from the automatic stay so that the bank could foreclose on the property, asserting that the appellant/debtor failed to pay taxes on the secured property and failed to maintain insurance on the property; that appellee was prejudiced by the delay caused by the stay; that appellee's interests were not adequately protected; and that appellant lacked any equity in the property and was unable to successfully reorganize her debts. A hearing was held on the motion on June 21, 1994, at which time the court granted appellee relief from the automatic stay in order to allow appellee to foreclose its security interest in appellant's property.

In June 1994, after determining that the appellant was in default, appellee began foreclosure proceedings; the sale was scheduled for the first Tuesday in August 1994. On June 6, 1994, appellant amended her answer to Schedule B, question 20 of her bankruptcy petition, which required a listing of "other contingent and unliquidated claims of every nature, counterclaims of the Debtor and rights to set off claims," to include a claim against appellee for breach of fiduciary duty and breach of contract. Appellant also filed suit against appellee on June 10, 1994, for set-off or recoupment, damages, punitive damages and expenses of litigation. However, the complaint was subsequently dismissed when, on September 9, 1994, appellant dismissed her Chapter 12 bankruptcy petition without prejudice pursuant to 11 U.S.C. § 1208(b).

In the meantime, on August 1, 1994, appellant filed a complaint against appellee in the Superior Court of Ben Hill County asserting, inter alia, breach of fiduciary duty, breach of contract, and wrongful foreclosure. Appellant also requested a temporary restraining order against the impending foreclosure, which was denied by the court.

Appellee moved for summary judgment on February 27, 1996, asserting that appellant's complaint failed to assert a cause of action for which relief can be granted. The trial court granted summary judgment to appellee on August 23, 1996, and an appeal was timely filed.

1. Res Judicata and Judicial Estoppel.

Appellant asserts in her first enumeration of error that the trial court erred in finding that her claims were barred under the theory of res judicata. This Court agrees with appellant that, under the specific facts of this case, res judicata does not apply here.

In the case sub judice, after appellant's Chapter 12 bankruptcy petition was filed and a Plan of Arrangement was confirmed by the court, appellant dismissed her suit without prejudice. Upon such dismissal, all parties were returned to the status quo ante and the property of the estate was revested in appellant, who again became liable to the appellee for the entire debt, while appellee was freed from the automatic stay to pursue its right to foreclosure under its Deed to Secure Debt. See 11 U.S.C. § 349(b)(3); see also In re Nash, 765 F.2d 1410 (9th Cir.1985) (dismissal of a Chapter 13 bankruptcy case effectively vacates a confirmed plan). While the appellee may have been prejudiced by the delay in pursuing foreclosure which resulted from the automatic stay, this slight prejudice is insufficient to bar appellant's claim under the principle of res judicata.

Further, appellee's assertion that judicial estoppel should bar the claim fails as well, even though the appellant failed to disclose a potential asset, the claim against appellee, in her sworn bankruptcy petition. Compare Johnson v. Trust Co. Bank, 223 Ga.App. 650, 478 S.E.2d 629 (1996). Cases holding that judicial estoppel precludes pre-existing, undisclosed claims are distinguishable on their facts and are not controlling in this case. See Hyre v. Denise, 214 Ga.App. 552, 449 S.E.2d 120 (1994) (plaintiff/appellant's claim was barred by judicial estoppel after her Chapter 13 bankruptcy case was converted to a Chapter 7 petition); Southmark Corp. v. Trotter, Smith, etc., 212 Ga.App. 454, 442 S.E.2d 265 (1994).

We hold that, under the specific facts of this case, appellant's claim was not barred under the principle of res judicata or judicial estoppel.

2. In her second and third enumerations of error, appellant asserts that the trial court erred in granting summary judgment to appellee on the basis that appellant's complaint is not supported by genuine issues of material fact. Specifically, appellant asserts that the Statute of Frauds does not apply to the contracts underlying her complaint. We disagree as to both assertions.

"To prevail at summary judgment under OCGA § 9-11-56, the moving party must demonstrate that there is no genuine issue of material fact and that the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law.... If there is no evidence sufficient to create a genuine issue as to any essential element of plaintiff[/appellant's] claim, that claim tumbles like a house of cards. All of the other disputes of fact are rendered immaterial. [Cit.]" Lau's Corp. v. Haskins, 261 Ga. 491, 405 S.E.2d 474 (1991).

(a) Breach of Fiduciary Duty.

Appellant's complaint asserts that appellee assumed a fiduciary position with respect to appellant's cattle business by undertaking the "management, direction, and control" over the operation. However, case law and evidence presented negates a finding of a fiduciary relationship between the parties. Such evidence includes a letter, signed by appellee, which affirmatively established the terms of any asserted oral contract between the two parties regarding future operating loans and other management issues. While this letter specifically noted that appellant would be required to meet monthly with a bank official to "monitor her farming operation and progress," there is no indication that the relationship between lender (appellee) and borrower (appellant) was so intertwined as to create a fiduciary relationship.

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