NEEDREPLACE, Civil Action No. 1:11–cv–3224–JEC.

CourtNew York District Court
Writing for the CourtJULIE E. CARNES
Citation7 F.Supp.3d 1259
PartiesFAS CAPITAL, LLC, Plaintiff, v. Carl CARR, Defendant.
Docket NumberCivil Action No. 1:11–cv–3224–JEC.
Decision Date20 March 2014

7 F.Supp.3d 1259

FAS CAPITAL, LLC, Plaintiff,
v.
Carl CARR, Defendant.

Civil Action No. 1:11–cv–3224–JEC.

United States District Court, N.D. Georgia, Atlanta Division.

Signed March 20, 2014


Motion denied.

[7 F.Supp.3d 1261]

Joseph Steven Bloodworth, Bush, Crowley & Leverett, Macon, GA, for Plaintiff.

Cameron M. McCord, Jones & Walden, LLC, Atlanta, GA, for Defendant.


ORDER & OPINION
JULIE E. CARNES, Chief Judge.

This case is before the Court on plaintiff's Motion for Summary Judgment [20]. The Court has reviewed the record and the arguments of the parties and, for the reasons set out below, concludes that the motion [20] should be DENIED without prejudice.

BACKGROUND

The facts of this case are for the most part undisputed. The parties agree that in June, 2005, defendant executed a promissory note in the principal amount of $250,150 in favor of Silverton Bank.1 (Def.'s Resp. to Pl.'s Statement of Material Facts [22] at ¶ 1.) In September, 2008, defendant executed a second promissory note to Silverton Bank in the principal amount of $358,000. ( Id. at ¶ 2.) Upon Silverton's failure in 2009, the Federal Deposit Insurance Corporation (“FDIC”) assumed the right to collect on the notes. (Compl. [1] at ¶¶ 5–6.)

Defendant concedes that he defaulted on both notes. (Def.'s Resp. [21] at 2.) The FDIC initiated this action to collect on the notes in September, 2011, in its capacity as Silverton's receiver. (Compl. [1] at ¶¶ 3–7.) The FDIC subsequently sold and transferred the notes to plaintiff FAS Capital, LLC (“FAS Capital”). (Pl. FDIC's Mot. to Substitute Party Pls.' [17] at 2.) In connection with the sale, the FDIC moved to substitute FAS Capital as the plaintiff in the case. ( Id. at 1.) The Court granted the motion on June 26, 2012. (Order [23].)

Plaintiff has filed a motion for summary judgment on its claim to collect on the notes. (Pl.'s Mot. for Summ. J. [20].) Although defendant concedes his default on the promissory note, he challenges the Court's jurisdiction to entertain plaintiff's suit now that the FDIC has been dismissed as a party. (Def.'s Resp. [21] at 5–8.) Defendant further argues that plaintiff has (1) failed to establish that it is the holder of the notes and (2) not submitted competent evidence to substantiate the balances it claims are due on the notes. ( Id. at 8–12.) Finally, defendant contends

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that plaintiff has failed to comply with the statutory requirements for recovering attorney's fees under O.C.G.A. § 13–1–11. ( Id. at 12–13.)

DISCUSSION I. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate when the “pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). A fact's materiality is determined by the controlling substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue is genuine when the evidence is such that a reasonable jury could return a verdict for the nonmovant. Id. at 249–50, 106 S.Ct. 2505.

Summary judgment is not properly viewed as a device that the trial court may, in its discretion, implement in lieu of a trial on the merits. Instead, Rule 56 of the Federal Rules of Civil Procedure mandates the entry of summary judgment against a party who fails to make a showing sufficient to establish the existence of every element essential to that party's case on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In such a situation, there can be “ ‘no genuine issue as to any material fact,’ ” as “a complete failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial.” Id. at 322–23, 106 S.Ct. 2548 (quoting FED. R. CIV. P. 56(c)).

The movant bears the initial responsibility of asserting the basis for his motion. Id. at 323, 106 S.Ct. 2548. However, the movant is not required to negate his opponent's claim. The movant may discharge his burden by “ ‘showing’—that is, pointing out to the district court—that there is an absence of evidence to support the non-moving party's case.” Id. at 325, 106 S.Ct. 2548. After the movant has carried his burden, the non-moving party is required to “go beyond the pleadings” and present competent evidence designating “ ‘specific facts showing that there is a genuine issue for trial.’ ” Id. at 324, 106 S.Ct. 2548.

In ruling on a motion for summary judgment, the Court must view the evidence and factual inferences in a light most favorable to the non-moving party. Samples v. City of Atlanta, 846 F.2d 1328, 1330 (11th Cir.1988). However, “the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment.” Anderson, 477 U.S. at 247–48, 106 S.Ct. 2505 (1986). The requirement is that there be no “ genuine issue of material fact.” Id.

II. PLAINTIFF'S RIGHT TO RECOVER UNDER THE NOTES

In Count I of the complaint, plaintiff seeks to recover the amounts due on the notes. (Am. Compl. [11] at ¶¶ 51–58.) A debtor's admission of default establishes his creditor's prima facie case for recovery. Pollard v. First Nat'l Bank of Albany, 169 Ga.App. 598, 598, 313 S.E.2d 785 (1984).2 See also Shropshire v. Alostar Bank of Commerce, 314 Ga.App. 310, 315, 724 S.E.2d 33 (2012) (“As to liability, ‘[a] plaintiff seeking to enforce a promissory note establishes a prima facie case by producing the note and showing that it was

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executed.’ ”) (quoting Core La Vista, LLC v. Cumming, 308 Ga.App. 791, 795, 709 S.E.2d 336 (2011)). When there is such an admission, “the burden shifts to the debtor to establish an affirmative defense.” Reece v. Chestatee State Bank, 260 Ga.App. 136, 138, 579 S.E.2d 11 (2003). To meet this burden, the debtor must point to specific facts and evidence in the record. Pollard, 169 Ga.App. at 598, 313 S.E.2d 785.

As indicated above, defendant admits that he is in default on both of the notes that he executed to Silverton Bank. (Def.'s Resp. to PSMF [22] at ¶¶ 1–2.) He does not raise any affirmative defenses or directly deny any of the facts set forth by plaintiff concerning the notes. (Def.'s Resp. [21] at 2.) Instead, defendant challenges the Court's jurisdiction to entertain plaintiff's claim to collect on the notes. ( Id. at 2–3.) He also points to evidentiary deficiencies underlying plaintiff's claim to be the current holder of the notes and its statement of the amounts due under the notes. ( Id. at 8–11.)

A. The Court has jurisdiction over the case.

The FDIC filed this action in federal court under the authority of 12 U.S.C. § 1819. (Compl. [1] at ¶ 10.) The jurisdictional provision of that statute provides that any civil suit in which the FDIC “in any capacity, is a party shall be deemed to arise under the laws of the United States.” 12 U.S.C. § 1819(b)(2)(A). By its plain terms, § 1819(b)(2)(A) gives rise to federal question jurisdiction under 28 U.S.C. § 1331, which states that “[t]he district courts shall have original jurisdiction of all civil actions arising under the ... laws ... of the United States.” 28 U.S.C. § 1331.

Defendant concedes that, by operation of § 1819, jurisdiction was proper when the FDIC filed the action. (Def.'s Resp. [21] at 6–7.) However, defendant contends that this jurisdictional grant is no longer applicable following the substitution of FAS Capital as the plaintiff and real party in interest in the case. ( Id. at 7.) Plaintiff points out that FAS Capital has not asserted any other basis for the Court's jurisdiction, such as diversity. ( Id.)

The question presented then is whether federal question jurisdiction, which is created when the FDIC as plaintiff brings the action under § 1819, vanishes when the FDIC is subsequently dismissed from the case by virtue of the sale of its assets to another party, who is then substituted as plaintiff. The Second Circuit has answered that question in the negative, concluding that federal jurisdiction remains in this circumstance. FDIC v. Four Star Holding Corp., 178 F.3d 97, 101 (2nd Cir.1999) (“the transfer of assets by FDIC to a private third party does not divest [a federal] court of subject matter jurisdiction”). The Third Circuit reached the opposite conclusion in New Rock Asset Partners, L.P. v. Preferred Entity Advancements, Inc., 101 F.3d 1492, 1501 (3rd Cir.1996). Yet, although finding that original jurisdiction evaporated once the plaintiff federal receiver sold the assets and left the case,3 the New Rock court nonetheless found that federal supplemental jurisdiction could still be properly exercised over the remaining parties, under 28 U.S.C. § 1367. Id. at 1504. In other words, both circuits agreed that a district court may continue to exercise jurisdiction after dismissal of the FDIC. With the Second Circuit, however, continuation of federal jurisdiction was

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mandatory, whereas the Third Circuit left the choice up to the district court, whose decision would be subject to an abuse of discretion standard.4

Nor have circuit courts reached a different decision when a case has found its way into federal court through removal by the FDIC as a defendant, as opposed to the above-discussed scenarios in which the FDIC as plaintiff had filed the case in federal court. Whether in the case as a plaintiff or a defendant, the FDIC's subsequent sale of its assets to another party does not rob the federal court of its jurisdiction. See Adair v. Lease Partners, Inc., 587 F.3d 238, 244 (5th Cir.2009) (federal jurisdiction continues to exist under § 1819 after the FDIC is dismissed as a party) and Casey v. FDIC, 583 F.3d 586, 590–91 (8th Cir.2009) (the same).

Indeed, since the above-cited decisions by other circuits, the Eleventh Circuit has recently, and explicitly, joined...

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