Peoples Bank of E. Tenn. v. Harp

• Citation: 948 F.Supp.2d 1335
• Decision Date: 12 February 2013
• Docket Number: Civil Action No. 2:11–CV–00182–WCO.
• Parties: PEOPLES BANK OF EAST TENNESSEE, Successor–in–Interest to Appalachian Community Bank, FSB, Plaintiff, v. Whitney HARP, Patricia Harp, Brent Baldasare, and Angela Baldasare, Defendants.
• Court: U.S. District Court — Northern District of Georgia

948 F.Supp.2d 1335

PEOPLES BANK OF EAST TENNESSEE, Successor–in–Interest to Appalachian Community Bank, FSB, Plaintiff,

v.Whitney HARP, Patricia Harp, Brent Baldasare, and Angela Baldasare, Defendants.

Civil Action No. 2:11–CV–00182–WCO.

United States District Court,

N.D. Georgia,

Gainesville Division.

Feb. 12, 2013.

Melissa W. Jurgens, Thomas Edward Austin, Jr., Thomas E. Austin, Jr., LLC, Atlanta, GA, for Plaintiff.

Hayden R. Pace, Pace Law, P.C., Atlanta, GA, for Defendants.

ORDER

WILLIAM C. O'KELLEY, Senior District Judge.

The court has before it for consideration Patricia Harp and Angela Baldasare's “Motion for Summary Judgment” [19] and defendants' “Amended Motion for Summary Judgment” [39].

I. General Factual and Procedural Background

This lawsuit arose from the financial failure of a residential subdivision. On August 6, 2007, each defendant executed and delivered a personal guaranty to Appalachian Community Bank, FSB (“FSB”), which guaranteed the prompt payment of a note from Blue Ridge Georgia Capital Partners, LLC (“Borrower”) ¹ in the original principal amount of $5,588,898.55 (the “Note”). ( See Compl. Exs. A–E, ECF Nos. 1–2, 1–3; Pl.'s Resp. to Defs.' First Statement of Material Facts ¶ 3, ECF No. 21–1.) ² The Note was executed with the understanding that it would be used for the acquisition and development of certain real property comprising a subdivision (the “Property”). (Mem. Supp. Defs.' Mot. Summ. J. 3.) The Note was renewed on July 9, 2008, in the amount of $5,026,898.55. (Pl.'s Resp. to Defs.' First SMF ¶ 3.)

Ultimately, the subdivision development failed and the Property was foreclosed upon. However, the proceeds from the foreclosure sale failed to satisfy the remaining balance on the Note. (Mem. Supp. Defs.' Mot. Summ. J. 2.) On April 29, 2011, plaintiff (the successor-in-interest to FSB) filed a complaint in the Superior Court of Fannin County, Georgia, to collect the deficiency owed on the Note. ( See Compl., ECF No. 1–1.) ³ On July 18, 2011, defendants removed the action to federal court pursuant to 28 U.S.C. § 1332. (Notice of Removal, ECF No. 1.)

On June 6, 2012, defendants Patricia Harp and Angela Baldasare (the “Wives”) filed a motion for summary judgment. (Defs.' Mot. Summ. J., ECF No. 19.) On November 5, 2012, defendants filed a motion seeking leave to amend their answer in order to add an affirmative defense. (Mot. to Amend, ECF No. 30.) In the same motion, defendants sought to amend the Wives' original motion for summary judgment. ( Id.) The proposed amended motion for summary judgment incorporated the original motion by reference and included a new ground for summary judgment in favor of all defendants. ( Id. at Ex. 2.) On December 31, 2012, plaintiff requested an oral argument on these pending motions. (Mot. for Oral Arg., ECF No. 35.) The court granted this motion, and a hearing was held on January 17, 2013. At the hearing, the court granted defendants' motion for leave to file an amended answer and amended motion for summary judgment. ⁴ Soon thereafter, defendants filed these amended documents with the court. ( See Defs.' Am. Mot. Summ. J., ECF No. 39; Am. Answer, ECF No. 41.)

II. Summary Judgment Standard

Summary judgment is appropriate where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “An issue of fact is ‘material’ if, under the applicable substantive law, it might affect the outcome of the case.” Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259 (11th Cir.2004). “An issue of fact is ‘genuine’ if the record taken as a whole could lead a rational trier of fact to find for the nonmoving party.” Id. at 1260.

The moving party may demonstrate the absence of a genuine dispute of material fact by “citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations ... admissions, interrogatory answers, or other materials.” Fed.R.Civ.P. 56(c)(1)(A). In addition to the materials cited by the parties, the court may also refer to other materials in the record. Fed.R.Civ.P. 56(c)(3). The moving party “always bears the initial responsibility of informing the district court of the basis for its motion” by “identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quotation marks omitted).

This initial responsibility is discharged when the movant shows that the nonmoving party has failed to present evidence in support of some element of its case on which it bears the ultimate burden of proof. Id. at 322, 106 S.Ct. 2548. Once the moving party has met this initial burden, the nonmoving party must “go beyond the pleadings” and, utilizing its own evidentiary submissions or those already filed, demonstrate that there is a genuine dispute of material fact such that a trial is required. Id. at 324, 106 S.Ct. 2548. “The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

If “the record taken as a whole could not lead a rational trier of fact to find for the non-moving party,” summary judgment is appropriate. Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir.1997) (quotation marks omitted). Thus, the moving party is entitled to “judgment as a matter of law” only when the nonmoving party fails to make a sufficient showing of an essential element of the case on which the nonmoving party bears the burden of proof. Celotex Corp., 477 U.S. at 322, 106 S.Ct. 2548. On the other hand, if the nonmovant “demonstrate[s] that there is indeed a material issue of fact ... [such that] the jury could reasonably find for that party,” summary judgment must be denied. Allen, 121 F.3d at 646.

III. Plaintiff's Alleged Failure to Comply with O.C.G.A. § 44–14–161

In their amended motion for summary judgment, defendants allege that plaintiff is statutorily precluded from seeking a deficiency judgment against them because plaintiff failed to comply with the confirmation procedures set forth in O.C.G.A. § 44–14–161. Although this argument was not raised in defendants' original motion for summary judgment, it potentially disposes of this entire action and therefore the court will address it first.

A. Factual Summary

At the time the Note was made, the loan amount was larger than the legal limit FSB could lend on its own. (Pl.'s Br. Resp. to Defs.' Am. Mot. Summ. J. 2, ECF No. 31.) Accordingly, FSB presented the Note to Appalachian Community Bank in Ellijay, Georgia (“ACB”), to see if ACB would purchase part of the loan. ( Id.) On July 9, 2008, FSB and ACB entered into a participation agreement, whereby ACB purchased 82.107 percent of the loan and FSB retained ownership of 17.893 percent and the responsibility for administering the loan. ( Id. at 2–3, Ex. A.)

Although both FSB and ACB had the words “Appalachian Community Bank” in their titles, they were separate and distinct legal entities.⁵ (Defs.' Am. Mot. Summ. J. 2–3; Quintrell Dep. 10:17–18.) FSB operated under the name of “Appalachian Community Bank, F.S.B.,” while ACB operated under the name of “Appalachian Community Bank,” “Appalachian Community Bank, Ellijay,” or “Gilmer County Bank.” ( Id. at 32–160; Compl. Exs. A–E; Pl.'s Br. Resp. to Defs.' Am. Mot. Summ. J. Ex. A; Pl.'s Supp. Resp. to Defs.' Second SMF ¶ 1.) Unfortunately, FSB and ACB's employees and/or lawyers failed to appreciate the legal distinction between the two banks in the transactions precipitating this lawsuit.

While the Note and guaranties were executed in the name of FSB, the security deeds executed for the Property simply identified the grantee as “Appalachian Community Bank.” ⁶ ( See Mem. Supp. Defs.' Mot. Summ. J. Exs. C–D (guaranties identifying lender as “Appalachian Community Bank, FSB”); Defs.' Am. Mot. Summ. J. 169–84 (security deeds identifying the grantee simply as “Appalachian Community Bank”).) According to plaintiff, the only way to determine which Appalachian Community Bank the security deeds designated as the grantee was by examining the address. (Pl.'s Br. Resp. to Defs.' Am. Mot. Summ. J. 3.) ⁷

In addition to sharing ownership of the Note, FSB and ACB were both represented by the firm of Thompson, O'Brien, Kemp & Nasuti, P.C. (“TOKN”). ( Id. at 4.) On October 6, 2009, TOKN conducted a foreclosure sale of the Property in the name of “Appalachian Community Bank.” ( Id.) Although the foreclosure notice failed to specify which Appalachian Community Bank was conducting the foreclosure sale, plaintiff contends and defendants do not dispute that it was conducted by FSB.

A petition for confirmation was then filed in the Superior Court of Fannin County, Georgia, with the petitioner simply identified as “Appalachian Community Bank” (the “Confirmation Action”). ( Id. at Ex. D.) The Confirmation Action was significantly delayed by the serial bankruptcy filings of the Note's various guarantors. ( Id. at 4.) While the Confirmation Action was pending, ACB went into receivership, and its assets were sold to Community & Southern Bank (“CSB”). ( Id. at 4–5.) This created a conflict in TOKN's representation of FSB, and the firm of Thomas E. Austin, Jr., LLC (“Austin”) was substituted as FSB's counsel. ( Id. at 5.) Shortly before the substitution was finalized, TOKN filed a motion to substitute CSB as the “real party petitioner in interest” in the Confirmation Action, allegedly without F SB's knowledge or consent. ( Id. at 5–6; Defs.' Am. Mot. Summ. J. 22–27.) ⁸ This motion was granted nunc pro tunc on June 17, 2010. (Defs.' Am. Mot. Summ. J. 20–21.) ⁹ Although CSB was now...