Regions Bank v. Schmauch

Decision Date09 June 2003
Docket NumberNo. 3651.,3651.
Citation582 S.E.2d 432,354 S.C. 648
CourtSouth Carolina Court of Appeals
PartiesREGIONS BANK, Respondent, v. Bobbie A. SCHMAUCH, Appellant. Bobbie A. Schmauch, Appellant, v. MCA Skywatch Traffic Network, Inc., Martin, Coleman & Associates, Inc., Donald Joe Schmauch, Jr. and Debra Coleman Schmauch and Richard Furman, Defendants, of whom Richard Furman is Respondent.

Robert C. Childs, III and Laura W.H. Teer, both of Greenville; for Appellant.

Stephanie H. Burton and Elizabeth J. Brady, both of Greenville; for Respondents.

ANDERSON, J.:

Regions Bank brought suit against Bobbie A. Schmauch (Appellant) to collect amounts owed on two loans allegedly guaranteed by Appellant. Appellant filed an answer, counterclaim, and third-party complaint. Regions Bank and Richard Furman (collectively referred to as Respondents) both moved for summary judgment. Appellant also moved for summary judgment. The trial judge granted Respondents' motions and denied Appellant's motion for summary judgment. Appellant's motion to alter or amend was also denied. We affirm.

FACTS/PROCEDURAL BACKGROUND

Appellant's son, Donald Joe Schmauch (Joe Schmauch), was owner of MCA Skywatch Traffic Network, Inc. (MCA) and Martin, Coleman & Associates, Inc. (Martin Coleman). Appellant provided financial support for Joe Schmauch's businesses on many occasions, including loaning him money and cosigning on loans. The businesses were established to purchase helicopters and use them to provide air surveillance for local broadcast stations and power companies.

On February 15, 1996, Joe Schmauch obtained a loan (first loan) from Greenville National Bank1 for $100,000.00 on behalf of Martin Coleman. Appellant accompanied Joe Schmauch to obtain the loan. A certificate of deposit (CD) owned by Appellant was listed as collateral for the loan. Richard Furman conducted the loan closing and executed the necessary paperwork. The note provided for payments to begin March 15, 1996 and the balance due on February 15, 1999. Appellant has admitted making payments on the loan when Joe Schmauch or Martin Coleman was unable to make the payments.

Martin Coleman received a second loan (second loan) for $40,000.00 from Regions Bank on May 30, 1996. Appellant signed a Guaranty Agreement on May 30, 1996. However, neither the borrower's name nor the liability section of the Guaranty was completed.

On July 17, 1996, Martin Coleman renewed the second loan and borrowed additional funds to bring the total to $60,000.00. A second Guaranty Agreement purports to bear Appellant's signature. The Guaranty provides for unlimited liability with regards to the loans given to Martin Coleman. While the July 17, 1996 Guaranty is completely filled out, it does not contain a reference to a specific loan number. It is simply matched to the loan by the date on the Guaranty.

The second loan was again renewed on September 12, 1996, and additional funds were borrowed bringing the total to $65,190.80. An additional Guaranty is in the possession of Regions Bank. While the Guaranty purports to bear Appellant's signature, she denied it is her signature. The second loan was renewed several more times, including December 4, 1996. The December Note indicates Appellant is the coborrower. However, Furman admitted she was listed as the co-borrower in error. Appellant also made payments on the second loan.

On February 15, 1999, the balance remaining on the first loan became due. Martin Coleman did not make payment. Regions Banks liquidated the CD and applied the proceeds to the amount due on the loan. The proceeds left a balance due of $1,726.05. The second loan came due on June 7, 1999. The balance due on the second loan was $51,154.79. Payment by Appellant was refused, and Regions Bank brought the instant action.

Regions Bank brought this collection action against Appellant on September 3, 1999, seeking to recover the balances owed on the two loans to Martin Coleman. Appellant filed an amended answer in which she made a general denial and proffered numerous allegations including fraud, discharge, forgery, equitable estoppel, coercion, and failure to provide notice of default. She also counterclaimed alleging, among others, negligence, breach of fiduciary duty, conversion, and fraud. Moreover, she asserted a third-party claim against Furman for negligence, breach of fiduciary duty, conversion, and fraud, among other claims.2

Respondents moved for summary judgment on July 10, 2001. Appellant also moved for summary judgment. At the hearing on the motions, Appellant withdrew several of her defenses, counterclaims, and third-party claims. The trial judge granted Respondents' motions for summary judgment. The court found the loan documents were clear and there was a contract between Appellant and Regions Bank for Appellant to guarantee the loans. The court concluded Appellant breached the Guaranty contract and awarded Regions Bank damages of $62,924.52 plus interest until the judgment is paid. The judge decided there was no evidence of forgery, fraud, or equitable estoppel.

The court determined Respondents did not owe Appellant any duty of care, and therefore, there were no grounds upon which to find them negligent. The court determined that the relationship between Regions Bank and Appellant was that of creditor-debtor and not a fiduciary relationship. Summary judgment was awarded to Respondents on Appellant's claim of conversion because the court held she pledged the CD as collateral and had no right to possession at the time the CD was liquidated. Finally, the court ruled Appellant did not establish fraud on the part of Respondents. Appellant's motion to alter or amend the judgment was denied.

ISSUES
I. Did the trial court err when it found Appellant pledged her CD as collateral and properly completed a Guaranty Agreement in granting summary judgment in favor of Regions Bank on its collection action?
II. Did the trial court err in granting summary judgment in favor of Respondents on Appellant's claim of fraud?
III. Did the trial court err in granting summary judgment in favor of Respondents on Appellant's claim of equitable estoppel?
IV. Did the trial court err in granting summary judgment in favor of Respondents on Appellant's claim of negligence?
V. Did the trial court err in granting summary judgment in favor of Respondents on Appellant's claim of breach of fiduciary duty?
VI. Did the trial court err in granting summary judgment in favor of Respondents on Appellant's claim of conversion?
STANDARD OF REVIEW

A trial court should grant a motion for summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), SCRCP; see also Tupper v. Dorchester County, 326 S.C. 318, 325, 487 S.E.2d 187, 191 (1997); Wells v. City of Lynchburg, 331 S.C. 296, 301, 501 S.E.2d 746, 749 (Ct.App.1998). In reviewing the grant of a summary judgment motion, this court applies the same standard which governs the trial court: summary judgment is proper when "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), SCRCP; Baughman v. Am. Tel. & Tel. Co., 306 S.C. 101, 114-15, 410 S.E.2d 537, 545 (1991). Under Rule 56(c), SCRCP, the party seeking summary judgment has the initial burden of demonstrating the absence of a genuine issue of material fact. Trivelas v. South Carolina Dep't of Transp., 348 S.C. 125, 130, 558 S.E.2d 271, 273 (Ct.App.2001). Once the party moving for summary judgment meets the initial burden of showing an absence of evidentiary support for the opponent's case, the opponent cannot simply rest on mere allegations or denials contained in the pleadings. Rather, the nonmoving party must come forward with specific facts showing there is a genuine issue for trial. Rule 56(c), SCRCP; SSI Med. Servs., Inc. v. Cox, 301 S.C. 493, 497, 392 S.E.2d 789, 792 (1990); Peterson v. W. Am. Ins. Co., 336 S.C. 89, 94, 518 S.E.2d 608, 610 (Ct.App.1999). "In determining whether any triable issues of fact exist, the evidence and all inferences which can be reasonably drawn from the evidence must be viewed in the light most favorable to the nonmoving party." Strother v. Lexington County Recreation Comm'n, 332 S.C. 54, 61, 504 S.E.2d 117, 121 (1998). "On appeal from an order granting summary judgment, the appellate court will review all ambiguities, conclusions, and inferences arising in and from the evidence in a light most favorable to the non-moving party below." Osborne v. Adams, 346 S.C. 4, 7, 550 S.E.2d 319, 321 (2001); accord Williams v. Chesterfield Lumber Co., 267 S.C. 607, 610, 230 S.E.2d 447, 448 (1976).

LAW/ANALYSIS
I. LIABILITY FOR PLEDGE AND AS GUARANTOR
A. Breach of Guaranty Agreement

Appellant contends the trial court erred in granting summary judgment to Regions Banks on the issue of her liability for payment on the second loan. She maintains there is a genuine issue of material fact as to whether she is liable under the guaranty agreements due to the irregularities claimed and her lack of an understanding that her liability was unlimited.

In order to find Appellant breached a contract with Regions Bank, a contract must first be found to exist. A contract is an obligation which arises from actual agreement of the parties manifested by words, oral or written, or by conduct. Prescott v. Farmers Tel. Co-op., Inc., 335 S.C. 330, 335, 516 S.E.2d 923, 925 (1999); Roberts v. Gaskins, 327 S.C. 478, 483, 486 S.E.2d 771, 773 (Ct.App.1997). "A contract exists where there is an agreement between two or more persons upon sufficient consideration either to do or not to do a particular act." Benya v. Gamble, 282 S.C. 624, 628, 321 S.E.2d 57, 60 (Ct.App.1984). "Stated another way,...

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