Rodgers v. First Union Nat. Bank of Georgia

• Decision Date: 06 March 1996
• Docket Number: No. A95A2492,A95A2492
• Citation: 470 S.E.2d 246,220 Ga.App. 821
• Parties: RODGERS v. FIRST UNION NATIONAL BANK OF GEORGIA.
• Court: Georgia Court of Appeals

Page 246

470 S.E.2d 246

220 Ga.App. 821

RODGERS v. FIRST UNION NATIONAL BANK OF GEORGIA.

No. A95A2492.

Court of Appeals of Georgia.

March 6, 1996.

Reconsideration Denied March 26, 1996.

Certiorari Denied May 31, 1996.

Albert A. Chapar, Jr., Atlanta, for appellant.

Glass, McCullough, Sherrill & Harrold, R. Phillip Shinall III, Bryan A. Downs, Atlanta, for appellee.

ANDREWS, Judge.

First Union National Bank of Georgia ("First Union") sued Patrick St. E. Rodgers, the guarantor of two notes, when the corporation of which he was president defaulted on its payments. The trial court granted summary judgment in favor of First Union on the issue of liability but determined that First Union failed to prove the exact amount Rodgers owed. For the reasons that follow, we affirm.

Summary judgment is appropriate when the court, viewing all the evidence and drawing reasonable inferences in a light most favorable to the non-movant, concludes that the evidence does not create a triable issue as to each essential element of the case. Lau's Corp. v. Haskins, 261 Ga. 491, 405 S.E.2d 474 (1991). Viewed in that light, the record shows the following. Rodgers formed a corporation, Maitland Grove, Inc. ("Maitland") to develop certain real property into a subdivision. As president of Maitland, Rodgers executed a note and security agreement in favor of First Union in the principal amount of $1,950,000. Rogers later executed a second note to First Union for $300,000. Rodgers executed an unconditional personal guaranty for the payment of all debts owed to First Union by Maitland including both notes. After Maitland defaulted on both notes, First Union demanded Rodgers make repayment, plus interest and attorney fees. At foreclosure, First Union acquired the real property for $1,700,000, resold the property for less than the foreclosure price, and then sued Rodgers for the deficiency.

In his answer, Rodgers admitted that he had "not tendered any amount to Plaintiff per its demand." Rodgers raised no counterclaims but offered four defenses: failure to state a claim, estoppel, a contention that OCGA § 44-14-161 precluded the suit because the confirmation order was not final, and an alleged violation of 15 USC § 1691 et seq. and 12 CFR § 202.7(d).

1. Rodgers contends the trial court erroneously granted summary judgment because the guarantor contract was void, First Union illegally took control of the development project prior to foreclosure and First Union "chilled the market" causing the destruction of Maitland.

Rodgers' admissions that he executed the two notes and had not paid First Union the amount it demanded established First Union's prima facie right to the judgment sought, and Rodgers then had the burden of establishing any claimed defense. Brooks v. McCorkle, 174 Ga.App. 132, 329 S.E.2d 214 (1985). "When signatures [on a negotiable instrument] are admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defense." OCGA § 11-3-307(2). Because the evidence indisputably shows that First Union established a prima facie right to the judgment it sought on the notes, we need examine only whether Rodgers raised any defense to preclude summary judgment.

A. First we address whether as a matter of law the guaranty could be deemed void due to the violation of applicable federal laws and regulations. Rodgers specifically argues that First Union's requirement that he personally guarantee Maitland's notes while failing to make a preliminary determination of the creditworthiness of Maitland was racially discriminatory.

Rodgers executed the guaranty in December 1988, and in June 1992 invoked an alleged violation of 15 USC § 1691, the Equal Credit Opportunity Act ("ECOA"), and 12 CFR § 202.7(d) as a general defense to First Union's suit. Even if this defense had factual support, it was barred as a matter of law for procedural and statute of limitation reasons. An alleged violation of 15 USC § 1691 et seq. and 12 CFR § 202.7(d)(1) cannot be asserted as an affirmative defense to void a guaranty, but only as a compulsory counterclaim. See CMF Virginia Land, L.P. v. Brinson, 806 F.Supp. 90, 93 (E.D.Va.1992) (holding the ECOA, 15 USC § 1691 et seq., is not properly asserted as an affirmative defense to liability and cannot, as a matter of law, render a debt void); and Diamond v. Union Bank & Trust, 776 F.Supp. 542 (N.D.Okla.1991) (holding no authority in statutory language or case law, for the proposition that a violation of the ECOA renders an instrument void).

Even if Rodgers had asserted an alleged violation of the ECOA as a counterclaim, such claim was barred by the applicable statute of limitation, under 15 USC § 1691e(f), "[n]o ... action shall be brought later than two years from the date of the occurrence of the violation." Rodgers had two years from December 1988 when he signed the guarantor agreement to file a complaint. Rodgers argues an exception to the two-year limit was permitted in Silverman v. Eastrich Multiple Investor Fund, L.P., 51 F.3d 28 (3rd Cir.1995) (holding exception to two-year statute of limitation possible where guarantor spouse raises violation of the ECOA at her first opportunity as defense to recoupment). However, this Court is not bound by decisions of other states or federal courts except the United States Supreme Court, and we do not find the reasoning in Silverman persuasive. T.G. Stegall Trucking Co. v. Tower Lines, 135 Ga.App. 286, 288(5), 217 S.E.2d 488 (1975). Thus, the trial court correctly determined that as matter of law the guaranty was not void.

B. Rodgers contends that there is an unresolved issue of material fact as to whether First Union's requirement that he personally guarantee Maitland's notes was racially discriminatory.

In support of its summary judgment motion, First Union offered evidence showing that it treated Rodgers exactly the same as any other individual pursuing a real estate development project. First Union's vice president of its...