Secured Realty & Invs., Inc. v. Bank of N. Ga.

• Citation: 12 FCDR 857,314 Ga.App. 628,725 S.E.2d 336
• Decision Date: 07 March 2012
• Docket Number: Nos. A11A2020,A11A2021.,s. A11A2020
• Court: United States Court of Appeals (Georgia)
• Parties: SECURED REALTY & INVESTMENTS, INC. et al. v. BANK OF NORTH GEORGIA. Bank of North Georgia v. Secured Realty & Investments, Inc. et al.

314 Ga.App. 628

725 S.E.2d 336

12 FCDR 857

SECURED REALTY & INVESTMENTS, INC. et al.

v.BANK OF NORTH GEORGIA.

Bank of North Georgia

v.Secured Realty & Investments, Inc. et al.

Nos. A11A2020, A11A2021.

Court of Appeals of Georgia.

March 7, 2012.

Charles Merritt Lane, Carrollton, for appellants.

Stokes, Lazarus & Carmichael, William Kim Carmichael, Atlanta, Rachel Humphrey, for appellee.

McFADDEN, Judge.

These appeals arise from a bank's lawsuit to collect amounts due on two promissory notes given or guaranteed by the debtors. The trial court denied summary judgment to the bank as to one of the notes and granted summary judgment to the bank as to the other note. Because there are no genuine issues of material fact, we affirm the grant of summary judgment and reverse the denial.

“Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. We review the grant of summary judgment de novo, construing the evidence in favor of the nonmovant.” (Citations and punctuation omitted.) Brooks v. Gwinnett Community Bank, 311 Ga.App. 806, 717 S.E.2d 647 (2011).

So construed, the evidence shows that Secured Realty Investments, Inc. (Secured), executed a promissory note, identified as Note 20, in favor of Bank of North Georgia (“BNG”) in the principal sum of $911,557, and Dennis McDowell personally guaranteed the note. Secured also executed another promissory note, identified as Note 21, in favor of BNG in the principal amount of $3.8 million, and McDowell personally guaranteed that note as well. Secured and McDowell defaulted and failed to pay the amounts due to BNG under the terms of the notes and guarantees.

BNG sued Secured and McDowell to collect the amounts due. BNG subsequently moved for summary judgment, filing the affidavit of its senior vice-president, along with documentary evidence, which set forth the parties' contracts and accounts, the debtors' defaults and their total debt to BNG. After a hearing, the trial court denied summary judgment to the bank as to Note 20 and granted summary judgment as to Note 21. In Case No. A11A2020, Secured and McDowell appeal from the grant of summary judgment on Note 21; and in Case No. A11A2021, BNG appeals from the denial of summary judgment on Note 20.

Case No. A11A2020

1. Secured and McDowell contend that the trial court erred in granting summary judgment in favor of the bank because genuine issues of material fact remain as to their affirmative defenses. The contention is without merit.

Under OCGA § 9–11–56, BNG had the burden on its motion for summary judgment to establish that there is no genuine issue of fact and that it is entitled to judgment as a matter of law. Lau's Corp. v. Haskins, 261 Ga. 491, 405 S.E.2d 474 (1991). Where, as here, the record shows that the promissory notes and guarantees were duly executed by the debtors and that they are in default, a prima facie right to judgment as a matter of law was established, and the burden shifted to Secured and McDowell to produce or point to evidence in the record which established an affirmative defense. Helton v. Jasper Banking Co., 311 Ga.App. 363, 363–364, 715 S.E.2d 765 (2011); Reece v. Chestatee State Bank, 260 Ga.App. 136, 138(1), 579 S.E.2d 11 (2003); Miller v. Calhoun/Johnson Co., 230 Ga.App. 648, 649–650(3)(b), 497 S.E.2d 397 (1998). In response to the bank's motion for summary judgment, Secured and McDowell were not entitled to rest on allegations in their pleadings to establish affirmative defenses on which they would have the burden of proof at trial, but were required to come forward with or point to specific facts in the record to establish affirmative defenses. Southeast Reducing Co. v. Wasserman, 229 Ga.App. 1, 4–5(2), 493 S.E.2d 201 (1997). Secured and McDowell failed to point to such specific facts establishing a triable issue as to their affirmative defenses of estoppel and breach of the implied covenant of good faith and fair dealing.

(a) “In order for an equitable estoppel to arise, there must generally be some intended deception in the conduct or declarations of the party to be estopped, or such gross negligence as to amount to constructive fraud, by which another has been misled to his injury.” (Citation and punctuation omitted.) Griffin v. State Bank of Cochran, 312 Ga.App. 87, 94(2)(a), 718 S.E.2d 35 (2011). Similarly, under the doctrine of promissory estoppel, “[a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” (Citation and punctuation omitted.) Georgia Investments Intl. v. Branch Banking & Trust Co., 305 Ga.App. 673, 675(1), 700 S.E.2d 662 (2010). However, promissory estoppel does not apply to vague or indefinite promises, or promises of uncertain duration. Id.

In this case, Secured and McDowell point to no deception by BNG or any promise upon which they relied to their detriment, and instead point only to the fact that the bank had previously renewed other loans. But there is no evidence that BNG made any promise to renew the instant loan; indeed, Secured and McDowell acknowledge in their brief that “[i]t is undisputed that [BNG] did not attempt to renew Note 21.” Given the absence of any evidence of deception or a promise to renew, not to mention the complete lack of evidence of the specific terms and conditions of any purported loan renewal promise, the bank “satisfied its burden of showing the lack of a genuine issue of fact as to [the] estoppel defense. [Cit.]” Griffin, supra at 96(2)(a), 718 S.E.2d 35.

(b) Secured and McDowell claim that BNG breached an implied contractual duty of good faith and fair dealing by using money from certain depository accounts to set off some of their other delinquent debts. We disagree.

Every contract implies a covenant of good faith and fair dealing in the contract's performance and enforcement. The implied covenant modifies and becomes a part of the provisions of the contract, but the covenant cannot be breached apart from the contract provisions it modifies and therefore cannot provide an independent basis for liability. Therefore, to prevail on their claim for breach of the duty of good faith and fair dealing, [Secured and McDowell] must establish that [BNG] owed a contractual obligation.

(Citations omitted.) Onbrand Media v. Codex Consulting, 301 Ga.App. 141, 147(2)(c), 687 S.E.2d 168 (2009). However, Secured and McDowell have not claimed, let alone established, that there is a contractual obligation in the note or guarantee prohibiting the use of funds from deposit accounts to set off delinquent debts. On the contrary, BNG points to specific contract language allowing such a set-off. Because Secured and McDowell have not met their burden, “[i]t follows that the trial court properly granted summary judgment to the [bank] on this claim.” Id. at 148, 687 S.E.2d 168. See also WirelessMD v. Healthcare.com Corp., 271 Ga.App. 461, 468–469(2), 610 S.E.2d 352 (2005).

Case No. A11A2021

2. BNG asserts that the trial court erred in denying its motion for summary judgment as to Note 20 because, as with Note 21, it established a prima facie case and the debtors then failed to meet their burden of pointing to specific evidence establishing an affirmative defense. We agree.

As explained above in Division 1, where, as here, the record shows that the promissory notes and guarantees were duly executed...