Shropshire v. Alostar Bank of Commerce

• Decision Date: 23 February 2012
• Docket Number: A11A2006,A11A1795,A11A1796,A11A1797.,A11A2005,A11A1771,A11A1772,Nos. A11A1770,s. A11A1770
• Citation: 12 FCDR 756,724 S.E.2d 33,314 Ga.App. 310
• Parties: SHROPSHIRE v. ALOSTAR BANK OF COMMERCE (two cases).Milton Organizers, LLC et al. v. Alostar Bank of Commerce (four cases).Klesko et al. v. Alostar Bank of Commerce (two cases).
• Court: Georgia Court of Appeals

12 FCDR 756
314 Ga.App. 310
724 S.E.2d 33

SHROPSHIRE
v.
ALOSTAR BANK OF COMMERCE (two cases).Milton Organizers, LLC et al.
v.
Alostar Bank of Commerce (four cases).Klesko et al.
v.
Alostar Bank of Commerce (two cases).

Nos. A11A1770

A11A1795

A11A1771

A11A1796

A11A2005

A11A2006

A11A1772

A11A1797.

Court of Appeals of Georgia.

Feb. 23, 2012.

[724 S.E.2d 35]

Kalka & Baer, Arthur Bryan Baer, King & Spalding, Philip Robbins Green, Schreeder, Wheeler & Flint, John A. Christy, Jared W. Heald, Atlanta, for Shropshire and Milton Organizers, LLC.

Stone & Baxter, Ward Stone, Jr., Christopher W. Terry and Matthew S. Cathey, Atlanta, for Klesko and Spear.

Arnall, Golden & Gregory, Matthew Tyler Covell, for appellee.MIKELL, Presiding Judge.

[314 Ga.App. 310] In these related cases, the maker and certain individual guarantors of two promissory notes appeal the trial court's orders granting summary judgment and final judgment in favor of lender Nexity Bank (the “ Bank”).¹ The two loans at issue were made in connection with appellants' efforts, ultimately unsuccessful, to form a new bank in Georgia. Because the underlying documents in these cases are the same, and because the appellants have raised some identical arguments, we have consolidated these cases for disposition. In Case Nos. A11A1770, A11A1771, A11A1795, and A11A1796, we affirm the trial court's grant of summary judgment to the Bank; in Case Nos. A11A2005 and A11A2006, we vacate the final judgment orders; and we remand these cases for further proceedings consistent with this opinion. In Case Nos. A11A1772 and A11A1797, we reverse the trial court's grant of summary judgment in favor of the Bank and against appellant Ryan Klesko, and remand for consideration of the pending jurisdictional issues; and we affirm the grant of summary judgment in favor of the Bank against appellant Richard Spear and remand for further proceedings consistent with this opinion.

On appeal from a trial court's grant of summary judgment, this Court conducts a de novo review of the evidence. On summary judgment, after the movant makes a prima facie showing of its entitlement to judgment as a matter of law, the burden then shifts to the respondent to come forward with rebuttal evidence. To do so, the respondent must set forth specific facts showing the existence of a genuine issue of disputed fact.²

Viewing the evidence in the light most favorable to the non-moving party, as we must,³ the record reflects that the Bank made two loans to the borrower, Milton Organizers, LLC (“Milton LLC”): [314 Ga.App. 311] one was evidenced

[724 S.E.2d 36]

by a Commercial Promissory Note (the “Note”), executed by Milton LLC on October 19, 2007; the other was evidenced by a Commercial Line of Credit Agreement and Note (the “LOC”), executed by Milton LLC on December 29, 2006. Payment of both loans was guaranteed by appellants George Shropshire, Joseph Lockwood, John Howell, Brent Baker, Orlando Wilson, Charles Shultz, Klesko, and Spear. ⁴

The Note, in the principal amount of $2,100,000, contemplated payments of interest only until the maturity date, at which time the principal and any accrued and unpaid interest became due. Until the maturity date, the Note provided for a variable interest rate based on “Wall Street Journal Prime.” After default, however, the Note provided for interest on the unpaid balance at 18% per annum. The maturity date, originally October 19, 2008, was eventually extended to December 31, 2009. On that date, appellants defaulted and failed to pay off the principal due under the Note ($2,099,996.20).

The LOC had an initial credit limit of $750,000; an interest rate of 6.750% per annum, to be adjusted daily based on “Wall Street Journal Prime”; and a maturity date of December 29, 2007. Like the Note, the LOC contemplated payments of interest only until the maturity date, when principal and any accrued and unpaid interest became due; and the interest rate after default was a flat 18% per annum. The Bank and Milton LLC later modified the LOC on several occasions, to increase the credit limit to $1,500,000; to adjust the pre-maturity interest rate; and to extend the maturity date, eventually, to December 31, 2009. On that date, the outstanding principal under the LOC was $1,480,000. Milton LLC and the guarantors failed to make this payment and defaulted on the LOC.

On April 15, 2010, the Bank filed two separate actions against appellants: one seeking recovery under the Note, and the other seeking recovery under the LOC. The Bank subsequently moved for summary judgment in both actions, first against Milton LLC and guarantors Shropshire, Lockwood, Howell, Baker, Wilson, and Shultz; and later against guarantors Klesko and Spear. In neither lawsuit did the defendants request a hearing on the Bank's summary judgment motions, and no hearing was held.

On March 17, 2011, in the Bank's action on the Note, the trial court granted summary judgment in favor of the Bank and against defendants Milton LLC, Shropshire, Lockwood, Howell, Baker, Wilson, and Shultz. On the same day, in the Bank's action on the LOC, the trial court entered an identical order granting summary judgment[314 Ga.App. 312] to the Bank against the same defendants (these orders hereinafter sometimes collectively referred to as the “Milton Orders”). In a separate order entered in each lawsuit, the court granted summary judgment against defendants Klesko and Spear on the Note and on the LOC. In none of these orders, however, did the court set forth the dollar amounts owing and awarded to the Bank under the Note or the LOC. From these orders the defendants appeal.

After appellants filed notices of appeal as to the Milton Orders, the trial court entered a final judgment order in each action, in which the court set forth the amounts awarded to the Bank under the Note and the LOC, respectively. Appellants appeal from these orders as well.

Case Nos. A11A2005 and A11A2006

1. In Case Nos. A11A2005 and A11A2006, appellants Milton LLC, Lockwood, Howell, Wilson, Shropshire, and Shultz appeal from the final judgment orders entered by the trial court.⁵ Appellants contend, and appellee Bank concedes, that the trial court was without jurisdiction to enter these orders, because they were entered after notices of appeal as to the summary judgment orders had already been filed. We agree. “ OCGA § 5–6–46(a) provides that the filing of a notice of appeal serves as supersedeas when all costs in the trial court are paid.

[724 S.E.2d 37]

This automatic supersedeas deprives the trial court of jurisdiction to modify or alter the judgment in the case pending the appeal.” ⁶ Accordingly, we vacate both final judgment orders entered by the trial court and remand for further proceedings consistent with this opinion.

Case Nos. A11A1770, A11A1771, A11A1795 and A11A1796

2. In Case Nos. A11A1770, A11A1771, A11A1795, and A11A1796, borrower Milton LLC and guarantors Shropshire, Lockwood, Howell, Baker, Wilson, and Shultz appeal the Milton Orders, in which the trial court granted summary judgment to the Bank on the Note and the LOC. We first address appellants' contention that the trial court erred in considering the amended affidavits filed by the Bank in support of its motion for summary judgment. We find no error.

In support of its motions for summary judgment, the Bank [314 Ga.App. 313] submitted the affidavits of its employee Joseph Sugg. The affidavits were filed on July 26, 2010, contemporaneously with the filing of the Bank's summary judgment motions; and in each affidavit, Sugg referred to an attached Exhibit A, a ledger recording the payment history of the loan at issue. Subsequently, on September 3, 2010, the Bank filed summary judgment reply briefs in each lawsuit, attaching to each an amended Sugg affidavit. In the action on the Note, the Bank explained that the wrong Exhibit A had been attached to Sugg's original affidavit; and that, in order to correct this clerical error, Sugg's amended affidavit had been filed with the correct exhibit attached. In the action on the LOC, the Bank explained that the amended Sugg affidavit was filed in answer to appellants' response to the Bank's summary judgment motion; and that the amended affidavit contained updated information as to principal payments on the Note made by other guarantors (who are not parties to these appeals).

Defendants moved to strike the amended affidavits in both lawsuits on September 16, 2010; and on September 21, 2010, the Bank moved for leave of court to consider the amended affidavit in both lawsuits. The trial court did not rule on any of these motions.

(a) Appellants assert that the trial court erred in not granting their motions to strike Sugg's amended affidavits from the record, on the ground that these amended affidavits were not filed contemporaneously with the Bank's motions for summary judgment in each action.⁷ However, the trial court failed to rule on appellants' motions to strike, nor did appellants seek a ruling in either lawsuit. “It is the duty of a litigant to obtain a ruling on his motions or objections.” ⁸ Appellants' failure to obtain rulings on their motions to strike Sugg's amended affidavits resulted in a waiver of appellate review of that issue.⁹

Even had this issue not been waived, however, it is without merit. Appellants cite OCGA § 9–11–56(c), which provides that motions for summary judgment “shall be served at least 30 days before the time fixed for the hearing.” We note that in both the underlying lawsuits, no hearing was requested or held. Thus, the 30–day period never applied in these cases. Appellants also rely on OCGA § 9–11–6(d), which provides that “[w]hen a motion is supported by affidavit, the affidavit shall be served with the motion.” As this Court has explained, the purpose of this contemporaneous filing requirement “is to ensure that the other side has adequate [314 Ga.App. 314] notice of and opportunity to respond to such evidence.” ¹⁰ The Bank submitted Sugg's amended...