Thomas Financial Group, Ltd. v. Standard Chartered Bank

• Decision Date: 18 March 1997
• Docket Number: Nos. A96A1974,A96A1975,s. A96A1974
• Citation: Thomas Financial Group, Ltd. v. Standard Chartered Bank, 485 S.E.2d 237, 225 Ga.App. 879 (Ga. App. 1997)
• Parties: , 97 FCDR 1546 THOMAS FINANCIAL GROUP, LTD. v. STANDARD CHARTERED BANK. STANDARD CHARTERED BANK v. THOMAS FINANCIAL GROUP, LTD.
• Court: Georgia Court of Appeals

Page 237

485 S.E.2d 237

225 Ga.App. 879, 97 FCDR 1546

THOMAS FINANCIAL GROUP, LTD. v. STANDARD CHARTERED BANK.

STANDARD CHARTERED BANK v. THOMAS FINANCIAL GROUP, LTD.

Nos. A96A1974, A96A1975.

Court of Appeals of Georgia.

March 18, 1997.

Reconsideration Denied April 3, 1997.

Davis, Matthews & Quigley, Ron L. Quigley, Ronald Tigner, Atlanta, for appellant.

Smith, Gambrell & Russell, Stephen M. Forte, Thomas M. Barton, Atlanta, for appellee.

ANDREWS, Chief Judge.

In Case No. A96A1974, The Thomas Financial Group, Ltd. (TFG) appeals from the grant of partial summary judgment to Standard Chartered Bank (SCB) and the grant and denial of various procedural motions by way of certificate of immediate review. In Case No. A96A1975, SCB has filed a cross-appeal addressing the trial court's grant of partial summary judgment to TFG on SCB's claim in Count 3 of its amended complaint, alleging breach of contract, which would come into play only if this Court reverses the trial court's conclusion that the business arrangement between SCB and TFG was void as violative of various federal and state laws and, therefore, unenforceable.

Case No. A96A1974

1. Although TFG has filed 29 enumerations of error, its brief does not comply with Rule 27(a)(3) of this Court in that there is no statement of the applicable standard of review of these claimed errors. Further, although 29 enumerations are designated, the argument and citation of authority section, in violation of Rule 27(c)(1), contains only three main headings, alleging (1) that the joint venture between TFG and SCB was legal and should not be void as against public policy (designated as addressing enumerations 1, 4, 5, 6, 17, 18, 19, 20, 21, 22, 23, 24, 25, 27); (2) TFG is entitled to lost profits from the joint venture (designated as addressing enumerations 2, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 19); and (3) TFG is entitled to judgment in its favor on all other issues and motions (designated as addressing enumerations 3, 19, 21, and 23).

We exercise our discretion, despite these errors which subject the appeal to dismissal, to consider the three main arguments presented, to the degree that we discern the enumerated errors discussed. ¹ Finch v Brown, 216 Ga.App. 451, 452, 454 S.E.2d 807 (1995); McHaffie v. Decatur Federal Sav., etc., Assn., 214 Ga.App. 368, 369, 448 S.E.2d 36 (1994).

2. Viewed under the standard of Lau's Corp. v. Haskins, 261 Ga. 491, 405 S.E.2d 474 (1991), the facts necessary for our determination are as follows. SCB, an English public company, and TFG, a corporation formed by Michael Thomas in 1984, engaged in business activities beginning in 1986 and continuing through early 1991 dealing with loans funded by SCB which had been originated by TFG and were guaranteed by the federal Small Business Administration (SBA). The loans, if approved by SBA, were guaranteed for 80 percent of the unpaid balance. SCB remained exposed on the unguaranteed portion of the loans if the borrowers defaulted.

The guaranteed portion of the loan was subject to being sold to investors on a secondary market for a percentage of the loan known as a premium. SCB also collected the payments on the loans and thereby earned a servicing fee. Although no written agreement was ever entered into by SCB and TFG, a pattern evolved through their working together on approximately 100 loans over this period of time. Loans would be originated by TFG, approved by the SBA, funded by SCB, and then sold through the secondary market, with TFG and SCB agreeing to share the servicing fee, premiums, and any losses equally.

Efforts were made by SCB and TFG over the course of their dealings to reduce this arrangement to a written agreement, but those efforts were unsuccessful, culminating in SCB officials declining to enter into such an agreement.

As a result of the deterioration beginning in 1990 of the SBA loan portfolio maintained by SCB and its decision to abandon SBA loans, SCB began attempting to sell its portfolio. It was unable to do so, however, because of TFG's continuing claim to a portion of the servicing fees, which resulted in the initiation of SCB's declaratory judgment action here at issue. The complaint was filed in 1992, alleging that TFG claimed an "interest as a joint venturer with SCB in the servicing fees" and SCB could not therefore dispose of these loans while TFG asserted this interest. The complaint sought a declaration that the anticipated losses on the loans were greatly in excess of any fees due and that TFG should share in these losses.

In its answer and counterclaim, filed in September 1992, TFG alleged as its third defense that the complaint "is barred by reason of illegality and violation of public policy." The answer acknowledged that a pattern had developed between SCB and TFG whereby premiums and servicing fees were to be shared, but alleged there was no agreement regarding offsetting losses from one loan toward fees payable on another loan. TFG further alleged that "any agreement or agreements that [TFG] would share losses with [SCB] on any basis would be void as against public policy, applicable regulations, and agreements" with the SBA.

TFG admitted that "it claims a vested ownership interest in fees with respect to the loans in [SCB's] portfolio which were referred to [SCB] by [TFG], but ... denies the characterization of its interest or status as that of a 'joint venturer' on any particular loan or series of loans and the fees to be derived therefrom." TFG filed a counterclaim contending that, through this "general pattern" of conducting business, it was entitled to service fees of over $100,000. It also alleged counts in quantum meruit or implied contract on four specific loans; a quasi contract theory regarding office space leased by TFG in 1991; rescission of a side deal on the Pilgreen's loan; breach of a confidential relationship; and breach of the duty of good faith as a result of which TFG claimed over $2,500,000 in business injury and "lost profits."

On September 14, 1993, SCB filed its motion for partial summary judgment on TFG's count regarding lost profits, based partially on TFG's denial in its pleadings of the existence of a joint venture and the assertion that, if one existed, it was illegal. In its response, on October 19, 1993, TFG contended that its allegations in paragraph 47 of its answer did allege a joint venture and that SCB illegally withdrew in 1991, causing it the claimed business losses in 1991 and 1992. Alternatively, TFG contended that, if that paragraph did not allege a joint venture, justice required that TFG be allowed to add such a claim by amending its counterclaim. A motion to add such a...